1ST SOURCE CORP 10-Q

source-20260630 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, 2026 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 Corp oration (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 17, 2026 — 24,081,826 shares Table of Contents TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Statements of Financial Condition — June 30, 2026 and December 31, 2025 3 Consolidated Statements of Income — three and six months ended June 30, 2026 and 2025 4 Consolidated Statements of Comprehensive Income (Loss) — three and six months ended June 30, 2026 and 2025 5 Consolidated Statements of Shareholders’ Equity — three and six months ended June 30, 2026 and 2025 6 Consolidated Statements of Cash Flows — six months ended June 30, 2026 and 2025 7 Notes to the Consolidated Financial Statements 8 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Item 3. Quantitative and Qualitative Disclosures About Market Risk 44 Item 4. Controls and Procedures 44 PART II. OTHER INFORMATION Item 1. Legal Proceedings 44 Item 1A. Risk Factors 44 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 44 Item 3. Defaults Upon Senior Securities 44 Item 4. Mine Safety Disclosures 45 Item 5. Other Information 45 Item 6. Exhibits 45 SIGNATURES 46 2 Table of Contents 1st SOURCE CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited - Dollars in thousands) June 30, 2026 December 31, 2025 ASSETS Cash and due from banks $ 67,497 $ 69,249 Federal funds sold and interest bearing deposits with other banks 59,806 50,608 Investment securities available-for-sale, at fair value (amortized cost of $ 1,588,489 and $ 1,568,429 at June 30, 2026 and December 31, 2025, respectively) 1,527,689 1,522,486 Other investments 22,140 22,140 Mortgages held for sale 4,990 4,866 Loans and leases, net of unearned discount: Commercial and agricultural 857,330 797,592 Renewable energy 741,164 652,799 Auto and light truck 828,721 887,876 Medium and heavy duty truck 266,719 269,749 Aircraft 1,067,328 1,086,821 Construction equipment 1,275,465 1,221,135 Commercial real estate 1,313,213 1,269,765 Residential real estate and home equity 760,656 740,777 Consumer 109,348 120,155 Total loans and leases 7,219,944 7,046,669 Allowance for loan and lease losses ( 166,354 ) ( 161,846 ) Net loans and leases 7,053,590 6,884,823 Equipment owned under operating leases, net 5,618 6,964 Premises and equipment, net 57,880 58,318 Goodwill and intangible assets 83,895 83,895 Accrued income and other assets 380,068 351,921 Total assets $ 9,263,173 $ 9,055,270 LIABILITIES Deposits: Noninterest-bearing demand $ 1,606,287 $ 1,600,495 Interest-bearing deposits: Interest-bearing demand 2,669,991 2,592,202 Savings 1,495,425 1,446,278 Time 1,660,542 1,586,600 Total interest-bearing deposits 5,825,958 5,625,080 Total deposits 7,432,245 7,225,575 Short-term borrowings: Federal funds purchased and securities sold under agreements to repurchase 63,494 112,470 Other short-term borrowings 135,996 126,151 Total short-term borrowings 199,490 238,621 Long-term debt and mandatorily redeemable securities 36,026 43,330 Subordinated notes 58,764 58,764 Accrued expenses and other liabilities 183,468 170,890 Total liabilities 7,909,993 7,737,180 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, 2026 and December 31, 2025 436,538 436,538 Retained earnings 1,084,880 1,015,160 Cost of common stock in treasury ( 4,123,848 shares at June 30, 2026 and 3,836,656 shares at December 31, 2025) ( 164,514 ) ( 141,950 ) Accumulated other comprehensive loss ( 46,516 ) ( 34,777 ) Total shareholders’ equity 1,310,388 1,274,971 Noncontrolling interests 42,792 43,119 Total equity 1,353,180 1,318,090 Total liabilities and equity $ 9,263,173 $ 9,055,270 The accompanying notes are a part of the unaudited consolidated financial statements. 3 Table of Contents 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, 2026 2025 2026 2025 Interest income: Loans and leases $ 116,814 $ 117,230 $ 230,237 $ 230,790 Investment securities, taxable 12,402 8,602 24,106 16,755 Investment securities, tax-exempt 304 297 611 574 Other 1,561 1,087 2,260 2,401 Total interest income 131,081 127,216 257,214 250,520 Interest expense: Deposits 34,465 39,106 67,043 78,952 Short-term borrowings 1,507 809 3,227 1,041 Subordinated notes 971 1,007 1,966 2,021 Long-term debt and mandatorily redeemable securities 996 1,102 1,698 2,376 Total interest expense 37,939 42,024 73,934 84,390 Net interest income 93,142 85,192 183,280 166,130 Provision for credit losses: Provision for credit losses — loans and leases 1,978 7,884 8,988 9,996 (Recovery of) provision for credit losses — unfunded loan commitments ( 439 ) ( 194 ) ( 177 ) 959 Total provision for credit losses 1,539 7,690 8,811 10,955 Net interest income after provision for credit losses 91,603 77,502 174,469 155,175 Noninterest income: Trust and wealth advisory 8,692 7,266 15,710 13,932 Service charges on deposit accounts 3,432 3,189 6,786 6,260 Debit card 4,734 4,567 9,114 8,716 Mortgage banking 858 1,116 1,869 1,969 Insurance commissions 1,791 1,685 4,302 4,125 Equipment rental 540 779 1,129 1,678 Gains (losses) on investment securities available-for-sale 13 ( 997 ) 13 ( 997 ) Other 4,959 5,452 9,097 10,477 Total noninterest income 25,019 23,057 48,020 46,160 Noninterest expense: Salaries and employee benefits 33,152 31,800 65,973 63,915 Net occupancy 3,387 3,035 6,935 6,259 Furniture and equipment 1,665 1,684 3,127 3,031 Data processing 7,492 7,410 15,065 14,701 Depreciation – leased equipment 423 619 877 1,337 Professional fees 2,152 1,499 3,727 3,167 FDIC and other insurance 1,454 1,438 2,903 2,878 Business development and marketing 2,064 1,884 3,967 3,809 Other 3,236 3,061 6,968 6,409 Total noninterest expense 55,025 52,430 109,542 105,506 Income before income taxes 61,597 48,129 112,947 95,829 Income tax expense 14,055 10,803 25,444 20,980 Net income 47,542 37,326 87,503 74,849 Net loss (income) attributable to noncontrolling interests 2 ( 7 ) ( 3 ) ( 10 ) Net income available to common shareholders $ 47,544 $ 37,319 $ 87,500 $ 74,839 Per common share: Basic net income per common share $ 1.95 $ 1.51 $ 3.58 $ 3.02 Diluted net income per common share $ 1.95 $ 1.51 $ 3.58 $ 3.02 Basic weighted average common shares outstanding 24,073,382 24,541,385 24,174,463 24,544,120 Diluted weighted average common shares outstanding 24,073,382 24,541,385 24,174,463 24,544,120 The accompanying notes are a part of the unaudited consolidated financial statements. 4 Table of Contents 1st SOURCE CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited - Dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net income $ 47,542 $ 37,326 $ 87,503 $ 74,849 Other comprehensive income (loss): Unrealized (depreciation) appreciation of available-for-sale securities ( 7,109 ) 13,509 ( 14,845 ) 38,699 Reclassification adjustment for realized (gains) losses included in net income ( 13 ) 997 ( 13 ) 997 Income tax effect 1,506 ( 3,383 ) 3,119 ( 9,225 ) Other comprehensive income (loss), net of tax ( 5,616 ) 11,123 ( 11,739 ) 30,471 Comprehensive income (loss) 41,926 48,449 75,764 105,320 Comprehensive (income) loss attributable to noncontrolling interests 2 ( 7 ) ( 3 ) ( 10 ) Comprehensive income (loss) available to common shareholders $ 41,928 $ 48,442 $ 75,761 $ 105,310 The accompanying notes are a part of the unaudited consolidated financial statements. 5 Table of Contents 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, 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 Balance at April 1, 2026 $ — $ 436,538 $ 1,047,027 $ ( 164,709 ) $ ( 40,900 ) $ 1,277,956 $ 42,882 $ 1,320,838 Net income — — 47,544 — — 47,544 ( 2 ) 47,542 Other comprehensive loss — — — — ( 5,616 ) ( 5,616 ) — ( 5,616 ) Issuance of 12,945 common shares under stock based compensation awards — — 698 195 — 893 — 893 Common stock dividend ($ 0.43 per share) — — ( 10,389 ) — — ( 10,389 ) — ( 10,389 ) Distributions to noncontrolling interests — — — — — — ( 88 ) ( 88 ) Balance at June 30, 2026 $ — $ 436,538 $ 1,084,880 $ ( 164,514 ) $ ( 46,516 ) $ 1,310,388 $ 42,792 $ 1,353,180 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, 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 Balance at January 1, 2026 $ — $ 436,538 $ 1,015,160 $ ( 141,950 ) $ ( 34,777 ) $ 1,274,971 $ 43,119 $ 1,318,090 Net income — — 87,500 — — 87,500 3 87,503 Other comprehensive loss — — — — ( 11,739 ) ( 11,739 ) — ( 11,739 ) Issuance of 51,164 common shares under stock based compensation awards — — 2,399 786 — 3,185 — 3,185 Cost of 338,356 shares of common stock acquired for treasury — — — ( 23,350 ) — ( 23,350 ) — ( 23,350 ) Common stock dividend ($ 0.83 per share) — — ( 20,179 ) — — ( 20,179 ) — ( 20,179 ) Distributions to noncontrolling interests — — — — — — ( 330 ) ( 330 ) Balance at June 30, 2026 $ — $ 436,538 $ 1,084,880 $ ( 164,514 ) $ (46,516) $ 1,310,388 $ 42,792 $ 1,353,180 The accompanying notes are a part of the unaudited consolidated financial statements. 6 Table of Contents 1st SOURCE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - Dollars in thousands) Six Months Ended June 30, 2026 2025 Operating activities: Net income $ 87,503 $ 74,849 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 8,811 10,955 Depreciation of premises and equipment 2,781 2,438 Depreciation of equipment owned and leased to others 877 1,337 Stock-based compensation 3,280 2,755 Net (accretion) amortization of investment securities available-for-sale ( 1,682 ) ( 1,551 ) Amortization of mortgage servicing rights 397 350 Amortization of right of use assets 1,579 1,489 Deferred income taxes 4,153 ( 9,496 ) (Gains) losses on investment securities available-for-sale ( 13 ) 997 Originations of loans held for sale, net of principal collected ( 38,452 ) ( 27,577 ) Proceeds from the sales of loans held for sale 38,989 25,895 Net gain on sale of loans held for sale ( 661 ) ( 83 ) Net gain on sale of other real estate and repossessions ( 377 ) ( 57 ) Change in interest receivable 886 422 Change in interest payable 308 ( 10,381 ) Change in other assets 2,902 9,284 Change in other liabilities ( 1,797 ) 36,025 Other 409 ( 1,006 ) Net change in operating activities 109,893 116,645 Investing activities: Proceeds from sales of investment securities available-for-sale 777 25,709 Proceeds from maturities and paydowns of investment securities available-for-sale 82,966 173,793 Purchases of investment securities available-for-sale ( 102,109 ) ( 79,110 ) Net change in partnership investments ( 14,008 ) ( 6,961 ) Net change in other investments — 1,715 Loans sold or participated to others 41,789 25,985 Proceeds from principal payments on direct finance leases 52,488 39,686 Net change in loans and leases ( 275,728 ) ( 319,700 ) Net change in equipment owned under operating leases 469 1,493 Purchases of premises and equipment ( 2,482 ) ( 4,333 ) Proceeds from disposal of premises and equipment 131 15 Proceeds from sales of other real estate and repossessions 1,945 1,439 Net change in investing activities ( 213,762 ) ( 140,269 ) Financing activities: Net change in demand deposits and savings accounts 132,728 104,505 Net change in time deposits 73,942 108,129 Net change in short-term borrowings ( 39,131 ) ( 139,140 ) Payments on long-term debt ( 11,863 ) ( 1,915 ) Stock issued under stock purchase plans 132 133 Acquisition of treasury stock ( 23,350 ) ( 3,295 ) Net (distributions to) contributions from noncontrolling interests ( 330 ) ( 1,768 ) Cash dividends paid on common stock ( 20,813 ) ( 18,743 ) Net change in financing activities 111,315 47,906 Net change in cash and cash equivalents 7,446 24,282 Cash and cash equivalents, beginning of year 119,857 124,826 Cash and cash equivalents, end of period $ 127,303 $ 149,108 Supplemental Information: Non-cash transactions: Loans transferred to other real estate and repossessions $ 3,697 $ 4,315 Common stock matching contribution to Employee Stock Ownership and Profit Sharing Plan 859 1,227 Right of use assets obtained in exchange for lease obligations 4,179 692 Liquidation of noncontrolling interests — 9,845 Cash paid (received) for: Interest 73,627 94,770 Income taxes 14,924 ( 11,663 ) The accompanying notes are a part of the unaudited consolidated financial statements. 