株探米国株
英語
エドガーで原本を確認する
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2025
OR
☐         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                    
Commission file number 0-6233
1st Source Corporation
(Exact name of registrant as specified in its charter)
Indiana
   35-1068133
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
100 North Michigan Street    
South Bend, IN   46601
(Address of principal executive offices)   (Zip Code)
(574) 235-2000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock - without par value SRCE The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x  Yes  o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  x Yes  o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x   Accelerated filer ☐
Non-accelerated filer ☐   Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐ Yes  x No
Number of shares of common stock outstanding as of July 18, 2025 — 24,537,756 shares


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2
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1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
June 30,
2025		 December 31,
2024
ASSETS    
Cash and due from banks $ 88,810  $ 76,837 
Federal funds sold and interest bearing deposits with other banks 60,298  47,989 
Investment securities available-for-sale
   (amortized cost of $1,530,847 and $1,650,684 at June 30, 2025 and December 31, 2024, respectively)
 1,456,157  1,536,299 
Other investments 22,140  23,855 
Mortgages held for sale 4,334  2,569 
Loans and leases, net of unearned discount:  
Commercial and agricultural 835,826  772,974 
Renewable energy 573,226  487,266 
Auto and light truck 972,461  948,435 
Medium and heavy duty truck 282,875  289,623 
Aircraft 1,134,838  1,123,797 
Construction equipment 1,207,209  1,203,912 
Commercial real estate 1,252,750  1,215,265 
Residential real estate and home equity 714,026  680,071 
Consumer 124,758  133,465 
Total loans and leases 7,097,969  6,854,808 
Allowance for loan and lease losses (163,484) (155,540)
Net loans and leases 6,934,485  6,699,268 
Equipment owned under operating leases, net 8,653  11,483 
Premises and equipment, net 55,602  53,456 
Goodwill and intangible assets 83,895  83,897 
Accrued income and other assets 372,788  396,285 
Total assets $ 9,087,162  $ 8,931,938 
LIABILITIES    
Deposits:    
Noninterest-bearing demand $ 1,583,621  $ 1,639,101 
Interest-bearing deposits:
Interest-bearing demand 2,601,353  2,544,839 
Savings 1,359,841  1,256,370 
Time 1,897,854  1,789,725 
Total interest-bearing deposits 5,859,048  5,590,934 
Total deposits 7,442,669  7,230,035 
Short-term borrowings:    
Federal funds purchased and securities sold under agreements to repurchase 58,242  72,346 
Other short-term borrowings 51,816  176,852 
Total short-term borrowings 110,058  249,198 
Long-term debt and mandatorily redeemable securities 41,850  39,156 
Subordinated notes 58,764  58,764 
Accrued expenses and other liabilities 176,397  173,279 
Total liabilities 7,829,738  7,750,432 
SHAREHOLDERS’ EQUITY    
Preferred stock; no par value
    
Authorized 10,000,000 shares; none issued or outstanding
 —  — 
Common stock; no par value
  
Authorized 40,000,000 shares; issued 28,205,674 at June 30, 2025 and December 31, 2024
 436,538  436,538 
Retained earnings 950,363  890,937 
Cost of common stock in treasury (3,674,878 shares at June 30, 2025 and 3,685,512 shares at December 31, 2024)
 (131,551) (129,175)
Accumulated other comprehensive loss (56,761) (87,232)
Total shareholders’ equity 1,198,589  1,111,068 
Noncontrolling interests 58,835  70,438 
Total equity 1,257,424  1,181,506 
Total liabilities and equity $ 9,087,162  $ 8,931,938 
The accompanying notes are a part of the unaudited consolidated financial statements.
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1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands, except per share amounts)
Three Months Ended
June 30,		 Six Months Ended
June 30,
  2025 2024 2025 2024
Interest income:        
Loans and leases $ 117,230  $ 113,101  $ 230,790  $ 222,303 
Investment securities, taxable 8,602  5,900  16,755  11,979 
Investment securities, tax-exempt 297  254  574  514 
Other 1,087  1,914  2,401  2,841 
Total interest income 127,216  121,169  250,520  237,637 
Interest expense:        
Deposits 39,106  43,095  78,952  82,839 
Short-term borrowings 809  2,158  1,041  5,260 
Subordinated notes 1,007  1,061  2,021  2,122 
Long-term debt and mandatorily redeemable securities 1,102  805  2,376  1,451 
Total interest expense 42,024  47,119  84,390  91,672 
Net interest income 85,192  74,050  166,130  145,965 
Provision for credit losses:
Provision for credit losses — loans and leases 7,884  56  9,996  6,651 
(Recovery of) provision for credit losses — unfunded loan commitments (194) (370) 959  512 
Total provision (recovery of provision) for credit losses 7,690  (314) 10,955  7,163 
Net interest income after provision for credit losses 77,502  74,364  155,175  138,802 
Noninterest income:        
Trust and wealth advisory 7,266  7,081  13,932  13,368 
Service charges on deposit accounts 3,189  3,203  6,260  6,273 
Debit card 4,567  4,562  8,716  8,763 
Mortgage banking 1,116  1,280  1,969  2,230 
Insurance commissions 1,685  1,611  4,125  3,387 
Equipment rental 779  1,257  1,678  2,928 
Losses on investment securities available-for-sale (997) —  (997) — 
Other 5,452  4,227  10,477  8,428 
Total noninterest income 23,057  23,221  46,160  45,377 
Noninterest expense:        
Salaries and employee benefits 31,800  29,238  63,915  58,810 
Net occupancy 3,035  2,908  6,259  5,904 
Furniture and equipment 1,684  1,265  3,031  2,414 
Data processing 7,410  6,712  14,701  13,212 
Depreciation – leased equipment 619  999  1,337  2,287 
Professional fees 1,499  1,713  3,167  3,058 
FDIC and other insurance 1,438  1,627  2,878  3,284 
Business development and marketing 1,884  2,026  3,809  3,770 
Other 3,061  3,373  6,409  5,826 
Total noninterest expense 52,430  49,861  105,506  98,565 
Income before income taxes 48,129  47,724  95,829  85,614 
Income tax expense 10,803  10,919  20,980  19,347 
Net income 37,326  36,805  74,849  66,267 
Net (income) loss attributable to noncontrolling interests (7) (12) (10) (19)
Net income available to common shareholders $ 37,319  $ 36,793  $ 74,839  $ 66,248 
Per common share:        
Basic net income per common share $ 1.51  $ 1.49  $ 3.02  $ 2.68 
Diluted net income per common share $ 1.51  $ 1.49  $ 3.02  $ 2.68 
Basic weighted average common shares outstanding 24,541,385  24,495,495  24,544,120  24,477,292 
Diluted weighted average common shares outstanding 24,541,385  24,495,495  24,544,120  24,477,292 
The accompanying notes are a part of the unaudited consolidated financial statements.
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1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited - Dollars in thousands)
Three Months Ended
June 30,		 Six Months Ended
June 30,
  2025 2024 2025 2024
Net income $ 37,326  $ 36,805  $ 74,849  $ 66,267 
Other comprehensive income (loss):        
Unrealized appreciation of available-for-sale securities 13,509  4,912  38,699  1,121 
Reclassification adjustment for realized losses included in net income 997  —  997  — 
Income tax effect (3,383) (1,202) (9,225) (363)
Other comprehensive income (loss), net of tax 11,123  3,710  30,471  758 
Comprehensive income (loss) 48,449  40,515  105,320  67,025 
Comprehensive (income) loss attributable to noncontrolling interests (7) (12) (10) (19)
Comprehensive income (loss) available to common shareholders $ 48,442  $ 40,503  $ 105,310  $ 67,006 
The accompanying notes are a part of the unaudited consolidated financial statements.

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1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited - Dollars in thousands, except per share amounts)
Three Months Ended
Preferred
Stock		 Common
Stock		 Retained
Earnings		 Cost of
Common
Stock
in Treasury		 Accumulated
Other
Comprehensive
Income (Loss), Net		 Total Shareholders’ Equity Noncontrolling Interests Total Equity
Balance at April 1, 2024 $ —  $ 436,538  $ 812,413  $ (129,790) $ (109,275) $ 1,009,886  $ 71,663  $ 1,081,549 
Net income —  —  36,793  —  —  36,793  12  36,805 
Other comprehensive income —  —  —  —  3,710  3,710  —  3,710 
Issuance of 29,365 common shares under stock based compensation awards
 —  —  924  542  —  1,466  —  1,466 
Common stock dividend ($0.34 per share)
 —  —  (8,340) —  —  (8,340) —  (8,340)
Distributions to noncontrolling interests —  —  —  —  —  —  (335) (335)
Balance at June 30, 2024 $ —  $ 436,538  $ 841,790  $ (129,248) $ (105,565) $ 1,043,515  $ 71,340  $ 1,114,855 
Balance at April 1, 2025 $ —  $ 436,538  $ 921,717  $ (128,912) $ (67,884) $ 1,161,459  $ 59,083  $ 1,220,542 
Net income —  —  37,319  —  —  37,319  7  37,326 
Other comprehensive income —  —  —  —  11,123  11,123  —  11,123 
Issuance of 15,613 common shares under stock based compensation awards
 —  —  678  201  —  879  —  879 
Cost of 47,428 shares of common stock acquired for treasury
 —  —  —  (2,840) —  (2,840) —  (2,840)
Common stock dividend ($0.38 per share)
 —  —  (9,351) —  —  (9,351) —  (9,351)
Distributions to noncontrolling interests —  —  —  —  —  —  (255) (255)
Balance at June 30, 2025 $ —  $ 436,538  $ 950,363  $ (131,551) $ (56,761) $ 1,198,589  $ 58,835  $ 1,257,424 
Six Months Ended
Preferred
Stock		 Common
Stock		 Retained
Earnings		 Cost of
Common
Stock
in Treasury		 Accumulated
Other
Comprehensive
Income (Loss), Net		 Total Shareholders’ Equity Noncontrolling Interests Total Equity
Balance at January 1, 2024 $ —  $ 436,538  $ 789,842  $ (130,489) $ (106,323) $ 989,568  $ 78,695  $ 1,068,263 
Net income —  —  66,248  —  —  66,248  19  66,267 
Other comprehensive income —  —  —  —  758  758  —  758 
Issuance of 72,419 common shares under stock based compensation awards
 —  —  2,386  1,241  —  3,627  —  3,627 
Common stock dividend ($0.68 per share)
 —  —  (16,686) —  —  (16,686) —  (16,686)
Distributions to noncontrolling interests —  —  —  —  —  —  (1,454) (1,454)
Liquidation of noncontrolling interests —  —  —  —  —  —  (5,920) (5,920)
Balance at June 30, 2024 $ —  $ 436,538  $ 841,790  $ (129,248) $ (105,565) $ 1,043,515  $ 71,340  1,114,855 
Balance at January 1, 2025 $ —  $ 436,538  $ 890,937  $ (129,175) $ (87,232) $ 1,111,068  $ 70,438  $ 1,181,506 
Net income —  —  74,839  —  —  74,839  10  74,849 
Other comprehensive income —  —  —  —  30,471  30,471  —  30,471 
Issuance of 65,616 common shares under stock based compensation awards
 —  —  2,803  919  —  3,722  —  3,722 
Cost of 54,982 shares of common stock acquired for treasury
 —  —  —  (3,295) —  (3,295) —  (3,295)
Common stock dividend ($0.74 per share)
 —  —  (18,216) —  —  (18,216) —  (18,216)
Distributions to noncontrolling interests —  —  —  —  —  —  (1,768) (1,768)
Liquidation of noncontrolling interests —  —  —  —  —  —  (9,845) (9,845)
Balance at June 30, 2025 $ —  $ 436,538  $ 950,363  $ (131,551) $ (56,761) $ 1,198,589  $ 58,835  $ 1,257,424 
The accompanying notes are a part of the unaudited consolidated financial statements.
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1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - Dollars in thousands)
  Six Months Ended June 30,
  2025 2024
Operating activities:    
Net income $ 74,849  $ 66,267 
Adjustments to reconcile net income to net cash provided by operating activities:    
Provision for credit losses 10,955  7,163 
Depreciation of premises and equipment 2,438  2,100 
Depreciation of equipment owned and leased to others 1,337  2,287 
Stock-based compensation 2,755  2,525 
(Accretion) amortization of investment securities premiums and discounts, net (1,551) 1,529 
Amortization of mortgage servicing rights 350  369 
Amortization of right of use assets 1,489  1,524 
Deferred income taxes (9,496) 201 
Losses on investment securities available-for-sale 997  — 
Originations of loans held for sale, net of principal collected (27,577) (29,233)
Proceeds from the sales of loans held for sale 25,895  28,989 
Net gain on sale of loans held for sale (83) (1,077)
Net gain on sale of other real estate and repossessions (57) (108)
Change in interest receivable 422  (1,683)
Change in interest payable (10,381) 6,457 
Change in other assets 9,284  813 
Change in other liabilities 36,025  4,304 
Other (1,006) (481)
Net change in operating activities 116,645  91,946 
Investing activities:    
Proceeds from sales of investment securities available-for-sale 25,709  — 
Proceeds from maturities and paydowns of investment securities available-for-sale 173,793  129,303 
Purchases of investment securities available-for-sale (79,110) (30,659)
Net change in partnership investments (6,961) (16,117)
Net change in other investments 1,715  490 
Loans sold or participated to others 25,985  71,900 
Proceeds from principal payments on direct finance leases 39,686  34,071 
Net change in loans and leases (319,700) (245,744)
Net change in equipment owned under operating leases 1,493  4,193 
Purchases of premises and equipment (4,333) (4,155)
Proceeds from disposal of premises and equipment 15  13 
Proceeds from sales of other real estate and repossessions 1,439  1,164 
Net change in investing activities (140,269) (55,541)
Financing activities:    
Net change in demand deposits and savings accounts 104,505  77,745 
Net change in time deposits 108,129  79,598 
Net change in short-term borrowings (139,140) (24,142)
Payments on long-term debt (1,915) (11,540)
Stock issued under stock purchase plans 133  153 
Acquisition of treasury stock (3,295) — 
Net (distributions to) contributions from noncontrolling interests (1,768) (1,454)
Cash dividends paid on common stock (18,743) (17,190)
Net change in financing activities 47,906  103,170 
Net change in cash and cash equivalents 24,282  139,575 
Cash and cash equivalents, beginning of year 124,826  129,668 
Cash and cash equivalents, end of period $ 149,108  $ 269,243 
Supplemental Information:    
Non-cash transactions:    
Loans transferred to other real estate and repossessed assets $ 4,315  $ 723 
Common stock matching contribution to Employee Stock Ownership and Profit Sharing Plan 1,227  1,153 
Right of use assets obtained in exchange for lease obligations 692  888 
Liquidation of noncontrolling interests 9,845  5,920 
Purchases of mandatorily redeemable securities with common stock —  586 
Cash paid (received) for:
Interest 94,770  85,215 
Income Taxes (11,663) 5,405 
The accompanying notes are a part of the unaudited consolidated financial statements.
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1ST SOURCE CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 — Accounting Policies
1st Source Corporation is a bank holding company headquartered in South Bend, Indiana that provides, through its subsidiaries (collectively referred to as “1st Source” or “the Company”), a broad array of financial products and services.
Basis of Presentation – The accompanying unaudited consolidated financial statements reflect all adjustments (all of which are normal and recurring in nature) which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position, the results of operations, changes in comprehensive income (loss), changes in shareholders’ equity, and cash flows for the periods presented. These unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been omitted.
The Notes to the Consolidated Financial Statements appearing in 1st Source Corporation’s Annual Report on Form 10-K (2024 Annual Report), which include descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. The Consolidated Statement of Financial Condition at December 31, 2024, has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation.
Use of Estimates in the Preparation of Financial Statements – Financial statements prepared in accordance with GAAP require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.
Loans and Leases – Loans are stated at the principal amount outstanding, net of unamortized deferred loan origination fees and costs and net of unearned income. Interest income is accrued as earned based on unpaid principal balances. Origination fees and direct loan and lease origination costs are deferred, and the net amount amortized to interest income over the estimated life of the related loan or lease. Loan commitment fees are deferred and amortized into other income over the commitment period.
Direct financing leases are carried at the aggregate of lease payments plus estimated residual value of the leased property, net of unamortized deferred lease origination fees and costs and unearned income. Only those costs incurred as a direct result of closing a lease transaction are capitalized and all initial direct costs are expensed immediately. Interest income on direct financing leases is recognized over the term of the lease to achieve a constant periodic rate of return on the outstanding investment.
Accrued interest is included in Accrued Income and Other Assets on the Consolidated Statements of Financial Condition. The accrual of interest on loans and leases is discontinued when a loan or lease becomes contractually delinquent for 90 days, or when an individual analysis of a borrower’s credit worthiness indicates a credit should be placed on nonperforming status, except for residential mortgage loans and consumer loans that are well secured and in the process of collection. Residential mortgage loans are placed on nonaccrual at the time the loan is placed in foreclosure. When interest accruals are discontinued, interest credited to income in the current year is reversed and interest accrued in the prior year is charged to the allowance for loan and lease losses. However, in some cases, the Company may elect to continue the accrual of interest when the net realizable value of collateral is sufficient to cover the principal and accrued interest. When a loan or lease is classified as nonaccrual and the future collectability of the recorded loan or lease balance is doubtful, collections on interest and principal are applied as a reduction to principal outstanding. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured, which is typically evidenced by a sustained repayment performance of at least six months.
Occasionally, the Company modifies loans and leases to borrowers experiencing financial difficulty (typically denoted by internal credit quality graded “substandard” or worse) by providing term extensions, other-than-insignificant payment delays, or interest rate reductions. In some cases, multiple modifications are made to the same loan or lease. These modifications typically result from the Company’s loss mitigation activities. If the Company determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance for loan and lease losses estimate or a charge-off to the allowance for loan and lease losses.
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Note 2 — Recent Accounting Pronouncements
Debt: In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-04 “Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversion of Convertible Debt Issuances.” These amendments clarify the requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. This guidance is effective for all entities for fiscal years including interim periods within those fiscal years, beginning after December 15, 2025. Early adoption is permitted in any interim period. The Company is assessing ASU 2024-04 and its impact on its accounting and disclosures.
Income Statement: In November 2024, the FASB issued ASU No. 2024-03 “Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” These amendments require public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. Specifically, they will be required to:
• Disclose the amounts of (a) purchases of inventory; (b) employee compensation; (c) depreciation; (d) intangible asset amortization; and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption.
• Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements.
• Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.
• Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.
In January 2025, the FASB issued ASU No. 2025-01 clarifying the effective date for public business entities for fiscal years beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is assessing ASU 2024-03 and its impact on its accounting and disclosures.
Income Taxes: In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” Among other things, these amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate.) The amendments also require that all entities disclose on an annual basis the following information about income taxes paid: (1) the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and (2) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received.) This guidance is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments should be applied on a prospective basis although retrospective application is permitted. The Company is assessing ASU 2023-09 and its impact on its disclosures.
Note 3 — Investment Securities Available-For-Sale
The following table shows investment securities available-for-sale.
(Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
June 30, 2025        
U.S. Treasury and Federal agencies securities $ 702,497  $ 1,963  $ (15,029) $ 689,431 
U.S. States and political subdivisions securities 102,059  526  (2,722) 99,863 
Mortgage-backed securities — Federal agencies 726,291  1,924  (61,352) 666,863 
Total debt securities available-for-sale $ 1,530,847  $ 4,413  $ (79,103) $ 1,456,157 
December 31, 2024        
U.S. Treasury and Federal agencies securities $ 786,417  $ 24  $ (28,692) $ 757,749 
U.S. States and political subdivisions securities 86,305  33  (3,706) 82,632 
Mortgage-backed securities — Federal agencies 777,962  192  (82,236) 695,918 
Total debt securities available-for-sale $ 1,650,684  $ 249  $ (114,634) $ 1,536,299 
Amortized cost excludes accrued interest receivable which is included in Accrued Income and Other Assets on the Consolidated Statements of Financial Condition. At June 30, 2025, and December 31, 2024, accrued interest receivable on investment securities available-for-sale was $4.92 million and $4.68 million, respectively.
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At June 30, 2025, and December 31, 2024, the residential mortgage-backed securities held by the Company consisted primarily of GNMA, FNMA and FHLMC pass-through certificates which are guaranteed by those respective agencies of the United States government (Government Sponsored Enterprise, GSEs).
The Company did not hold any marketable equity securities at June 30, 2025, and December 31, 2024.
The following table shows the contractual maturities of investments in debt securities available-for-sale at June 30, 2025. Expected maturities will differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
(Dollars in thousands) Amortized Cost Fair Value
Due in one year or less $ 277,103  $ 272,399 
Due after one year through five years 458,038  447,688 
Due after five years through ten years 52,091  52,379 
Due after ten years 17,324  16,828 
Mortgage-backed securities 726,291  666,863 
Total debt securities available-for-sale $ 1,530,847  $ 1,456,157 
The following table summarizes gross unrealized losses and fair value by investment category and age. At June 30, 2025, the Company’s available-for-sale securities portfolio consisted of 617 securities, 496 of which were in an unrealized loss position.
  Less than 12 Months 12 months or Longer Total
(Dollars in thousands)  Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
June 30, 2025            
U.S. Treasury and Federal agencies securities $ 29,676  $ (138) $ 516,190  $ (14,891) $ 545,866  $ (15,029)
U.S. States and political subdivisions securities 19,891  (501) 35,112  (2,221) 55,003  (2,722)
Mortgage-backed securities - Federal agencies 59,342  (538) 449,715  (60,814) 509,057  (61,352)
Total debt securities available-for-sale $ 108,909  $ (1,177) $ 1,001,017  $ (77,926) $ 1,109,926  $ (79,103)
December 31, 2024            
U.S. Treasury and Federal agencies securities $ 103,621  $ (1,324) $ 644,614  $ (27,368) $ 748,235  $ (28,692)
U.S. States and political subdivisions securities 37,017  (670) 39,280  (3,036) 76,297  (3,706)
Mortgage-backed securities - Federal agencies 191,779  (3,355) 466,204  (78,881) 657,983  (82,236)
Total debt securities available-for-sale $ 332,417  $ (5,349) $ 1,150,098  $ (109,285) $ 1,482,515  $ (114,634)
The Company does not consider available-for-sale securities with unrealized losses at June 30, 2025, to be experiencing credit losses and recognized no resulting allowance for credit losses. The Company does not intend to sell these investments, and it is more likely than not that the Company will not be required to sell these investments before recovery of the amortized cost basis, which may be the maturity dates of the securities. The unrealized losses occurred as a result of changes in interest rates, market spreads and market conditions subsequent to purchase.
The following table shows the gross realized gains and losses from the available-for-sale debt securities portfolio. Realized gains and losses of all securities are computed using the specific identification cost basis.
Three Months Ended
June 30,		 Six Months Ended
June 30,
(Dollars in thousands) 2025 2024 2025 2024
Gross realized gains $ —  $ —  $ —  $ — 
Gross realized losses (997) —  (997) — 
Net realized losses $ (997) $ —  $ (997) $ — 
At June 30, 2025, and December 31, 2024, investment securities available-for-sale with carrying values of $235.11 million and $359.10 million, respectively, were pledged as collateral for security repurchase agreements and for other purposes.
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Note 4 — Loan and Lease Financings
The Company evaluates loans and leases for credit quality at least annually, but more frequently if certain circumstances occur (such as material new information which becomes available and indicates a potential change in credit risk). The Company uses two methods to assess credit risk: loan or lease credit quality grades and credit risk classifications. The purpose of the loan or lease credit quality grade is to document the degree of risk associated with individual credits, as well as inform management of the degree of risk in the portfolio taken as a whole. Credit risk classifications are used to categorize loans by degree of risk and to designate individual or committee approval authorities for higher risk credits at the time of origination. Credit risk classifications include categories for: Acceptable, Marginal, Special Attention, Special Risk, Restricted by Policy, Regulated and Prohibited by Law.
All loans and leases, except residential real estate loans‚ home equity loans, and consumer loans, are assigned credit quality grades on a scale from 1 to 12, with grade 1 representing superior credit quality. The criteria used to assign grades to extensions of credit that exhibit potential problems or well-defined weaknesses are primarily based upon the degree of risk and the likelihood of orderly repayment, and their effect on the Company’s safety and soundness. Loans or leases graded 7 or weaker are considered “special attention” credits and, as such, relationships in excess of $250,000 are reviewed quarterly as part of management’s evaluation of the appropriateness of the allowance for loan and lease losses. Grade 7 credits are defined as “watch” and contain greater than average credit risk and are monitored to limit the exposure to increased risk; grade 8 credits are “special mention” and, following regulatory guidelines, are defined as having potential weaknesses that deserve management’s close attention. Credits that exhibit well-defined weaknesses and a distinct possibility of loss are considered “classified” and are graded 9 through 12 corresponding to the regulatory definitions of “substandard” (grades 9 and 10) and the more severe “doubtful” (grade 11) and “loss” (grade 12). For residential real estate and home equity and consumer loans, credit quality is based on the aging status of the loan and by payment activity. Nonperforming loans are those loans which are on nonaccrual status or are 90 days or more past due.
Below is a summary of the Company’s loan and lease portfolio segments and a discussion of the risk characteristics relevant to each portfolio segment.
Commercial and agricultural – loans are to entities within the Company’s local market communities. Loans are for business or agri-business purposes and include working capital lines of credit secured by accounts receivable and inventory that are generally renewable annually and term loans secured by equipment with amortizations based on the expected life of the underlying collateral, generally three to seven years. These loans are typically further supported by personal guarantees. Commercial exposure is to a wide range of industries and services. Risks in this sector are also varied and are most impacted by general economic conditions. Risk mitigants include appropriate underwriting and monitoring and, when appropriate, government guarantees, including Small Business Administration and Farm Service Agency.
Renewable energy – loans are for the purpose of financing primarily solar related projects and may include construction draw notes, operating loans, letters of credit and may entail a tax equity structure. Collateral in a multi-state area includes tangible assets of the borrower, assignment of intangible assets including power purchase agreements, and pledges of permits and licenses. Financing is provided to qualified borrowers throughout the continental United States with an emphasis on the regions east of the Rocky Mountains.
Auto and light truck – loans are secured by vehicles and borrowers are nationwide. The portfolio consists of multiple industries: auto rental, auto leasing and a small specialty vehicle segment which the Company is largely exiting. Borrowers in the auto rental segment are primarily independent auto rental entities with on-airport and off-airport locations, and some insurance replacement business. Loan terms are relatively short, generally eighteen months, but up to four years. Auto leasing customers lease to businesses and the Company takes assignment of the lease stream and places its lien on the vehicles. Terms are generally longer than the auto rental sector, three to seven years and match the underlying leases. Risks include economic risks and collateral risks, principally used vehicle values.
Medium and heavy duty truck – loans and full-service truck leases are secured by heavy-duty trucks, commonly Class 8 trucks, and are generally personally guaranteed. In addition to economic risks, collateral risk is significant. Financing is generally at full cost, plus additional expenditures to get the vehicle operational, such as taxes, insurance and fees. It takes three to four years of debt amortization to reach an equity position in the collateral.
Aircraft – loans are to domestic and foreign borrowers with the domestic segment further divided into two pools: 1) personal and business use, and 2) dealers and operators. The Company’s focus for the foreign sector is Latin America, principally Mexico and Brazil. Loans are primarily secured by new and used business jets and helicopters, with appropriate advances, amortizations of ten to fifteen years, and are generally guaranteed by individuals. The most significant risk in the Aircraft portfolio is collateral risk - volatility in underlying values and maintenance concerns. The portfolio is subject to national and global economic risks.
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Construction equipment – loans are to borrowers throughout the country secured by specific equipment. The borrowers include highway and road builders, asphalt producers and pavers, suppliers of aggregate products, site developers, frac sand operations, general construction equipment dealers and operators, and crane rental entities. Generally, loans include personal guarantees. The construction equipment industry is heavily dependent on the U.S. economy and the global economy. Market growth is reliant on investments from public and private sectors into urbanization and infrastructure projects.
Commercial real estate – loans are generally to entities within the local market communities served by the Company with advances generally within regulatory guidelines. Historically, the Company’s exposure to commercial real estate had been primarily to the less risky owner-occupied segment although growth in the non-owner-occupied segment of this portfolio has increased over the last several years. The non-owner-occupied segment includes hotels, apartment complexes and warehousing facilities. There is generally limited exposure to construction loans although at present, construction exposures are comparably higher than previous periods. Many commercial real estate loans carry personal guarantees. Additional risks in the commercial real estate portfolio include interest rate risk, geographical concentration in northern Indiana and southwest Michigan and general economic conditions.
Residential real estate and home equity – loans predominantly include one-to-four family mortgages to borrowers in the Company’s local market communities and are appropriately underwritten and secured by residential real estate.
Consumer – loans are to individuals in the Company’s local markets and auto loans are generally secured by personal vehicles and appropriately underwritten.

