1st Source Corporation (SRCE): Boston Consulting Group Matrix [10-2024 Updated]
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1st Source Corporation (SRCE) Bundle
In the dynamic landscape of finance, understanding where a company stands can illuminate its potential for growth and profitability. For 1st Source Corporation (SRCE), a detailed analysis using the Boston Consulting Group Matrix reveals distinct categories of business segments: Stars, Cash Cows, Dogs, and Question Marks. With strong performance in renewable energy financing and established revenue streams from commercial real estate loans, SRCE showcases both robust opportunities and challenges that investors should be aware of. Dive deeper into each segment to uncover the strategic implications for SRCE as we explore its financial landscape in 2024.
Background of 1st Source Corporation (SRCE)
1st Source Corporation (SRCE) is a financial services holding company based in South Bend, Indiana. The company operates primarily through its banking subsidiary, 1st Source Bank, which offers a wide range of financial products and services including commercial banking, personal banking, and trust services. As of September 30, 2024, 1st Source Corporation reported total assets of approximately $8.76 billion, demonstrating its significant presence in the banking sector.
Established in 1863, 1st Source Bank has a long history of serving its local communities. The bank focuses on commercial and agricultural loans, residential real estate, and consumer lending, among other areas. As of the latest financial data, the company has a diversified loan portfolio, with the largest segments being commercial and agricultural loans amounting to $723.18 million, auto and light truck loans at $949.47 million, and commercial real estate loans totaling $1.16 billion.
In terms of financial performance, 1st Source Corporation has shown steady growth. For the nine months ended September 30, 2024, the company reported a net income of $101.18 million, compared to $96.52 million in the same period of 2023. This growth in net income reflects an increase in net interest income, which was $221.45 million for the nine months ending September 30, 2024, compared to $207.32 million the previous year.
The company has also maintained a strong capital position, with total shareholders' equity reaching $1.10 billion as of September 30, 2024. This represents an increase of over 11.59% from $989.57 million at the end of 2023. The growth in equity has been supported by retained earnings and a decrease in accumulated other comprehensive losses.
1st Source Corporation is committed to community involvement and sustainable practices, focusing on areas like renewable energy financing, which is part of their strategy to diversify their loan portfolio and meet evolving market demands. The company operates in a competitive banking landscape, continually adapting to changes in regulatory requirements and economic conditions.
1st Source Corporation (SRCE) - BCG Matrix: Stars
Strong growth in net income
1st Source Corporation reported a net income of $101.19 million for the first nine months of 2024, up from $96.50 million during the same period in 2023.
Robust performance in loan and lease segments
The company demonstrated robust performance in its loan and lease segments, particularly in commercial and agricultural loans, contributing significantly to the overall growth in net interest income, which was $221.89 million for the first nine months of 2024, compared to $207.31 million in 2023.
Increased market share in renewable energy financing
1st Source Corporation has increased its market share in the renewable energy financing sector, reflecting its strategic focus on growth areas within the financial services market.
High return on equity
The return on average common shareholders’ equity stood at 13.02% for the nine months ended September 30, 2024, down from 14.04% in 2023.
Positive trends in noninterest income
There have been positive trends in noninterest income, particularly from trust and wealth advisory services, contributing to the overall financial health of the company.
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Income (Nine Months) | $101.19 million | $96.50 million | +4.4% |
| Net Interest Income | $221.89 million | $207.31 million | +6.73% |
| Return on Equity | 13.02% | 14.04% | -1.02% |
1st Source Corporation (SRCE) - BCG Matrix: Cash Cows
Established revenue streams from commercial real estate loans, contributing significantly to overall earnings.
Total loans and leases as of September 30, 2024, were $6.62 billion, reflecting an increase of $97.60 million from December 31, 2023.
Steady interest income from investment securities, maintaining a strong yield.
| Type of Investment | Average Balance (in thousands) | Interest Income (in thousands) | Yield Rate |
|---|---|---|---|
| Taxable Investment Securities | $1,537,066 | $18,099 | 1.57% |
| Tax-Exempt Investment Securities | $30,057 | $962 | 4.28% |
| Mortgages Held for Sale | $3,257 | $162 | 6.64% |
| Other Investments | $110,580 | $4,500 | 5.44% |
Consistent performance in auto and light truck financing, with stable demand.
The auto and light truck financing portfolio showed resilience, with demand remaining consistent, contributing to the overall stability of revenues in this sector.
Solid dividend payouts, with a common stock dividend of $1.04 per share in 2024.
The common stock dividend for 2024 was $1.04 per share, with a trailing four quarters dividend payout ratio of 26.34%.
Strong asset base with total assets exceeding $8.7 billion.
Total assets as of September 30, 2024, were $8.76 billion, an increase from the previous year.
1st Source Corporation (SRCE) - BCG Matrix: Dogs
Residential real estate and home equity loans showing signs of stagnation.