7 Table of Contents 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, income, comprehensive income (loss), 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 (2025 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, 2025 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. 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. Note 2 — Recent Accounting Pronouncements Codification Improvements: In December 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2025-12 “ Codification Improvements. ” These amendments update the FASB Accounting Standards Codification (ASC) for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The amendments in the ASU, which addresses 33 issues, affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. The amendments in this ASU are effective for all entities for annual periods beginning after December 15, 2026, and interim periods within those annual periods. Early adoption is permitted in both interim and annual periods in which financial statements have not yet been issued or made available for issuance. If an entity adopts the amendments in this ASU in an interim period, it must adopt them as of the beginning of the annual period that includes that interim period. An entity may elect to early adopt the amendments on an issue-by-issue basis. The Company is assessing ASU 2025-12 and its impact on its accounting and disclosures. Interim Reporting: In December 2025, the FASB issued ASU No. 2025-11 “ Interim Reporting (Topic 270): Narrow-Scope Improvements. ” This ASU does not change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. The amendments in this ASU (1) clarify that the guidance in Topic 270 applies to all entities that provide interim financial statements and notes in accordance with generally accepted accounting principles (GAAP); (2) create a comprehensive list in FASB ASC Topic 270 of interim disclosures that are required in interim financial statements and notes in accordance with GAAP; (3) incorporate a disclosure principle, which is modeled after previous Securities and Exchange Commission (SEC) guidance, that requires entities to disclose events and changes that occur after the end of the most recent fiscal year that have a material impact on the entity; and (4) improve guidance about information included in and the format of interim financial statements. The amendments in this ASU are effective for pubic business entities for interim periods within annual periods beginning after December 15, 2027, and for entities other than public business entities the amendments are effective for interim periods within annual periods beginning after December 15, 2028. Early adoption is permitted for all entities. The amendments can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is assessing ASU 2025-11 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. 8 Table of Contents • 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. 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, 2026 U.S. Treasury and Federal agencies securities $ 736,718 $ 312 $ ( 8,428 ) $ 728,602 U.S. States and political subdivisions securities 108,121 514 ( 1,637 ) 106,998 Mortgage-backed securities — Federal agencies 743,150 920 ( 52,477 ) 691,593 Corporate debt securities 500 — ( 4 ) 496 Total debt securities available-for-sale $ 1,588,489 $ 1,746 $ ( 62,546 ) $ 1,527,689 December 31, 2025 U.S. Treasury and Federal agencies securities $ 697,652 $ 3,171 $ ( 4,046 ) $ 696,777 U.S. States and political subdivisions securities 113,126 1,333 ( 1,396 ) 113,063 Mortgage-backed securities — Federal agencies 757,151 3,372 ( 48,380 ) 712,143 Corporate debt securities 500 3 — 503 Total debt securities available-for-sale $ 1,568,429 $ 7,879 $ ( 53,822 ) $ 1,522,486 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, 2026, and December 31, 2025, accrued interest receivable on investment securities available-for-sale was $ 8.47 million and $ 8.04 million, respectively. At June 30, 2026, and December 31, 2025, 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, 2026, and December 31, 2025. The following table shows the contractual maturities of investments in debt securities available-for-sale at June 30, 2026. 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 $ 178,761 $ 176,163 Due after one year through five years 557,683 551,463 Due after five years through ten years 76,886 76,412 Due after ten years 32,009 32,058 Mortgage-backed securities 743,150 691,593 Total debt securities available-for-sale $ 1,588,489 $ 1,527,689 9 Table of Contents The following table summarizes gross unrealized losses and fair value by investment category and age. At June 30, 2026, the Company’s available-for-sale securities portfolio consisted of 642 securities, 525 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, 2026 U.S. Treasury and Federal agencies securities $ 517,487 $ ( 5,961 ) $ 150,930 $ ( 2,467 ) $ 668,417 $ ( 8,428 ) U.S. States and political subdivisions securities 32,815 ( 379 ) 24,557 ( 1,258 ) 57,372 ( 1,637 ) Mortgage-backed securities - Federal agencies 195,788 ( 2,734 ) 370,066 ( 49,743 ) 565,854 ( 52,477 ) Corporate debt securities 496 ( 4 ) — — 496 ( 4 ) Total debt securities available-for-sale $ 746,586 $ ( 9,078 ) $ 545,553 $ ( 53,468 ) $ 1,292,139 $ ( 62,546 ) December 31, 2025 U.S. Treasury and Federal agencies securities $ 146,252 $ ( 300 ) $ 173,152 $ ( 3,746 ) $ 319,404 $ ( 4,046 ) U.S. States and political subdivisions securities 13,587 ( 81 ) 29,532 ( 1,315 ) 43,119 ( 1,396 ) Mortgage-backed securities - Federal agencies 75,414 ( 355 ) 415,247 ( 48,025 ) 490,661 ( 48,380 ) Total debt securities available-for-sale $ 235,253 $ ( 736 ) $ 617,931 $ ( 53,086 ) $ 853,184 $ ( 53,822 ) The Company does not consider available-for-sale securities with unrealized losses at June 30, 2026, 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 proceeds from sales of available-for-sale debt securities and the gross realized gains and gross realized losses that have been included in earnings as a result of these sales. 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) 2026 2025 2026 2025 Proceeds from sales $ 777 $ 25,709 $ 777 $ 25,709 Gross realized gains 13 — 13 — Gross realized losses — ( 997 ) — ( 997 ) At June 30, 2026, and December 31, 2025, investment securities available-for-sale with carrying values of $ 295.36 million and $ 237.34 million, respectively, were pledged as collateral for security repurchase agreements and for other purposes. 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. 10 Table of Contents 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, undergo enhanced monitoring on a quarterly basis. Grade 7 credits are defined as “watch” and contain greater than average credit risk and are monitored to limit the Company’s 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. The Company’s core focus is solar financing, but its lending activities may also include a limited amount of battery storage projects or other alternative energy resources. 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 mainly of auto rental and auto leasing. 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 trailers, 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, all denominated in U.S. dollars, 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. 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 has been primarily to the less risky owner-occupied segment, although growth has occurred in the non-owner-occupied segment of this portfolio 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. 11 Table of Contents 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. 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, 2026, and gross charge-offs for the six months ended June 30, 2026. Term Loans and Leases by Origination Year (Dollars in thousands) 2026 2025 2024 2023 2022 Prior Revolving Loans Revolving Loans Converted to Term Total Commercial and agricultural Grades 1-6 $ 77,424 $ 139,651 $ 81,099 $ 58,096 $ 40,379 $ 28,165 $ 389,730 $ — $ 814,544 Grades 7-12 2,228 2,087 862 4,273 1,024 3,114 29,198 — 42,786 Total commercial and agricultural 79,652 141,738 81,961 62,369 41,403 31,279 418,928 — 857,330 Current period gross charge-offs — 330 73 46 — — 303 — 752 Renewable energy Grades 1-6 173,645 282,774 60,179 81,571 22,894 120,101 — — 741,164 Grades 7-12 — — — — — — — — — Total renewable energy 173,645 282,774 60,179 81,571 22,894 120,101 — — 741,164 Current period gross charge-offs — — — — — — — — — Auto and light truck Grades 1-6 273,392 269,327 128,458 55,689 25,283 8,190 — — 760,339 Grades 7-12 1,658 14,107 14,416 37,987 194 20 — — 68,382 Total auto and light truck 275,050 283,434 142,874 93,676 25,477 8,210 — — 828,721 Current period gross charge-offs — 161 1,307 2,253 33 13 — — 3,767 Medium and heavy duty truck Grades 1-6 48,706 78,185 49,859 39,606 34,225 6,649 — 323 257,553 Grades 7-12 — 1,351 1,256 1,262 4,000 1,297 — — 9,166 Total medium and heavy duty truck 48,706 79,536 51,115 40,868 38,225 7,946 — 323 266,719 Current period gross charge-offs — — — — — — — — — Aircraft Grades 1-6 144,732 312,257 191,026 119,401 161,995 88,582 14,744 — 1,032,737 Grades 7-12 1,537 14,351 4,534 4,706 7,656 1,807 — — 34,591 Total aircraft 146,269 326,608 195,560 124,107 169,651 90,389 14,744 — 1,067,328 Current period gross charge-offs — — — — — — — — — Construction equipment Grades 1-6 316,107 396,566 275,613 140,775 62,657 23,273 41,450 211 1,256,652 Grades 7-12 — 2,315 4,287 2,300 1,225 8,686 — — 18,813 Total construction equipment 316,107 398,881 279,900 143,075 63,882 31,959 41,450 211 1,275,465 Current period gross charge-offs — 994 11 36 83 — — — 1,124 Commercial real estate Grades 1-6 122,770 256,483 243,719 239,939 179,710 231,598 59 — 1,274,278 Grades 7-12 1,627 1,537 14,068 13,624 3,473 4,606 — — 38,935 Total commercial real estate 124,397 258,020 257,787 253,563 183,183 236,204 59 — 1,313,213 Current period gross charge-offs — — 354 — — — — — 354 Residential real estate and home equity Performing 52,835 95,165 60,206 48,127 74,605 197,896 218,227 7,979 755,040 Nonperforming — 378 145 559 1,552 967 1,942 73 5,616 Total residential real estate and home equity 52,835 95,543 60,351 48,686 76,157 198,863 220,169 8,052 760,656 Current period gross charge-offs — — — — — 72 54 — 126 Consumer Performing 19,532 28,965 19,516 12,953 9,045 2,716 16,059 — 108,786 Nonperforming — 73 31 196 175 87 — — 562 Total consumer 19,532 29,038 19,547 13,149 9,220 2,803 16,059 — 109,348 Current period gross charge-offs 224 108 136 91 35 32 15 — 641 12 Table of Contents 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, 2025 and gross charge-offs for the year ended December 31, 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 $ 166,469 $ 91,665 $ 71,108 $ 47,491 $ 21,408 $ 15,469 $ 342,362 $ — $ 755,972 Grades 7-12 2,409 555 4,287 1,583 1,503 