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The following table shows the amortized cost of loans and leases, segregated by portfolio segment, credit quality rating and year of origination as of June 30, 2025, and gross charge-offs for the six months ended June 30, 2025.
Term Loans and Leases by Origination Year
(Dollars in thousands) 2025 2024 2023 2022 2021 Prior Revolving Loans Revolving Loans Converted to Term Total
Commercial and agricultural
Grades 1-6 $ 93,436  $ 108,659  $ 100,458  $ 57,419  $ 29,178  $ 22,420  $ 367,269  $ —  $ 778,839 
Grades 7-12 2,184  263  4,763  6,265  1,939  2,200  39,373  —  56,987 
Total commercial and agricultural 95,620  108,922  105,221  63,684  31,117  24,620  406,642  —  835,826 
Current period gross charge-offs —  9  134  109  10  —  592  —  854 
Renewable energy
Grades 1-6 162,509  137,208  104,391  23,903  59,761  85,454  —  —  573,226 
Grades 7-12 —  —  —  —  —  —  —  —  — 
Total renewable energy 162,509  137,208  104,391  23,903  59,761  85,454  —  —  573,226 
Current period gross charge-offs —  —  —  —  —  —  —  —  — 
Auto and light truck
Grades 1-6 298,186  308,845  182,256  66,832  16,175  9,437  —  —  881,731 
Grades 7-12 3,444  43,483  40,456  2,675  28  644  —  —  90,730 
Total auto and light truck 301,630  352,328  222,712  69,507  16,203  10,081  —  —  972,461 
Current period gross charge-offs —  1,484  129  226  1  —  —  —  1,840 
Medium and heavy duty truck
Grades 1-6 51,172  75,851  63,097  58,580  16,524  8,488  —  —  273,712 
Grades 7-12 —  —  1,336  5,026  2,155  7  —  639  9,163 
Total medium and heavy duty truck 51,172  75,851  64,433  63,606  18,679  8,495  —  639  282,875 
Current period gross charge-offs —  —  —  —  —  —  —  —  — 
Aircraft
Grades 1-6 175,262  292,317  170,152  260,878  131,374  76,629  7,364  —  1,113,976 
Grades 7-12 —  2,881  7,371  6,957  —  3,653  —  —  20,862 
Total aircraft 175,262  295,198  177,523  267,835  131,374  80,282  7,364  —  1,134,838 
Current period gross charge-offs —  —  485  —  —  —  —  —  485 
Construction equipment
Grades 1-6 243,374  412,247  262,335  157,700  45,542  22,512  25,638  1,717  1,171,065 
Grades 7-12 2,579  5,739  6,143  10,251  1,274  10,158  —  —  36,144 
Total construction equipment 245,953  417,986  268,478  167,951  46,816  32,670  25,638  1,717  1,207,209 
Current period gross charge-offs —  201  816  —  —  —  —  —  1,017 
Commercial real estate
Grades 1-6 98,895  288,915  292,665  214,490  119,180  212,841  74  —  1,227,060 
Grades 7-12 46  1,225  9,494  5,228  5,889  3,808  —  —  25,690 
Total commercial real estate 98,941  290,140  302,159  219,718  125,069  216,649  74  —  1,252,750 
Current period gross charge-offs —  2  —  —  —  4  —  —  6 
Residential real estate and home equity
Performing 51,607  81,280  63,846  88,946  77,973  150,468  189,126  7,248  710,494 
Nonperforming —  —  145  612  215  1,015  1,448  97  3,532 
Total residential real estate and home equity 51,607  81,280  63,991  89,558  78,188  151,483  190,574  7,345  714,026 
Current period gross charge-offs —  —  —  4  —  1  30  —  35 
Consumer
Performing 22,492  34,954  25,399  20,035  6,456  1,916  12,725  —  123,977 
Nonperforming 74  23  322  242  65  54  1  —  781 
Total consumer 22,566  34,977  25,721  20,277  6,521  1,970  12,726  —  124,758 
Current period gross charge-offs $ 272  $ 163  $ 113  $ 147  $ 44  $ 2  $ 11  $ —  $ 752 
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The following table shows the amortized cost of loans and leases, segregated by portfolio segment, credit quality rating and year of origination as of December 31, 2024, and gross charge-offs for the year ended December 31, 2024.
Term Loans and Leases by Origination Year
(Dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Revolving Loans Converted to Term Total
Commercial and agricultural
Grades 1-6 $ 136,888  $ 115,508  $ 66,696  $ 36,315  $ 19,677  $ 18,369  $ 331,282  $ —  $ 724,735 
Grades 7-12 438  4,079  7,769  2,426  194  2,325  31,008  —  48,239 
Total commercial and agricultural 137,326  119,587  74,465  38,741  19,871  20,694  362,290  —  772,974 
Current period gross charge-offs —  276  117  550  —  —  8,882  —  9,825 
Renewable energy
Grades 1-6 150,951  145,126  22,110  70,606  22,329  76,144  —  —  487,266 
Grades 7-12 —  —  —  —  —  —  —  —  — 
Total renewable energy 150,951  145,126  22,110  70,606  22,329  76,144  —  —  487,266 
Current period gross charge-offs —  —  —  —  —  —  —  —  — 
Auto and light truck
Grades 1-6 443,033  276,295  106,199  25,535  10,018  6,677  —  —  867,757 
Grades 7-12 26,131  48,319  4,754  99  1,210  165  —  —  80,678 
Total auto and light truck 469,164  324,614  110,953  25,634  11,228  6,842  —  —  948,435 
Current period gross charge-offs —  165  448  6  —  111  —  —  730 
Medium and heavy duty truck
Grades 1-6 88,395  72,816  81,238  25,726  11,298  5,493  —  —  284,966 
Grades 7-12 —  1,524  1,623  690  —  13  —  807  4,657 
Total medium and heavy duty truck 88,395  74,340  82,861  26,416  11,298  5,506  —  807  289,623 
Current period gross charge-offs —  —  —  —  —  —  —  —  — 
Aircraft
Grades 1-6 347,099  190,776  285,677  151,194  82,208  32,326  7,773  —  1,097,053 
Grades 7-12 2,882  7,704  10,920  1,846  3,392  —  —  —  26,744 
Total aircraft 349,981  198,480  296,597  153,040  85,600  32,326  7,773  —  1,123,797 
Current period gross charge-offs —  —  —  15  —  53  —  —  68 
Construction equipment
Grades 1-6 488,870  325,443  208,114  70,258  33,095  10,890  25,916  1,966  1,164,552 
Grades 7-12 2,716  10,650  11,686  1,679  12,629  —  —  —  39,360 
Total construction equipment 491,586  336,093  219,800  71,937  45,724  10,890  25,916  1,966  1,203,912 
Current period gross charge-offs 46  989  390  267  —  —  —  —  1,692 
Commercial real estate
Grades 1-6 258,988  303,717  237,103  126,129  82,249  177,798  264  —  1,186,248 
Grades 7-12 145  14,580  5,846  6,386  27  2,033  —  —  29,017 
Total commercial real estate 259,133  318,297  242,949  132,515  82,276  179,831  264  —  1,215,265 
Current period gross charge-offs —  —  —  —  —  —  —  —  — 
Residential real estate and home equity
Performing 87,045  69,439  94,441  81,345  79,575  85,333  173,876  6,210  677,264 
Nonperforming —  171  624  346  103  340  1,138  85  2,807 
Total residential real estate and home equity 87,045  69,610  95,065  81,691  79,678  85,673  175,014  6,295  680,071 
Current period gross charge-offs —  3  —  32  —  —  30  1  66 
Consumer
Performing 43,692  33,063  28,594  10,092  2,398  983  13,823  —  132,645 
Nonperforming 22  352  336  57  33  20  —  —  820 
Total consumer 43,714  33,415  28,930  10,149  2,431  1,003  13,823  —  133,465 
Current period gross charge-offs $ 565  $ 230  $ 276  $ 118  $ 16  $ 22  $ 122  $ —  $ 1,349 
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The following table shows the amortized cost of loans and leases, segregated by portfolio segment, with delinquency aging and nonaccrual status.
(Dollars in thousands)  Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due and Accruing Total
Accruing 		 Total Nonaccrual Nonaccrual with No Allowance for Credit Loss Total
June 30, 2025              
Commercial and agricultural $ 828,267  $ 1,352  $ 530  $ —  $ 830,149  $ 5,677  $ 4,440  $ 835,826 
Renewable energy 573,226  —  —  —  573,226  —  —  573,226 
Auto and light truck 899,953  27,184  4  —  927,141  45,320  9,251  972,461 
Medium and heavy duty truck 282,875  —  —  —  282,875  —  —  282,875 
Aircraft 1,134,838  —  —  —  1,134,838  —  —  1,134,838 
Construction equipment 1,190,755  1,554  1,105  —  1,193,414  13,795  13,088  1,207,209 
Commercial real estate 1,247,716  1,771  438  —  1,249,925  2,825  2,247  1,252,750 
Residential real estate and home equity 708,876  950  668  119  710,613  3,413  —  714,026 
Consumer 122,870  945  162  79  124,056  702  —  124,758 
Total $ 6,989,376  $ 33,756  $ 2,907  $ 198  $ 7,026,237  $ 71,732  $ 29,026  $ 7,097,969 
December 31, 2024              
Commercial and agricultural $ 767,942  $ 275  $ 42  $ —  $ 768,259  $ 4,715  $ 3,167  $ 772,974 
Renewable energy 487,266  —  —  —  487,266  —  —  487,266 
Auto and light truck 943,403  2,226  —  —  945,629  2,806  939  948,435 
Medium and heavy duty truck 289,623  —  —  —  289,623  —  —  289,623 
Aircraft 1,123,797  —  —  —  1,123,797  —  —  1,123,797 
Construction equipment 1,185,936  —  —  —  1,185,936  17,976  17,404  1,203,912 
Commercial real estate 1,203,967  9,703  —  —  1,213,670  1,595  1,055  1,215,265 
Residential real estate and home equity 675,669  1,010  585  96  677,360  2,711  —  680,071 
Consumer 131,585  852  208  10  132,655  810  —  133,465 
Total $ 6,809,188  $ 14,066  $ 835  $ 106  $ 6,824,195  $ 30,613  $ 22,565  $ 6,854,808 
Accrued interest receivable on loans and leases at June 30, 2025, and December 31, 2024, was $27.41 million and $28.02 million, respectively.
A loan or lease is considered collateral-dependent when the borrower is experiencing financial difficulty and the loan or lease is expected to be repaid substantially through the operation or sale of the collateral. Expected credit losses for collateral-dependent loan and leases is based on the fair value of the collateral, adjusted for selling costs as appropriate. Significant quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value.
The following table shows the amortized cost basis of collateral-dependent loans, segregated by portfolio segment, which are individually evaluated to determine credit losses.
(Dollars in thousands) Real Estate Equipment General
Business
Assets		 Total Allowance on Collateral Dependent Loans and Leases
June 30, 2025
Commercial and agricultural $ —  $ —  $ 5,572  $ 5,572  $ 1,026 
Auto and light truck —  43,960  —  43,960  1,228 
Construction equipment —  13,088  —  13,088  — 
Commercial real estate 2,387  —  —  2,387  2 
Total $ 2,387  $ 57,048  $ 5,572  $ 65,007  $ 2,256 
December 31, 2024
Commercial and agricultural $ —  $ —  $ 4,102  $ 4,102  $ 209 
Auto and light truck —  939  —  939  — 
Construction equipment —  17,404  —  17,404  — 
Commercial real estate 1,055  —  —  1,055  — 
Total $ 1,055  $ 18,343  $ 4,102  $ 23,500  $ 209 
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Loan Modifications to Borrowers Experiencing Financial Difficulty
The following table shows the amortized cost of loans and leases over $250,000 at June 30, 2025, and June 30, 2024, respectively, that were both experiencing financial difficulty and modified during the three months ended June 30, 2025, and June 30, 2024, respectively, segregated by portfolio segment and type of modification. The percentage of the amortized cost of loans and leases that were modified to borrowers in financial distress as compared to the amortized cost of each segment of financial receivable is also presented below.
(Dollars in thousands) Payment
Delay		 Term
Extension		 Interest
Rate
Reduction		 Combination
Payment Delay
and Term
Extension		 % of Total
Segment
Financing
Receivables
Three Months Ended June 30, 2025
Commercial and agricultural $ —  $ 4,026  $ —  $ —  0.48  %
Total $ —  $ 4,026  $ —  $ —  0.06  %
Three Months Ended June 30, 2024
Commercial and agricultural $ —  $ —  $ —  $ 5,920  0.82  %
Auto and light truck —  —  —  8,348  0.83 
Total $ —  $ —  $ —  $ 14,268  0.21  %
The following table shows the amortized cost of loans and leases over $250,000 at June 30, 2025, and June 30, 2024, respectively, that were both experiencing financial difficulty and modified during the six months ended June 30, 2025, and June 30, 2024, respectively, segregated by portfolio segment and type of modification. The percentage of the amortized cost of loans and leases that were modified to borrowers in financial distress as compared to the amortized cost of each segment of financial receivable is also presented below.
(Dollars in thousands) Payment
Delay		 Term
Extension		 Interest
Rate
Reduction		 Combination
Payment Delay
and Term
Extension		 % of Total
Segment
Financing
Receivables
Six months ended June 30, 2025
Commercial and agricultural $ —  $ 4,026  $ —  $ —  0.48  %
Construction equipment —  498  —  —  0.04 
Total $ —  $ 4,524  $ —  $ —  0.06  %
Six months ended June 30, 2024
Commercial and agricultural $ —  $ 108  $ —  $ 5,920  0.84  %
Auto and light truck —  —  —  32,550  3.22 
Total $ —  $ 108  $ —  $ 38,470  0.58  %
There were $2.80 million and $0.00 million in commitments to lend additional amounts to the borrowers included in the previous table at June 30, 2025, and June 30, 2024, respectively.
The Company closely monitors the performance of loans and leases that have been modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table shows the performance of such loans and leases that have been modified during the twelve months ended June 30, 2025, and June 30, 2024, respectively.
(Dollars in thousands) Current 30-59
Days
Past Due		 60-89
Days
Past Due		 90 Days or
More Past Due		 Total
Past Due
Twelve months ended June 30, 2025
Commercial and agricultural $ 5,028  $ —  $ —  $ —  $ — 
Auto and light truck —  —  —  7,863  7,863 
Medium and heavy duty truck 2,586  —  —  —  — 
Construction equipment 498  —  —  —  — 
Commercial real estate 981  —  —  —  — 
Total $ 9,093  $ —  $ —  $ 7,863  $ 7,863 
Twelve months ended June 30, 2024
Commercial and agricultural $ 6,493  $ 140  $ —  $ —  $ 140 
Auto and light truck 32,550  —  —  —  — 
Medium and heavy duty truck 10,320  —  —  —  — 
Total $ 49,363  $ 140  $ —  $ —  $ 140 
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The following table shows the financial effect of loan and lease modifications presented above to borrowers experiencing financial difficulty for the twelve months ended June 30, 2025, and June 30, 2024, respectively.
Weighted-
Average
Interest Rate
Reduction		 Weighted-
Average
Term
Extension (in months)		 Weighted-
Average Payment
Delay
(in months)		 Combination Weighted-Average Payment Delay and Term Extension (in months)
Twelve months ended June 30, 2025
Commercial and agricultural —  % 12 6 0
Auto and light truck —  0 0 3
Medium and heavy duty truck —  0 0 4
Construction equipment —  5 0 0
Commercial real estate —  0 6 0
Total —  % 11 6 3
Twelve months ended June 30, 2024
Commercial and agricultural —  % 9 6 10
Auto and light truck —  0 0 3
Medium and heavy duty truck —  0 0 6
Total —  % 9 6 5
There was one modified loan to a borrower experiencing financial difficulty which had a payment default within twelve months of modification during the six month period ended June 30, 2025, and no modified loans to borrowers experiencing financial difficulty which had payment defaults within twelve months of modification during the six months ended June 30, 2024.
Upon the Company’s determination that a modified loan or lease has subsequently been deemed uncollectible, the loan or lease is written off. Therefore, the amortized cost of the loan is reduced by the uncollectible amount and the allowance for loan and lease losses is adjusted by the same amount.
Note 5 — Allowance for Credit Losses
Allowance for Loan and Lease Losses
The allowance for credit losses is established for current expected credit losses on the Company’s loan and lease portfolios utilizing guidance in Accounting Standards Codification (ASC) Topic 326. The determination of the allowance requires significant judgment to estimate credit losses measured on a collective pool basis when similar risk characteristics exist, and for loans evaluated individually. In determining the allowance, the Company estimates expected future losses for the loan’s entire contractual term adjusted for expected payments when appropriate. The allowance estimate considers relevant available information, from internal and external sources, relating to the historical loss experience, current conditions, and reasonable and supportable forecasts for the Company’s outstanding loan and lease balances. The allowance is an estimation that reflects management’s evaluation of expected losses related to the Company’s financial assets measured at amortized cost. To ensure the allowance is maintained at an adequate level, a detailed analysis is performed on a quarterly basis and an appropriate provision is made to adjust the allowance.
The Company categorizes its loan portfolios into nine segments based on similar risk characteristics. Loans within each segment are collectively evaluated using either: 1) a cohort cumulative loss rate methodology (“cohort”) or, 2) the probability of default (“PD”)/loss given default (“LGD”) methodology (PD/LGD).

