Published Wed, 09 Oct 2019 23:26:19 -0400 on Seeking Alpha
1st Source Corporation (SRCE) is a publicly traded regional bank as well as a Dividend Aristocrat, having raised its dividend for 31 consecutive years. It's a relatively small company at $1.15 billion in market cap, but it has demonstrated phenomenal resilience in this tough environment for community banks. Despite a relatively low starting yield of 2.4%, the bank only pays out a little less than a third of its profits (~31%), and the dividend is likely to continue growing for a long time to come. That makes the stock a reasonable buy at current levels, although I will give my target entry price below.
SRCE serves the Northern half of Indiana as well as Southwestern Michigan, offering both retail and commercial banking services. The company boasts over $6.5 billion in total assets, with nearly $5 billion of that as loans and leases as well as $4.3 billion in assets under management in the wealth management department. In addition, the lender also operates a specialty finance business for aircraft ($811 million loans and leases), construction machinery ($687 million), automobiles for commercial use ($635 million), and medium and heavy trucks ($300 million).
As of Q2, 2019, the specialty finance division (~$2.55 billion) had grown to nearly the same size as the community banking division (~$2.69 billion) in terms of assets.
Source: Q2 Company Presentation
The bank is headquartered in South Bend, Indiana (where one Pete... Read more