2,035 29,248 — 41,620 Total commercial and agricultural 168,878 92,220 75,395 49,074 22,911 17,504 371,610 — 797,592 Current period gross charge-offs 220 32 171 198 9 — 1,790 — 2,420 Renewable energy Grades 1-6 326,861 94,730 82,739 23,454 57,332 67,683 — — 652,799 Grades 7-12 — — — — — — — — — Total renewable energy 326,861 94,730 82,739 23,454 57,332 67,683 — — 652,799 Current period gross charge-offs — — — — — — — — — Auto and light truck Grades 1-6 438,559 206,382 96,058 38,777 9,475 5,038 — — 794,289 Grades 7-12 7,296 35,446 49,032 1,611 5 197 — — 93,587 Total auto and light truck 445,855 241,828 145,090 40,388 9,480 5,235 — — 887,876 Current period gross charge-offs — 2,010 129 226 1 — — — 2,366 Medium and heavy duty truck Grades 1-6 90,318 60,465 47,654 44,315 10,101 3,478 — 481 256,812 Grades 7-12 284 — 4,729 5,495 2,360 69 — — 12,937 Total medium and heavy duty truck 90,602 60,465 52,383 49,810 12,461 3,547 — 481 269,749 Current period gross charge-offs — — — — — — — — — Aircraft Grades 1-6 356,020 211,086 141,743 201,381 112,448 31,204 6,550 — 1,060,432 Grades 7-12 5,063 4,722 4,946 8,141 — 3,517 — — 26,389 Total aircraft 361,083 215,808 146,689 209,522 112,448 34,721 6,550 — 1,086,821 Current period gross charge-offs — — 485 — — — — — 485 Construction equipment Grades 1-6 468,572 340,807 203,162 103,306 24,023 14,702 34,925 1,437 1,190,934 Grades 7-12 2,771 5,094 3,734 8,397 912 9,293 — — 30,201 Total construction equipment 471,343 345,901 206,896 111,703 24,935 23,995 34,925 1,437 1,221,135 Current period gross charge-offs — 201 1,206 — — — — — 1,407 Commercial real estate Grades 1-6 242,722 253,670 275,286 197,066 109,679 157,033 56 — 1,235,512 Grades 7-12 812 13,256 9,897 4,643 3,748 1,897 — — 34,253 Total commercial real estate 243,534 266,926 285,183 201,709 113,427 158,930 56 — 1,269,765 Current period gross charge-offs — 5 17 — — 5 — — 27 Residential real estate and home equity Performing 96,957 71,597 54,957 82,427 72,962 141,902 207,536 8,334 736,672 Nonperforming 209 146 549 839 340 72 1,870 80 4,105 Total residential real estate and home equity 97,166 71,743 55,506 83,266 73,302 141,974 209,406 8,414 740,777 Current period gross charge-offs — — — 13 — 5 50 6 74 Consumer Performing 38,401 26,781 18,328 13,858 3,837 1,142 17,068 — 119,415 Nonperforming 70 34 294 195 106 41 — — 740 Total consumer 38,471 26,815 18,622 14,053 3,943 1,183 17,068 — 120,155 Current period gross charge-offs 621 287 282 239 52 10 30 — 1,521 13 Table of Contents 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 Financing Receivables June 30, 2026 Commercial and agricultural $ 850,838 $ 483 $ — $ — $ 851,321 $ 6,009 $ 1,608 $ 857,330 Renewable energy 741,164 — — — 741,164 — — 741,164 Auto and light truck 785,703 — — — 785,703 43,018 31,336 828,721 Medium and heavy duty truck 265,454 — — — 265,454 1,265 1,262 266,719 Aircraft 1,057,811 — — — 1,057,811 9,517 9,517 1,067,328 Construction equipment 1,271,128 1,123 — — 1,272,251 3,214 557 1,275,465 Commercial real estate 1,311,013 152 — — 1,311,165 2,048 467 1,313,213 Residential real estate and home equity 752,909 1,884 818 996 756,607 4,049 — 760,656 Consumer 107,951 686 149 — 108,786 562 — 109,348 Total $ 7,143,971 $ 4,328 $ 967 $ 996 $ 7,150,262 $ 69,682 $ 44,747 $ 7,219,944 December 31, 2025 Commercial and agricultural $ 794,559 $ 516 $ 24 $ — $ 795,099 $ 2,493 $ 773 $ 797,592 Renewable energy 652,799 — — — 652,799 — — 652,799 Auto and light truck 833,507 21 — — 833,528 54,348 28,411 887,876 Medium and heavy duty truck 268,173 — — — 268,173 1,576 — 269,749 Aircraft 1,084,554 2,267 — — 1,086,821 — — 1,086,821 Construction equipment 1,205,931 3,863 — — 1,209,794 11,341 10,797 1,221,135 Commercial real estate 1,267,157 149 — — 1,267,306 2,459 1,798 1,269,765 Residential real estate and home equity 733,037 2,677 958 460 737,132 3,645 — 740,777 Consumer 118,277 919 219 — 119,415 740 — 120,155 Total $ 6,957,994 $ 10,412 $ 1,201 $ 460 $ 6,970,067 $ 76,602 $ 41,779 $ 7,046,669 Accrued interest receivable on loans and leases at June 30, 2026, and December 31, 2025, was $ 26.15 million and $ 27.43 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 loans and leases are 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. 14 Table of Contents 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, 2026 Commercial and agricultural $ — $ — $ 4,817 $ 4,817 $ 695 Auto and light truck — 42,900 — 42,900 521 Medium and heavy duty truck — 1,262 — 1,262 — Aircraft — 9,517 — 9,517 — Construction equipment — 1,810 — 1,810 285 Commercial real estate 1,557 — — 1,557 96 Total $ 1,557 $ 55,489 $ 4,817 $ 61,863 $ 1,597 December 31, 2025 Commercial and agricultural $ — $ — $ 1,136 $ 1,136 $ 19 Auto and light truck — 53,981 — 53,981 1,080 Medium and heavy duty truck — 1,507 — 1,507 166 Construction equipment — 10,797 — 10,797 — Commercial real estate 1,798 — — 1,798 — Total $ 1,798 $ 66,285 $ 1,136 $ 69,219 $ 1,265 Loan Modifications to Borrowers Experiencing Financial Difficulty The following table shows the amortized cost of loans and leases over $ 250,000 at June 30, 2026, and June 30, 2025, respectively, that were both experiencing financial difficulty and modified during the three months ended June 30, 2026, and June 30, 2025, 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, 2026 Commercial and agricultural $ 2,228 $ — $ — $ — 0.26 % Total $ 2,228 $ — $ — $ — 0.03 % Three Months Ended June 30, 2025 Commercial and agricultural $ — $ 4,026 $ — $ — 0.48 % Total $ — $ 4,026 $ — $ — 0.06 % 15 Table of Contents The following table shows the amortized cost of loans and leases over $250,000 at June 30, 2026, and June 30, 2025, respectively, that were both experiencing financial difficulty and modified during the six months ended June 30, 2026, and June 30, 2025, 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, 2026 Commercial and agricultural $ 2,228 $ — $ — $ — 0.26 % Total $ 2,228 $ — $ — $ — 0.03 % Six months ended June 30, 2025 Commercial and agricultural $ — $ 4,026 $ — $ — 0.48 % Construction equipment — 498 — — 0.04 Total $ — $ 4,524 $ — $ — 0.06 % There were $ 0.00 million and $ 2.80 million in commitments to lend additional amounts to the borrowers included in the previous table at June 30, 2026, and June 30, 2025, 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, 2026, and June 30, 2025, 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, 2026 Commercial and agricultural $ 3,789 $ — $ — $ — $ — Auto and light truck 21,262 — — 15,957 15,957 Medium and heavy duty truck 1,262 — — — — Total $ 26,313 $ — $ — $ 15,957 $ 15,957 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 16 Table of Contents 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, 2026, and June 30, 2025, 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, 2026 Commercial and agricultural — % 0 4 7 Auto and light truck — 16 3 0 Medium and heavy duty truck — 0 0 3 Total — % 16 3 5 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 There were two modified loans to borrowers experiencing financial difficulty which had a payment default within twelve months of modification during the six month period ended June 30, 2026, and one modified loan to a borrower experiencing financial difficulty which had a payment default within twelve months of modification during the six months ended June 30, 2025. 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 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). 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, 2026, and 2025. 17 Table of Contents (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, 2026 Balance, beginning of period $ 23,027 $ 12,942 $ 18,938 $ 6,101 $ 36,797 $ 28,736 $ 26,734 $ 9,419 $ 2,204 $ 164,898 Charge-offs 597 — 13 — — 225 354 116 287 1,592 Recoveries 441 — 501 — — 4 29 7 88 1,070 Net charge-offs (recoveries) 156 — ( 488 ) — — 221 325 109 199 522 Provision (recovery of provision) 1,014 509 ( 118 ) ( 48 ) ( 1,679 ) 1,433 285 454 128 1,978 Balance, end of period $ 23,885 $ 13,451 $ 19,308 $ 6,053 $ 35,118 $ 29,948 $ 26,694 $ 9,764 $ 2,133 $ 166,354 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 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, 2026, and 2025. (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, 2026 Balance, beginning of period $ 21,983 $ 11,833 $ 21,653 $ 6,295 $ 35,843 $ 27,529 $ 25,396 $ 9,076 $ 2,238 $ 161,846 Charge-offs 752 — 3,767 — — 1,124 354 126 641 6,764 Recoveries 997 — 973 — — 4 77 71 162 2,284 Net charge-offs (recoveries) ( 245 ) — 2,794 — — 1,120 277 55 479 4,480 Provision (recovery of provision) 1,657 1,618 449 ( 242 ) ( 725 ) 3,539 1,575 743 374 8,988 Balance, end of period $ 23,885 $ 13,451 $ 19,308 $ 6,053 $ 35,118 $ 29,948 $ 26,694 $ 9,764 $ 2,133 $ 166,354 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 The increase in the allowance for credit losses as compared to the prior quarter primarily reflects higher loan balances during the period. The forecast was maintained as the prior quarter’s assumptions continue to be applicable to the forward outlook. Consensus forecasts for GDP growth remain generally resilient, although overall economic uncertainty is elevated. The Company’s forecast assumes current geopolitical unrest may persist longer than current market expectations, contributing to commodity price volatility, firming inflationary expectations and a higher-for-longer interest rate environment. Ongoing risks include domestic trade instability, softness in labor markets, increasing consumer financial stress, and generally subdued consumer confidence. Loan balances increased during the quarter while special attention loans, which are reserved at higher rates, declined. Historical loss rates decreased slightly, as charge-off activity during the period was modest. Lower charge-off activity, coupled with a change in loan mix during the period towards lower reserved pools, led to a decline in the overall allowance as a percentage of total loans and leases. Additionally, the Company modestly reduced certain qualitative adjustments as the corresponding quantitative loss rates sufficiently reflect current risk characteristics. Economic Outlook As of June 30, 2026, the most significant economic factor impacting the Company’s loan portfolios is heightened geopolitical uncertainty. Risks associated with geopolitical tensions raise the potential for energy price volatility, supply disruptions, and broader economic impacts. The breadth of hiring across industry segments improved slightly during the quarter but overall labor conditions remain soft. The Company continues to monitor the impact of tariff policies, uncertainty surrounding policy implementation, and heightened instability across the Company’s markets. Consumer stress indicators remain elevated and consumer confidence remains subdued. The Company is attentive to the potential impact of these conditions on small business borrowers, whose ability to manage operating expenses may be challenged by elevated interest rates and energy costs, increased input costs, and a higher overall cost of capital. Restrictive trade policies, volatile energy prices, and supply disruptions increase the potential for volatility in asset prices which collateralize the Company’s loans. 