Regional Banks Stocks Q3 Highlights: 1st Source (NASDAQ:SRCE)

As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the regional banks industry, including 1st Source (NASDAQ:SRCE) and its peers.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

The 95 regional banks stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 1.3%.

Thankfully, share prices of the companies have been resilient as they are up 9.9% on average since the latest earnings results.

1st Source (NASDAQ:SRCE)

Tracing its roots back to 1863 during the Civil War era, 1st Source Corporation (NASDAQ:SRCE) is a regional bank holding company that provides commercial, consumer, specialty finance, and wealth management services across Indiana, Michigan, and Florida.

1st Source reported revenues of $110.8 million, up 13% year on year. This print exceeded analysts’ expectations by 1.3%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ net interest income estimates and a beat of analysts’ EPS estimates.

Andrea G. Short, President and Chief Executive Officer, commented, "We are pleased that we achieved record quarterly net income during the third quarter and continued net interest margin expansion for the seventh consecutive quarter. Higher rates on increased average loan and lease balances, and lower short-term borrowing costs led to an eight basis point improvement in our margin from the prior quarter. The credit quality challenges we experienced during the second quarter improved moderately during the quarter and our nonperforming asset levels decreased. Nonperforming assets to loans and leases at September 30, 2025 was 0.91% down from 1.06% at June 30, 2025 while the allowance for loans and lease losses as a percentage of total loans and leases remained strong at 2.32% up slightly from 2.30% the previous quarter.

Interestingly, the stock is up 12.6% since reporting and currently trades at $66.30.

Is now the time to buy 1st Source? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Customers Bancorp (NYSE:CUBI)

Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp (NYSE:CUBI) is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.

Customers Bancorp reported revenues of $231.8 million, up 38.3% year on year, outperforming analysts’ expectations by 6.9%. The business had a stunning quarter with an impressive beat of analysts’ net interest income estimates and a solid beat of analysts’ revenue estimates.

The market seems happy with the results as the stock is up 11.5% since reporting. It currently trades at $73.08.

Is now the time to buy Customers Bancorp? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: The Bancorp (NASDAQ:TBBK)

Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp (NASDAQ:TBBK) is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.

The Bancorp reported revenues of $174.7 million, up 38.8% year on year, falling short of analysts’ expectations by 9.9%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue estimates and a significant miss of analysts’ net interest income estimates.

The Bancorp delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 11.1% since the results and currently trades at $68.66.

Read our full analysis of The Bancorp’s results here.

TowneBank (NASDAQ:TOWN)

Founded in 1998 with a commitment to community-centered banking in the Hampton Roads region, TowneBank (NASDAQ:TOWN) is a community-focused financial institution providing banking, lending, and wealth management services to individuals and businesses in Virginia and North Carolina.

TowneBank reported revenues of $215.7 million, up 23.6% year on year. This number was in line with analysts’ expectations. Taking a step back, it was a mixed quarter as it also recorded a solid beat of analysts’ tangible book value per share estimates but a miss of analysts’ net interest income estimates.

The stock is up 5.7% since reporting and currently trades at $35.52.

Read our full, actionable report on TowneBank here, it’s free for active Edge members.

Byline Bancorp (NYSE:BY)

Ranking as the fifth most active Small Business Administration lender in the country, Byline Bancorp (NYSE:BY) is a Chicago-based bank that provides banking services to small and medium-sized businesses, commercial real estate developers, and consumers.

Byline Bancorp reported revenues of $115.7 million, up 13.6% year on year. This print surpassed analysts’ expectations by 4.5%. Overall, it was an exceptional quarter as it also recorded a solid beat of analysts’ revenue estimates and an impressive beat of analysts’ net interest income estimates.

The stock is up 15.5% since reporting and currently trades at $30.78.

Read our full, actionable report on Byline Bancorp here, it’s free for active Edge members.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.