1st Source Should Trade At A Premium To Peers, D.A. Davidson Says

The analyst's price target represents a price-to-earnings multiple of 15.1x, a 7.1 percent premium to its Indiana peer group of 14.1x, according to Reevey.

"We believe SRCE should trade at a premium to its peers given its above average profitability, superior credit quality, and healthy mix (more than one-third) of revenues derived from diverse sources of fee income," said Reevey.

Management Has ‘Skin in the Game'

"Executive officers and directors own more than one-third of the company's shares outstanding," according to the Davidson analyst. With this much "skin in the game," the company's interests are bound to be closely aligned with that of its shareholders.

Related Link: D.A. Davidson: Lakeland Financial Deserves To Trade At A Premium To Its Peers

Diverse Sources Of Fee Income

The analyst noted the company's diverse sources of fee income, while demonstrating 1st Source's reliance on them:

• Rental Income: 28.1 percent
• Trust Fees: 21.4 percent
• Other Income: 16.7 percent
• Debit Fee Income: 12 percent
• Service Charges On Deposit Accounts: 9.7 percent
• Insurance Commissions: 7.2 percent
• Mortgage Banking Income 4.8 percent

"Total fee income comprised more than one-third of its revenue stream in the most recent period," stated Reevey.

At time of writing, 1st Source traded at $33.40, up 0.03 percent on the day.

Full ratings data available on Benzinga Pro.

Did you like this article? Could it have been improved? Please email feedback@benzinga.com with the story link to let us know!