18 Table of Contents The Bank remains cognizant of geopolitical and energy market risks despite the recent retreat in crude oil prices. The potential for renewed supply disruptions, infrastructure damage, shipping interruptions, or further escalation in regional conflict remains elevated and no durable framework for lasting regional stability in the Middle East has emerged. Prolonged instability may contribute to renewed volatility in energy markets, upward pressure on inflation, tighter financial conditions, and slower economic growth. Consistent with this outlook, we view the overall operating environment as fragile and economic growth remains uneven. The Company’s reasonable and supportable forecast incorporates the anticipated global and domestic economic impacts of these factors, along with other key macroeconomic variables, including projected changes in GDP and unemployment rates that may affect the financial condition of the Company’s clients. The forecast reflects a continued weighting toward downside risks over the two-year forecast horizon, with inflation expected to remain elevated for an extended period and a return to the Federal Reserve’s long-term 2% target will be protracted. 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, 2026, 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) 2026 2025 2026 2025 Balance, beginning of period $ 9,297 $ 8,138 $ 9,035 $ 6,985 (Recovery of provision) provision ( 439 ) ( 194 ) ( 177 ) 959 Balance, end of period $ 8,858 $ 7,944 $ 8,858 $ 7,944 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) 2026 2025 2026 2025 Direct finance leases: Interest income on lease receivable $ 3,250 $ 5,115 $ 6,266 $ 8,445 Operating leases: Income related to lease payments $ 540 $ 779 $ 1,129 $ 1,678 Depreciation expense 423 619 877 1,337 Income related to reimbursements from lessees for personal property tax on operating leased equipment for the three months ended June 30, 2026, and 2025, was $ 0.01 million and $ 0.00 million, respectively, and for the six months ended June 30, 2026, and 2025 was $ 0.13 million and $ 0.11 million, respectively. Expense related to personal property tax payments on operating leased equipment for the three months ended June 30, 2026, and 2025, was $ 0.01 million and $ 0.00 million, respectively for the six months ended June 30, 2026, and 2025 was $ 0.13 million and $ 0.11 million, respectively. ,. 19 Table of Contents 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 $ 745.13 million and $ 756.53 million at June 30, 2026, and December 31, 2025, 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) 2026 2025 2026 2025 Mortgage servicing rights: Balance at beginning of period $ 3,318 $ 3,344 $ 3,300 $ 3,436 Additions 159 143 366 227 Amortization ( 208 ) ( 174 ) ( 397 ) ( 350 ) Carrying value before valuation allowance at end of period 3,269 3,313 3,269 3,313 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 $ 3,269 $ 3,313 $ 3,269 $ 3,313 Fair value of mortgage servicing rights at end of period $ 7,597 $ 7,732 $ 7,597 $ 7,732 The balance of MSRs is located in Accrued Income and Other Assets on the Consolidated Statements of Financial Condition. At June 30, 2026, and 2025, the fair value of MSRs exceeded the carrying value reported in the Consolidated Statements of Financial Condition by $ 4.33 million and $ 4.42 million, respectively. This difference represents increases in the fair value of certain MSRs that could not be recorded above cost basis. Mortgage loan contractual servicing fees, including late fees and ancillary income, were $ 0.58 million and $ 0.59 million for the three months ended June 30, 2026, and 2025, respectively. Mortgage loan contractual servicing fees, including late fees and ancillary income, were $ 1.16 million and $ 1.18 million for the six months ended June 30, 2026, and 2025, 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, 2026 December 31, 2025 Amounts of commitments: Loan commitments to extend credit $ 1,401,971 $ 1,438,112 Standby letters of credit $ 30,173 $ 20,870 Commercial and similar letters of credit $ 1,203 $ 1,435 20 Table of Contents 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. 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, 2026 Interest rate swap contracts $ 1,338,448 Other assets $ 11,414 Other liabilities $ 11,624 Loan commitments 3,839 Mortgages held for sale 110 N/A — Forward contracts - mortgage loan 4,250 N/A — Mortgages held for sale 3 Total $ 1,346,537 $ 11,524 $ 11,627 December 31, 2025 Interest rate swap contracts $ 1,242,696 Other assets $ 16,486 Other liabilities $ 16,798 Loan commitments 8,208 Mortgages held for sale 153 N/A — Forward contracts - mortgage loan 10,000 N/A — Mortgages held for sale 21 Total $ 1,260,904 $ 16,639 $ 16,819 21 Table of Contents 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 2026 2025 2026 2025 Interest rate swap contracts Other expense $ 49 $ ( 23 ) $ 101 $ ( 44 ) Interest rate swap contracts Other income 491 426 707 877 Loan commitments Mortgage banking ( 45 ) 20 ( 43 ) 102 Forward contracts - mortgage loan Mortgage banking ( 40 ) ( 43 ) 18 ( 68 ) Total $ 455 $ 380 $ 783 $ 867 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, 2026 Interest rate swaps $ 11,414 $ — $ 11,414 $ — $ 1,135 $ 10,279 December 31, 2025 Interest rate swaps $ 16,486 $ — $ 16,486 $ — $ 105 $ 16,381 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, 2026 Interest rate swaps $ 11,624 $ — $ 11,624 $ — $ — $ 11,624 Repurchase agreements 63,494 — 63,494 — — 63,494 Total $ 75,118 $ — $ 75,118 $ — $ — $ 75,118 December 31, 2025 Interest rate swaps $ 16,798 $ — $ 16,798 $ — $ 6,230 $ 10,568 Repurchase agreements 62,470 — 62,470 62,470 — — Total $ 79,268 $ — $ 79,268 $ 62,470 $ 6,230 $ 10,568 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, 2026, and December 31, 2025, repurchase agreements had a remaining contractual maturity of $ 63.49 million and $ 62.42 million in overnight and $ 0.00 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. 22 Table of Contents • 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 $ 1.12 million and $ 0.96 million for the three months ended June 30, 2026, and 2025, respectively, and $ 2.25 million and $ 1.91 million for the six months ended June 30, 2026, and 2025, respectively. The Company also recognized $ 2.61 million and $ 14.32 million million of investment tax credits for the three months ended June 30, 2026, and 2025 respectively, and $ 2.80 million and $ 14.34 million of investment tax credits for the six months ended June 30, 2026, and 2025, 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. 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, 2026 December 31, 2025 Investment carrying amount $ 105,285 $ 72,390 Unfunded capital and other commitments 85,125 57,989 Maximum exposure to loss 81,127 84,442 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, 2026, and December 31, 2025, approximately $ 47.50 million and $ 47.87 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. 23 Table of Contents 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, 2026. (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 5.41 % 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. 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, 2026, and 2025. The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share. 24 Table of Contents Three Months Ended June 30, Six Months Ended June 30, (Dollars in thousands - except per share amounts) 2026 2025 2026 2025 Distributed earnings allocated to common stock $ 10,342 $ 9,329 $ 20,095 $ 18,166 Undistributed earnings allocated to common stock 36,684 27,676 66,499 56,042 Net earnings allocated to common stock 47,026 37,005 86,594 74,208 Net earnings allocated to participating securities 518 314 906 631 Net income allocated to common stock and participating securities $ 47,544 $ 37,319 $ 87,500 $ 74,839 Weighted average shares outstanding for basic earnings per common share 24,073,382 24,541,385 24,174,463 24,544,120 Dilutive effect of stock compensation — — — — Weighted average shares outstanding for diluted earnings per common share 24,073,382 24,541,385 24,174,463 24,544,120 Basic earnings per common share $ 1.95 $ 1.51 $ 3.58 $ 3.02 Diluted earnings per common share $ 1.95 $ 1.51 $ 3.58 $ 3.02 Note 12 — Stock Based Compensation As of June 30, 2026, 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, 2025 and the Definitive Proxy Statement for the Company’s 2026 Annual Meeting of Shareholders filed with the SEC on March 13, 2026. 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, 2026. 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, 2026, and 2025. As of June 30, 2026, and 2025, there were no outstanding stock options. There were no stock options exercised during the six months ended June 30, 2026, and 2025. All shares issued in connection with stock option exercises are issued from available treasury stock. As of June 30, 2026, there was $ 16.64 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 3.33 years . 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) 2026 2025 2026 2025 Realized gains (losses) included in net income $ 13 $ ( 997 ) $ 13 $ ( 997 ) Gains (losses) on investment securities available-for-sale 13 ( 997 ) 13 ( 997 ) Income before income taxes Tax effect ( 3 ) 240 ( 3 ) 240 Income tax expense Net of tax $ 10 $ ( 757 ) $ 10 $ ( 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, 2026, and December 31, 2025. Interest and penalties are recognized through the income tax provision. For the six months ended June 30, 2026, and 2025, the Company recognized no interest expense or penalties. 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. There were no accrued interest and penalties at June 30, 2026, and December 31, 2025. 25 Table of Contents Tax years that remain open and subject to audit include the federal 2022-2025 years and the Indiana 2022-2025 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, 2026, and December 31, 2025, all mortgages held for sale were carried at fair value. 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, 2026 Mortgages held for sale reported at fair value $ 4,990 $ 4,805 $ 185 (1) December 31, 2025 Mortgages held for sale reported at fair value $ 4,866 $ 4,647 $ 219 (1) (1) The excess of fair value carrying amount over (under) unpaid principal is included in Mortgage Banking Income on the Consolidated Statements of Income and includes changes in fair value at and subsequent to funding and gains and losses on the related loan commitment prior to funding. 26 Table of Contents 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. 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. 27 Table of Contents 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, 2026 Assets: Investment securities available-for-sale: U.S. Treasury and Federal agencies securities $ 540,692 $ 187,910 $ — $ 728,602 U.S. States and political subdivisions securities — 106,108 890 106,998 Mortgage-backed securities — Federal agencies — 691,593 — 691,593 Corporate debt securities — 496 — 496 Total debt securities available-for-sale 540,692 986,107 890 1,527,689 Mortgages held for sale — 4,990 — 4,990 Accrued income and other assets (interest rate swap agreements) — 11,414 — 11,414 Total $ 540,692 $ 1,002,511 $ 890 $ 1,544,093 Liabilities: Accrued expenses and other liabilities (interest rate swap agreements) $ — $ 11,624 $ — $ 11,624 Total $ — $ 11,624 $ — $ 11,624 December 31, 2025 Assets: Investment securities available-for-sale: U.S. Treasury and Federal agencies securities $ 516,892 $ 179,885 $ — $ 696,777 U.S. States and political subdivisions securities — 112,080 983 113,063 Mortgage-backed securities — Federal agencies — 712,143 — 712,143 Corporate debt securities — 503 — 503 Total debt securities available-for-sale 516,892 1,004,611 983 1,522,486 Mortgages held for sale — 4,866 — 4,866 Accrued income and other assets (interest rate swap agreements) — 16,486 — 16,486 Total $ 516,892 $ 1,025,963 $ 983 $ 1,543,838 Liabilities: Accrued expenses and other liabilities (interest rate swap agreements) $ — $ 16,798 $ — $ 16,798 Total $ — $ 16,798 $ — $ 16,798 28 Table of Contents The following table shows changes in Level 3 assets measured at fair value on a recurring basis for the three and six months ended June 30, 2026, and 2025. U.S. States and political subdivisions securities U.S. States and political subdivisions securities Three months ended June 30, Six months ended June 30, (Dollars in thousands) 2026 2025 2026 2025 Beginning balance $ 888 $ 958 $ 983 $ 1,032 Total gains or losses (realized/unrealized): Included in earnings — — — — Included in other comprehensive income (loss) 2 13 ( 3 ) 29 Purchases — — — — Issuances — — — — Sales — — — — Settlements — — — — Maturities — — ( 90 ) ( 90 ) Transfers into Level 3 — — — — Transfers out of Level 3 — — — — Ending balance June 30, 2026 $ 890 $ 971 $ 890 $ 971 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, 2026, or 2025. 