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The following table shows the changes in the allowance for loan and lease losses, segregated by portfolio segment, for the three months ended June 30, 2025 and 2024.
(Dollars in thousands) Commercial and
agricultural		 Renewable energy Auto and
light truck		 Medium 
and
heavy duty 
truck		 Aircraft Construction
equipment		 Commercial
real estate		 Residential
real estate
and home
equity		 Consumer Total
June 30, 2025                  
Balance, beginning of period $ 21,912  $ 8,865  $ 18,657  $ 6,884  $ 36,832  $ 28,721  $ 24,973  $ 8,438  $ 2,188  $ 157,470 
Charge-offs 439  —  1,500  —  485  335  1  29  276  3,065 
Recoveries 519  —  364  —  206  16  18  2  70  1,195 
Net charge-offs (recoveries) (80) —  1,136  —  279  319  (17) 27  206  1,870 
Provision (recovery of provision) 2,347  1,179  3,344  (362) 153  673  12  355  183  7,884 
Balance, end of period $ 24,339  $ 10,044  $ 20,865  $ 6,522  $ 36,706  $ 29,075  $ 25,002  $ 8,766  $ 2,165  $ 163,484 
June 30, 2024                  
Balance, beginning of period $ 17,263  $ 6,858  $ 17,584  $ 8,788  $ 36,924  $ 26,804  $ 23,844  $ 7,808  $ 2,151  $ 148,024 
Charge-offs 43  —  15  —  —  306  —  —  383  747 
Recoveries 53  —  909  —  481  1,207  3  14  67  2,734 
Net charge-offs (recoveries) (10) —  (894) —  (481) (901) (3) (14) 316  (1,987)
Provision (recovery of provision) 1,364  795  (752) 433  (2,239) (761) 1,000  (30) 246  56 
Balance, end of period $ 18,637  $ 7,653  $ 17,726  $ 9,221  $ 35,166  $ 26,944  $ 24,847  $ 7,792  $ 2,081  $ 150,067 
The following table shows the changes in the allowance for loan and lease losses, segregated by portfolio segment, for the six months ended June 30, 2025, and 2024.
(Dollars in thousands) Commercial and
agricultural		 Renewable energy Auto and
light truck		 Medium
and
heavy duty
truck		 Aircraft Construction
equipment		 Commercial
real estate		 Residential
real estate
and home
equity		 Consumer Total
June 30, 2025                  
Balance, beginning of period $ 21,316  $ 8,562  $ 18,437  $ 7,292  $ 36,663  $ 28,258  $ 24,821  $ 7,976  $ 2,215  $ 155,540 
Charge-offs 854  —  1,840  —  485  1,017  6  35  752  4,989 
Recoveries 801  —  1,254  —  415  297  21  18  131  2,937 
Net charge-offs (recoveries) 53  —  586  —  70  720  (15) 17  621  2,052 
Provision (recovery of provision) 3,076  1,482  3,014  (770) 113  1,537  166  807  571  9,996 
Balance, end of period $ 24,339  $ 10,044  $ 20,865  $ 6,522  $ 36,706  $ 29,075  $ 25,002  $ 8,766  $ 2,165  $ 163,484 
June 30, 2024                  
Balance, beginning of period $ 17,385  $ 6,610  $ 16,858  $ 8,965  $ 37,653  $ 26,510  $ 23,690  $ 7,698  $ 2,183  $ 147,552 
Charge-offs 7,111  —  16  —  68  598  —  13  612  8,418 
Recoveries 139  —  1,562  —  849  1,406  184  22  120  4,282 
Net charge-offs (recoveries) 6,972  —  (1,546) —  (781) (808) (184) (9) 492  4,136 
Provision (recovery of provision) 8,224  1,043  (678) 256  (3,268) (374) 973  85  390  6,651 
Balance, end of period $ 18,637  $ 7,653  $ 17,726  $ 9,221  $ 35,166  $ 26,944  $ 24,847  $ 7,792  $ 2,081  $ 150,067 
The higher allowance for credit losses during the current quarter reflects an increase in loan balances along with an increase in historical loss rates in the auto and light truck portfolio due to charge-off activity during the period. The Company also added modest qualitative adjustments in the auto and light truck portfolio due to increased delinquency, nonperforming activity, and elevated special attention concerns. The previous forecast assumption as of March 31, 2025, was maintained as the underlying assumptions remain pertinent and continue to be applicable to economic conditions expected during the forecast period. The forecast reflects weakness in growth expectations during the two-year forecast time horizon and continued uncertainty in the macro environment stemming from a lack of predictability of domestic trade policies. Wide-ranging tariffs targeting steel, aluminum, automobile manufacturing, and a host of other goods and materials which directly impact the Company’s loan portfolios have been implemented or proposed. The Company remains cautious on the forward outlook. Ongoing risks include heightened geopolitical instability, trade policy uncertainty, tightened credit conditions, increasing consumer stressors and falling consumer confidence, some softening in labor markets, and still elevated inflation and interest rates. Credit quality metrics reflect higher special attention outstandings during the current quarter, with increased levels of nonperforming and delinquency activity, largely centered in the auto and light truck portfolio. Net credit losses were modest during the period, with losses in the auto and light truck, construction equipment and aircraft portfolios, partially offset by net recoveries in the commercial and agricultural and aircraft portfolios.

Commercial and agricultural – the increase in the allowance in the current quarter was principally due to loan growth. The commercial and agricultural portfolio also reported increased special attention loans during the period, which are reserved at higher rates.
Renewable energy – the allowance increased due to loan growth. Credit quality remains stable.
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Auto and light truck – the allowance increased during the current quarter due to modest loan growth, an increase in historical loss rates due to charge-off activity during the period, and the accretive impact of qualitative adjustments to address higher special attention, delinquency, and nonperforming rates in the segment. The industry is currently challenged by higher vehicle capital costs and weaker rental rates.
Medium and heavy duty truck – the allowance decreased due to a decline in loan balances. The industry continues to work through difficulties brought on by overcapacity. The forward outlook for freight demand remains uncertain.
Aircraft – the allowance was little changed during the current quarter as modest loan growth was offset by a slight decline in historical loss rates due to ongoing recovery activity in the foreign portion of this segment. The Company has historically carried a higher allowance in this portfolio due to risk volatility.
Construction equipment – the allowance increased due to higher loan balances, partially offset by a modest reduction in qualitative factors to account for lower delinquency rates within the portfolio year-to-date.
Commercial real estate – the allowance increased slightly due to higher loan balances offset by slightly lower historical loss rates. Higher interest rates and shifting demand dynamics have impacted commercial real estate markets, but the Company’s real estate portfolios have exhibited minimal problem loan activity, and it has experienced no material losses in recent quarters. The majority of the Company’s real estate exposure is owner-occupied, and exposure to non-owner-occupied office property is minimal.
Residential real estate and home equity – the allowance increased due to loan growth.
Consumer – the allowance decreased slightly due to lower loan balances.
Economic Outlook
As of June 30, 2025, the most significant economic factors impacting the Company’s loan portfolios are a uncertain domestic growth outlook, impacted trade policies, elevated inflation and interest rates, along with ongoing foreign conflicts and increasing geopolitical instability. The labor market has shown limited signs of softening and questions surrounding the timing and velocity of future interest rate cuts persist. The Company is concerned about the breadth of tariff proposals, uncertainty surrounding their implementation, their impact on the Company’s markets, and the corresponding increase in downside economic risks. Consumer stressors are increasing and consumer confidence is falling. The Company remains concerned about small businesses’ ability to manage expenses in an environment of broader macro instability, higher interest rates, and higher cost of capital. Asset valuations, particularly in the auto and light truck, construction equipment, and medium and heavy duty portfolios, are softening. Restrictive trade policies increase the potential for volatility in asset prices which collateralize the Company’s loans. Tightened lending conditions and the higher-rate environment are impacting commercial real estate activity. The forecast considers global and domestic economic impacts from these factors, as well as other key economic factors, such as changes in gross domestic product and unemployment which may impact the Company’s clients. The Company’s assumptions in the prior quarter’s forecast analysis remain pertinent and continue to be applicable to the forward outlook. The forecast reflects uncertain economic growth expectations and a continued weighting towards downside risks during the forecast period over the next two years with inflation slowly moving back towards the 2% Federal Reserve target rate resulting in an adverse impact on the loan and lease portfolio.
Although the Company’s current loss estimates consider geopolitical and economic risk, due to the level of uncertainty associated with these and other risk factors, the complexity of the current environment, and the potential for future changes in the forecast, the Company’s future loss estimates may vary considerably from the June 30, 2025, assumptions.
Liability for Credit Losses on Unfunded Loan Commitments
The liability for credit losses inherent in unfunded loan commitments is included in Accrued Expenses and Other Liabilities on the Consolidated Statements of Financial Condition. The following table shows the changes in the liability for credit losses on unfunded loan commitments.
Three Months Ended
June 30,		 Six Months Ended
June 30,
(Dollars in thousands) 2025 2024 2025 2024
Balance, beginning of period $ 8,138  $ 9,064  $ 6,985  $ 8,182 
(Recovery of provision) provision (194) (370) 959  512 
Balance, end of period $ 7,944  $ 8,694  $ 7,944  $ 8,694 
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Note 6 — Lease Investments
As a lessor, the Company’s loan and lease portfolio includes direct finance leases, which are included in Commercial and Agricultural, Renewable Energy, Auto and Light Truck, Medium and Heavy Duty Truck, Aircraft, and Construction Equipment on the Consolidated Statements of Financial Condition. The Company also finances various types of construction equipment, medium and heavy duty trucks, automobiles and other equipment under leases classified as operating leases, which are included in Equipment Owned Under Operating Leases, Net, on the Consolidated Statements of Financial Condition.
The following table shows interest income recognized from direct finance lease payments and operating lease equipment rental income and related depreciation expense.
Three Months Ended
June 30,		 Six Months Ended
June 30,
(Dollars in thousands) 2025 2024 2025 2024
Direct finance leases:
Interest income on lease receivable $ 5,115  $ 3,451  $ 8,445  $ 6,890 
Operating leases:
Income related to lease payments $ 779  $ 1,257  $ 1,678  $ 2,928 
Depreciation expense 619  999  1,337  2,287 
Income related to reimbursements from lessees for personal property tax on operating leased equipment for the three months ended June 30, 2025, and 2024, was $0.00 million and $0.04 million, respectively, and for the six months ended June 30, 2025, and 2024, was $0.11 million and $0.16 million, respectively. Expense related to personal property tax payments on operating leased equipment for the three months ended June 30, 2025, and 2024, was $0.00 million and $0.04 million, respectively, and for the six months ended June 30, 2025, and 2024, was $0.11 million and $0.16 million, respectively.
Note 7 — Mortgage Servicing Rights
The Company recognizes the rights to service residential mortgage loans for others as separate assets, whether the servicing rights are acquired through a separate purchase or through the sale of originated loans with servicing rights retained. The Company allocates a portion of the total proceeds of a mortgage loan to servicing rights based on the relative fair value. The unpaid principal balance of residential mortgage loans serviced for third parties was $761.31 million and $777.81 million at June 30, 2025, and December 31, 2024, respectively.
Mortgage servicing rights (MSRs) are evaluated for impairment at each reporting date. For purposes of impairment measurement, MSRs are stratified based on the predominant risk characteristics of the underlying servicing, principally by loan type. If temporary impairment exists within a tranche, a valuation allowance is established through a charge to income equal to the amount by which the carrying value exceeds the fair value. If it is later determined all or a portion of the temporary impairment no longer exists for a particular tranche, the valuation allowance is reduced through a recovery of income.
The following table shows changes in the carrying value of MSRs and the associated valuation allowance.
Three Months Ended
June 30,		 Six Months Ended
June 30,
(Dollars in thousands) 2025 2024 2025 2024
Mortgage servicing rights:        
Balance at beginning of period $ 3,344  $ 3,574  $ 3,436  $ 3,670 
Additions 143  178  227  266 
Amortization (174) (185) (350) (369)
Carrying value before valuation allowance at end of period 3,313  3,567  3,313  3,567 
Valuation allowance:        
Balance at beginning of period —  —  —  — 
Impairment recoveries —  —  —  — 
Balance at end of period $ —  $ —  $ —  $ — 
Net carrying value of mortgage servicing rights at end of period $ 3,313  $ 3,567  $ 3,313  $ 3,567 
Fair value of mortgage servicing rights at end of period $ 7,732  $ 8,075  $ 7,732  $ 8,075 
At June 30, 2025, and 2024, the fair value of MSRs exceeded the carrying value reported in the Consolidated Statements of Financial Condition by $4.42 million and $4.51 million, respectively. This difference represents increases in the fair value of certain MSRs that could not be recorded above cost basis.
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Mortgage loan contractual servicing fees, including late fees and ancillary income, were $0.59 million and $0.56 million for the three months ended June 30, 2025, and 2024, respectively. Mortgage loan contractual servicing fees, including late fees and ancillary income, were $1.18 million and $1.17 million for the six months ended June 30, 2025, and 2024, respectively. Mortgage loan contractual servicing fees are included in Mortgage Banking on the Consolidated Statements of Income.
Note 8 — Commitments and Financial Instruments with Off-Balance-Sheet Risk
Financial Instruments with Off-Balance-Sheet Risk — 1st Source and its subsidiaries are parties to financial instruments with off-balance-sheet risk in the normal course of business. These off-balance-sheet financial instruments include commitments to originate and sell loans and standby letters of credit. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Statements of Financial Condition.
The following table shows financial instruments whose contract amounts represent credit risk.
(Dollars in thousands) June 30,
2025		 December 31,
2024
Amounts of commitments:
Loan commitments to extend credit $ 1,325,801  $ 1,304,735 
Standby letters of credit $ 23,692  $ 21,828 
Commercial and similar letters of credit $ 1,051  $ 161 
The exposure to credit loss in the event of nonperformance by the other party to the financial instruments for loan commitments and standby letters of credit is represented by the dollar amount of those instruments. The Company uses the same credit policies and collateral requirements in making commitments and conditional obligations as it does for on-balance-sheet instruments.
Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company grants mortgage loan commitments to borrowers, subject to normal loan underwriting standards. The interest rate risk associated with these loan commitments is managed by entering into contracts for future deliveries of loans.
Standby letters of credit are conditional commitments issued to guarantee the performance of a client to a third party. The credit risk involved in and collateral obtained when issuing standby letters of credit are essentially the same as those involved in extending loan commitments to clients. Standby letters of credit generally have terms ranging from two months to one year.
Commercial letters of credit are issued specifically to facilitate commerce and typically result in the commitment being drawn on when the underlying transaction is consummated between the customer and the third party. Commercial letters of credit generally have terms ranging from two months to six months.
Note 9 — Derivative Financial Instruments
Commitments to originate residential mortgage loans held for sale and forward commitments to sell residential mortgage loans are considered derivative instruments. See Note 8 for further information.
The Company has certain interest rate derivative positions that are not designated as hedging instruments. Derivative assets and liabilities are recorded at fair value on the Consolidated Statements of Financial Condition and do not take into account the effects of master netting agreements. Master netting agreements allow the Company to settle all derivative contracts held with a single counterparty on a net basis, and to offset net derivative positions with related collateral, where applicable. These derivative positions relate to transactions in which the Company enters into an interest rate swap with a client while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each transaction, the Company agrees to pay interest to the client on a notional amount at a variable interest rate and receive interest from the client on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the client to effectively convert a variable rate loan to a fixed rate. Because the terms of the swaps with the customers and the other financial institutions offset each other, with the only difference being counterparty credit risk, changes in the fair value of the underlying derivative contracts are not materially different and do not significantly impact the Company’s results of operations.
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The following table shows the amounts of non-hedging derivative financial instruments.
    Asset derivatives Liability derivatives
(Dollars in thousands) Notional or contractual amount Statement of Financial Condition classification Fair value Statement of Financial Condition classification Fair value
June 30, 2025          
Interest rate swap contracts $ 1,216,784  Other assets $ 18,496  Other liabilities $ 18,843 
Loan commitments 7,720  Mortgages held for sale 220  N/A — 
Forward contracts - mortgage loan 8,500  N/A —  Mortgages held for sale 51 
Total $ 1,233,004    $ 18,716    $ 18,894 
December 31, 2024          
Interest rate swap contracts $ 1,083,673  Other assets $ 16,424  Other liabilities $ 16,727 
Loan commitments 3,586  Mortgages held for sale 118  N/A — 
Forward contracts - mortgage loan 4,500  Mortgages held for sale 17  N/A — 
Total $ 1,091,759    $ 16,559    $ 16,727 
The following table shows the amounts included in the Consolidated Statements of Income for non-hedging derivative financial instruments.
    Gain (loss)
  Three Months Ended
June 30,		 Six Months Ended
June 30,
(Dollars in thousands) Statement of Income classification 2025 2024 2025 2024
Interest rate swap contracts Other expense $ (23) $ 15  $ (44) $ 42 
Interest rate swap contracts Other income 426  367  877  553 
Loan commitments Mortgage banking 20  117  102  178 
Forward contracts - mortgage loan Mortgage banking (43) 29  (68) 37 
Total   $ 380  $ 528  $ 867  $ 810 
The following table shows the offsetting of financial assets and derivative assets.
Gross Amounts Not Offset in the Statement of Financial Condition
(Dollars in thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Condition Net Amounts of
Assets Presented in
the Statement of Financial Condition		 Financial Instruments Cash Collateral Received Net Amount
June 30, 2025            
Interest rate swaps $ 18,496  $ —  $ 18,496  $ —  $ 3,105  $ 15,391 
December 31, 2024            
Interest rate swaps $ 16,424  $ —  $ 16,424  $ —  $ 12,615  $ 3,809 
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The following table shows the offsetting of financial liabilities and derivative liabilities.
Gross Amounts Not Offset in the Statement of Financial Condition
(Dollars in thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Liabilities Presented in the Statement of Financial Condition Financial Instruments Cash Collateral Pledged Net Amount
June 30, 2025            
Interest rate swaps $ 18,843  $ —  $ 18,843  $ —  $ —  $ 18,843 
Repurchase agreements 58,242  —  58,242  58,242  —  — 
Total $ 77,085  $ —  $ 77,085  $ 58,242  $ —  $ 18,843 
December 31, 2024            
Interest rate swaps $ 16,727  $ —  $ 16,727  $ —  $ —  $ 16,727 
Repurchase agreements 72,345  —  72,345  72,345  —  — 
Total $ 89,072  $ —  $ 89,072  $ 72,345  $ —  $ 16,727 
If a default in performance of any obligation of a repurchase agreement occurs, each party will set-off property held in respect of transactions against obligations owing in respect of any other transactions. At June 30, 2025, and December 31, 2024, repurchase agreements had a remaining contractual maturity of $58.19 million and $72.30 million in overnight and $0.05 million and $0.05 million in up to 30 days, respectively and were collateralized by U.S. Treasury and Federal agencies securities.
Note 10 — Variable Interest Entities
A variable interest entity (VIE) is a partnership, limited liability company, trust or other legal entity that meets any one of the following criteria:
•The entity does not have sufficient equity to conduct its activities without additional subordinated financial support from another party.
•The entity’s investors lack the power to direct the activities that most significantly affect the entity’s economic performance.
•The entity’s at-risk holders do not have the obligation to absorb the losses or the right to receive residual returns.
•The voting rights of some investors are not proportional to their economic interests in the entity, and substantially all of the entity’s activities involve, or are conducted on behalf of, investors with disproportionately few voting rights.
The Company is involved in various entities that are considered to be VIEs. The Company’s investments in VIEs are primarily related to investments promoting affordable housing, community development and renewable energy sources. Some of these tax-advantaged investments support the Company’s regulatory compliance with the Community Reinvestment Act. The Company’s investments in these entities generate a return primarily through the realization of federal and state income tax credits and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods. These tax credits are recognized as a reduction of tax expense or, for investments qualifying as investment tax credits, as a reduction to the related investment asset. The Company recognized federal and state income tax credits related to its affordable housing and community development tax-advantaged investments in tax expense of $0.96 million and $0.79 million for the three months ended June 30, 2025, and 2024, respectively, and $1.91 million and $1.59 million for the six months ended June 30, 2025 and 2024, respectively. The Company also recognized $14.32 million and $5.72 million of investment tax credits for the three months ended June 30, 2025, and 2024, respectively, and $14.34 million and $10.79 million of investment tax credits for the six months ended June 30, 2025, and 2024, respectively.
The Company is not required to consolidate VIEs in which it has concluded it does not have a controlling financial interest, and thus is not the primary beneficiary. In such cases, the Company does not have both the power to direct the entities’ most significant activities and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIEs. As a limited partner in these operating partnerships, the Company is allocated credits and deductions associated with the underlying properties. The Company has determined that it is not the primary beneficiary of these investments because the general partners have the power to direct activities that most significantly influence the economic performance of their respective partnerships.
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The Company’s investments in these unconsolidated VIEs are carried in Other Assets on the Consolidated Statements of Financial Condition. The Company’s unfunded capital and other commitments related to these unconsolidated VIEs are generally carried in Other Liabilities on the Consolidated Statements of Financial Condition. The Company’s maximum exposure to loss from these unconsolidated VIEs includes the investment recorded on the Consolidated Statements of Financial Condition, net of unfunded capital commitments, and previously recorded tax credits which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level. While the Company believes potential losses from these investments are remote, the maximum exposure was determined by assuming a scenario where the community-based business projects, housing projects, and renewable energy projects completely fail and do not meet certain taxing authority compliance requirements, resulting in recapture of the related tax credits.
The following table provides a summary of investments in affordable housing, community development, and renewable energy VIEs that the Company has not consolidated.
(Dollars in thousands) June 30, 2025 December 31, 2024
Investment carrying amount $ 65,766  $ 62,044 
Unfunded capital and other commitments 62,101  52,806 
Maximum exposure to loss 72,802  74,242 
The Company is required to consolidate VIEs in which it has concluded it has significant involvement and the ability to direct the activities that impact the entity’s economic performance. The Company is the managing general partner of entities in which it shares interest in tax-advantaged investments with a third party. At June 30, 2025, and December 31, 2024, approximately $65.29 million and $78.20 million, respectively, of the Company’s assets and $0.00 million and $0.00 million, respectively, of its liabilities included on the Consolidated Statements of Financial Condition were related to tax-advantaged investment VIEs which the Company has consolidated. The assets of the consolidated VIEs are reported in Other Assets, the liabilities are reported in Other Liabilities, and the non-controlling interest is reported in Equity on the Consolidated Statements of Financial Condition. The assets of a particular VIE are the primary source of funds to settle its obligations. The creditors of the VIE do not have recourse to the general credit of the Company. The Company’s exposure to the consolidated VIE is generally limited to the carrying value of its variable interest plus any related tax credits previously recognized.
Additionally, the Company sponsors one trust, 1st Source Master Trust (Capital Trust), of which 100% of the common equity is owned by the Company. The Capital Trust was formed in 2007 for the purpose of issuing corporation-obligated mandatorily redeemable capital securities (the capital securities) to third-party investors and investing the proceeds from the sale of the capital securities solely in junior subordinated debenture securities of the Company (the subordinated notes). The subordinated notes held by the Capital Trust are the sole assets of the Capital Trust. The Capital Trust qualifies as a variable interest entity for which the Company is not the primary beneficiary and is therefore reported in the financial statements as an unconsolidated subsidiary. The junior subordinated debentures are reflected as subordinated notes on the Consolidated Statements of Financial Condition with the corresponding interest distributions reflected as Interest Expense on the Consolidated Statements of Income. The common shares issued by the Capital Trust are included in Other Assets on the Consolidated Statements of Financial Condition.
Distributions on the capital securities issued by the Capital Trust are payable quarterly at a rate per annum equal to the interest rate being earned by the Capital Trust on the subordinated notes held by the Capital Trust. The capital securities are subject to mandatory redemption, in whole or in part, upon repayment of the subordinated notes. The Company has entered into agreements which, taken collectively, fully and unconditionally guarantee the capital securities subject to the terms of each of the guarantees. The capital securities held by the Capital Trust qualify as Tier 1 capital under Federal Reserve Board guidelines.
The following table shows subordinated notes at June 30, 2025.
(Dollars in thousands) Amount of Subordinated Notes Interest Rate Maturity Date
June 2007 issuance (1) $ 41,238  7.22  % 6/15/2037
August 2007 issuance (2) 17,526  6.06  % 9/15/2037
Total $ 58,764     
(1) Fixed rate through life of debt.
(2) 3-Month Term SOFR + the 3-Month tenor spread adjustment + 1.48% through remaining life of debt.

