1st Source Corporation

The DCF model estimates a fair value of $124.61 per share, implying the stock trades roughly 38% below intrinsic value. Combined with Graham's formula pointing to $84.58, the hard cash flows and asset values suggest significant hidden upside at the current price of $76.91.

An alternative fair P/E model suggests a normalized multiple closer to 10.4x, implying a price of approximately $68 — meaning the stock may actually be slightly overvalued at current levels if market expectations normalize downward and growth remains modest.

1st Source Corporation posted a strong Q1 2026 revenue beat of $113.14 million and a robust tax-equivalent net interest margin of 4.25%, demonstrating resilience against macroeconomic pressures and underlining the strength of its $9.1 billion balance sheet.

As a slow grower in a cyclical sector, 1st Source faces potential headwinds from tightening credit conditions that could compress its earnings multiple. Projected revenue and net income growth of only 3.1%–5.7% may not justify holding the stock at current prices.

With nearly four decades of uninterrupted dividend increases, placing it in the top 2% of all public companies for dividend consistency, and a board decision to raise the cash dividend to $0.43 per share alongside a $23.35 million share repurchase program, the capital return story remains highly compelling.

While the 38-year dividend growth streak is impressive, the conservative Tier 1 leverage ratio of 17.80% and modest growth projections raise questions about whether 1st Source is deploying capital efficiently or simply hoarding it at the cost of shareholder returns and competitive expansion.