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, 2026 Debt securities available-for sale Direct placement municipal securities $ 890 Discounted cash flows Credit spread assumption 3.44 % - 4.19 % 3.85 % December 31, 2025 Debt securities available-for sale Direct placement municipal securities $ 983 Discounted cash flows Credit spread assumption 0.88 % - 3.99 % 3.45 % 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. The Credit Policy Committee (CPC), a management committee, is responsible for overseeing the processes and controls for supporting Level 3 valuation inputs used for collateral dependent loans and leases, other real estate, and repossessions. The CPC reviews these assets on a quarterly basis to determine the appropriateness and accuracy of observable inputs which can include third-party appraisals, auction values, trade publications and borrower-provided information, and unobservable inputs which may include discounts for current market conditions, collateral condition, estimated time to liquidation, and collection considerations. Standard discount frameworks by asset type and valuation source are utilized and deviations from the standard are documented. The discounts are reviewed at least annually to determine whether they remain appropriate. Consideration is given to current trends in market values for the asset categories and realized gains and losses on sales of similar assets. The Loan and Funds Management Committee of the Board of Directors provides oversight for the CPC. Discounts vary depending on the nature of the assets and the source of value. Aircraft valuations may incorporate quarterly trade publication data adjusted for engine time, condition, and maintenance programs, typically discounted by 10 %. Likewise, autos are valued using current auction data, typically discounted by 10 %; medium and heavy duty trucks are valued using trade publications and auction data, commonly discounted by 15 %. Construction equipment values may reference trade publications and auction data, typically discounted by 20 %. Real estate is valued based on appraisals or evaluations, generally discounted by 20 % with higher discounts for property in poor condition or property with characteristics which may make it more difficult to market. For commercial loans subject to borrowing base certificates, discounts of at least 20 % are applied to receivables and 40 % - 75 % for inventory with higher discounts when monthly borrowing base certificates are not required or received. 29 Table of Contents For collateral dependent loans and leases, where repayment is expected substantially from the collateral, expected credit losses are measured based on the fair value of the underlying collateral, less estimated cost to sell. Collateral values are reviewed at least quarterly and estimated using a market-based valuation approach that may include appraisals, dealer and auction quotations, trade publications, and other relevant market data, adjusted for collateral condition, market trends, and liquidation assumptions. In accordance with ASC 820, Fair Value Measurements, the collateral dependent loans and leases themselves are carried at amortized cost and are not classified within the fair value hierarchy. However, collateral dependent loans and leases for which an allowance for loan and lease loss has been established based on the fair value of collateral require classification in the fair value hierarchy. The Company has established MSRs valuation policies and procedures based on industry standards, designed to ensure that valuation methodologies are applied consistently and resulting fair value measurements are verifiable. MSRs are accounted for at the lower of cost or fair value. For purposes of impairment assessment, MSRs are stratified based on the predominant risk characteristics of the underlying servicing assets, principally by loan type. The fair value of each tranche of the servicing portfolio is estimated by calculating the present value of expected future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, servicing costs, and other relevant economic factors. Prepayment rates and discount rates are derived through a third-party pricing agent. Changes in the most significant valuation inputs, including prepayment rates and discount rates, are evaluated in relation to changes in the fair value measurements and an appropriate resolution is made. In addition, an independent third-party fair value analysis is obtained and compared to the Company’s internal valuation for reasonableness. MSRs do not trade in an active, open market with readily observable prices, and while MSRs sales do occur, the specific terms and conditions are not typically publicly available. Accordingly, the characteristics of the Company’s servicing portfolio may differ from those of other MSRs servicing portfolios that do trade. Other real estate is carried at fair value less estimated costs to sell. Fair value is determined primarily using appraisals and reflects 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, 2026: collateral dependent loans and leases - $ 0.33 million; MSRs - $ 0.00 million; repossessions - $ 0.00 million; and other real estate - $ 0.00 million. 30 Table of Contents 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, 2026 Collateral dependent loans and leases $ — $ — $ 15,519 $ 15,519 Accrued income and other assets (mortgage servicing rights) — — 3,269 3,269 Accrued income and other assets (repossessions) — — 2,291 2,291 Accrued income and other assets (other real estate) — — 106 106 Total $ — $ — $ 21,185 $ 21,185 December 31, 2025 Collateral dependent loans and leases $ — $ — $ 26,175 $ 26,175 Accrued income and other assets (mortgage servicing rights) — — 3,300 3,300 Accrued income and other assets (repossessions) — — 267 267 Total $ — $ — $ 29,742 $ 29,742 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, 2026 Collateral dependent loans and leases $ 15,519 $ 15,519 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 20 % - 100 % 42.1 % Mortgage servicing rights 3,269 7,597 Discounted cash flows Constant prepayment rate (CPR) 5.9 % - 19.7 % 6.2 % Discount rate 10.4 % - 12.4 % 10.6 % Repossessions 2,291 2,294 Appraisals, trade publications and auction values Discount for lack of marketability 0 % - 29 % 0 % Other real estate 106 117 Appraisals Discount for lack of marketability 0 % - 17 % 9 % December 31, 2025 Collateral dependent loans and leases $ 26,175 $ 26,175 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 15 % - 30 % 23.9 % Mortgage servicing rights 3,300 7,325 Discounted cash flows Constant prepayment rate (CPR) 6.4 % - 33.4 % 7.4 % Discount rate 10.4 % - 12.4 % 10.6 % Repossessions 267 297 Appraisals, trade publications and auction values Discount for lack of marketability 0 % - 20 % 10 % 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. 31 Table of Contents 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, 2026 Assets: Cash and due from banks $ 67,497 $ 67,497 $ 67,497 $ — $ — Federal funds sold and interest bearing deposits with other banks 59,806 59,806 59,806 — — Other investments 22,140 22,140 22,140 — — Loans and leases, net of allowance for loan and lease losses 7,053,590 7,108,407 — — 7,108,407 Accrued interest receivable 34,653 34,653 — 34,653 — Liabilities: Deposits $ 7,432,245 $ 7,426,344 $ 5,771,703 $ 1,654,641 $ — Short-term borrowings 199,490 199,490 64,490 135,000 — Long-term debt and mandatorily redeemable securities 36,026 36,026 — 36,026 — Subordinated notes 58,764 57,949 — 57,949 — Accrued interest payable 25,046 25,046 — 25,046 — Off-balance-sheet instruments * — 188 — 188 — December 31, 2025 Assets: Cash and due from banks $ 69,249 $ 69,249 $ 69,249 $ — $ — Federal funds sold and interest bearing deposits with other banks 50,608 50,608 50,608 — — Other investments 22,140 22,140 22,140 — — Loans and leases, net of allowance for loan and lease losses 6,884,823 6,946,110 — — 6,946,110 Accrued interest receivable 35,539 35,539 — 35,539 — Liabilities: Deposits $ 7,225,575 $ 7,223,139 $ 5,638,975 $ 1,584,164 $ — Short-term borrowings 238,621 238,621 113,574 125,047 — Long-term debt and mandatorily redeemable securities 43,330 43,292 — 43,292 — Subordinated notes 58,764 59,076 — 59,076 — Accrued interest payable 24,738 24,738 — 24,738 — Off-balance-sheet instruments * — 139 — 139 — * 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. 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 19 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, 2025. The 32 Table of Contents 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 President and Chief Executive Officer, the President of 1st Source Bank, the Chief Financial Officer, and several Group/Division Heads that report directly to the Chief Executive Officer or the President of 1st Source Bank. 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, 2026, as compared to December 31, 2025, and the results of operations for the three and six months ended June 30, 2026, and 2025. 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 2025 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 2025, which filings are available from the SEC. We undertake no obligation to publicly update or revise any forward-looking statements. FINANCIAL CONDITION Our total assets at June 30, 2026, were $9.26 billion, an increase of $207.90 million or 2.30% from December 31, 2025. Total investment securities available-for-sale were $1.53 billion, an increase of $5.20 million or 0.34% from December 31, 2025. Federal funds sold and interest bearing deposits with other banks were $59.81 million, an increase of $9.20 million or 18.17% from December 31, 2025. The increase in federal funds sold and interest bearing deposits with other banks was due to higher interest bearing deposits at other banks. 33 Table of Contents Total loans and leases were $7.22 billion, an increase of $173.28 million or 2.46% from December 31, 2025. The largest contributors to the increase in loans and leases was growth in the renewable energy, commercial and agricultural, construction equipment, and commercial real estate portfolios, offset by decreases in the auto and light truck, aircraft, and consumer portfolios. Our foreign loan and lease balances, all denominated in U.S. dollars, were $305.31 million and $319.93 million as of June 30, 2026, and December 31, 2025, respectively. Foreign loans and leases are in aircraft financing. Loan and lease balances to borrowers in Brazil and Mexico were $139.15 million and $151.99 million as of June 30, 2026, respectively, compared to $136.98 million and $163.70 million as of December 31, 2025, respectively. As of June 30, 2026, and December 31, 2025, there was not a significant concentration in any other country. Equipment owned under operating leases was $5.62 million, a decrease of $1.35 million, or 19.33% compared to December 31, 2025. 