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Note 11 — Earnings Per Share
Earnings per common share is computed using the two-class method. Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Participating securities include non-vested restricted stock awards. Non-vested restricted stock awards are considered participating securities to the extent the holders of these securities receive non-forfeitable dividends at the same rate as holders of common stock. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method.
Stock options, where the exercise price was greater than the average market price of the common shares, were excluded from the computation of diluted earnings per common share because the result would have been antidilutive. There were no stock options outstanding as of June 30, 2025, and 2024.
The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share.
Three Months Ended
June 30,		 Six Months Ended
June 30,
(Dollars in thousands - except per share amounts) 2025 2024 2025 2024
Distributed earnings allocated to common stock $ 9,329  $ 8,308  $ 18,166  $ 16,617 
Undistributed earnings allocated to common stock 27,676  28,124  56,042  48,994 
Net earnings allocated to common stock 37,005  36,432  74,208  65,611 
Net earnings allocated to participating securities 314  361  631  637 
Net income allocated to common stock and participating securities $ 37,319  $ 36,793  $ 74,839  $ 66,248 
Weighted average shares outstanding for basic earnings per common share 24,541,385  24,495,495  24,544,120  24,477,292 
Dilutive effect of stock compensation —  —  —  — 
Weighted average shares outstanding for diluted earnings per common share 24,541,385  24,495,495  24,544,120  24,477,292 
Basic earnings per common share $ 1.51  $ 1.49  $ 3.02  $ 2.68 
Diluted earnings per common share $ 1.51  $ 1.49  $ 3.02  $ 2.68 
 
Note 12 — Stock Based Compensation
As of June 30, 2025, the Company had four active stock-based employee compensation plans, which are more fully described in Note 16 of the Consolidated Financial Statements in 1st Source’s Annual Report on Form 10-K for the year ended December 31, 2024. These plans include three executive stock award plans, the Executive Incentive Plan (EIP), the Restricted Stock Award Plan (RSAP), the Strategic Deployment Incentive Plan (SDP); and the Employee Stock Purchase Plan (ESPP). The 2011 Stock Option Plan was approved by the shareholders on April 21, 2011, but the Company had not made any grants through June 30, 2025.
Stock-based compensation expense for all stock-based compensation awards granted is based on the grant-date fair value. For all awards except stock option awards, the grant date fair value is either the fair market value per share or book value per share (corresponding to the type of stock awarded) as of the grant date. For stock option awards, the grant date fair value is estimated using the Black-Scholes option pricing model. For all awards, the Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, for which the Company uses the related vesting term.
Total fair value of options vested and expensed was zero for the six months ended June 30, 2025, and 2024. As of June 30, 2025, and 2024 there were no outstanding stock options. There were no stock options exercised during the six months ended June 30, 2025, and 2024. All shares issued in connection with stock option exercises are issued from available treasury stock.
As of June 30, 2025, there was $11.68 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 3.28 years.
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Note 13 — Accumulated Other Comprehensive Loss
The following table presents reclassifications out of accumulated other comprehensive income (loss) related to unrealized gains and losses on available-for-sale securities.
  Three Months Ended June 30, Six Months Ended June 30, Affected Line Item in the Consolidated Statements of Income
(Dollars in thousands) 2025 2024 2025 2024
Realized losses included in net income $ (997) $ —  $ (997) $ —  Losses on investment securities available-for-sale
  (997) —  (997) —  Income before income taxes
Tax effect 240  —  240  —  Income tax expense
Net of tax $ (757) $ —  $ (757) $ —  Net income
 
Note 14 — Income Taxes
The total amount of unrecognized tax benefits that would affect the effective tax rate if recognized was zero at June 30, 2025, and December 31, 2024. Interest and penalties are recognized through the income tax provision. For the six months ended June 30, 2025, the Company recognized the receipt of a one-time $0.74 million after-tax interest payment on federal tax refunds from tax credit carrybacks and no penalties. For the three and six months ended June 30, 2025, and 2024, the Company recognized no interest expense or penalties. There were no accrued interest and penalties at June 30, 2025, and December 31, 2024.
Tax years that remain open and subject to audit include the federal 2021-2024 years and the Indiana 2021-2024 years. The Company does not anticipate a significant change in the amount of uncertain tax positions within the next 12 months.
Note 15 — Fair Value Measurements
The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are also utilized to determine the initial value of certain assets and liabilities, to perform impairment assessments, and for disclosure purposes. The Company uses quoted market prices and observable inputs to the maximum extent possible when measuring fair value. In the absence of quoted market prices, various valuation techniques are utilized to measure fair value. When possible, observable market data for identical or similar financial instruments is used in the valuation. When market data is not available, fair value is determined using valuation models that incorporate management’s estimates of the assumptions a market participant would use in pricing the asset or liability.
Fair value measurements are classified within one of three levels based on the observability of the inputs used to determine fair value, as follows:
•Level 1 — The valuation is based on quoted prices in active markets for identical instruments.
•Level 2 — The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
•Level 3 — The valuation is based on unobservable inputs that are supported by minimal or no market activity and that are significant to the fair value of the instrument. Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar techniques that incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument, or valuations that require significant management judgment or estimation.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The Company elected fair value accounting for mortgages held for sale and for its best-efforts forward sales commitments. The Company economically hedges its mortgages held for sale at the time the interest rate locks are issued to the customers. The Company believes the election for mortgages held for sale will reduce certain timing differences and better match changes in the value of these assets with changes in the value of derivatives or best-efforts forward sales commitments. At June 30, 2025, and December 31, 2024, all mortgages held for sale were carried at fair value.
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The following table shows the differences between the fair value carrying amount of mortgages held for sale measured at fair value and the aggregate unpaid principal amount the Company is contractually entitled to receive at maturity.
(Dollars in thousands) Fair value 
carrying
amount		 Aggregate
unpaid principal		 Excess of fair value carrying amount over (under) unpaid principal  
June 30, 2025        
Mortgages held for sale reported at fair value $ 4,334  $ 4,025  $ 309  (1)
December 31, 2024        
Mortgages held for sale reported at fair value $ 2,569  $ 2,343  $ 226  (1)
(1)The excess of fair value carrying amount over (under) unpaid principal is included in mortgage banking income and includes changes in fair value at and subsequent to funding and gains and losses on the related loan commitment prior to funding.
Financial Instruments on Recurring Basis:
The following is a description of the valuation methodologies used for financial instruments measured at fair value on a recurring basis:
Investment securities available-for-sale are valued primarily by a third-party pricing agent. Prices supplied by the independent pricing agent, as well as their pricing methodologies and assumptions, are reviewed by the Company for reasonableness and to ensure such prices are aligned with market levels. In general, the Company’s investment securities do not possess a complex structure that could introduce greater valuation risk. The portfolio mainly consists of traditional investments including U.S. Treasury and Federal agencies securities, Federal agency mortgage pass-through securities, and general obligation and revenue municipal bonds. Pricing for such instruments is fairly generic and is easily obtained. On a quarterly basis, prices supplied by the pricing agent are validated by comparison to prices obtained from other third-party sources for a material portion of the portfolio.
The valuation policy and procedures for Level 3 fair value measurements of available-for-sale debt securities are decided through collaboration between management of the Corporate Accounting and Funds Management departments. The changes in fair value measurement for Level 3 securities are analyzed on a periodic basis under a collaborative framework with the aforementioned departments. The methodology and variables used for input are derived from the combination of observable and unobservable inputs. The unobservable inputs are determined through internal assumptions that may vary from period to period due to external factors, such as market movement and credit rating adjustments.
Both the market and income valuation approaches are implemented using the following types of inputs:
•U.S. treasuries are priced using the market approach and utilizing live data feeds from active market exchanges for identical securities.
•Government-sponsored agency debt securities and corporate bonds are primarily priced using available market information through processes such as benchmark curves, market valuations of like securities, sector groupings and matrix pricing.
•Other government-sponsored agency securities, mortgage-backed securities and some of the actively traded REMICs and CMOs, are primarily priced using available market information including benchmark yields, prepayment speeds, spreads and volatility of similar securities.
•State and political subdivisions are largely grouped by characteristics, i.e., geographical data and source of revenue in trade dissemination systems. Since some securities are not traded daily and due to other grouping limitations, active market quotes are often obtained using benchmarking for like securities. Local direct placement municipal securities, with very little market activity, are priced using an appropriate market yield curve, which includes a credit spread assumption.
Mortgages held for sale and the related loan commitments and forward contracts (hedges) are valued by a third-party pricing agent. Prices supplied by the independent pricing agent, as well as their pricing methodologies, are reviewed by the Company for reasonableness and to ensure such prices are aligned with market values. On a quarterly basis, prices supplied by the pricing agent are validated by comparison to the prices obtained from other third-party sources.
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Interest rate swap positions, both assets and liabilities, are valued by a third-party pricing agent using an income approach and utilizing models that use as their basis readily observable market parameters. This valuation process considers various factors including interest rate yield curves, time value and volatility factors. Validation of third-party agent valuations is accomplished by comparing those values to the Company’s swap counterparty valuations. Management believes an adjustment is required to “mid-market” valuations for derivatives tied to its performing loan portfolio to recognize the imprecision and related exposure inherent in the process of estimating expected credit losses as well as velocity of deterioration evident with systemic risks embedded in these portfolios. Any change in the mid-market derivative valuation adjustment will be recognized immediately through the Consolidated Statements of Income.
The following table shows the balance of assets and liabilities measured at fair value on a recurring basis.
(Dollars in thousands) Level 1 Level 2 Level 3 Total
June 30, 2025        
Assets:        
Investment securities available-for-sale:        
U.S. Treasury and Federal agencies securities $ 402,230  $ 287,201  $ —  $ 689,431 
U.S. States and political subdivisions securities —  98,892  971  99,863 
Mortgage-backed securities — Federal agencies —  666,863  —  666,863 
Total debt securities available-for-sale 402,230  1,052,956  971  1,456,157 
Mortgages held for sale —  4,334  —  4,334 
Accrued income and other assets (interest rate swap agreements) —  18,496  —  18,496 
Total $ 402,230  $ 1,075,786  $ 971  $ 1,478,987 
Liabilities:        
Accrued expenses and other liabilities (interest rate swap agreements) $ —  $ 18,843  $ —  $ 18,843 
Total $ —  $ 18,843  $ —  $ 18,843 
December 31, 2024        
Assets:        
Investment securities available-for-sale:        
U.S. Treasury and Federal agencies securities $ 446,021  $ 311,728  $ —  $ 757,749 
U.S. States and political subdivisions securities —  81,600  1,032  82,632 
Mortgage-backed securities — Federal agencies —  695,918  —  695,918 
Total debt securities available-for-sale 446,021  1,089,246  1,032  1,536,299 
Mortgages held for sale —  2,569  —  2,569 
Accrued income and other assets (interest rate swap agreements) —  16,424  —  16,424 
Total $ 446,021  $ 1,108,239  $ 1,032  $ 1,555,292 
Liabilities:        
Accrued expenses and other liabilities (interest rate swap agreements) $ —  $ 16,727  $ —  $ 16,727 
Total $ —  $ 16,727  $ —  $ 16,727 

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The following table shows changes in Level 3 assets measured at fair value on a recurring basis for the quarter ended June 30, 2025, and 2024.
(Dollars in thousands) U.S. States and
political
subdivisions
securities
Beginning balance April 1, 2025 $ 958 
Total gains or losses (realized/unrealized):  
Included in earnings — 
Included in other comprehensive income (loss) 13 
Purchases — 
Issuances — 
Sales — 
Settlements — 
Maturities — 
Transfers into Level 3 — 
Transfers out of Level 3 — 
Ending balance June 30, 2025 $ 971 
Beginning balance April 1, 2024 $ 1,044 
Total gains or losses (realized/unrealized):  
Included in earnings — 
Included in other comprehensive income (loss) (7)
Purchases — 
Issuances — 
Sales — 
Settlements — 
Maturities — 
Transfers into Level 3 — 
Transfers out of Level 3 — 
Ending balance June 30, 2024 $ 1,037 
There were no gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2025, or 2024.
The following table shows the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a recurring basis.
(Dollars in thousands) Fair Value Valuation Methodology Unobservable Inputs Range of Inputs Weighted Average
June 30, 2025        
Debt securities available-for sale        
Direct placement municipal securities
 $ 971  Discounted cash flows Credit spread assumption
3.30% - 4.26%
 3.70  %
December 31, 2024        
Debt securities available-for sale
        