The residential real estate and home equity loan segments have exhibited minimal growth, with a loan portfolio totaling approximately $1.21 billion as of September 30, 2024. The growth rate has stagnated at around 1.5% year-over-year, indicating a lack of market momentum.
Consumer loan segment facing challenges with increasing delinquency rates.
The consumer loan segment has reported increasing delinquency rates, rising to 3.5% as of September 30, 2024, compared to 2.8% a year prior. The total consumer loan portfolio stands at approximately $1.05 billion, with net charge-offs of $4.99 million recorded for the first nine months of 2024.
Limited growth prospects in medium and heavy-duty truck financing due to industry overcapacity.
The medium and heavy-duty truck financing sector is constrained by overcapacity, leading to a portfolio decrease of 9% year-over-year, now valued at about $284 million. The average loan size in this segment has also diminished, reflecting reduced demand.
Nonperforming loans in the consumer sector indicating potential credit risks.
Nonperforming loans in the consumer sector have increased, totaling $40.46 million, which represents 4.3% of the total consumer loan portfolio. This uptick highlights potential credit risks and the need for increased provisions for credit losses.
Minimal contribution from equipment rental services, reflecting a lack of market demand.
The equipment rental services division has contributed minimally, with revenues of only $3.1 million for the first nine months of 2024, down 36.11% from the previous year, reflecting reduced leasing volume due to competitive pricing pressures.
| Segment | Portfolio Value (in billions) | Year-over-Year Growth Rate | Nonperforming Loans (in millions) | Delinquency Rate |
|---|---|---|---|---|
| Residential Real Estate & Home Equity | $1.21 | 1.5% | N/A | N/A |
| Consumer Loans | $1.05 | N/A | $40.46 | 3.5% |
| Medium & Heavy-Duty Truck Financing | $0.284 | -9% | N/A | N/A |
| Equipment Rental Services | N/A | -36.11% | N/A | N/A |
1st Source Corporation (SRCE) - BCG Matrix: Question Marks
Renewable Energy Loans
As of September 30, 2024, 1st Source Corporation reported renewable energy loans amounting to $479.95 million, a significant increase from $399.71 million in the previous year. This segment is experiencing growth, driven by rising demand for sustainable financing options, yet it remains uncertain regarding long-term profitability due to fluctuating market conditions and competitive pressures.
Aircraft Financing
The aircraft financing portfolio was valued at $1.07 billion as of September 30, 2024, down from $1.08 billion a year earlier. This segment is exhibiting volatility attributed to changing economic conditions and varying demand for air travel, which affects the stability of income from this financing area.
Construction Equipment Loans
Construction equipment loans were reported at $1.14 billion, an increase from $1.08 billion in 2023. However, this segment faces risks from potential economic downturns that could significantly impact the construction sector, leading to reduced demand for financing in this category.
Emerging Markets in Commercial and Agricultural Loans
The commercial and agricultural loans segment remains a focal point for growth, with commercial loans totaling $723.18 million and agricultural loans at $479.95 million. This area requires a strategic focus to capture potential growth opportunities in emerging markets, which are critical for expanding the bank's footprint.
Auto and Light Truck Loan Market
The auto and light truck loan market, valued at approximately $949.47 million, is under pressure from increasing competition. This necessitates innovation and strategic marketing efforts to enhance market share and profitability in a sector that is becoming increasingly crowded.
| Loan Type | Amount (in millions) | Change from Previous Year | Market Trends |
|---|---|---|---|
| Renewable Energy Loans | $479.95 | +20.24% | High growth, uncertain profitability |
| Aircraft Financing | $1,065.80 | -1.90% | Volatility due to economic conditions |
| Construction Equipment Loans | $1,141.37 | +5.20% | Risk from economic downturns |
| Commercial Loans | $723.18 | -5.61% | Emerging market focus needed |
| Agricultural Loans | $479.95 | +20.24% | Strategic growth opportunities |
| Auto and Light Truck Loans | $949.47 | -1.81% | Increased competition |
In summary, 1st Source Corporation (SRCE) showcases a diverse portfolio within the Boston Consulting Group Matrix, with Stars demonstrating significant growth and strong market positioning, especially in commercial and agricultural loans. Meanwhile, Cash Cows like commercial real estate loans provide stable revenue, underpinning a solid asset base. However, the Dogs category highlights challenges in residential and consumer loans, indicating potential risks. Lastly, the Question Marks signal areas requiring careful strategic focus, particularly in renewable energy and aircraft financing, as the company navigates a competitive landscape. Overall, SRCE's balanced approach will be crucial for sustaining growth and mitigating risks in 2024 and beyond.
Article updated on 8 Nov 2024
Resources:
- 1st Source Corporation (SRCE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of 1st Source Corporation (SRCE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View 1st Source Corporation (SRCE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.