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 $7.43 billion at June 30, 2026, an increase of $206.67 million or 2.86% from December 31, 2025. Changes to the mix in total deposits included higher interest-bearing demand deposits, brokered deposits, time deposits, and savings 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 $199.49 million, a decrease of $39.13 million or 16.40% from December 31, 2025, due primarily to a decrease in federal funds purchased. Long-term debt and mandatorily redeemable securities were $36.03 million, a decrease of $7.30 million or 16.86% from December 31, 2025, due primarily to the maturity of a $10.00 million long-term borrowing. Accrued expenses and other liabilities were $183.47 million, an increase of $12.58 million or 7.36% from December 31, 2025, mainly due to increased unfunded partnership commitments offset by decreased reserves for employee benefit plan contributions. The following table shows accrued income and other assets. (Dollars in thousands) June 30, 2026 December 31, 2025 Accrued income and other assets: Bank owned life insurance cash surrender value $ 88,914 $ 88,357 Operating lease right of use assets 22,568 20,130 Accrued interest receivable 34,653 35,539 Mortgage servicing rights 3,269 3,300 Other real estate 106 — Repossessions 2,291 267 Partnership investments carrying amount 152,787 120,260 Deferred tax assets 43,926 44,959 All other assets 31,554 39,109 Total accrued income and other assets $ 380,068 $ 351,921 The largest contributor to the increase in accrued income and other assets from December 31, 2025, was an increase in partnership investments. CAPITAL As of June 30, 2026, total shareholders’ equity was $1.31 billion, up $35.42 million, or 2.78% from the $1.27 billion at December 31, 2025. In addition to net income of $87.50 million, other significant changes in shareholders’ equity during the first six months of 2026 included $23.35 million in common stock repurchased and $20.18 million of dividends paid. The accumulated other comprehensive loss component of shareholders’ equity increased to $46.52 million at June 30, 2026, compared to $34.78 million at December 31, 2025, due to changes in interest rates, market spreads, and market conditions on our available-for-sale investment portfolio subsequent to purchase. Our shareholders’ equity-to-assets ratio was 14.15% as of June 30, 2026, compared to 14.08% at December 31, 2025. Book value per common share increased to $54.41 at June 30, 2026, from $52.32 at December 31, 2025, primarily due to increased retained earnings. We declared and paid cash dividends per common share of $0.43 during the second quarter of 2026. The trailing four quarters dividend payout ratio, representing cash dividends per common share divided by diluted earnings per common share, was 23.13%. 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. 34 Table of Contents The actual capital amounts and ratios of 1st Source Corporation and 1st Source Bank as of June 30, 2026, 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 $ 1,481,236 17.96 % $ 659,894 8.00 % $ 866,110 10.50 % $ 824,867 10.00 % 1st Source Bank 1,370,259 16.62 659,683 8.00 865,834 10.50 824,604 10.00 Tier 1 Capital (to Risk-Weighted Assets): 1st Source Corporation 1,377,237 16.70 494,920 6.00 701,137 8.50 659,894 8.00 1st Source Bank 1,266,293 15.36 494,762 6.00 700,913 8.50 659,683 8.00 Common Equity Tier 1 Capital (to Risk-Weighted Assets): 1st Source Corporation 1,277,445 15.49 371,190 4.50 577,407 7.00 536,163 6.50 1st Source Bank 1,223,501 14.84 371,072 4.50 577,223 7.00 535,993 6.50 Tier 1 Capital (to Average Assets): 1st Source Corporation 1,377,237 14.92 369,252 4.00 N/A N/A 461,565 5.00 1st Source Bank 1,266,293 13.72 369,130 4.00 N/A N/A 461,413 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. We maintain prudent strategies to support a strong liquidity position. The following table represents our sources of liquidity as of June 30, 2026. (Dollars in thousands) Available Internal Sources Unencumbered securities $ 1,231,327 External Sources FHLB advances (1) 450,220 FRB borrowings 433,488 Fed funds purchased (2) 510,000 Brokered deposits (3) 628,942 Listing services deposits (3) 461,708 Total liquidity $ 3,715,685 % of Total deposits net brokered and listing services certificates of deposit 52.08 % (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 $3.72 billion at June 30, 2026, which accounted for approximately 52% of total deposits net of brokered and listing services certificates of deposit. Our loan to asset ratio was 77.94% at June 30, 2026, compared to 77.82% at December 31, 2025 and 78.11% at June 30, 2025. Cash and cash equivalents totaled $127.30 million at June 30, 2026, compared to $119.86 million at December 31, 2025 and $149.11 million at June 30, 2025. The increase in cash and cash equivalents for the six month period ended June 30, 2026 was primarily due to an increase in deposits . The decrease in cash and cash equivalents compared to June 30, 2025, was primarily due to funding loan growth and purchases of investment securities available-for-sale . Management believes that the present funding sources provide adequate liquidity to meet our cash flow needs. At June 30, 2026, the Consolidated Statements of Financial Condition was rate sensitive by $175.37 million more liabilities than assets scheduled to reprice within one year, or approximately 0.96%. Management evaluates interest rate risk using multiple measures and analytical techniques, as each provides a different perspective on the Bank's exposure to changes in interest rates. 35 Table of Contents 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 $1.54 billion. RESULTS OF OPERATIONS Net income available to common shareholders for the three and six month periods ended June 30, 2026, was $47.54 million and $87.50 million compared to $37.32 million and $74.84 million for the same periods in 2025. Diluted net income per common share was $1.95 and $3.58 for the three and six month periods ended June 30, 2026, compared to $1.51 and $3.02 earned for the same periods in 2025. Return on average common shareholders’ equity was 13.61% for the six months ended June 30, 2026, compared to 12.96% in 2025. The return on total average assets was 1.93% for the six months ended June 30, 2026, compared to 1.69% in 2025. Net income increased for the six months ended June 30, 2026, compared to the first six months of 2025. Net interest income and noninterest income increased and the provision for credit losses decreased offset partially by an increase in noninterest expense. Details of the changes in the various components of net income are discussed further below. 36 Table of Contents 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, 2026 March 31, 2026 June 30, 2025 (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 $ 1,496,209 $ 12,402 3.32 % $ 1,493,065 $ 11,704 3.18 % $ 1,444,203 $ 8,602 2.39 % Tax exempt (1) 32,962 384 4.67 % 34,005 387 4.62 % 32,418 375 4.64 % Mortgages held for sale 4,116 63 6.14 % 4,930 75 6.17 % 3,385 55 6.52 % Loans and leases, net of unearned discount (1) 7,142,693 116,825 6.56 % 7,022,759 113,423 6.55 % 6,968,463 117,250 6.75 % Other investments 153,723 1,561 4.07 % 63,852 699 4.44 % 95,469 1,087 4.57 % Total earning assets (1) 8,829,703 131,235 5.96 % 8,618,611 126,288 5.94 % 8,543,938 127,369 5.98 % Cash and due from banks 59,208 57,339 67,535 Allowance for loan and lease losses (166,429) (163,666) (159,418) Other assets 523,625 508,021 510,079 Total assets $ 9,246,107 $ 9,020,305 $ 8,962,134 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest-bearing deposits $ 5,848,085 $ 34,465 2.36 % $ 5,605,444 $ 32,578 2.36 % $ 5,774,752 $ 39,106 2.72 % Short-term borrowings: Securities sold under agreements to repurchase 64,030 137 0.86 % 53,514 91 0.69 % 60,863 121 0.80 % Other short-term borrowings 142,875 1,370 3.85 % 173,524 1,629 3.81 % 61,917 688 4.46 % Subordinated notes 58,764 971 6.63 % 58,764 995 6.87 % 58,764 1,007 6.87 % Long-term debt and mandatorily redeemable securities 35,520 996 11.25 % 39,521 702 7.20 % 41,328 1,102 10.70 % Total interest-bearing liabilities 6,149,274 37,939 2.47 % 5,930,767 35,995 2.46 % 5,997,624 42,024 2.81 % Noninterest-bearing deposits 1,579,517 1,586,125 1,574,332 Other liabilities 173,756 167,427 144,057 Shareholders’ equity 1,300,695 1,292,902 1,187,076 Noncontrolling interests 42,865 43,084 59,045 Total liabilities and equity $ 9,246,107 $ 9,020,305 $ 8,962,134 Less: Fully tax-equivalent adjustments (154) (155) (153) Net interest income/margin (GAAP-derived) (1) $ 93,142 4.23 % $ 90,138 4.24 % $ 85,192 4.00 % Fully tax-equivalent adjustments 154 155 153 Net interest income/margin - FTE (1) $ 93,296 4.24 % $ 90,293 4.25 % $ 85,345 4.01 % (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, 2026, compared to the Quarter Ended June 30, 2025 The taxable-equivalent net interest income for the three months ended June 30, 2026, was $93.30 million, an increase of 9.32% over the same period in 2025. The net interest margin on a fully taxable-equivalent basis was 4.24% for the three months ended June 30, 2026, compared to 4.01% for the three months ended June 30, 2025. During the three month period ended June 30, 2026, average earning assets increased $285.77 million, up 3.34% over the comparable period in 2025. Average interest-bearing liabilities increased $151.65 million or 2.53%. The yield on average earning assets decreased to 5.96% at June 30, 2026, down two basis points from the same period in the prior year. Total cost of average interest-bearing liabilities decreased 34 basis points to 2.47% from 2.81%, primarily as a result of lower rates on interest-bearing deposits offset by increased short-term borrowing costs. 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 23 basis points. 