Direct placement municipal securities
 $ 1,032  Discounted cash flows Credit spread assumption
1.15% - 4.59%
 3.96  %
Financial Instruments on Non-recurring Basis:
The Company may be required, from time to time, to measure certain other financial assets at fair value on a non-recurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower of cost or market accounting or impairment charges of individual assets.
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The Credit Policy Committee (CPC), a management committee, is responsible for overseeing the valuation processes and procedures for Level 3 measurements of impaired loans, other real estate and repossessions. The CPC reviews these assets on a quarterly basis to determine the accuracy of the observable inputs, generally third-party appraisals, auction values, values derived from trade publications and data submitted by the borrower, and the appropriateness of the unobservable inputs, generally discounts due to current market conditions and collection issues. The CPC establishes discounts based on asset type and valuation source; deviations from the standard are documented. The discounts are reviewed periodically, annually at a minimum, to determine they remain appropriate. Consideration is given to current trends in market values for the asset categories and gains and losses on sales of similar assets. The Loan and Funds Management Committee of the Board of Directors is responsible for overseeing the CPC.
Discounts vary depending on the nature of the assets and the source of value. Aircraft are generally valued using quarterly trade publications adjusted for engine time, condition, maintenance programs, discounted by 10%. Likewise, autos are valued using current auction values, discounted by 10%; medium and heavy duty trucks are valued using trade publications and auction values, discounted by 15%. Construction equipment is generally valued using trade publications and auction values, discounted by 20%. Real estate is valued based on appraisals or evaluations, discounted by 20% with higher discounts for property in poor condition or property with characteristics which may make it more difficult to market. Commercial loans subject to borrowing base certificates are generally discounted by 20% for receivables and 40% - 75% for inventory with higher discounts when monthly borrowing base certificates are not required or received.
Collateral-dependent impaired loans and related write-downs are based on the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are reviewed quarterly and estimated using customized discounting criteria, appraisals and dealer and trade magazine quotes which are used in a market valuation approach. In accordance with fair value measurements, only impaired loans for which an allowance for loan loss has been established based on the fair value of collateral require classification in the fair value hierarchy. As a result, only a portion of the Company’s collateral-dependent loans are classified in the fair value hierarchy.
The Company has established MSRs valuation policies and procedures based on industry standards and to ensure valuation methodologies are consistent and verifiable. MSRs and related adjustments to fair value result from application of lower of cost or fair value accounting. For purposes of impairment, MSRs are stratified based on the predominant risk characteristics of the underlying servicing, principally by loan type. The fair value of each tranche of the servicing portfolio is estimated by calculating the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, servicing costs, and other economic factors. Prepayment rates and discount rates are derived through a third-party pricing agent. Changes in the most significant inputs, including prepayment rates and discount rates, are compared to the changes in the fair value measurements and appropriate resolution is made. A fair value analysis is also obtained from an independent third-party agent and compared to the internal valuation for reasonableness. MSRs do not trade in an active, open market with readily observable prices and though sales of MSRs do occur, precise terms and conditions typically are not readily available, and the characteristics of the Company’s servicing portfolio may differ from those of any servicing portfolios that do trade.
Other real estate is based on the fair value of the underlying collateral less expected selling costs. Collateral values are estimated primarily using appraisals and reflect a market value approach. Fair values are reviewed quarterly, and new appraisals are obtained annually. Repossessions are similarly valued.
For assets measured at fair value on a nonrecurring basis, the following represents impairment charges (recoveries) recognized on these assets during the quarter ended June 30, 2025: collateral-dependent impaired loans - $0.02 million; mortgage servicing rights - $0.00 million; repossessions - $0.00 million; and other real estate - $0.00 million.
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The following table shows the carrying value of assets measured at fair value on a non-recurring basis.
(Dollars in thousands) Level 1 Level 2 Level 3 Total
June 30, 2025        
Collateral-dependent impaired loans $ —  $ —  $ 33,725  $ 33,725 
Accrued income and other assets (mortgage servicing rights) —  —  3,313  3,313 
Accrued income and other assets (repossessions) —  —  3,549  3,549 
Total $ —  $ —  $ 40,587  $ 40,587 
December 31, 2024        
Collateral-dependent impaired loans $ —  $ —  $ 725  $ 725 
Accrued income and other assets (mortgage servicing rights) —  —  3,436  3,436 
Accrued income and other assets (repossessions) —  —  155  155 
Accrued income and other assets (other real estate) —  —  460  460 
Total $ —  $ —  $ 4,776  $ 4,776 
The following table below shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a non-recurring basis.
(Dollars in thousands) Carrying Value Fair Value Valuation Methodology Unobservable Inputs Range of Inputs Weighted Average
June 30, 2025          
Collateral-dependent impaired loans $ 33,725  $ 33,725  Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions
10% - 50%
 31.7  %
Mortgage servicing rights 3,313  7,732  Discounted cash flows Constant prepayment rate (CPR)
6.0% - 25.6%
 6.7  %
        Discount rate
10.8% - 12.8%
 10.9  %
Repossessions 3,549  3,639  Appraisals, trade publications and auction values Discount for lack of marketability
0% - 40%
 2  %
December 31, 2024          
Collateral-dependent impaired loans $ 725  $ 725  Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions
25% - 30%
 28.0  %
Mortgage servicing rights 3,436  7,480  Discounted cash flows Constant prepayment rate (CPR)
7.6% - 23.0%
 7.6  %
        Discount rate
11.1% - 13.1%
 11.3  %
Repossessions 155  170  Appraisals, trade publications and auction values Discount for lack of marketability
0% - 10%
 9  %
Other real estate 460  500  Appraisals Discount for lack of marketability
0% - 8%
 8  %
GAAP requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring or non-recurring basis.
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The following table shows the fair values of the Company’s financial instruments.
(Dollars in thousands) Carrying or Contract Value Fair Value Level 1 Level 2 Level 3
June 30, 2025          
Assets:          
Cash and due from banks $ 88,810  $ 88,810  $ 88,810  $ —  $ — 
Federal funds sold and interest bearing deposits with other banks 60,298  60,298  60,298  —  — 
Investment securities, available-for-sale 1,456,157  1,456,157  402,230  1,052,956  971 
Other investments 22,140  22,140  22,140  —  — 
Mortgages held for sale 4,334  4,334  —  4,334  — 
Loans and leases, net of allowance for loan and lease losses 6,934,485  6,902,532  —  —  6,902,532 
Mortgage servicing rights 3,313  7,732  —  —  7,732 
Accrued interest receivable 32,368  32,368  —  32,368  — 
Interest rate swaps 18,496  18,496  —  18,496  — 
Liabilities:          
Deposits $ 7,442,669  $ 7,438,185  $ 5,544,815  $ 1,893,370  $ — 
Short-term borrowings 110,058  110,058  60,011  50,047  — 
Long-term debt and mandatorily redeemable securities 41,850  41,639  —  41,639  — 
Subordinated notes 58,764  59,081  —  59,081  — 
Accrued interest payable 26,113  26,113  —  26,113  — 
Interest rate swaps 18,843  18,843  —  18,843  — 
Off-balance-sheet instruments * —  110  —  110  — 
December 31, 2024          
Assets:          
Cash and due from banks $ 76,837  $ 76,837  $ 76,837  $ —  $ — 
Federal funds sold and interest bearing deposits with other banks 47,989  47,989  47,989  —  — 
Investment securities, available-for-sale 1,536,299  1,536,299  446,021  1,089,246  1,032 
Other investments 23,855  23,855  23,855  —  — 
Mortgages held for sale 2,569  2,569  —  2,569  — 
Loans and leases, net of allowance for loan and lease losses 6,699,268  6,608,109  —  —  6,608,109 
Mortgage servicing rights 3,436  7,480  —  —  7,480 
Accrued interest receivable 32,790  32,790  —  32,790  — 
Interest rate swaps 16,424  16,424  —  16,424  — 
Liabilities:          
Deposits $ 7,230,035  $ 7,226,239  $ 5,440,309  $ 1,785,930  $ — 
Short-term borrowings 249,198  249,198  74,198  175,000  — 
Long-term debt and mandatorily redeemable securities 39,156  38,784  —  38,784  — 
Subordinated notes 58,764  56,903  —  56,903  — 
Accrued interest payable 36,494  36,494  —  36,494  — 
Interest rate swaps 16,727  16,727  —  16,727  — 
Off-balance-sheet instruments * —  144  —  144  — 
* Represents estimated cash outflows required to currently settle the obligations at current market rates.
These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. These estimates are subjective in nature and require considerable judgment to interpret market data. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange, nor are they intended to represent the fair value of the Company as a whole. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The fair value estimates presented herein are based on pertinent information available to management as of the respective balance sheet date. Although the Company is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented herein.
Other significant assets, such as premises and equipment, other assets, and liabilities not defined as financial instruments, are not included in the above disclosures. Also, the fair value estimates for deposits do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market.
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Note 16 — Segment Information
The Company has one reportable operating segment, commercial banking. While our chief operating decision maker monitors revenue streams of various products and services, the identifiable segments’ operations are managed, and financial performance is evaluated on a company-wide basis. The commercial banking segment provides a broad array of financial products and services including commercial and consumer banking services, trust and wealth advisory services, and insurance to individual and business clients through most of its 78 banking center locations in 18 counties in Indiana and Michigan and Sarasota County in Florida.
The accounting policies of the commercial banking segment are the same as those described in Note 1 of the Notes to Consolidated Financial Statements in 1st Source’s Annual Report on Form 10-K for the year ended December 31, 2024. The chief operating decision maker assesses performance for the commercial banking segment and decides how to allocate resources based on net income available to common shareholders which is also reported on the Consolidated Statements of Income as net income available to common shareholders. The measure of segment assets is reported on the Consolidated Statements of Financial Condition as total assets.
The chief operating decision maker uses net income available to common shareholders to evaluate income generated from segment assets in deciding whether to reinvest profits into the commercial banking segment or to pay dividends or fund acquisitions. Net income available to common shareholders is also used by the chief operating decision maker to monitor budget versus actual results. Net income available to common shareholders as well as other common company-wide financial performance and credit quality metrics such as earnings per common share and net interest margin, among others, are used for competitive analysis by benchmarking to the Company’s competitors as well as used in assessing the performance of the segment and for establishing management’s compensation. See the Consolidated Statements of Financial Condition, the Consolidated Statements of Income, the Consolidated Statements of Comprehensive Income (Loss), the Consolidated Statements of Shareholders’ Equity, and the Consolidated Statements of Cash Flows.
The Company’s chief operating decision maker is the Strategic Deployment Committee which includes the Chairman of the Board and Chief Executive Officer, the President, the Chief Financial Officer, and several Group/Division Heads that report directly to the Chief Executive Officer or President.
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management’s discussion and analysis is presented to provide information concerning 1st Source Corporation and its subsidiaries’ (collectively referred to as “the Company”, “we”, and “our”) financial condition as of June 30, 2025, as compared to December 31, 2024, and the results of operations for the three and six months ended June 30, 2025, and 2024. This discussion and analysis should be read in conjunction with our consolidated financial statements and the financial and statistical data appearing elsewhere in this report and our 2024 Annual Report.
Except for historical information contained herein, the matters discussed in this document express “forward-looking statements.” Generally, the words “believe,” “contemplate,” “seek,” “plan,” “possible,” “assume,” “hope,” “expect,” “intend,” “targeted,” “continue,” “remain,” “estimate,” “anticipate,” “project,” “will,” “should,” “indicate,” “would,” “may” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Those statements, including statements, projections, estimates or assumptions concerning future events or performance, and other statements that are other than statements of historical fact, are subject to material risks and uncertainties. We caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. We may make other written or oral forward-looking statements from time to time. Readers are advised that various important factors could cause our actual results or circumstances for future periods to differ materially from those anticipated or projected in such forward-looking statements. Such factors include, but are not limited to, changes in law, regulations or GAAP; our competitive position within the markets we serve; increasing consolidation within the banking industry; unforeseen changes in interest rates; unforeseen changes in loan prepayment assumptions; unforeseen downturns in or major events affecting the local, regional or national economies or the industries in which we have credit concentrations; potential impacts of epidemics, pandemics or other infectious disease outbreaks; and other matters discussed in our filings with the SEC, including our Annual Report on Form 10-K  for 2024, which filings are available from the SEC. We undertake no obligation to publicly update or revise any forward-looking statements.
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FINANCIAL CONDITION
Our total assets at June 30, 2025, were $9.09 billion, an increase of $155.22 million or 1.74% from December 31, 2024. Total investment securities available-for-sale were $1.46 billion, a decrease of $80.14 million or 5.22% from December 31, 2024. The largest contributor to the decrease in investment securities available-for-sale was expected redemptions. Federal funds sold and interest bearing deposits with other banks were $60.30 million, an increase of $12.31 million or 25.65% from December 31, 2024. The increase in federal funds sold and interest bearing deposits with other banks was due to higher interest bearing deposits at other banks as a result of growth in deposit balances and the expected maturities of investment securities.
Total loans and leases were $7.10 billion, an increase of $243.16 million or 3.55% from December 31, 2024. The largest contributors to the increase in loans and leases was growth in the renewable energy, commercial and agricultural, commercial real estate and residential real estate and home equity portfolios, offset by decreases in the consumer and medium and heavy duty truck portfolios. Our foreign loan and lease balances, all denominated in U.S. dollars were $301.53 million and $301.18 million as of June 30, 2025, and December 31, 2024, respectively. Foreign loans and leases are in aircraft financing. Loan and lease balances to borrowers in Brazil and Mexico were $138.16 million and $146.11 million as of June 30, 2025, respectively, compared to $129.12 million and $145.85 million as of December 31, 2024, respectively. As of June 30, 2025, and December 31, 2024, there was not a significant concentration in any other country.
Equipment owned under operating leases was $8.65 million, a decrease of $2.83 million, or 24.65% compared to December 31, 2024. The largest contributors to the decrease in equipment owned under operating leases was reduced leasing volume primarily due to a change in customer preferences and continued competitive pricing pressure for new business.
Total deposits were $7.44 billion, an increase of $212.63 million or 2.94% from the end of 2024. The largest contributors to the increase in total deposits were higher savings, time and interest-bearing demand deposits offset by a decrease in non-interest bearing deposits. Rate competition for deposits persisted during the second quarter across our footprint from various sources, including traditional bank and credit union competitors, money market funds, bond markets, and other non-bank alternatives.
Short-term borrowings were $110.06 million, a decrease of $139.14 million or 55.84% from December 31, 2024, due primarily to the maturity and pay off of $100 million in borrowings from the Federal Reserve’s Bank Term Funding Program and pay downs of short-term FHLB borrowings. Long-term debt and mandatorily redeemable securities were $41.85 million, an increase of $2.69 million or 6.88% from December 31, 2024, due primarily to an increase in mandatorily redeemable securities. Accrued expenses and other liabilities were $176.40 million, an increase of $3.12 million or 1.80% from December 31, 2024, mainly due to increased accrued accounts payable and unfunded partnership commitments offset by a decrease in accrued interest payable.
The following table shows accrued income and other assets.
(Dollars in thousands) June 30,
2025		 December 31,
2024
Accrued income and other assets:    
Bank owned life insurance cash surrender value $ 87,210  $ 86,396 
Operating lease right of use assets 20,280  21,076 
Accrued interest receivable 32,368  32,790 
Mortgage servicing rights 3,313  3,436 
Other real estate —  460 
Repossessions 3,549  155 
Partnership investments carrying amount 131,052  140,244 
Deferred tax assets 55,815  55,543 
All other assets 39,201  56,185 
Total accrued income and other assets $ 372,788  $ 396,285 
The largest contributors to the decrease in accrued income and other assets from December 31, 2024, were decreases in accounts receivable and partnership investments offset by increased repossessions.
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CAPITAL
As of June 30, 2025, total shareholders’ equity was $1.20 billion, up $87.52 million, or 7.88% from the $1.11 billion at December 31, 2024. In addition to net income of $74.84 million, other significant changes in shareholders’ equity during the first six months of 2025 included $18.22 million of dividends paid. The accumulated other comprehensive loss component of shareholders’ equity decreased to $56.76 million at June 30, 2025, compared to $87.23 million at December 31, 2024, due to changes in market conditions on our available-for-sale investment portfolio. Our shareholders’ equity-to-assets ratio was 13.19% as of June 30, 2025, compared to 12.44% at December 31, 2024. Book value per common share increased to $48.86 at June 30, 2025, from $45.31 at December 31, 2024, primarily due to increased retained earnings and decreased accumulated other comprehensive losses.
We declared and paid cash dividends per common share of $0.38 during the second quarter of 2025. The trailing four quarters dividend payout ratio, representing cash dividends per common share divided by diluted earnings per common share, was 25.57%. The dividend payout is continually reviewed by management and the Board of Directors subject to the Company’s capital and dividend policy.
The banking regulators have established guidelines for leverage capital requirements, expressed in terms of Tier 1 or core capital as a percentage of average assets, to measure the soundness of a financial institution. In addition, banking regulators have established risk-based capital guidelines for U.S. banking organizations.
The actual capital amounts and ratios of 1st Source Corporation and 1st Source Bank as of June 30, 2025, remained at their historically strong and conservative levels and are presented in the table below.
  Actual Minimum Capital Adequacy Minimum Capital Adequacy with
Capital Buffer		 To Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Amount Ratio
Total Capital (to Risk-Weighted Assets):            
1st Source Corporation $ 1,393,257  17.30  % $ 644,248  8.00  % $ 845,575  10.50  % $ 805,310  10.00  %
1st Source Bank 1,284,609  15.95  644,302  8.00  845,647  10.50  805,378  10.00 
Tier 1 Capital (to Risk-Weighted Assets):            
1st Source Corporation 1,291,720  16.04  483,186  6.00  684,513  8.50  644,248  8.00 
1st Source Bank 1,183,063  14.69  483,227  6.00  684,571  8.50  644,302  8.00 
Common Equity Tier 1 Capital (to Risk-Weighted Assets):
1st Source Corporation 1,175,885  14.60  362,389  4.50  563,717  7.00  523,451  6.50 
1st Source Bank 1,124,228  13.96  362,420  4.50  563,764  7.00  523,496  6.50 
Tier 1 Capital (to Average Assets):            
1st Source Corporation 1,291,720  14.39  359,155  4.00  N/A N/A 448,944  5.00 
1st Source Bank 1,183,063  13.18  359,048  4.00  N/A N/A 448,810  5.00 
LIQUIDITY AND INTEREST RATE SENSITIVITY
Effective liquidity management ensures that the cash flow requirements of depositors and borrowers, as well as our operating cash needs are met. Funds are available from a number of sources, including the securities portfolio, the core deposit base, access to the national brokered certificates of deposit market, national listing service certificates of deposit, Federal Home Loan Bank (FHLB) borrowings, Federal Reserve Bank (FRB) borrowings, and the capability to package loans for sale.
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We maintain prudent strategies to support a strong liquidity position. The following table represents our sources of liquidity as of June 30, 2025.
(Dollars in thousands) Available
Internal Sources
Unencumbered securities $ 1,221,043 
External Sources
FHLB advances(1)
 561,709 
FRB borrowings 424,728 
Fed funds purchased(2)
 410,000 
Brokered deposits(3)
 365,762 
Listing services deposits(3)
 452,457 
Total liquidity $ 3,435,699 
% of Total deposits net brokered and listing services certificates of deposit 49.80  %
(1) Availability is shown net of required stock purchases under the FHLB activity-based stock ownership requirement, which is currently 4.50%, and may vary
(2) Availability contingent on correspondent bank approvals at time of borrowing
(3) Availability contingent on internal borrowing guidelines
External sources as listed in the table above are managed to approved guidelines by our Board of Directors. Total net available liquidity was $3.44 billion at June 30, 2025, which accounted for approximately 50% of total deposits net of brokered and listing services certificates of deposit.
Our loan to asset ratio was 78.11% at June 30, 2025, compared to 76.74% at December 31, 2024, and 74.94% at June 30, 2024. Cash and cash equivalents totaled $149.11 million at June 30, 2025, compared to $124.83 million at December 31, 2024, and $269.24 million at June 30, 2024. The increase in cash and cash equivalents for the six month period ended June 30, 2025 was primarily due to an increase in deposits and the expected redemptions of investment securities available-for-sale. The decrease in cash and cash equivalents compared to June 30, 2024, was primarily due to funding loan growth and the repayment of short-term borrowings. At June 30, 2025, the Consolidated Statements of Financial Condition was rate sensitive by $462.18 million more liabilities than assets scheduled to reprice within one year, or approximately 0.90%. Management believes that the present funding sources provide adequate liquidity to meet our cash flow needs.
Under Indiana law governing the collateralization of public fund deposits, the Indiana Board of Depositories determines which financial institutions are required to pledge collateral based on the strength of their financial ratings. We have been informed that no collateral is required for our public fund deposits. However, the Board of Depositories could alter this requirement in the future and adversely impact our liquidity. Our potential liquidity exposure if we must pledge collateral is approximately $1.48 billion.
RESULTS OF OPERATIONS
Net income available to common shareholders for the three and six month periods ended June 30, 2025, was $37.32 million and $74.84 million compared to $36.79 million and $66.25 million for the same periods in 2024. Diluted net income per common share was $1.51 and $3.02 for the three and six month periods ended June 30, 2025, compared to $1.49 and $2.68 earned for the same periods in 2024. Return on average common shareholders’ equity was 12.96% for the six months ended June 30, 2025, compared to 13.10% in 2024. The return on total average assets was 1.69% for the six months ended June 30, 2025, compared to 1.53% in 2024.
Net income increased for the six months ended June 30, 2025, compared to the first six months of 2024. Net interest income and noninterest income increased offset partially by an increase in the provision for credit losses and noninterest expense. Details of the changes in the various components of net income are discussed further below.
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NET INTEREST INCOME
The following tables provide an analysis of net interest income and illustrates the interest income earned and interest expense charged for each major component of interest earning assets and interest bearing liabilities. Yields/rates are computed on a tax-equivalent basis, using a 21% rate. Nonaccrual loans and leases are included in the average loan and lease balance outstanding.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
Three Months Ended
June 30, 2025 March 31, 2025 June 30, 2024
(Dollars in thousands) Average
Balance		 Interest Income/Expense Yield/
Rate		 Average
Balance		 Interest Income/Expense Yield/
Rate		 Average
Balance		 Interest Income/Expense Yield/
Rate
ASSETS
Investment securities available-for-sale:
Taxable $ 1,444,203  $ 8,602  2.39  % $ 1,488,005  $ 8,153  2.22  % $ 1,524,751  $ 5,900  1.56  %
Tax exempt(1)
 32,418  375  4.64  % 31,172  349  4.54  % 29,611  319  4.33  %
Mortgages held for sale 3,385  55  6.52  % 2,409  39  6.57  % 4,179  65  6.26  %
Loans and leases, net of unearned discount(1)
 6,968,463  117,250  6.75  % 6,798,952  113,596  6.78  % 6,606,209  113,115  6.89  %
Other investments 95,469  1,087  4.57  % 114,252  1,314  4.66  % 138,768  1,914  5.55  %
Total earning assets(1)
 8,543,938  127,369  5.98  % 8,434,790  123,451  5.94  % 8,303,518  121,313  5.88  %
Cash and due from banks 67,535  64,009    60,908     
Allowance for loan and lease losses (159,418) (157,318)   (149,688)    
Other assets 510,079  514,797    546,268     
Total assets $ 8,962,134  $ 8,856,278    $ 8,761,006     
LIABILITIES AND SHAREHOLDERS’ EQUITY
          
Interest-bearing deposits $ 5,774,752  $ 39,106  2.72  % $ 5,745,134  $ 39,846  2.81  % $ 5,603,880  $ 43,095  3.09  %
Short-term borrowings:
Securities sold under agreements to repurchase 60,863  121  0.80  % 58,232  104  0.72  % 61,729  146  0.95  %
Other short-term borrowings 61,917  688  4.46  % 18,450  128  2.81  % 159,953  2,012  5.06  %
Subordinated notes 58,764  1,007  6.87  % 58,764  1,014  7.00  % 58,764  1,061  7.26  %
Long-term debt and mandatorily redeemable securities
 41,328  1,102  10.70  % 39,675  1,274  13.02  % 38,590  805  8.39  %
Total interest-bearing liabilities
 5,997,624  42,024  2.81  % 5,920,255  42,366  2.90  % 5,922,916  47,119  3.20  %
Noninterest-bearing deposits
 1,574,332      1,588,408      1,579,798     
Other liabilities 144,057      139,379      159,552     
Shareholders’ equity 1,187,076      1,141,922      1,027,138     
Noncontrolling interests
 59,045  66,314  71,602 
Total liabilities and equity
 $ 8,962,134      $ 8,856,278      $ 8,761,006     
Less: Fully tax-equivalent adjustments (153) (147) (144)
Net interest income/margin (GAAP-derived)(1)
   $ 85,192  4.00  %   $ 80,938  3.89  %   $ 74,050  3.59  %
Fully tax-equivalent adjustments
 153  147  144 
Net interest income/margin - FTE(1)
   $ 85,345  4.01  %   $ 81,085  3.90  %   $ 74,194  3.59  %
(1) See “Reconciliation of Non-GAAP Financial Measures” at the end of this section for additional information on this performance measure/ratio.
Quarter Ended June 30, 2025, compared to the Quarter Ended June 30, 2024
The taxable-equivalent net interest income for the three months ended June 30, 2025, was $85.35 million, an increase of 15.03% over the same period in 2024. The net interest margin on a fully taxable-equivalent basis was 4.01% for the three months ended June 30, 2025, compared to 3.59% for the three months ended June 30, 2024.
During the three month period ended June 30, 2025, average earning assets increased $240.42 million, up 2.90% over the comparable period in 2024. Average interest-bearing liabilities increased $74.71 million or 1.26%. The yield on average earning assets increased 10 basis points to 5.98% from 5.88% at June 30, 2024, primarily due to higher loan and lease average balances and higher rates on investment securities. Total cost of average interest-bearing liabilities decreased 39 basis points to 2.81% from 3.20% primarily as a result of lower rates on interest-bearing deposits and other short-term borrowings. The result to the tax-equivalent net interest margin, or the ratio of tax-equivalent net interest income to average earning assets, was an increase of 42 basis points.
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The largest contributors to the improved yield on average earning assets for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was an increase in average loan and lease balances and higher rates on investments securities offset by lower rates on other investments, which include federal funds sold, time deposits with other banks, Federal Reserve Bank excess balances, Federal Reserve Bank and Federal Home Loan Bank (FHLB) stock and commercial paper. The yield on loans and leases decreased 14 basis points, mainly from lower rates on loans during the quarter compared to the prior year second quarter. Average loans and leases increased $362.25 million or 5.48%, primarily in the renewable energy, commercial real estate, commercial and agricultural, and construction equipment portfolios. Net interest reversals during the quarter had no impact on the yield on average loans and leases while net interest recoveries contributed five basis points to the average loans and leases yield during the prior year second quarter. Average investment securities decreased $77.74 million or 5.00%, due to the expected redemption of securities used to fund loan growth and pay down short-term borrowings. Average other investments, primarily held at the Federal Reserve Bank, decreased $43.30 million or 31.20% and were used to fund loan growth.
Average interest-bearing deposits increased $170.87 million, or 3.05% for the second quarter of 2025 over the same period in 2024 primarily in interest-bearing demand and savings deposits. The effective rate on average interest-bearing deposits decreased 37 basis points to 2.72% from 3.09%, primarily as a result of Fed rate cuts during the second half of 2024. Average noninterest-bearing deposits declined $5.47 million or 0.35% for the second quarter of 2025 over the same period in 2024.
Average short-term borrowings decreased $98.90 million or 44.61% for the second quarter of 2025 compared to the same period in 2024. Interest on short-term borrowings decreased 124 basis points due to the maturity and pay off of $100 million in borrowings from the Federal Reserve’s Bank Term Funding Program during the first quarter of this year along with lower rates on short-term FHLB borrowings. Interest on subordinated notes decreased 39 basis points during the second quarter of 2025 from the same period a year ago due to a variable rate decrease on one tranche. Average long-term debt and mandatorily redeemable securities balances increased $2.74 million or 7.10%. Interest on long-term debt and mandatorily redeemable securities increased 231 basis points during the second quarter of 2025 from the same period in 2024, primarily due to higher imputed interest on mandatorily redeemable securities from a larger increase in book value per share during the quarter compared to the previous year’s second quarter. Mandatorily redeemable securities are issued under the terms of one of our executive incentive compensation plans and are settled based on book value per share with changes from the previous reporting date recorded as interest expense.
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Six Months Ended
June 30, 2025 June 30, 2024
(Dollars in thousands) Average
Balance		 Interest Income/Expense Yield/
Rate		 Average
Balance		 Interest Income/Expense Yield/
Rate
ASSETS
Investment securities available-for-sale:
Taxable $ 1,465,984  $ 16,755  2.30  % $ 1,550,665  $ 11,979  1.55  %
Tax exempt(1)
 31,798  724  4.59  % 30,563  646  4.25  %
Mortgages held for sale 2,899  94  6.54  % 3,004  99  6.63  %
Loans and leases, net of unearned discount(1)
 6,884,176  230,846  6.76  % 6,555,139  222,364  6.82  %
Other investments 104,808  2,401  4.62  % 103,470  2,841  5.52  %
Total earning assets(1)
 8,489,665  250,820  5.96  % 8,242,841  237,929  5.80  %
Cash and due from banks 65,782  61,399     
Allowance for loan and lease losses (158,374) (149,335)    
Other assets 512,426  551,670     
Total assets $ 8,909,499  $ 8,706,575     
LIABILITIES AND SHAREHOLDERS’ EQUITY
      
