First Merchants Corporation's Q4 2024: Navigating Contradictions in Loan Growth, Deposit Costs, and Fee Income

These are the key contradictions discussed in First Merchants Corporation's latest 2024Q4 earnings call, specifically including: Loan Growth Expectations, Deposit Cost Management, Fee Income Growth, Loan Yields and Repricing Dynamics, and Expense Growth Expectations:



Strong Financial Performance and Tangible Book Value Growth:
- First Merchants Corporation reported earnings per share of $1.10 for Q4, with a tangible book value per share of $26.78, marking a 25% increase over two years.
- The growth was supported by loan growth, a stable net interest margin, and effective expense management.

Loan and Deposit Trends:
- Loan growth totaled 6% for the quarter, aligning with the 2025 expectations, and the net interest margin improved by 5 basis points.
- Total deposits grew at a 4.4% annualized rate, with commercial deposits showing a strong increase, while public fund balances declined by 6%.

Capital and Non-Interest Income:
- The tangible common equity ratio is now 8.81%, with the company maintaining strong capital ratios that provide strategic flexibility for 2025.
- Non-interest income totaled $42.7 million, with customer-related fees remaining robust, reflecting strong performance in wealth management and mortgage activities.

Asset Quality and Credit Portfolio:
- The allowance for credit losses is 1.5%, with net provision expense recorded as $4.2 million.
- Asset quality remains stable, with a focus on growing the commercial real estate portfolio while managing risks effectively.