37 Table of Contents The largest contributors to the reduced yield on average earning assets for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, was a decrease in yields on net loans and leases mainly from Federal Reserve rate cuts during the second half of 2025 and 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 offset by improved yields on investments from portfolio repositioning trades executed during 2025. The yield on loans and leases decreased 19 basis points, mainly from Fed rate cuts during the second half of 2025. Average loans and leases increased $174.23 million or 2.50%, primarily in the renewable energy, commercial real estate, residential real estate and home equity, construction equipment, and commercial and agricultural portfolios. Net interest recoveries contributed three basis points to the yield on average loans and leases during the quarter and had no impact to the average loans and leases yield during the prior year second quarter . Average investment securities increased $52.55 million or 3.56%, driven by additional investments made during the period. Average other investments, primarily held at the Federal Reserve Bank, increased $58.25 million or 61.02%. Average interest-bearing deposits increased $73.33 million or 1.27% for the second quarter of 2026 over the same period in 2025 primarily from higher savings deposits, interest-bearing demand deposits, and time deposits, offset by a decrease in brokered deposits. The effective rate on average interest-bearing deposits decreased 36 basis points to 2.36% from 2.72%, primarily as a result of Fed rate cuts during 2025 and lower brokered deposit balances. Average noninterest-bearing deposits increased $5.19 million or 0.33% for the second quarter of 2026 over the same period in 2025. Average short-term borrowings increased $84.13 million or 68.52% for the second quarter of 2026, compared to the same period in 2025. Interest on short-term borrowings increased 28 basis points primarily due to the increase in average balances in FHLB borrowings. Interest on subordinated notes decreased 24 basis points during the second quarter of 2026 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 decreased $5.81 million or 14.05% mainly from the maturity of a $10.00 million long-term borrowing. Interest on long-term debt and mandatorily redeemable securities increased 55 basis points during the second quarter of 2026 from the same period in 2025, primarily from an increase in mandatorily redeemable securities average balances. 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. 38 Table of Contents Six Months Ended June 30, 2026 June 30, 2025 (Dollars in thousands) Average Balance Interest Income/Expense Yield/ Rate Average Balance Interest Income/Expense Yield/ Rate ASSETS Investment securities available-for-sale: Taxable $ 1,494,645 $ 24,106 3.25 % $ 1,465,984 $ 16,755 2.30 % Tax exempt (1) 33,481 771 4.64 % 31,798 724 4.59 % Mortgages held for sale 4,521 138 6.16 % 2,899 94 6.54 % Loans and leases, net of unearned discount (1) 7,083,058 230,248 6.56 % 6,884,176 230,846 6.76 % Other investments 109,036 2,260 4.18 % 104,808 2,401 4.62 % Total earning assets (1) 8,724,741 257,523 5.95 % 8,489,665 250,820 5.96 % Cash and due from banks 58,279 65,782 Allowance for loan and lease losses (165,055) (158,374) Other assets 515,865 512,426 Total assets $ 9,133,830 $ 8,909,499 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest-bearing deposits $ 5,727,434 $ 67,043 2.36 % $ 5,760,025 $ 78,952 2.76 % Short-term borrowings: Securities sold under agreements to repurchase 58,801 228 0.78 % 59,555 225 0.76 % Other short-term borrowings 158,115 2,999 3.82 % 40,304 816 4.08 % Subordinated notes 58,764 1,966 6.75 % 58,764 2,021 6.94 % Long-term debt and mandatorily redeemable securities 37,509 1,698 9.13 % 40,506 2,376 11.83 % Total interest-bearing liabilities 6,040,623 73,934 2.47 % 5,959,154 84,390 2.86 % Noninterest-bearing deposits 1,582,803 1,581,331 Other liabilities 170,610 141,731 Shareholders’ equity 1,296,820 1,164,624 Noncontrolling interests 42,974 62,659 Total liabilities and equity $ 9,133,830 $ 8,909,499 Less: Fully tax-equivalent adjustments (309) (300) Net interest income/margin (GAAP-derived) (1) $ 183,280 4.24 % $ 166,130 3.95 % Fully tax-equivalent adjustments 309 300 Net interest income/margin - FTE (1) $ 183,589 4.24 % $ 166,430 3.95 % (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, 2026, compared to the Six Months Ended June 30, 2025 The taxable-equivalent net interest income for the six months ended June 30, 2026, was $183.59 million, an increase of 10.31% over the same period in 2025. The net interest margin on a fully taxable-equivalent basis was 4.24% for the six months ended June 30, 2026, compared to 3.95% for the same period in 2025. During the six month period ended June 30, 2026, average earning assets increased $235.08 million, up 2.77% over the comparable period in 2025. Average interest-bearing liabilities increased $81.47 million or 1.37%. The yield on average earning assets decreased one basis point to 5.95% from 5.96% primarily due to lower rates on loans and leases, and 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 39 basis points to 2.47% from 2.86% as a result of lower rates on interest-bearing deposits offset by increased short-term borrowing costs. The result to the net interest margin, or the ratio of net interest income to average earning assets, was a net 29 basis point improvement. The largest contributors to the declined yield on average earning assets for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was a decrease in yields on loans and leases, and other investments offset by improved yields on investments from portfolio repositioning trades executed during 2025. Average loans and leases increased $198.88 million, up 2.89%. Average investment securities increased $30.34 million or 2.03% driven by additional investments made during the period . Average interest-bearing deposits decreased $32.59 million or 0.57% for the first six months of 2026 compared to the same period in 2025, primarily due to decreased brokered deposit balances. The effective rate paid on average interest-bearing deposits decreased 40 basis points to 2.36% from 2.76% mainly from Fed rate cuts during the second half of 2025 and lower brokered deposit average balances. 39 Table of Contents Average short-term borrowings increased $117.06 million or 117.22% for the first six months of 2026, compared to the same period in 2025. Interest paid on short-term borrowings increased 90 basis points primarily due to an increase in average balances in FHLB borrowings and federal funds purchased. Interest paid on subordinated notes decreased 19 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 $3.00 million or 7.40%, primarily from the maturity of a $10.00 million long term borrowing. Interest paid on long-term debt and mandatorily redeemable securities decreased 270 basis points due to lower imputed interest on mandatorily redeemable securities from a smaller increase in book value per share during 2026. 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) 2026 2026 2025 2026 2025 Calculation of Net Interest Margin (A) Interest income (GAAP) $ 131,081 $ 126,133 $ 127,216 $ 257,214 $ 250,520 Fully tax-equivalent adjustments: (B) - Loans and leases 74 75 75 149 150 (C) - Tax-exempt investment securities 80 80 78 160 150 (D) Interest income - FTE (A+B+C) 131,235 126,288 127,369 257,523 250,820 (E) Interest expense (GAAP) 37,939 35,995 42,024 73,934 84,390 (F) Net interest income (GAAP) (A–E) 93,142 90,138 85,192 183,280 166,130 (G) Net interest income - FTE (D–E) 93,296 90,293 85,345 183,589 166,430 (H) Annualization factor 4.011 4.056 4.011 2.017 2.017 (I) Total earning assets $ 8,829,703 $ 8,618,611 $ 8,543,938 $ 8,724,741 $ 8,489,665 Net interest margin (GAAP-derived) (F*H)/I 4.23 % 4.24 % 4.00 % 4.24 % 3.95 % Net interest margin - FTE (G*H)/I 4.24 % 4.25 % 4.01 % 4.24 % 3.95 % PROVISION AND ALLOWANCE FOR CREDIT LOSSES The provision for credit losses for the three and six months ended June 30, 2026, was $1.54 million and $8.81 million, compared to $7.69 million and $10.96 million during the three and six months ended June 30, 2025. Net charge-offs of $0.52 million or 0.03% of average loans and leases were recorded for the second quarter of 2026, compared to $1.87 million or 0.11% of average loans and leases for the same quarter a year ago. Year-to-date net charge-offs of $4.48 million or 0.13% of average loans and leases have been recorded in 2026, compared to net charge-offs of $2.05 million or 0.06% of average loans and leases through June 30, 2025. Net charge-offs recognized in 2026 are principally concentrated in the auto and light truck, construction equipment, and consumer portfolios offset by modest net recoveries in the commercial and agricultural portfolio. The provision for credit losses for the three months ended June 30, 2026, was driven primarily by loan growth in our construction equipment, commercial and agricultural, and renewable energy portfolios during the period. We maintained our forecast adjustment as the prior quarter’s assumptions continue to be applicable to the forecast outlook. Key risks include heightened global geopolitical uncertainty, volatile energy prices, firming inflationary expectations, ever-changing trade policies, and overall macroeconomic uncertainty. Reserves for assets individually evaluated total $1.60 million this quarter, consisting of accounts in our commercial and agricultural, auto and light truck, construction equipment, and commercial real estate portfolios. 40 Table of Contents We remain attentive to potential risks within the small business segment of the commercial and agricultural portfolio. Credit concerns are elevated for small business borrowers. The agricultural portion of this portfolio is under stress as grain producers struggle with higher input costs and low commodity prices. Within the auto and light truck portfolio, borrowers are contending with lower rental rates, higher fleet carrying costs, and industry overcapacity. The medium and heavy duty truck portfolio is emerging from a prolonged industry downturn as freight rates have improved with capacity reductions. However, overall freight demand remains soft. Consumer financial stress indicators remain elevated, economic imbalances persist, and overall consumer confidence remains subdued. The impact of volatile energy prices, should they persist, could result in a meaningful headwind across multiple portfolios. We continually evaluate risks that may impact our loan portfolios including an uncertain domestic and global economic outlook influenced by geopolitical instability, evolving trade policies, elevated interest rates, and ongoing efforts by the Federal Reserve to balance inflation and labor market conditions. While economic growth has remained generally resilient, downside risks persist and the operating environment remains fragile. Uncertainty is pervasive. Ongoing macroeconomic instability and higher interest rates may contribute to increased volatility in asset prices and place downward pressure on the values of collateral securing our loans. Our aircraft portfolio exhibits collateral concentration and contains $305.31 million of foreign exposure at June 30, 2026, the majority of which is in Mexico and Brazil. We regularly review political and economic conditions in these markets to assess potential impact on borrower performance. Credit quality in the aircraft portfolio remains stable, and we have experienced minimal credit losses in recent years. In the past, the portfolio has experienced periods of elevated and unanticipated losses, primarily driven by abrupt declines in collateral values coinciding with borrower financial stress. We review and assess aircraft values on an ongoing basis utilizing a tiered approach to establishing advance rates and amortization schedules to limit collateral exposure with continuous monitoring of individual borrower performance and overall portfolio trends. On June 30, 2026, 30 day and over loan and lease delinquency as a percentage of loan and lease balances was 0.09%, compared to 0.52% on June 30, 2025. 