Interest-bearing deposits $ 5,760,025  $ 78,952  2.76  % $ 5,499,367  $ 82,839  3.03  %
Short-term borrowings:
Securities sold under agreements to repurchase 59,555  225  0.76  % 54,851  193  0.71  %
Other short-term borrowings 40,304  816  4.08  % 197,313  5,067  5.16  %
Subordinated notes 58,764  2,021  6.94  % 58,764  2,122  7.26  %
Long-term debt and mandatorily redeemable securities
 40,506  2,376  11.83  % 42,904  1,451  6.80  %
Total interest-bearing liabilities
 5,959,154  84,390  2.86  % 5,853,199  91,672  3.15  %
Noninterest-bearing deposits
 1,581,331      1,598,024     
Other liabilities 141,731      163,655     
Shareholders’ equity 1,164,624      1,016,712     
Noncontrolling interests
 62,659  74,985 
Total liabilities and equity
 $ 8,909,499      $ 8,706,575     
Less: Fully tax-equivalent adjustments (300) (292)
Net interest income/margin (GAAP-derived)(1)
   $ 166,130  3.95  %   $ 145,965  3.56  %
Fully tax-equivalent adjustments
 300  292 
Net interest income/margin - FTE(1)
   $ 166,430  3.95  %   $ 146,257  3.57  %
(1) See “Reconciliation of Non-GAAP Financial Measures” at the end of this section for additional information on this performance measure/ratio.
Six Months Ended June 30, 2025, compared to the Six Months Ended June 30, 2024
The taxable-equivalent net interest income for the six months ended June 30, 2025, was $166.43 million, an increase of 13.79% over the same period in 2024. The net interest margin on a fully taxable-equivalent basis was 3.95% for the six months ended June 30, 2025, compared to 3.57% for the same period in 2024.
During the six month period ended June 30, 2025, average earning assets increased $246.82 million, up 2.99% over the comparable period in 2024. Average interest-bearing liabilities increased $105.96 million or 1.81%. The yield on average earning assets increased 16 basis points to 5.96% from 5.80% primarily due to higher loan and lease average balances and higher rates on investment securities offset by lower rates on other investments, which include federal funds sold, time deposits with other banks, Federal Reserve Bank excess balances, Federal Reserve Bank and Federal Home Loan Bank (FHLB) stock and commercial paper. Total cost of average interest-bearing liabilities decreased 29 basis points to 2.86% from 3.15% as a result of repricing of interest-bearing deposits and lower interest expense on other short-term borrowings which is predominately short-term FHLB borrowings offset by higher rates on mandatorily redeemable securities. The result to the net interest margin, or the ratio of net interest income to average earning assets, was a net 38 basis point improvement.
The largest contributors to the improved yield on average earning assets for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was an increase in average loan and lease balances and higher rates on investment securities. Average loans and leases increased $329.04 million, up 5.02%. Average investment securities decreased $83.45 million or 5.28% which represents the expected maturity of securities used to support liquidity and fund loan growth.
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Average interest-bearing deposits increased $260.66 million or 4.74% for the first six months of 2025 over the same period in 2024 primarily due to the increased interest-bearing demand deposits, savings, and time deposit balances. The effective rate paid on average interest-bearing deposits decreased 27 basis points to 2.76% from 3.03% mainly from Fed rate cuts during the second half of 2024. Average noninterest-bearing deposits declined $16.69 million or 1.04% for the first six months of 2025 over the same period in 2024 primarily due to persistent rate competition for deposits and greater utilization of excess funds by our business customers.
Average short-term borrowings decreased $152.31 million or 60.40% for the first six months of 2025 compared to the same period in 2024. Interest paid on short-term borrowings decreased 209 basis points due to the maturity and pay off of $100 million in borrowings from the Federal Reserve’s Bank Term Funding Program and lower short-term FHLB borrowings. Interest paid on subordinated notes decreased 32 basis points during the first six months due to a variable rate decrease on one tranche. Average long-term debt and mandatorily redeemable securities balances decreased $2.40 million or 5.59%, primarily from maturity of long term debt. Interest paid on long-term debt and mandatorily redeemable securities increased 503 basis points during the first half of 2025 compared to the same time period in 2024 due to higher imputed interest on mandatorily redeemable securities from an increase in book value per share during 2025. Mandatorily redeemable securities are issued under the terms of one of our executive incentive compensation plans and are settled based on book value per share with changes from the previous reporting date recorded as interest expense.
Reconciliation of Non-GAAP Financial Measures
The accounting and reporting policies of 1st Source conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures are used by management to evaluate and measure the Company’s performance. These include taxable-equivalent net interest income (including its individual components) and net interest margin (including its individual components). Management believes that these measures provide users of the Company’s financial information a more meaningful view of the performance of the interest-earning assets and interest-bearing liabilities.
Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent (“FTE”) basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources.
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2025 2025 2024 2025 2024
Calculation of Net Interest Margin
(A) Interest income (GAAP) $ 127,216  $ 123,304  $ 121,169  $ 250,520  $ 237,637 
Fully tax-equivalent adjustments:
(B) - Loans and leases 75  75  79  150  160 
(C) - Tax-exempt investment securities 78  72  65  150  132 
(D) Interest income - FTE (A+B+C) 127,369  123,451  121,313  250,820  237,929 
(E) Interest expense (GAAP) 42,024  42,366  47,119  84,390  91,672 
(F) Net interest income (GAAP) (A–E) 85,192  80,938  74,050  166,130  145,965 
(G) Net interest income - FTE (D–E) 85,345  81,085  74,194  166,430  146,257 
(H) Annualization factor 4.011  4.056  4.022  2.017  2.011 
(I) Total earning assets $ 8,543,938  $ 8,434,790  $ 8,303,518  $ 8,489,665  $ 8,242,841 
Net interest margin (GAAP-derived) (F*H)/I 4.00  % 3.89  % 3.59  % 3.95  % 3.56  %
Net interest margin - FTE (G*H)/I 4.01  % 3.90  % 3.59  % 3.95  % 3.57  %

PROVISION AND ALLOWANCE FOR CREDIT LOSSES
The provision for credit losses for the three and six months ended June 30, 2025, was $7.69 million and $10.96 million compared to a recovery of $0.31 million and a provision of $7.16 million during the three and six months ended June 30, 2024. Net charge-offs of $1.87 million or 0.11% of average loans and leases were recorded for the second quarter of 2025, compared to net recoveries of $1.99 million or 0.12% of average loans and leases for the same quarter a year ago. Year-to-date net charge-offs of $2.05 million or 0.06% of average loans and leases have been recorded in 2025, compared to net charge-offs of $4.14 million or 0.13% of average loans and leases through June 30, 2024. Net charge-offs recognized in 2025 are principally concentrated in the construction equipment, consumer, and auto and light truck portfolios.
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The provision for credit losses for the three months ended June 30, 2025, was principally driven by loan growth and an increase in special attention balances which are reserved at higher rates, most notably in the auto and light truck portfolio. The forecast adjustment was unchanged as the previous assumptions continue to be applicable to economic conditions expected during the forecast period. Risks include an unpredictable trade environment, a weakened domestic GDP outlook, heightened geopolitical instability, continued tight credit conditions, limited softening in the labor market, and continued elevated levels of inflation and interest rates. We remain concerned about the potential risks in the small business portion of the commercial and agricultural portfolio, as domestic trade proposals increase the potential for pricing instability and shifting demand dynamics which may impact our customers. The agricultural portion of this portfolio is reporting increased special attention activity as financial performance has been adversely impacted by lower commodity prices. Clients in our auto and light truck portfolio are experiencing lower rental rates, higher fleet carrying costs, and overcapacity. A modest qualitative adjustment was made in the current quarter to account for higher special attention balances along with increasing delinquency and nonperforming rates in the auto rental portion of the portfolio. Consumers remain under stress, economic imbalances are prevalent, and confidence is waning. Reserves for assets individually evaluated total $2.26 million this quarter, consisting largely of accounts in our auto and light truck and commercial and agricultural portfolios.
We continually evaluate risks which may impact our loan portfolios. Such risks include a weakened economic outlook and increased uncertainty fueled by proposed significant changes in domestic trade policy, ongoing conflicts around the world with the potential to impact commodity prices and shipping routes, and the Federal Reserve’s challenge of maintaining full employment, while balancing inflation and interest rate concerns in an effort to maintain overall economic stability. The possibility for a downside economic scenario is heightened as disruptive trade policy, geopolitical uncertainty, and fragile growth prospects raise the potential for adverse impacts in the domestic and global economies. The potential for trade disruption increases asset price volatility and higher interest rates apply downward pressure to asset values which collateralize our loans. Credit market conditions remain tightened, and uncertainty is pervasive. The growth outlook in the U.S. remains weakened and is susceptible to disruption caused by global conflicts and an environment of heightened instability. Our domestic political environment is fraught with uncompromising partisanship. Political discord and corruption scandals are also an ever-present threat in our Latin American markets. Globally, there is an ongoing threat of terrorism.
Our aircraft portfolio exhibits collateral concentration and contains $302 million of foreign exposure at June 30, 2025, the majority of which is in Mexico and Brazil. We review political and economic data for these countries on a regular basis to assess the impact the environment may have on our customers. We have recognized minimal credit losses in recent years in the aircraft portfolio. However, historically, we have experienced brief periods of volatile and unanticipated losses in both foreign and domestic aircraft. Losses have been primarily attributable to unexpected declines in the value of specific aircraft collateral at a time when the borrower is experiencing financial difficulties. We review and assess aircraft values on an ongoing basis and use a tiered approach to establish advance rates and amortization schedules to limit collateral exposure. We continually monitor individual customer performance and assess risks in the overall portfolio.
On June 30, 2025, 30 day and over loan and lease delinquency as a percentage of loan and lease balances was 0.52%, compared to 0.36% on June 30, 2024. The allowance for loan and lease losses as a percentage of loans and leases outstanding at the end of the period was 2.30% compared to 2.26% one year ago. A summary of loan and lease loss experience during the three and six months ended June 30, 2025, and 2024 is located in Note 5 of the Consolidated Financial Statements.
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NONPERFORMING ASSETS
The following table shows nonperforming assets.
(Dollars in thousands) June 30,
2025		 December 31,
2024		 June 30,
2024
Loans and leases past due 90 days or more and accruing $ 198  $ 106  $ 185 
Nonaccrual loans and leases 71,732  30,613  20,297 
Other real estate —  460  — 
Repossessions 3,549  155  352 
Equipment owned under operating leases 62  —  — 
Total nonperforming assets $ 75,541  $ 31,334  $ 20,834 
Nonperforming assets to loans and leases, net of unearned discount 1.06  % 0.46  % 0.31  %
Nonperforming assets totaled $75.54 million at June 30, 2025, an increase of 141.08% from the $31.33 million reported at December 31, 2024, and a 262.59% increase from the $20.83 million reported at June 30, 2024. The increase in nonperforming assets during the first six months of 2025 was primarily related to higher nonaccrual loans and leases and repossessions. The increase in nonperforming assets as of June 30, 2025, from June 30, 2024, was also related to an increase in nonaccrual loans and leases and repossessions. There were no properties held in other real estate as of June 30, 2025.
The increase in nonaccrual loans and leases at June 30, 2025, from December 31, 2024, was predominantly in our auto and light truck portfolio as several large accounts were transferred to nonaccrual status during the year. A summary of nonaccrual loans and leases and past due aging for the periods ended June 30, 2025, and December 31, 2024, is located in Note 4 of the Consolidated Financial Statements.
Repossessions consisted primarily of two loan relationships in the construction equipment portfolio and one in the domestic aircraft portfolio, coupled with minimal amounts in our auto and light truck, and consumer portfolios at June 30, 2025. At the time of repossession, the recorded amount of the loan or lease is written down to the fair value of the equipment or vehicle by a charge to the allowance for loan and lease losses or other income, if a positive adjustment, unless the equipment is in the process of immediate sale. Any subsequent fair value write-downs or write-ups, to the extent of previous write-downs, are included in noninterest expense.
The following table shows a summary of repossessions and other real estate.
(Dollars in thousands) June 30,
2025		 December 31,
2024		 June 30,
2024
Commercial and agricultural $ —  $ —  $ — 
Renewable energy —  —  — 
Auto and light truck 134  —  80 
Medium and heavy duty truck —  —  — 
Aircraft 900  —  — 
Construction equipment 2,504  594  211 
Commercial real estate —  —  — 
Residential real estate and home equity —  —  — 
Consumer 11  21  61 
Total $ 3,549  $ 615  $ 352 
For financial statement purposes, nonaccrual loans and leases are included in loan and lease outstandings, whereas repossessions and other real estate are included in other assets.
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NONINTEREST INCOME
The following table shows the details of noninterest income.
Three Months Ended
June 30,		 Six Months Ended
June 30,
(Dollars in thousands) 2025 2024 $ Change % Change 2025 2024 $ Change % Change
Noninterest income:        
Trust and wealth advisory $ 7,266  $ 7,081  $ 185  2.61  % $ 13,932  $ 13,368  $ 564  4.22  %
Service charges on deposit accounts 3,189  3,203  (14) (0.44) % 6,260  6,273  (13) (0.21) %
Debit card 4,567  4,562  5  0.11  % 8,716  8,763  (47) (0.54) %
Mortgage banking 1,116  1,280  (164) (12.81) % 1,969  2,230  (261) (11.70) %
Insurance commissions 1,685  1,611  74  4.59  % 4,125  3,387  738  21.79  %
Equipment rental 779  1,257  (478) (38.03) % 1,678  2,928  (1,250) (42.69) %
Losses on investment securities available-for-sale (997) —  (997) NM (997) —  (997) NM
Other 5,452  4,227  1,225  28.98  % 10,477  8,428  2,049  24.31  %
Total noninterest income $ 23,057  $ 23,221  $ (164) (0.71) % $ 46,160  $ 45,377  $ 783  1.73  %
NM = Not Meaningful
Trust and wealth advisory fees (which include investment management fees, estate administration fees, mutual fund fees, annuity fees, and fiduciary fees) increased during the three and six months ended June 30, 2025, compared with the same periods a year ago. Trust and wealth advisory fees are largely based on the number and size of client relationships and the market value of assets under management. The market value of trust assets under management at June 30, 2025, December 31, 2024, and June 30, 2024, was $5.94 billion, $5.97 billion, and $5.83 billion, respectively. Larger than average customer withdrawals to meet income tax payments during the first six months of 2025 resulted in a decrease in assets under management compared to December 31, 2024.
Service charges on deposit accounts remained flat for the comparable periods in 2024.
Debit card income remained flat during the three months ended June 30, 2025, but decreased during the six months ended June 30, 2025, compared to the same periods a year ago. The decrease during the first six months was due to shifts in both client transaction behavior and the networks over which those merchants are routing transactions.

Mortgage banking income decreased during the three and six months ended June 30, 2025, compared to the same periods in 2024. The decrease was primarily a result of lower production of loans originated for the secondary market along with a reduction in servicing fees resulting from fewer loans being serviced for others.
Insurance commissions increased during the three and six months ended June 30, 2025, compared to the same periods a year ago. The increase was mainly due to higher contingent commissions received and an increased book of business.
Equipment rental income decreased for the three and six months ended June 30, 2025, over the comparable periods in 2024. The decline was the result of a reduction in the average equipment rental portfolio by 44.04% over the same period a year ago, due to changing customer preferences and competitive pricing pressures for new business.
Losses on investment securities available-for-sale during 2025 were exclusively the result of repositioning the portfolio during the second quarter. In the repositioning, approximately $26 million of securities with a weighted average yield of 1.04% were sold and used to purchase approximately $26 million of securities with a weighted average yield of 4.18%.
Other income increased for the three and six months ended June 30, 2025, compared to the same periods in 2024. The increase was primarily the result of gains on sale of renewable energy tax equity investments, gains from a small business capital investment, increased customer interest rate swap fees, and higher brokerage and commission fees.
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NONINTEREST EXPENSE
The following table shows the details of noninterest expense.
Three Months Ended
June 30,		 Six Months Ended
June 30,
(Dollars in thousands) 2025 2024 $ Change % Change 2025 2024 $ Change % Change
Noninterest expense:        
Salaries and employee benefits $ 31,800  $ 29,238  $ 2,562  8.76  % $ 63,915  $ 58,810  $ 5,105  8.68  %
Net occupancy 3,035  2,908  127  4.37  % 6,259  5,904  355  6.01  %
Furniture and equipment 1,684  1,265  419  33.12  % 3,031  2,414  617  25.56  %
Data processing 7,410  6,712  698  10.40  % 14,701  13,212  1,489  11.27  %
Depreciation – leased equipment 619  999  (380) (38.04) % 1,337  2,287  (950) (41.54) %
Professional fees 1,499  1,713  (214) (12.49) % 3,167  3,058  109  3.56  %
FDIC and other insurance 1,438  1,627  (189) (11.62) % 2,878  3,284  (406) (12.36) %
Business development and marketing
 1,884  2,026  (142) (7.01) % 3,809  3,770  39  1.03  %
Other 3,061  3,373  (312) (9.25) % 6,409  5,826  583  10.01  %
Total noninterest expense $ 52,430  $ 49,861  $ 2,569  5.15  % $ 105,506  $ 98,565  $ 6,941  7.04  %
Salaries and employee benefits increased during the three and six months ended June 30, 2025, compared to the same periods in 2024. Higher salaries and employee benefits were a result of normal merit increases, increased incentive compensation as well as higher group insurance costs as a result of overall higher health insurance claims experienced.
Net occupancy expense increased during the three and six months ended June 30, 2025, compared to the same periods in 2024. The increase was primarily due to higher building depreciation and increased premises expenses.
Furniture and equipment expenses, including depreciation, increased during the three and six months of 2025 compared to the same periods a year ago. The increase was mainly due to an increase in equipment repairs and maintenance and higher equipment depreciation.
Data processing expense grew during the three and six months ended June 30, 2025, compared to the same periods a year ago due primarily to higher computer processing charges and software maintenance expense on technology projects.
Depreciation on leased equipment decreased for the three and six months ended June 30, 2025, compared to the same periods in 2024. Depreciation on leased equipment correlates with the decrease in equipment rental income.
Professional fees were lower during the three months ended June 30, 2025, compared to the same period a year ago and higher during the first half of 2025 compared with the same period in 2024. The decrease during the second quarter was mainly due to lower legal and professional consulting fees offset by an increase in audit fees. The increase during the first six months was primarily due to an increase in audit and legal fees offset by a reduction in professional consulting fees.
FDIC and other insurance was lower during the three and six months ended June 30, 2025, compared to the same periods in 2024. The decrease was the result of lower blanket bond insurance premiums due to a more cost effective policy renewal.
Business development and marketing expense was lower during the second quarter of 2025 but increased slightly for the six months ended June 30, 2025 compared with the same periods in 2024. The decrease during the quarter was related to a decrease in business meals and entertainment, and fewer marketing promotions.
Other expenses were lower during the second quarter and higher during the first half of 2025 compared to the same periods a year ago. The decrease during the quarter was primarily the result of lower loan and lease collection and repossession expenses and a reduction in debit card and fraud losses. The increase during the first six months was primarily the result of fewer gains related to the sale of fixed assets and off-lease equipment, increased fraud losses due to a recovery of check fraud losses during the first quarter last year, and higher employment and relocation costs offset by lower debit card loss activity and fewer loan and lease collection and repossession expenses.
INCOME TAXES
The provision for income taxes for the three and six month periods ended June 30, 2025, was $10.80 million and $20.98 million compared to $10.92 million and $19.35 million for the same periods in 2024. The effective tax rate was 22.45% and 22.88% for the quarters ended June 30, 2025, and 2024, respectively, and 21.89% and 22.60% for the six months ended June 30, 2025, and 2024, respectively. The decrease in the year-to-date effective tax rate was due to a one-time $0.74 million after-tax interest payment on federal tax refunds from tax credit carrybacks recorded in the first quarter of 2025.
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ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in market risks faced by 1st Source since December 31, 2024. For information regarding our market risk, refer to 1st Source’s Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 4.
CONTROLS AND PROCEDURES
As of the end of the period covered by this report an evaluation was carried out, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, at June 30, 2025, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by 1st Source in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and are designed to ensure that information required to be disclosed in those reports is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.
In addition, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the second fiscal quarter of 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II.  OTHER INFORMATION
ITEM 1.        Legal Proceedings.
1st Source and its subsidiaries are involved in various legal proceedings that are inherent risks of, or incidental to, the conduct of our businesses. Management does not expect the outcome of any such proceeding will have a material adverse effect on our consolidated financial position or results of operations.
ITEM 1A.    Risk Factors.
There have been no material changes in risks faced by 1st Source since December 31, 2024. For information regarding our risk factors, refer to 1st Source’s Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 2.        Unregistered Sales of Equity Securities and Use of Proceeds.
ISSUER PURCHASES OF EQUITY SECURITIES
Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs* Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Plans or Programs
April 01 - 30, 2025 32,528  $ 59.85  32,528  956,921 
May 01 - 31, 2025 —  —  —  956,921 
June 01 - 30, 2025 14,900  59.97  14,900  942,021 
*1st Source maintains a stock repurchase plan that was authorized by the Board of Directors on October 19, 2023. Under the terms of the plan, 1st Source may repurchase up to 1,000,000 shares of its common stock from time to time to mitigate the potential dilutive effects of stock-based incentive plans and other potential uses of common stock for corporate purposes. Since the inception of the plan, 1st Source has repurchased 57,979 shares.
ITEM 3.        Defaults Upon Senior Securities.
None
ITEM 4.        Mine Safety Disclosures.
None
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ITEM 5.        Other Information.
During the three months ended June 30, 2025, there were no “Rule 10b5-1 trading plans” or “non-Rule 10b5-1 trading arrangements” adopted, modified or terminated by any director or officer of the Company (as each term is defined in Item 408(a) of Regulation S-K).
The Executive Compensation and Human Resources Committee of the Board of Directors took action on July 23, 2025, to amend the 1982 Restricted Stock Award Plan (“Restricted Plan”) to add clawback language in Section 8(h) consistent with the 1982 Executive Incentive Plan (“Plan”) and the Company’s Clawback Policy. Additionally, the Committee amended the Restricted Plan to allow for the issuance of book value stock in a manner generally consistent with the use of book value stock in the Plan. Book value stock issued to Participants through the Restricted Plan is intended to be held until the Participants’ retirement and then repurchased by the Company. Section 7(d) has been broadened to include the types of corporate performance measures allowable to be consistent with the Plan. Sections 7 (e), (f) and (g) have been clarified to state that death and total disability are not acts of forfeiture and further include a definition of normal retirement consistent with what was added in 2024 to the Plan.
The Executive Compensation and Human Resources Committee of the Board of Directors also took action on July 23, 2025, to amend the 1982 Executive Incentive Plan to change the method of calculating the Corporate Performance Factor used in determining annual awards under the Plan. It is based on the Company’s return on assets performance compared to the performance of its $3 to $10 billion peer group. The Company Performance Factor is set at 100% at the 50% percentile and then is increased by 1% for each percentile above 50% to a maximum Company Performance Factor of 125% at the 75th percentile level or above. The Company Performance Factor is reduced by 2.5% for each percentile below 50% to a minimum of 75% at the 40th percentile level. Additionally, Sections 5(h) and 6(g) now include language clarifying that the Committee will consider partial year awards for annual awards and long-term awards for someone working at least 50% of an annual award year or the final year of a long-term award period if they die or become totally disabled during those years.
ITEM 6.        Exhibits.
The following exhibits are filed with this report:
 
 
 
 
101.INS   XBRL Instance Document — The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB   XBRL Taxonomy Extension Labels Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

    1st Source Corporation
     
     
     
DATE July 24, 2025   /s/ CHRISTOPHER J. MURPHY III
    Christopher J. Murphy III
Chairman of the Board and CEO
     
     
DATE July 24, 2025   /s/ BRETT A. BAUER
    Brett A. Bauer
Treasurer and Chief Financial Officer
Principal Accounting Officer

47
EX-10.C 2 exhibit10camended1982execu.htm EX-10.C 1982 EXECUTIVE INCENTIVE PLAN Document
        

    Exhibit 10(c)

Amended as of July 23, 2025

1st SOURCE CORPORATION
    1982 EXECUTIVE INCENTIVE PLAN


1.    PURPOSE. This Executive Incentive Plan (the “Plan”) is intended to promote the interests of 1st Source Corporation, an Indiana corporation (“1st Source” or the “Corporation”) and its shareholders by attracting and motivating educated, self-disciplined and professional managers, and by providing an incentive to induce continued future employment of certain key employees of the Corporation and certain key employees of one or more Subsidiaries of the Corporation. For the purposes of this Plan, the term “Subsidiary” shall mean a corporation or corporations of which the Corporation owns, directly or indirectly, a majority of the outstanding voting stock.

