SRCE · 1st Source Corporation

1st Source Corporation delivered record first quarter 2026 results, reporting $39.96 million in net income — up 6.49% year-over-year — driven by strong growth in tax-equivalent net interest income ($90.29 million, +11.36% YoY) and disciplined expense management, despite a $3.16 million sequential decline. The 4.25% net interest margin reflected a 35-basis-point improvement over Q1 2025, supported by higher average loan and lease balances ($7.02 billion, +3.29% YoY), improved investment yields from 2025 portfolio repositioning, and lower interest-bearing deposit costs; however, the 4-basis-point sequential decline signaled emerging pressure from lower loan yields and higher short-term borrowing costs. Notably, the provision for credit losses surged to $7.27 million — more than double the prior quarter — primarily due to $3.96 million in net charge-offs concentrated in two Auto and Light Truck accounts serving the film industry, prompting an increase in the allowance ratio to 2.33%. Management explicitly cited a 'weakened economic outlook with increased uncertainty' as a driver of the higher reserve build. Capital remained robust, with the CET1 ratio at 15.30% and common equity-to-assets at 14.02%, enabling both a 13.16% dividend increase to $0.43 per share and $23.35 million in share repurchases (338,356 shares). CEO Andrea Short emphasized balance sheet strength, safety-and-soundness focus, and recognition via Forbes’ America’s Best Banks (#11) and Best Midsize Employers (#12) lists — reinforcing institutional stability and culture-driven differentiation. No forward-looking guidance was disclosed in Exhibit 99.1.