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 2.30% one year ago. A summary of loan and lease loss experience during the three and six months ended June 30, 2026, and 2025 is located in Note 5 of the Consolidated Financial Statements. NONPERFORMING ASSETS The following table shows nonperforming assets. (Dollars in thousands) June 30, 2026 December 31, 2025 June 30, 2025 Loans and leases past due 90 days or more and accruing $ 996 $ 460 $ 198 Nonaccrual loans and leases 69,682 76,602 71,732 Other real estate 106 — — Repossessions 2,291 267 3,549 Equipment owned under operating leases 43 49 62 Total nonperforming assets $ 73,118 $ 77,378 $ 75,541 Nonperforming assets to loans and leases, net of unearned discount 1.01 % 1.10 % 1.06 % Nonperforming assets totaled $73.12 million at June 30, 2026, a decrease of 5.51% from the $77.38 million reported at December 31, 2025, and a 3.21% decrease from the $75.54 million reported at June 30, 2025. The decrease in nonperforming assets during the first six months of 2026 was primarily related to lower nonaccrual loans and leases partially offset by an increase in repossessions. The decrease in nonperforming assets as of June 30, 2026, from June 30, 2025, was related to decreases in nonaccrual loans and leases and repossessions. There are three properties held in other real estate related to our residential real estate and home equity portfolio as of June 30, 2026. The decrease in nonaccrual loans and leases at June 30, 2026, from December 31, 2025, was predominantly related to defleeting activity and charge-offs in our auto and light truck portfolio and payoffs in the construction equipment portfolio during the period . A summary of nonaccrual loans and leases and past due aging for the periods ended June 30, 2026, and December 31, 2025, is located in Note 4 of the Consolidated Financial Statements. Repossessions consisted primarily of one loan relationship in the aircraft portfolio, coupled with minimal amounts in our commercial and agricultural and consumer portfolios at June 30, 2026. 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. 41 Table of Contents The following table shows a summary of repossessions and other real estate. (Dollars in thousands) June 30, 2026 December 31, 2025 June 30, 2025 Commercial and agricultural $ 48 $ 21 $ — Renewable energy — — — Auto and light truck — — 134 Medium and heavy duty truck — — — Aircraft 2,210 — 900 Construction equipment — 192 2,504 Commercial real estate — — — Residential real estate and home equity 106 — — Consumer 33 54 11 Total $ 2,397 $ 267 $ 3,549 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. NONINTEREST INCOME The following table shows the details of noninterest income. Three Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2026 2025 $ Change % Change 2026 2025 $ Change % Change Noninterest income: Trust and wealth advisory $ 8,692 $ 7,266 $ 1,426 19.63 % $ 15,710 $ 13,932 $ 1,778 12.76 % Service charges on deposit accounts 3,432 3,189 243 7.62 % 6,786 6,260 526 8.40 % Debit card 4,734 4,567 167 3.66 % 9,114 8,716 398 4.57 % Mortgage banking 858 1,116 (258) (23.12) % 1,869 1,969 (100) (5.08) % Insurance commissions 1,791 1,685 106 6.29 % 4,302 4,125 177 4.29 % Equipment rental 540 779 (239) (30.68) % 1,129 1,678 (549) (32.72) % Gains (losses) on investment securities available-for-sale 13 (997) 1,010 101.30 % 13 (997) 1,010 101.30 % Other 4,959 5,452 (493) (9.04) % 9,097 10,477 (1,380) (13.17) % Total noninterest income $ 25,019 $ 23,057 $ 1,962 8.51 % $ 48,020 $ 46,160 $ 1,860 4.03 % Trust and wealth ad visory 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, 2026, 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, 2026, December 31, 2025, and June 30, 2025, was $6.60 billion, $6.28 billion, and $5.94 billion, respectively. The increase in trust and wealth advisory fees included larger than usual estate administration fees primarily from one customer account in the process of settlement during the three months ended June 30, 2026. Service charges on deposit accounts increased for the three and six months ended June 30, 2026, compared to the same periods in 2025. The increase in service charges on deposit accounts was mainly the result of higher consumer nonsufficient fund and overdraft transactions. Debit card income increased for both the three and six month periods ended June 30, 2026, compared to the same periods in the prior year. This growth was driven primarily by higher transaction and spending volumes, supported by consistent client transaction behavior and merchant network routing patterns. Mortgage banking income decreased for the three and six months ended June 30, 2026, over the comparable periods in 2025. The decrease was mainly from lower gains on loan sales due to reduced profit margins as well as a reduction in loan servicing fee income. Insurance commissions increased during the three and six months ended June 30, 2026, compared to the same periods a year ago. The increases were mainly due to higher contingent commissions received. Equipment rental income decreased for the three and six months ended June 30, 2026, over the comparable periods in 2025. The decline was the result of a reduction in the average equipment rental portfolio by 34.58% over the same six month period a year ago, due to changing customer preferences and competitive pricing pressures for new business. 42 Table of Contents Gains on available-for-sale investment securities during 2026 primarily resulted from active portfolio management activities, including the sale of a $0.79 million municipal bond that had been downgraded. While the security remained investment grade and was further supported by insurance enhancement, the sale of the bond was a proactive measure to reduce exposure to potential future credit downgrades. Losses on investment securities available-for-sale during 2025 were exclusively the result of repositioning the portfolio during the second quarter. Other income decreased for the three and six months ended June 30, 2026, compared to the same periods in 2025. The decrease was primarily the result of lower partnership investment gains partially offset by increased brokerage commissions and fees. NONINTEREST EXPENSE The following table shows the details of noninterest expense. Three Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2026 2025 $ Change % Change 2026 2025 $ Change % Change Noninterest expense: Salaries and employee benefits $ 33,152 $ 31,800 $ 1,352 4.25 % $ 65,973 $ 63,915 $ 2,058 3.22 % Net occupancy 3,387 3,035 352 11.60 % 6,935 6,259 676 10.80 % Furniture and equipment 1,665 1,684 (19) (1.13) % 3,127 3,031 96 3.17 % Data processing 7,492 7,410 82 1.11 % 15,065 14,701 364 2.48 % Depreciation – leased equipment 423 619 (196) (31.66) % 877 1,337 (460) (34.41) % Professional fees 2,152 1,499 653 43.56 % 3,727 3,167 560 17.68 % FDIC and other insurance 1,454 1,438 16 1.11 % 2,903 2,878 25 0.87 % Business development and marketing 2,064 1,884 180 9.55 % 3,967 3,809 158 4.15 % Other 3,236 3,061 175 5.72 % 6,968 6,409 559 8.72 % Total noninterest expense $ 55,025 $ 52,430 $ 2,595 4.95 % $ 109,542 $ 105,506 $ 4,036 3.83 % Salaries and employee benefits increased during the three and six months ended June 30, 2026, compared to the same periods in 2025. 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, and increased employee benefit plan contributions. Net occupancy expense increased during the three and six months ended June 30, 2026, compared to the same periods in 2025. The increase was primarily due to increased snow removal costs from seasonal weather conditions during the first quarter and higher premises expenses and repairs. Furniture and equipment expense, including depreciation, was relatively flat during the second quarter of 2026, compared to the same period in 2025, and increased year to date compared to the same time period a year ago. The increase was mainly due to higher equipment depreciation and equipment repairs partially offset by a decrease in equipment maintenance. Data processing expense grew during the three and six months ended June 30, 2026, compared to the same periods a year ago due primarily to increased software maintenance expense on technology projects. Depreciation on leased equipment decreased for the three and six months ended June 30, 2026, compared to the same periods in 2025. Depreciation on leased equipment correlates with the decrease in equipment rental income. Professional fees were higher during the three and six months ended June 30, 2026, compared to the same periods a year ago due primarily to higher legal and professional consulting fees. FDIC and other insurance remained flat during the three and six months ended June 30, 2026, compared to the same periods in 2025. Business development and marketing expense increased during the three and six months ended June 30, 2026, compared with the same periods in 2025. The increase was primarily due to an increase in marketing promotions offset by lower business development and travel expenses. Other expenses were higher during the three and six months ended June 30, 2026, compared to the same periods a year ago. The increase was primarily the result of higher collection and repossession expenses and a rise in debit card and fraud losses offset by increased gains on the sale of repossessed assets. 43 Table of Contents INCOME TAXES The provision for income taxes for the three and six month periods ended June 30, 2026, was $14.06 million and $25.44 million compared to $10.80 million and $20.98 million for the same periods in 2025. The effective tax rate was 22.82% and 22.45% for the quarters ended June 30, 2026, and 2025, respectively, and 22.53% and 21.89% for the six months ended June 30, 2026, and 2025, respectively. The increase 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. 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, 2025. For information regarding our market risk, refer to 1st Source’s Annual Report on Form 10-K for the year ended December 31, 2025. 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, 2026, 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 2026 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, 2025. For information regarding our risk factors, refer to 1st Source’s Annual Report on Form 10-K for the year ended December 31, 2025. 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, 2026 — $ — — 428,611 May 01 - 31, 2026 — — — 428,611 June 01 - 30, 2026 — — — 428,611 *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 571,389 shares. ITEM 3. Defaults Upon Senior Securities. None 44 Table of Contents ITEM 4. Mine Safety Disclosures. None ITEM 5. Other Information. During the three months ended June 30, 2026, 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). ITEM 6. Exhibits. The following exhibits are filed with this report: 10 (c) 1st Source Corporation 1982 Executive Incentive Plan, amended February 15, 2026 , filed as an exhibit to Form 8 - K, dated April 24, 2026, and inco rporated herein by reference . 10 (d) 1st Source Corporation 1982 Restricted Stock Award Plan, amended February 15, 2026 , filed as an exhibit to Form 8-K, dated April 24, 2026, and incorporated herein by reference . 10 (e) 1st Source Corporation Strategic Deployment Incentive Plan, amended February 15, 2026 , filed as an exhibit to Form 8-K, dated April 24, 2026, and incorporated h erein by reference . 31.1 Certification of Chief Executive Officer required by Rule 13a-14(a). 31.2 Certification of Chief Financial Officer required by Rule 13a-14(a). 32.1 Certification pursuant to 18 U.S.C. Section 1350 of Chief Executive Officer. 32.2 Certification pursuant to 18 U.S.C. Section 1350 of Chief Financial Officer. 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) 45 Table of Contents 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 23, 2026 /s/ ANDREA G. SHORT Andrea G. Short President and CEO DATE July 23, 2026 /s/ BRETT A. BAUER Brett A. Bauer Treasurer and Chief Financial Officer Principal Accounting Officer 46