2.    ADOPTION AND ADMINISTRATION OF THE PLAN. The Plan became effective as of January 1, 1982. The Plan shall be administered by the Executive Compensation and Human Resources Committee of the Board of Directors of the Corporation (the “Committee”). The Committee shall interpret, implement, and administer the Plan and, to the extent and the manner contemplated herein, it shall exercise the discretion granted to it as to the determination of who shall participate in the Plan, the terms and conditions under which key employees may participate or continue participating in the Plan, the size and terms of awards to each Participant (as defined below), and the time when such awards shall be granted to each Participant. Any action taken by the Committee with respect to the implementation, interpretation or administration of the Plan shall be final, conclusive and binding on the Corporation and each Participant.

3.    STOCK SUBJECT TO THE PLAN.    The Committee may issue under this Plan not more than 0.60% in any one calendar year of the common stock of the Corporation outstanding at the beginning of such year. Such common stock is herein sometimes referred to either as “book value shares” or as “market value shares.” The distribution of shares pursuant to this Plan may be made either from authorized and unissued shares or from Treasury shares, as determined by the Committee. All shares issued in accordance with the Plan shall be fully paid and non-assessable shares and free from preemptive rights.

4. ELIGIBILITY. The Committee shall designate from time to time, those key employees who serve in management of the Corporation or any of its subsidiaries as the Chief Executive Officer may recommend, and the Committee deems appropriate. The key employees who shall be eligible to receive an award under the Plan shall be selected because of their management responsibility and the long-term impact their management has on the overall performance of the Corporation or because of their inclusion in one of the Corporation’s sales and service incentive plans. The Committee shall make its selections of management participants from among the Chief Executive Officer and the candidates recommended by the Chief Executive Officer and shall determine their partnership percentage and salary level for purposes of the Plan. In making its decisions, the Committee shall consider, among other items, the position and responsibility of the Participant, the value of the future service to be performed, the compensation of the Participant, the actual earnings performance of the Corporation and the allocation proposed by the Chief Executive Officer. Management shall forthwith advise each employee selected to participate in an award by written notice. Each employee who shall be the subject of an award shall be designated as a “Participant.” All awards under the Plan shall require a satisfactory performance evaluation.

    Page 1 of 14



        


5.    ANNUAL AWARD. The Committee shall establish the amount of the annual award or awards to be granted to each Participant. These awards will be granted for attainment of annual, calendar year, goals. Any annual awards made to Participants under the Plan will be performance-based compensation to the maximum extent possible subject to the attainment of pre-established objective performance goals established by the Committee.

(a)    The Corporation may provide two annual awards up to a maximum amount as determined by the Committee: (i) an amount payable in cash and earned immediately, and (ii) an amount equal to a full or partial match of the cash award in book value or market value shares of common stock. At the end of the performance period the Committee shall determine (i) the amount of cash earned, which shall be paid in a lump sum after the end of the performance period and (ii) the type of shares (i.e. book value shares or market shares) and the number of shares. These shares of stock are fixed at a maximum amount and will be subject to a substantial risk of forfeiture over the succeeding five (5) years based on the achievement of future performance metrics and the employee remaining with the Corporation, as described in Section 8 as the “Forfeiture Period”. The total value of cash and stock as of the end of each performance period shall not exceed $1 million. The total annual awards paid in a single calendar year to a single Participant made in cash and in shares shall not exceed $3 million in the aggregate. The book value shares will be restricted as described in paragraph 8 and 9 below.

(b)    Each Participant under the Plan (except for Participants under separate sales and service incentive plans discussed in section (f) below) is assigned a “partnership level” percentage as of the date of grant that is the starting point for determining his or her annual cash award. Partnership levels are stated as a percentage of the Participant’s salary range midpoint or base salary as assigned by the Committee as of the date of grant for purposes of computing the cash award. The “Base Bonus” for each Participant is equal to the Participant’s assigned salary range midpoint or base salary multiplied by the assigned partnership share percentage.



    Page 2 of 14



        

(c)    If the Committee determines it appropriate at the date of grant of an award, the Base Bonus may be further adjusted up or down by the “Company Performance Factor.” The Company Performance Factor is based on the Company’s return on assets performance compared to the performance of its $3 to $10 billion peer group. The Company Performance Factor is set at 100% at the 50% percentile and then is increased by 1% for each percentile above 50% to a maximum Company Performance Factor of 125% at the 75th percentile level or above. The Company Performance Factor is reduced by 2.5% for each percentile below 50% to a minimum of 75% at the 40th percentile level. As long as such adjustments do not result in the award failing to be qualified performance based compensation under Section 162(m) of the Internal Revenue Code, the Committee is authorized to make adjustments from reported net income in its discretion for purposes of determining the Company Performance Factor to account for extraordinary impacts positive or negative that were not in control of nor could be foreseen by the Participants or that were caused by actions undertaken for the long-term benefit of the shareholders and that are not considered “normal operating activities” and the sources of such adjustments may include one or more of the following not included in the budget or other net income target: (i) results of acquisition, divestiture or restructuring activities; (ii) investment securities gains or losses; (iii) tax planning activities; (iv) new regulatory costs; (v) tax law or regulatory changes; (vi) changes in generally accepted accounting principles or the Company’s interpretation or implementation of these; or (vii) significant national and/or international events significantly affecting the Company’s reported net income.

(d)    For each Participant, the Base Bonus opportunity after adjustment for the Company Performance Factor is multiplied by 300% for each goal to calculate the maximum award and then the maximum award may be adjusted down to a minimum of 0% for each goal based upon the Participant’s performance against a set of corporate, group, division, unit and individual Participant performance goals established at the beginning of the fiscal year with such award levels generally being targeted at 150% for staff employees and 200% for those line managers with primary responsibility for revenues and/or credit.

(e) After applying the Company Performance Factor in (c) above the Base Bonus opportunity will be adjusted for each Participant as described in (d) above based on one or more of the following criteria at the corporate, group, division, unit or individual Participant level: (i) net income; (ii) return on assets; (iii) exceed median return on assets results for selected peer group; (iv) return on common equity; (v) revenues, net interest margin, pricing, and/or fees; (vi) expense to revenue ratio and/or expenses; (vii) growth in average assets, loans or core deposits; (viii) average 30-day delinquency ratio; (ix) year-end nonperforming assets and/or monthly average nonperforming assets; (x) net charge offs and other credit-related losses to average loans, leases, repossessed assets and other real estate; (xi) net growth in primary relationships or other strategic growth metrics; (xii) deposit mix or noninterest-bearing deposit growth; (xiii) assets under management and/or investment performance; and (xii) other performance goals.

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(f)    The Corporation may also provide the annual awards described in (a) above to Participants whose awards are calculated pursuant to other sales incentive programs, investment management programs, operational risk management programs, or other programs established by the Corporation and determined by the Committee.

(g)    The stock portion of the awards shall be made in whole book value shares or whole market value shares only. No fractional shares shall be awarded.

(h)    Except as otherwise determined by the Committee, if the Participant’s employment ends prior to the payment of the cash portion of the annual award, the entire annual award shall be forfeited, void and of no further force and effect. An annual award will be considered for someone who has worked at least 50% of the year before their death or total disability. The award would not be automatic but based on the facts and circumstances involved and subject to the review and approval of the Committee.

6.    LONG-TERM AWARD.

(a)The Corporation may also provide for a long-term award from time to time for selected Participants as designated by the Committee. These awards will be granted for attainment of longer-term goals, usually for three (3) years or longer. Such awards will consist of two distinct parts: (i) an amount payable in cash and earned immediately; and (ii) an amount in market value shares of common stock. At the end of the performance period the Committee shall determine (i) the amount of cash earned, which shall be paid in a lump sum after the end of the performance period and (ii) the number of shares. These shares of stock are fixed at a maximum amount and will be subject to a substantial risk of forfeiture over the succeeding five (5) years based on the Participant remaining with the Corporation and the Corporation continuing to have positive net income calculated as of the end of each calendar year, as described in Section 8 as the Forfeiture Period. The total value of cash and stock as of the end of each performance period shall not exceed $1 million. Total long-term awards paid in a single calendar year to a single Participant made in cash and in shares shall not exceed $3 million in the aggregate.

    Page 4 of 14



        


(b)The Committee assigns a set of weighted long-term goals at the start of each long-term award period. For each goal Company performance is scored at 50% for minimum, 100% for target and 200% for maximum.

(c)The Committee also assigns each Participant a “partnership level” for long-term award purposes as of the date of grant.

(d)The long-term awards then are calculated based upon a pre-determined mathematical formula that multiplies the Company’s weighted performance relative to its long-term goals by the Participant’s partnership level and then by the Participant’s average annual incentive award under the Plan over the long-term award period.

(e)Long-term cash awards made to Participants under the Plan will be performance-based compensation subject to the attainment of pre-established objective performance goals, based on one or more of the following criteria: (i) return on assets; (ii) expense to revenue ratio; (iii) net interest margin; (iv) net charge offs and other credit-related losses to average loans, leases, repossessed assets and other real estate; (v) average and/or period-end nonperforming assets; (vi) sales volume and/or pricing; (vii) fee income; (viii) average and/or period-end loans, deposits, or other volumes outstanding; and (ix) net new primary relationships

(f)    The stock portion of the awards shall be made in whole market value shares only. No fractional shares shall be awarded.

(g)    Except as otherwise determined by the Committee, if the Participant’s employment ends prior to the payment of the cash portion of the long-term award, the entire long-term award shall be forfeited, void and of no further force and effect. A long-term award will be considered for someone who has worked at least 50% of the final year of a long-term award period before their death or total disability. The award would not be automatic but based on the facts and circumstances involved and subject to the review and approval of the Committee.

7.ACTION REQUIRED OF PARTICIPANTS.


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(a) Within 30 days from the date of such written notice of a Participant’s initial award under the Plan, the Participant shall notify the Committee, in writing, of acceptance of the award and the terms thereof, applicable to the initial award and to all subsequent awards accepted under the Plan, which notice shall be deemed delivered for all purposes under this Plan when personally delivered or mailed to Chief Financial Officer, 1st Source Corporation, P.O. Box 1602, South Bend, Indiana 46634 by postpaid certified United States mail. In addition, commencing with awards made in 2017 for 2016 performance, each new or existing Participant who has not already signed and delivered to the Corporation the Corporation’s standard form of Confidentiality and Non-Solicitation Agreement shall, before receipt of any initial or further awards under the Plan, be required to do so as a condition for continued participation and receipt of awards under the Plan.

(b)    The Corporation may require that, in allocating shares, the Participant agree with, and represent to, the Corporation that Participant is acquiring such shares for the purpose of investment and with no present intention to transfer, sell or otherwise dispose of such shares except such transfer by a legal representative as shall be required by will or the laws of any jurisdiction in winding up the estate of any Participant. Such shares shall be transferable thereafter only if the proposed transfer shall be permissible pursuant to this Plan and if, in the opinion of counsel (who shall be satisfactory to Corporation), such transfer shall at such time be in compliance with applicable securities law.

8.    RESTRICTIONS. By accepting the award of shares under this Plan, Participant agrees and consents to the following additional restrictions:

(a)    All shares are subject to forfeiture and shall be retained by Corporation. A notice of the shares awarded to a Participant shall be delivered by the Corporation to a Participant on or after the date of issuance. Such Participant thereupon shall be a shareholder with respect to all of the shares represented by such certificate or certificates and shall have all rights of a shareholder with respect to all such shares, including the right to vote such shares and receive all dividends and other distributions, subject to termination upon the occurrence of an Act of Forfeiture as set forth in the Plan. The certificates for such shares shall be either imprinted or stamped with a legend to the effect that the shares represented thereby may not be sold, exchanged, transferred, pledged, hypothecated (except to issuer), assigned, conveyed, or otherwise voluntarily or involuntarily disposed of except in accordance with this Plan (any such disposition being automatically an Act of Forfeiture) by the holder thereof until such time as the restrictions provided for herein lapse.

(b) If new or additional or different shares or securities are distributed with respect to shares of common stock of the Corporation as the result of a stock split, stock dividend, combination of shares or other change involving 1st Source securities, or exchange for other securities, or reclassification, reorganization, merger, consolidation, recapitalization or otherwise, the Participant shall, as the owner of book value or market value shares subject to terms and restrictions hereunder, be entitled to such new or additional or different shares of stock or securities subject to such terms, conditions and restrictions as existed on the originally awarded shares.

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(1)    In the case of such a stock split, stock dividend, combination or other change involving 1st Source securities, exchange for other 1st Source securities, reclassification, recapitalization, or other like event involving the distribution of 1st Source securities, the certificate or certificates for, or other evidences of, such new or additional or different book value or market value shares or securities shall be appropriately imprinted with the legend provided in paragraph 8(a) of this Plan and all provisions of this Plan relating to restrictions to such new or additional or different book value or market value shares or securities to the extent applicable to the shares with respect to which they were distributed; provided, further, that if the Participant shall receive rights, warrants or fractional interests in respect of any of such shares, such rights or warrants and such fractional interests shall be received by the Participant subject to all of the remaining restrictions herein set forth. All such additional book value or market value shares, rights or other securities shall be retained in safekeeping by the Corporation for the account of the Participant.

(2)    In the case of such an exchange for securities of an issuer other than 1st Source, or such a reorganization, merger, consolidation, or other like event involving the distribution of securities of an issuer other than 1st Source, which will result in a change of control of 1st Source, (i) all awarded book value shares shall be converted to market value shares, (ii) all awarded shares subject to forfeiture under this Plan shall no longer be subject to forfeiture, and (iii) all restrictions on shares of stock theretofore awarded hereunder shall terminate (including the restrictions at paragraphs 7, 8 and 9 hereof and except for those imposed by applicable securities laws). The foregoing sentence shall be effective immediately prior to such distribution or exchange. The Committee shall have full and sole discretion to determine whether a change in control of 1st Source will occur for these purposes, but in the absence of a contrary finding by the Committee, the acquisition by any person or group of persons, other than 1st Source, of beneficial ownership of 50.01% or more of the then outstanding shares (as determined pursuant to Treasury Reg. § 1.409A-3(i)(5)(vi)) of 1st Source common stock shall be deemed to be a change of control.

(c) The term “Restricted Period” with respect to any book value shares awarded to a Participant under this Plan shall mean that period commencing with the date of issuance of such shares and ending on the date at which all such shares have been purchased from Participant by Corporation or exchanged by the Participant for market value shares as provided herein.

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(d)    The term “Forfeiture Period” with respect to any award of shares issued to a Participant under this Plan shall mean a period commencing on the date of grant of such shares to the Participant and ending over a five (5) year period thereafter. The Forfeiture Period shall terminate at an equal and proportionate rate for each year in which:

(1)    the Participant served continuously as an employee, for the full year, however continuous employment shall not be required if it ended because the Participant died, became totally disabled or retired at his/her normal retirement age or thereafter while an employee, and during which,

(2)    for annual award shares only (whether book value or market value shares), the Corporation achieved the requisite annual net income, ROA, ROE or other performance goal or goals established in advance by the Committee in connection with the applicable award; and

(3)    for long term award shares only, the Corporation achieved positive net income at the end of the calendar year during the Forfeiture Period.

(e)The “normal retirement age” means age 65 unless changed by the Committee. Alternatively, a Participant who is age 60 or older will be treated as attaining normal retirement age if they have completed either:
(i) 15 years of participation in the Plan or
(ii) 20 years of service with the Corporation,
and, in either case, have provided notice of their upcoming retirement at least 150 days beforehand so the Corporation can plan in advance for succession and transition of clients in the most effective way.

(f)    However, the Committee may also authorize a “normal” retirement at an earlier age for a Participant if it determines that such action is in the best interests of the Corporation and is otherwise warranted based upon extreme hardship or other special or extraordinary circumstances and such circumstances be limited to career ending events where the Participant is unable to work effectively or properly carry out his or her assigned duties, or other extremely unlikely occurrences which prevents the Participant from continuing to serve. This decision is at the sole discretion of the Committee and is to be extremely limited.

(g)With respect to annual award shares only, for any year in which the Corporation’s performance is equal to or has exceeded the requisite cumulative goals established for the accumulated years subsequent to the date of the award, all risk of forfeiture is removed for those shares which were not released in that year or any prior year in which the Corporation failed to meet the required annual or cumulative goals.

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(h)The Committee generally may not change or adjust upward the number of shares determined as of the end of the applicable performance period, however, the Committee may reduce the number of shares, down to zero, in such circumstances as are set forth herein or otherwise determined by the Committee in its discretion. In addition, there may be circumstances in which the annual net income growth, EPS growth, ROA, ROE or other performance goal or goals established by the Committee for annual award shares become unattainable or otherwise unreasonable during the Forfeiture Period. In such situations, and upon an explicit determination that (i) unfavorable market conditions or external events have demonstrably rendered such performance goals unattainable, unreasonable or adverse, and (ii) the Corporation’s relative financial performance under the current conditions or since such event remains in the top quartile of the Corporation’s peers with regard to ROA, nonperforming assets, net charge-offs, or other performance indicators, the Committee may take such other action as the Committee deems appropriate with respect to an award as long as such action does not increase the award. Such other action includes, without limitation, extending the forfeiture period or adjusting the performance goals for the forfeiture period to fairly compensate the Participants for their performance during the calendar years for which such annual awards were made. Relative performance in the top quartile of peers in the face of unfavorable market conditions or external events is an indicator that financial performance goals were achieved in prior years without sacrificing the management of the risks of unfavorable market conditions or external events. The Committee’s authorization to make adjustments under these circumstances is intended to recognize and encourage continuing good stewardship of the Corporation as reflected by high quality financial performance and strong risk management for the long-term benefit of its shareholders.
(i)    For all purposes of this Plan, an Act of Forfeiture shall be deemed to be any one of the following:

(1)    The voluntary or involuntary termination of the employment of a Participant during the Forfeiture Period, other than by death, disability or normal retirement, or

(2) The employment or engagement part or full time or in any consulting or advisory capacity of a Participant by a competitor of the Corporation or any Subsidiary at any time after termination of Participant’s employment due to disability or normal retirement unless, upon written request from the Participant, the Committee determines in its sole discretion that such engagement does not increase strategic or other risks to the Corporation or any Subsidiary, or

    Page 9 of 14



        


(3)    The attempted sale, exchange, transfer, pledge, hypothecation, assignment, conveyance or other voluntary or involuntary disposition of any of the unearned stock all of which is hereby expressly prohibited by this Plan, or

(4)    The election by the Participant to be taxed in the year of receipt of an award of stock under Section 83(b) of the Internal Revenue Code of 1986 as amended, or

(5)    Termination of the five (5) year Forfeiture Period for annual award shares if the Corporation fails to achieve the requisite annual net income, ROA, ROE or other performance goal or goals established in advance by the Committee in connection with the applicable award with respect to any portion of the unearned stock, if the Committee does not determine otherwise as discussed in subparagraph 8(g) above, or

(6)    Termination of the five (5) year Forfeiture Period for long term award shares only if the Corporation fails to achieve positive net income during each year.

(j)    Upon the occurrence of an Act of Forfeiture relating to a Participant, the right, title and interest of all remaining unearned stock of Corporation held by such Participant shall be automatically forfeited and terminated for all purposes.

(k)    The right, title and interest of any transferee of any shares acquired from a Participant under this Plan by will or by laws of descent and distribution will and shall be subject to all of the terms and conditions of the Plan, including but without limitation, the restrictions on transfer and the provisions relating to forfeiture.

(l) The book value shares may only be sold to the Corporation under the terms of this Plan except as provided in subparagraphs 8(b)(1) and 8(b)(2) above. 1st Source may, in addition to any other purchases required by this Plan, upon request of a Participant, purchase earned book value stock from the Participant prior to death, disability, retirement, or other termination of employment. Any such purchase is limited to 50% of the Participant’s shares of earned book value stock which, at the time of purchase, have been earned book value stock for at least seven years. Such a purchase is permitted only upon approval of the Committee and only for the following reasons: (1) purchase of the Participant’s principal residence or a second home, (2) payment of tuition or related educational expenses for the Participant, the Participant’s spouse, or a dependent and (3) financial hardship. The Committee will have sole discretion to determine whether the enumerated criteria are being satisfied in any purchase. Any transfer or purported transfer made by a Participant at any time, except at the times and in the manner expressly authorized, shall be null and void and the Corporation shall not be obligated to recognize nor to give effect to such transfer on its books or records nor to recognize the person or persons to whom such purported transfer has been made as the legal beneficial holder of such shares.

    Page 10 of 14



        


(m)    The Committee may impose such other restrictions on any shares awarded to a Participant pursuant to this Plan as it may deem advisable, including without limitation, restrictions under the Securities Act of 1933, as amended, under the requirements of any stock exchange upon which such shares or shares of the same class are then listed, and under any blue-sky or securities laws applicable to such shares.

9.    MANDATORY RESALE OF BOOK VALUE STOCK.

(a)    If the Participant is employed at the time of his death, total disability, or normal retirement, Participant or his/her personal representative must sell his/her earned book value stock back to the Corporation.

(1)    Twenty percent (20%) of the purchase price will be paid each year thereafter, beginning on the first anniversary of the date of such death, total disability, or retirement.

(2)    The purchase price for any year shall be the book value at the close of the most recent year ended prior to the date of such death, total disability or retirement.

(3)    The amount of the purchase price shall bear interest at the percentage determined by 1st Source Corporation’s
(i) Dividends for the most recently completed calendar year divided by
(ii) The ending market value for the most recently completed calendar year,
(iii) adjusted annually on the anniversary date of the note documenting the sale agreement.

(4) At the date of such retirement or total disability, Participant may elect to delay the sale of all book value stock for a period of up to five (5) years from the date of retirement or total disability under the sale terms above. The purchase price for any delayed sale shall be the book value at the close of the most recent year ended prior to the end of the delayed period.

    Page 11 of 14



        


(5)    The Corporation may elect to pay the purchase price through an exchange of all book value stock for market value stock of equal value. Such election must be made for all book value shares earned at time of such retirement or disability in accordance with the requirements established by the Committee. The Corporation may take into account the request of the Participant to be paid in either cash or market value stock.

(6)    As any unearned book value stock at date of such retirement is earned thereafter, it shall be sold to, or exchanged with, the Corporation consistent with the Corporation’s election in the immediately preceding subparagraph, and otherwise subject to the terms above.

(b)    Upon termination of employment by voluntary act of Participant or by act of Corporation, except death or disability or normal retirement, all of such Participant’s earned book value stock must be sold to Corporation.

(1)    The price to be paid by Corporation shall be the lower of (a) book value at the close of the most recent year ended prior to the date of departure, or (b) book value at the close of the year of departure. Book value shall be determined by the Committee as described in paragraph 10 below.

(2)    Installments of ten percent (10%) of the purchase price of the shares shall be paid to the Participant each year, without interest.

(c)    If the Committee in its sole discretion determines in any case that lump sum payment instead of installment payment as required by paragraph 9(a) or (b) would be desirable (whether for financial reasons, administrative ease, or otherwise) due to the size of the required installment payments, the Committee may order without consent of the Participant such lump sum payment be made in lieu of payment in installments. Such a lump sum payment shall be in an amount equal to the present value of the installment payments which would have otherwise been paid discounted at the current long-term “applicable federal rate.”

