Executive Summary

EPS $1.27 rose 10.43% year over year but fell 9.93% quarter over quarter; net income was $31.44M, up 10.58% YoY and down 10.02% QoQ .
Net interest margin expanded 14 bps QoQ to 3.78% on an FTE basis (3.77% GAAP), and tax-equivalent NII grew 11.22% YoY and 5.14% QoQ to $79.52M .
Noninterest income declined 17.67% QoQ, driven by a $3.89M realized loss from repositioning the AFS securities portfolio (replacing 0.71% yield bonds with ~4.64% yield) .
Board raised the quarterly cash dividend to $0.36 (+5.88% YoY) and loans/deposits ended the year at $6.85B/$7.23B (+5.16%/+2.7% YoY) providing capital return and balance sheet growth catalysts .
Wall Street consensus (S&P Global) for Q4 2024 EPS/Revenue was unavailable at the time of analysis; we cannot benchmark beats/misses vs estimates.

What Went Well and What Went Wrong

What Went Well

Net interest margin expanded sequentially (+14 bps QoQ to 3.78% FTE) despite sustained deposit pricing competition; tax-equivalent NII increased 11.22% YoY and 5.14% QoQ .
Average loans and leases rose $288.56M (+4.52% YoY) in Q4; end-of-period loans/leases reached $6.85B (+5.16% YoY), driven by Construction Equipment, Auto & Light Truck, and Renewable Energy portfolios .
ROA improved to 1.42% (vs 1.32% prior-year Q4) and CET1 strengthened to 14.21% vs 13.22% a year ago, reinforcing earnings quality and capital buffers .
Management quote: “We are pleased to announce record net income for the fourth year in a row… tax-equivalent net interest margin expanded during 2024 to 3.64%… we also experienced margin expansion of 14 basis points [in Q4].” – CEO Christopher J. Murphy III .

What Went Wrong

Noninterest income fell $3.97M QoQ (-17.67%) due to $3.90M losses from selling low-yield AFS securities (0.71%) to reposition into ~4.64% yield; estimated breakeven ~1.6 years .
Noninterest expense rose $3.38M QoQ (+6.65%), including $0.85M stolen check fraud loss and higher data processing costs tied to technology projects .
Credit costs normalized with Q4 net charge-offs of $0.69M (vs net recoveries in prior-year Q4), and the provision for credit losses increased to $3.58M (vs $2.07M prior-year Q4) as nonperforming assets-to-loans rose to 0.46% (vs 0.37% a year ago) .

Financial Results

P&L and Key Ratios vs Prior Year and Prior Quarter

Metric	Q4 2023	Q3 2024	Q4 2024
Net Interest Income ($M)	$71.33	$75.49	$79.37
Net Interest Income - FTE ($M)	$71.50	$75.63	$79.52
Provision for Credit Losses ($M)	$2.07	$3.11	$3.58
Noninterest Income ($M)	$20.08	$22.45	$18.48
Noninterest Expense ($M)	$52.81	$49.44	$54.21
Net Income ($M)	$28.42	$34.91	$31.44
Diluted EPS ($)	$1.15	$1.41	$1.27
ROA (%)	1.32%	1.59%	1.42%
ROE (%)	11.87%	12.87%	11.21%
NIM (GAAP, %)	3.51%	3.63%	3.77%
NIM (FTE, %)	3.51%	3.64%	3.78%
Efficiency Ratio (GAAP, %)	57.77%	50.49%	55.40%
Total Net Revenue (GAAP) ($M)	$91.41	$97.93	$97.85

Segment/Portfolio Balances (End of Period)

Portfolio ($000)	Q4 2023	Q3 2024	Q4 2024
Commercial & Agricultural	$766,223	$723,176	$772,974
Renewable Energy	$399,708	$479,947	$487,266
Auto & Light Truck	$966,912	$949,473	$948,435
Medium & Heavy Duty Truck	$311,947	$299,208	$289,623
Aircraft	$1,078,172	$1,065,801	$1,123,797
Construction Equipment	$1,084,752	$1,141,367	$1,203,912
Commercial Real Estate	$1,129,861	$1,156,823	$1,215,265
Residential RE & Home Equity	$637,973	$664,581	$680,071
Consumer	$142,957	$135,724	$133,465
Total Loans & Leases	$6,518,505	$6,616,100	$6,854,808

KPIs (End of Period and Credit Quality)

KPI	Q4 2023	Q3 2024	Q4 2024
Deposits ($000)	$7,038,581	$7,125,944	$7,230,035
Allowance for Loan & Lease Losses ($000)	$147,552	$152,324	$155,540
ALLL / Loans (%)	2.26%	2.30%	2.27%
Net Charge-offs (Recoveries) to Avg Loans (%)	(0.10%)	0.05%	0.04%
Nonperforming Assets / Loans (%)	0.37%	0.47%	0.46%
CET1 (%)	13.22%	14.18%	14.21%
Quarterly Dividend ($/sh)	$0.34	$0.36	$0.36
NPS (Customer Experience)	—	—	76.4 (Excellent)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Cash Dividend per Common Share	Q4 2024	$0.34 (Q4 2023 actual)	$0.36	Raised
Formal Financial Guidance (Revenue/Margins/OpEx/Tax)	Q4 2024	None provided	None provided	Maintained (no formal guidance)

Earnings Call Themes & Trends

Note: A Q4 2024 earnings call transcript was not available; themes below reflect management commentary from press releases and filings.