10.    MISCELLANEOUS PROVISIONS.

(a)    Expense. All expenses and costs in connection with the administration of the Plan shall be borne by the Corporation.


    Page 12 of 14



        

(b)    No Prior Rights of Offer. Nothing in the Plan shall be deemed to give any officer or employee of the Corporation or his or its legal representatives or assigns or any other person or entity claiming under or through any Participant any contractual or other right to participate in the benefits of the Plan.

(c)    Indemnification of the Committee. In addition to such other rights or indemnification as they may have, the members of the Committee shall be indemnified by the Corporation against all costs and expenses reasonably incurred by them or any of them in connection with any action, suit or proceeding to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any award granted thereof and against all amounts paid by them in settlement thereof (provided such settlement is approved by legal counsel selected by the Corporation) or paid by them in satisfaction of a judgment in any such action, suit or proceedings, the person desiring indemnification shall give the Corporation an opportunity, at its own expense, to handle and defend the same.

(d)    Liability of Corporation. The liability of the Corporation under this Plan or any award of shares made hereunder is limited to the obligation set forth with respect to such award, and nothing herein contained shall be construed to impose any liability on the Corporation in favor of any Participant with respect to any loss, cost or expense which a Participant may incur in connection with or arising out of any transaction in connection therewith.

(e)    No Agreement to Employ. Nothing in the Plan shall be construed to constitute or be evidence of an agreement or understanding expressed or implied on the part of the Corporation or any Subsidiary to employ or retain any Participant to whom any shares have been awarded for any specified period of time or times.

(f)    Book value. Book value under this Plan shall be determined in accordance with generally accepted accounting principles, as published in the Corporation’s Annual Report.

(g)    Market value. Market value under this Plan shall mean the closing price of a share of common stock, as reported by NASDAQ, or by any other exchange upon which the shares may be traded, for the day on which the value is to be determined or if that day is not a stock trading day, then on the last preceding trading day.


    Page 13 of 14



        

(h)Overstated Financial Results or Other Metrics, Fraud, Malfeasance or Purposeful Misstatement. In addition to any terms as the Committee may determine, all awards under the Plan are subject to the Corporation’s Clawback Policy which provides for potential forfeiture and/or recovery by the Corporation of (i) excess awards received by any Participant upon a determination that the awards were based upon financial results or other metrics that were misstated or otherwise inaccurate, either for business units of the Corporation or the Corporation as a whole, and (ii) all such awards received by any Participant upon a determination that the Participant had responsibilities for the accounting that led to the misstatement or inaccuracy, or committed fraud or other malfeasance while employed by the Corporation.

(i)Requirements of Internal Revenue Section Code 162(m). Notwithstanding any other provision of the Plan, the Committee may impose such conditions on any award as may be required to satisfy the requirements of Section 162(m) of the Internal Revenue Code (or any successor or similar rule relating thereto) to the extent desired by the Committee and whether awards are qualified performance based compensation under Section 162(m) of the Internal Revenue Code shall be at the sole discretion of the Committee.

(j)Tax Withholding. The Corporation will have the right to withhold from the payment of any Award the amount of any federal, state or local taxes which the Corporation is required to withhold.

11.    AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors, acting through the Committee, may amend, suspend or terminate the Plan, any portion thereof at any time, consistent with applicable law, regulation and listing rules, but it may not adversely affect the rights of any participant with respect to an award already earned. Notwithstanding the foregoing, any material amendments (as defined under the NASDAQ Listing Rules) of the EIP Plan will require shareholder approval.

12.    POWERS OF EXECUTIVE COMPENSATION AND HUMAN RESOURCES COMMITTEE. The Committee shall have the authority to make all interpretations of this plan in its sole discretion. It shall make all administrative rules and other determinations and shall rule upon all questions and requests with respect to the Plan.

    Page 14 of 14
EX-10.D 3 exhibit10damended1982restr.htm EX-10.D RESTRICTED STOCK AWARD PLAN Document
                                

    Exhibit 10(d)

Amended as of July 23, 2025

1ST SOURCE CORPORATION
    1982 RESTRICTED STOCK AWARD PLAN


1.    Purpose. This Restricted Stock Award Plan (“the Plan”) is intended to promote the interest of 1st Source Corporation, an Indiana corporation (the “Corporation”) and its shareholders by providing an incentive to induce continued future employment and performance of certain key exempt or non-exempt employees of the Corporation and certain key employees of one or more Subsidiaries of Corporation. For the purposes of this Plan, the term “Subsidiary” shall mean a corporation or corporations of which the Corporation owns, directly or indirectly, a majority of the outstanding voting stock.

2.    Adoption and Administration of the Plan. The Plan shall become effective as of May 1, 1982. The Plan shall be administered by the Executive Compensation Committee of the Corporation (the “Committee”). The Committee shall interpret, implement, and administer the Plan to the extent and the manner contemplated herein it shall exercise the discretion granted to it as to the determination of who shall participate in the Plan, the terms and conditions under which key employees may participate or continue participating in the Plan, how many shares shall be allocated to each participant, and the time when such shares shall be allocated and issued to each participant. Any action taken by the Committee with respect to the implementation, interpretation or administration of the Plan shall be final, conclusive and binding on the Corporation and each participant.

3.    Stock Subject to Plan. After November 8, 2016 the Committee may allocate and issue under the Restricted Stock Award Plan not more than 250,000 shares of the outstanding common stock of the Corporation, which common stock is herein sometimes referred to as “shares.” The distribution of shares pursuant to this Plan may be made either from authorized and unissued shares or from Treasury shares as determined by the Committee. All shares issued in accordance with the Plan shall be fully paid and non-assessable shares and free from preemptive rights. Such shares may be issued in the form of book value shares or market value shares as the Committee shall determine for each award approved under the Plan. The aggregate number of shares available to be allocated under this Plan shall be proportionately adjusted to reflect any change in the number or kind of shares of stock resulting from: (1) a subdivision or consolidation of shares or any other capital adjustment, (2) the payment of a dividend, (3) an increase or decrease in the number of shares of issued stock effected without receipt of consideration by the Corporation (other than contributions of stock by the Corporation to any employee benefit plan), or (4) any transaction or occurrence which, in the judgment of the Committee, has a similar effect on the stock.

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4.    Eligibility. The Committee shall designate from time to time key exempt and non-exempt employees of the Corporation or a Subsidiary (including officers) engaged in activities which further the objectives of the Corporation, who shall be eligible to receive an allocation or allocations of shares under the Plan as recommended by the Chief Executive Officer, and the number of shares of stock of the Corporation to be allocated to each. In selecting those persons to whom allocations of shares hereunder shall be made at any time, and in determining the number of shares to be allocated, the Committee shall consider with respect to those employees the position and responsibility of such persons, the value of their future services to the Corporation, the compensation otherwise received by persons and other factors as the Committee deems pertinent.

5.    Form of Allocation. At the time of making any allocation by the Committee, the Committee shall advise the employee selected to participate in a stock award under this Plan as to such allocation by written notice, which employee so selected hereinafter is sometimes referred to as “Participant.”

6.    Action Required of Participants.
(a)    Within 30 days from the date of such written notice of the Participant’s initial allocation under the Plan, the Participant shall notify the Committee, in writing, of acceptance of the allocation and the terms thereof, applicable to the initial allocation and to all subsequent allocations accepted under the Plan, which notice shall be deemed delivered for all purposes by this Plan when personally delivered or mailed to Chief Financial Officer, 1st Source Corporation, P.O. Box 1602, South Bend, Indiana 46634 by postpaid certified United States mail.

(b)    The Corporation may require that, in allocating shares, the Participant agree with, and represent to, the Corporation that Participant is acquiring such shares for the purpose of investment and with no present intention to transfer, sell or otherwise dispose of such shares except such distribution by a legal representative as shall be required by will or the laws of any jurisdiction in winding up the estate of any Participant. Such shares shall be transferable thereafter only if the proposed transfer shall be permissible pursuant to this Plan and if, in the opinion of counsel (who shall be satisfactory to Corporation), such transfer shall at such time be in compliance with applicable securities laws.

7.    Restrictions. By accepting the allocation of shares under this Plan, a Participant agrees and consents to the following additional restrictions:

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(a)    A certificate or certificates for the shares allocated to a Participant shall be delivered by the Corporation to a Participant on the date at which restrictions set forth in paragraph 7(c) below, shall have lapsed. Until such time as the restrictions lapse, Corporation shall issue and retain in safekeeping such allocation. Upon issue Participant shall be a shareholder with respect to all of the shares represented by such certificate or certificates and shall have all rights of a shareholder with respect to all such shares, including the right to vote such shares and receive all dividends and other distributions, subject to termination upon the occurrence of an Act of Forfeiture as set forth in this Plan. The certificates for such shares may be either imprinted or stamped with a legend to the effect that the shares represented thereby may not be sold, exchanged, transferred, pledged, hypothecated, assigned, conveyed, or otherwise voluntarily or involuntarily disposed of except in accordance with this Plan (any such disposition being automatically an Act of Forfeiture) by the holder thereof until such time as the restrictions provided for herein lapse.

(b)    If new or additional or different shares or securities are distributed with respect to shares of common stock of the Corporation as the result of a stock split, stock dividend, combination of shares or other change involving 1st Source securities, or exchange for other securities, or reclassification, reorganization, merger, consolidation, recapitalization or otherwise (“Exchange Event”), the Participant shall, as the owner of shares subject to restrictions hereunder, be entitled to such new or additional or different shares of stock or securities.

(1)    In the case of an Exchange Event, the certificate or certificates for, or other evidences of, such new or additional or different shares or securities shall be appropriately imprinted with the legend provided in paragraph 7(a) of this Plan, and all provisions of this Plan relating to restrictions and lapse of restrictions herein set forth shall thereupon be applicable to such new or additional or different shares or securities to the extent applicable to the shares with respect to which they were distributed; provided, further, that if the Participant shall receive rights, warrants or fractional interests in respect of any of such shares, such rights or warrants and such fractional interests shall be received by the Participant subject to all of the remaining restrictions herein set forth. All such additional shares, rights or other securities shall be retained in safekeeping by the Corporation for the account of the Participant.

(2)    In the case of a qualifying termination of employment of the Participant, as defined below, (i) all awarded shares subject to forfeiture under this Plan shall no longer be subject to forfeiture and shall be earned stock for all purposes of the Plan, (ii) all awarded book value shares shall be converted to market value shares, and (iii) all restrictions on shares of stock theretofore awarded hereunder shall terminate (except for any restrictions imposed by applicable securities laws). The foregoing sentence shall be effective immediately prior to such qualifying termination of employment.

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(3)    For purposes of this Section, the following defined terms have the described meanings. “Qualifying termination of employment” means the involuntary termination of the Participant's employment (i) within one year following an Exchange Event that involves the distribution of securities of an issuer other than 1st Source and that results in a change of control of 1st Source and (ii) for reasons other than the Participant’s willful and continued failure to perform his or her material duties and other than the Participant's dishonesty or willful misconduct in connection with his or her work. “Change of control” means a change of ownership or management that the Committee, in its full and sole discretion, shall determine to be a change of control for purposes of this Section; in the absence of a contrary finding by the Committee, the acquisition by any person or group of persons, other than 1st Source, of beneficial ownership of 50.01% or more of the then outstanding shares of 1st Source common stock shall be deemed a change of control.

        (c) The term “Restricted Period” with respect to any book value shares awarded to a Participant under this Plan shall mean that period commencing with the date of issuance of such shares and ending on the date at which all such shares have been purchased from Participant by Corporation or exchanged by the Participant for market value shares as provided herein.

(d)    The term “Forfeiture Period” with respect to any allocation of shares issued to a Participant under this Plan shall mean a period commencing on the date of issuance of such shares to the Participant and ending ten (10) years or such other period as the Committee may designate in the notice of allocation thereafter. The Forfeiture Period shall terminate at an equal and proportionate amount of the allocation of shares for each year in which:

(1)    the Participant has served continuously as an employee, and was employed or retired at year end, or in which such employee dies or becomes disabled while employed.

(2)    the Corporation achieves the requisite annual net income, ROA, ROE or other performance goal or goals established in advance by the Committee in connection with the applicable award, or the Participant meets or exceeds the individual performance goal(s) established in advance by the Committee, as applicable.

Any year in which the Corporation achieves the requisite annual net income, ROA, ROE or other performance goal or goals established for the accumulated years subsequent to the year of the award, will remove the restrictions for that year and any prior year for which the yearly rate failed to meet the established rate.

Notwithstanding the foregoing, the Committee may in its sole discretion at any time extend the Forfeiture Period on issued shares for the current or prior year(s), despite the Corporation’s failure to meet the required annual or cumulative rate of return.

With respect to individual performance goals, if a Participant fails to meet or exceed his/her individual performance goal(s) for a given year, all shares so restricted with respect to that year will be forfeited.
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The Committee may designate the particular shares with respect to which such restrictions end at the expiration of each such yearly period either by authorizing the issuance of separate certificates or by other instruments or documentation as deemed feasible by the Committee, and such certificates shall be delivered to Participant forthwith.

(e)    For all purposes of this Plan, an “Act of Forfeiture” with respect to the remaining restricted stock of any award shall be deemed to be any one of the following:

(1)    Voluntary or involuntary termination during the Forfeiture Period, other than by death, total disability or normal retirement, or

(2)    The attempted sale, exchange, transfer, pledge, hypothecation, assignment, conveyance or other voluntary or involuntary disposition of any of the restricted shares during their Restricted Period, all of which is hereby expressly prohibited by this agreement, or

(3)    The election by the Participant to be taxed in the year of receipt of the restricted stock under Section 83(b) of the Internal Revenue Code of 1986 as amended, or

(4)    Termination of the Forfeiture Period if the annual or cumulative Corporation goals or annual individual performance goals have not been achieved.

(f) The “normal retirement age” means age 65 unless changed by the Committee. Alternatively, a Participant who is age 60 or older will be treated as attaining normal retirement age if they have completed 20 years of service with the Corporation, and have provided notice of their upcoming retirement at least 150 days beforehand so the Corporation can plan in advance for succession and transition of clients in the most effective way.

        (g) However, the Committee may also authorize a “normal” retirement at an earlier age for a Participant if it determines that such action is in the best interests of the Corporation and is otherwise warranted based upon extreme hardship or other special or extraordinary circumstances and such circumstances be limited to career ending events where the Participant is unable to work effectively or properly carry out his or her assigned duties, or other extremely unlikely occurrences which prevents the Participant from continuing to serve. This decision is at the sole discretion of the Committee and is to be extremely limited.

(h)    Upon the occurrence of an Act of Forfeiture relating to a Participant, the right, title and interest of all remaining restricted shares of Corporation allocated to the Participant shall be automatically forfeited and terminated for all purposes and Participant agrees on behalf of himself, his personal representatives, heirs, legatees, or successors to:

Page 5 of 9

(1)    Execute and deliver to Corporation such forms of stock power, assignments or instruments of transfer which Corporation may reasonably request and, upon the failure of Participant or his personal representatives, heirs, legatees or successors so to do, the Secretary of Corporation is hereby appointed as the attorney-in-fact of Participant and his personal representatives, heirs, legatees or successors to execute and deliver any and all forms of stock power, assignments and instruments of transfer requested by the Committee to vest and transfer to Corporation complete title to all such forfeited shares, and further each Participant consents and agrees that the St. Joseph Circuit Court of St. Joseph County, Indiana, shall have personal jurisdiction over such Participant to permit Corporation to obtain an order to specific performance which is authorized and for which consent is hereby given by each Participant who accepts an allocation of shares under this Plan.

(i)    The right, title and interest of any transferee of any restricted shares acquired from a Participant under this Plan by Will or by the laws of descent and distribution shall be subject to all the terms and conditions of this Plan, including, but without limitation, the restrictions on transfer and the provisions relating to forfeiture.

(j)    Any transfer or purported transfer made by a Participant at any time while restricted or prohibited by this Plan, except at the times and in the manner expressly authorized, shall be null and void and the Corporation shall not be obligated to recognize or give effect to such transfer on its books or records or recognize the person or persons to whom such purported transfer has been made as the legal beneficial holder of such shares.

(k)    The Committee may impose such other restrictions on any shares allocated to a Participant pursuant to this Plan as it may deem advisable, including without limitation, restrictions under the Securities Act of 1933, as amended, under the requirements of any stock exchange upon which such shares or shares of the same class are then listed, and under any blue-sky or securities laws applicable to such shares.

    8.    Mandatory Resale of Book Value Stock.
(a)    If the Participant is employed at the time of his/her death, total disability, or normal retirement, Participant or his/her personal representative must sell his/her earned book value stock back to the Corporation.

    (1)    Twenty percent (20%) of the purchase price will be paid each year thereafter, beginning on the first anniversary of the date of such death, total disability, or retirement.

    (2)    The purchase price for any year shall be the book value at the close of the most recent year ended prior to the date of such death, total disability or retirement.

(3) The amount of the purchase price shall bear interest at the percentage determined by 1st Source Corporation’s (4) At the date of such retirement or total disability, Participant may elect to delay the sale of all book value stock for a period of up to five (5) years from the date of retirement or total disability under the sale terms above.
        (i) Dividends for the most recently completed calendar year divided by
        (ii) The ending market value for the most recently completed calendar year,
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        (iii) adjusted annually on the anniversary date of the note documenting the sale agreement.

The purchase price for any delayed sale shall be the book value at the close of the most recent year ended prior to the end of the delayed period.

    (5)    The Corporation may elect to pay the purchase price through an exchange of all book value stock for market value stock of equal value. Such election must be made for all book value shares earned at time of such retirement or disability in accordance with the requirements established by the Committee. The Corporation may take into account the request of the Participant to be paid in either cash or market value stock.

    (6)    As any unearned book value stock at date of such retirement is earned thereafter, it shall be sold to, or exchanged with, the Corporation consistent with the Corporation’s election in the immediately preceding subparagraph, and otherwise subject to the terms above.

    (b)    Upon termination of employment by voluntary act of Participant or by act of Corporation, except death or disability or normal retirement, all of such Participant’s earned book value stock must be sold to Corporation.

    (1)    The price to be paid by Corporation shall be the lower of (a) book value at the close of the most recent year ended prior to the date of departure, or (b) book value at the close of the year of departure. Book value shall be determined by the Committee as described in paragraph 9 below.

    (2)    Installments of ten percent (10%) of the purchase price of the shares shall be paid to the Participant each year, without interest.

    (c)    If the Committee in its sole discretion determines in any case that lump sum payment instead of installment payment as required by paragraph 8(a) or (b) would be desirable (whether for financial reasons, administrative ease, or otherwise) due to the size of the required installment payments, the Committee may order without consent of the Participant such lump sum payment be made in lieu of payment in installments. Such a lump sum payment shall be in an amount equal to the present value of the installment payments which would have otherwise been paid discounted at the current long-term “applicable federal rate.”

9.    Miscellaneous Provisions.
(a) Expense. All expenses and costs in connection with the administration of the Plan shall be borne by the Corporation.

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(b)    No Prior Rights of Offer. Nothing in the Plan shall be deemed to give any officer or employee of the Corporation or his or its legal representatives or assigns or any other person or entity claiming under or through any Participant any contractual or other right to participate in the benefits of the Plan.

(c)    Indemnification of the Committee. In addition to such other rights or indemnifications as they may have, the members of the Committee shall be indemnified by the Corporation against all costs and expenses reasonably incurred by them or any of them in connection with any action, suit or proceeding to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any award granted thereof and against all amounts paid by them in settlement thereof (provided such settlement is approved by legal counsel selected by the Corporation) or paid by them in satisfaction of a judgment in any such action, suit or proceedings, the person desiring indemnification shall give the Corporation an opportunity, at its own expense, to handle and defend the same.

(d)    Liability of Corporation. The Liability of the Corporation under this Plan or any allocation of shares made hereunder is limited to the obligation set forth with respect to such allocation, and nothing herein contained shall be construed to impose any liability on the Corporation in favor of any Participant with respect to any loss, cost or expense which a Participant may incur in connection with or arising out of any transaction in connection therewith.

(e)    No Agreement to Employ. Nothing in the Plan shall be construed to constitute or be evidenced of an agreement or understanding expressed or implied on the part of the Corporation or any Subsidiary to employ or retain any Participant to whom any shares have been allocated for any specified period of time or times.

        (f)    Book value. Book value under this Plan shall be determined in accordance with generally accepted accounting principles, as published in the Corporation’s Annual Report.

        (g)    Market value. Market value under this Plan shall mean the closing price of a share of common stock, as reported by NASDAQ, or by any other exchange upon which the shares may be traded, for the day on which the value is to be determined or if that day is not a stock trading day, then on the last preceding trading day.
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        (h) Overstated Financial Results or Other Metrics, Fraud, Malfeasance or Purposeful Misstatement. In addition to any terms as the Committee may determine, all awards under the Plan are subject to the Corporation’s Clawback Policy which provides for potential forfeiture and/or recovery by the Corporation of (i) excess awards received by any Participant upon a determination that the awards were based upon financial results or other metrics that were misstated or otherwise inaccurate, either for business units of the Corporation or the Corporation as a whole, and (ii) all such awards received by any Participant upon a determination that the Participant had responsibilities for the accounting that led to the misstatement or inaccuracy, or committed fraud or other malfeasance while employed by the Corporation.

10.    Amendment and Termination of the Plan. The Corporation may at any time terminate or extend the Plan, or make such modification of the Plan or of the exhibits attached to this Plan as it shall deem advisable. No termination or amendment of the Plan shall, without the consent of any person affected thereby, modify or in any way affect any right or obligation created prior to such termination or amendment.
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EX-31.1 4 ex311063025.htm EX-31.1 Document

Exhibit 31.1
CERTIFICATION
I, Christopher J. Murphy III, Chief Executive Officer, certify that:
1.I have reviewed this quarterly report on Form 10-Q of 1st Source Corporation;
2.Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 24, 2025
/s/ CHRISTOPHER J. MURPHY III
Christopher J. Murphy III
Chief Executive Officer
EX-31.2 5 ex312063025.htm EX-31.2 Document

Exhibit 31.2
CERTIFICATION
I, Brett A. Bauer, Chief Financial Officer, certify that:
1.I have reviewed this quarterly report on Form 10-Q of 1st Source Corporation;
2.Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 24, 2025
/s/ BRETT A. BAUER
Brett A. Bauer
Chief Financial Officer
EX-32.1 6 ex321063025.htm EX-32.1 Document

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of 1st Source Corporation (1st Source) on Form 10-Q for the quarterly period ended June 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christopher J. Murphy III, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1)The Report fully complies with the requirements of sections 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of 1st Source.

Date: July 24, 2025
/s/ CHRISTOPHER J. MURPHY III
Christopher J. Murphy III
Chief Executive Officer
EX-32.2 7 ex322063025.htm EX-32.2 Document

Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of 1st Source Corporation (1st Source) on Form 10-Q for the quarterly period ended June 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brett A. Bauer, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1)The Report fully complies with the requirements of sections 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of 1st Source.

Date: July 24, 2025
/s/ BRETT A. BAUER
Brett A. Bauer
Chief Financial Officer