Topic	Q2 2024 (Prior Mentions)	Q3 2024 (Prior Mentions)	Q4 2024 (Current Period)	Trend
Net Interest Margin	NIM up 5 bps QoQ to 3.59% (FTE) on disciplined pricing; third consecutive quarter of expansion	NIM up 4–5 bps QoQ to 3.63%/3.64% (GAAP/FTE); fourth consecutive expansion	NIM up 14 bps QoQ to 3.77%/3.78% (GAAP/FTE)	Improving
Deposit Pricing Competition	Rate competition persisted across banks/MMFs/bonds	Persistent deposit rate competition as Fed kept rates elevated; noted recent start to lowering	“Despite sustained deposit pricing competition,” margin expanded	Easing gradually
Credit Quality	Net recoveries $1.99M; NPA/loans 0.31%; ALLL 2.26%	Net charge-offs $0.85M; provision up; NPA/loans 0.47%; ALLL 2.30%	Net charge-offs $0.69M; provision $3.58M; NPA/loans 0.46%; ALLL 2.27%	Normalizing
Technology Initiatives	Higher data processing costs tied to tech projects	Continued tech project spend	Joined U.S. Faster Payment Council; higher data processing costs	Ongoing investment
Renewable Energy Financing	Portfolio growth in Renewable Energy in Q2	Continued portfolio contribution	Renewable Energy portfolio $487M EOP; Agilitas financing package announced	Expanding
Capital & Dividends	CET1 13.74%; dividend increased to $0.36	CET1 14.18%; dividend $0.36	CET1 14.21%; dividend $0.36; 37th consecutive year of dividend growth	Strengthening

Management Commentary

“We are pleased to announce record net income for the fourth year in a row and we reached our 37th consecutive year of dividend growth… our tax-equivalent net interest margin expanded during 2024 to 3.64%… During the fourth quarter, we also experienced margin expansion of 14 basis points.” – Christopher J. Murphy III, Chairman & CEO .
“Our NPS has remained strong through each quarter of 2024 - above 76%… we were pleased to achieve an ‘Excellent’ Net Promoter Score (NPS) of 76.4%.” .
“1st Source Bank joined the U.S. Faster Payment Council in the fourth quarter of 2024.” .
“Partnered with the City of South Bend and ISBDC on the South Bend Opportunity Fund… small business loans at lower interest rates.” .

Q&A Highlights

A Q4 2024 earnings call transcript was not available in the document set; no Q&A themes or clarifications can be provided at this time.

Estimates Context

Wall Street consensus estimates from S&P Global (Capital IQ) for Q4 2024 EPS and Revenue were unavailable at the time of analysis due to data access limits. As a result, we cannot assess beats/misses versus consensus for this quarter.

Key Takeaways for Investors

Margin expansion and disciplined loan pricing are driving core earnings resilience: NIM rose 14 bps QoQ to 3.78% (FTE), and tax-equivalent NII increased 11.22% YoY .
Balance sheet growth remains healthy: loans/leases ended at $6.85B (+5.16% YoY), deposits at $7.23B (+~2.7% vs Q4 2023), supporting forward NII trajectory .
Credit costs are normalizing, not spiking: Q4 net charge-offs were $0.69M with NPA/loans at 0.46%; ALLL held at 2.27% of loans .
Near-term earnings headwind from AFS portfolio repositioning likely transitory: $3.89M realized loss swaps ~0.71% yields to ~4.64% with ~1.6-year breakeven, improving future NII/NIM .
Opex vigilance needed: Q4 noninterest expense rose 6.65% QoQ on fraud loss and tech spend; monitor trajectory and efficiency ratio (55.40%) as tech investments scale .
Capital and shareholder returns are robust: CET1 14.21% and dividend at $0.36 with 37 consecutive years of growth; modest buybacks occurred (2,997 shares; $0.18M) .
Strategic momentum in payments and renewable energy financing (e.g., Faster Payments Council membership; Agilitas financing) broadens growth vectors beyond core banking .

1ST SOURCE CORP (SRCE)·Q4 2024 Earnings Summary