What is the market's earnings forecast for First Merchants next quarter?

What were the key takeaways from First Merchants’s earnings call?

What does First Merchants do and what are its main business segments?

What is First Merchants's gross profit margin?

What guidance did First Merchants's management provide for the next earnings period?

What is the revenue and EPS growth rate for First Merchants year over year?

What factors drove the changes in First Merchants's revenue and profit?

What were the key takeaways from First Merchants's earnings call?

- **Record Growth**: 2025 net income up 13.8% to $224.1M, driven by 7.3% loan growth and 54.5% efficiency ratio. 
- **Strategic Deal**: $2.4B First Savings acquisition closing Feb 1, with 27.5% cost savings post-May integration. 
- **Margin & Expense**: 2026 noninterest income +10% (fee growth), net interest margin stable despite rate cuts. 
- **Capital Return**: 2025 buybacks ($46.9M) to continue; 2026 tax rate ~12%. 
- **Risk Management**: Asset quality stable (NPAs 0.45%), with multifamily construction portfolio managed through payoffs. 


**【CEO Summary Section】**
- **Record Financial Performance**: Ended 2025 with record total assets ($19B), loans ($13.8B), and deposits ($15.3B). Full-year net income of $224.1M (+13.8% YoY) and EPS of $3.88. Q4 net income: $56.6M ($0.99 EPS). 
- **Loan Growth Momentum**: +$939M annualized loan growth (7.3% YoY), driven by commercial ($852M) and consumer ($87M). Q4 pipeline stable, supporting 2026 outlook of mid-single-digit growth. 
- **Efficiency & Capital Management**: Efficiency ratio 54.5% (5x revenue growth vs. expenses). Share buybacks ($46.9M in 2025) and dividend returns. 
- **Strategic Acquisition**: $2.4B First Savings Group acquisition closing Feb 1, 2026, with 27.5% cost savings expected post-May integration. 

**【President (Michael Stewart)】**
- **Business Strategy**: Focus on Midwest expansion, deeper client relationships, and tech-driven efficiency. 2025 highlights: 
  - **Commercial Loans**: +$852M (7% YoY), driven by capex, revolvers, and M&A. 
  - **Consumer Loans**: +$87M (7.3% YoY), led by mortgages and HELOCs. 
  - **Deposit Growth**: Q4 consumer deposits +$155M, with focus on non-maturity balances. 
- **Integration Progress**: First Savings teams engaged, product/process mapping complete; on-site training begins post-close. 

**【CFO (Michele Kawiecki)】**
- **Financial Highlights**: 
  - Q4 net interest income +$5.4M YoY, noninterest income +$0.6M. 
  - 2025 EPS up 12.2%, tangible book value +12.7% to $30.18. 
  - Deposit cost management: Q4 rate decline 12bps (2.32%), interest expense down $3M despite +$424.9M deposits. 
- **Balance Sheet Optimization**: Plan to sell First Savings bond portfolio ($250M) and evaluate modest bond/loan sales. 
- **Margin & Expense**: Core net interest margin 3.29% (5bps QoQ). 2026 noninterest expense growth 3-5% (talent additions), with operating leverage expected. 

**【CCO (John Martin)】**
- **Asset Quality**: Stable with NPAs 0.45% (0.66% YoY). 2025 net charge-offs 18bps annualized. 
- **Credit Portfolio**: C&I growth (+$700M YoY) offset by moderate CRE growth. Sponsor finance portfolio underwritten to higher standards. 
- **Multifamily Construction**: Q4 $9.6M charge, but $12.9M payoff post-quarter end. 

**【Q&A Highlights】**
- **Loan Growth Outlook**: 2026 mid-single-digit growth expected, supported by Midwest economy and First Savings integration. 
- **Deposit Repricing**: 2026 CD maturities ($800M first half) at 3.75-3.65% vs. current 3.30-3.45% specials. 
- **Buybacks & Capital**: Buybacks ($10.4M Q4) to continue if valuation remains below target. 2026 tax rate ~12% (13% core). 
- **M&A Focus**: No new deals planned; focused on integrating First Savings and returning capital via buybacks. 


First Merchants Corporation (FRME) Q4 2025 Earnings Call Transcript

- **Loan Growth Dynamism**: 9% YTD loan growth (10% Q3 C&I), fueled by $268M commercial originations and $100M+ SBA pipeline. 
- **Acquisition Synergy**: $2.4B First Savings deal adds Southern Indiana presence and $100M+ annual SBA origination capacity. 
- **Margin Resilience**: NIM held steady at 3.24% despite 14bps deposit cost increase, with 2026 rate cuts expected to compress 2-4bps. 
- **Capital Efficiency**: 54.56% efficiency ratio, 9.18% TCE ratio, and $167.5M net income (+23.5% YoY). 
- **Credit Strength**: NPLs down 3bps to 0.51%, with 85% of sponsor finance borrowers under 3x leverage.

**【CEO Summary Section】**
- CEO Mark Hardwick highlighted 9% year-to-date loan growth, driven by commercial and consumer segments, with Q3 commercial loan growth of $268M (10% annualized). 
- Announced acquisition of First Savings Financial Group for $2.4B, expanding into Southern Indiana and adding SBA lending capabilities. 
- Emphasized disciplined deposit growth, with non-maturity deposits up 5% annualized and core commercial deposits up 49%. 
- Noted 23.5% year-over-year net income growth to $167.5M and EPS of $2.90, up 25.5%.

**【President's Business Update】**
- President Michael Stewart detailed Q3 loan growth of $289M (8.7% annualized), with C&I up $169M and CRE up $87M. 
- Highlighted strong pipeline consistency and focus on fee-generating products like SBA loans, with First Savings originating $100M+ annually. 
- Consumer segment grew $21M in residential mortgages and HELOCs, supported by non-maturity deposit growth of 5% annualized.

**【CFO Financial Commentary】**
- CFO Michele Kawiecki reported Q3 net interest income up $0.7M to $139.9M, with NIM stable at 3.24%. 
- Noninterest income rose $1.2M to $32.5M, driven by customer fees. 
- Core expenses remained disciplined at $95.7M, with efficiency ratio 54.56%. 
- Tangible book value grew 4% Q/Q and 9% Y/Y, supported by strong earnings and AOCI recapture.

**【Credit Officer's Portfolio Review】**
- CCO John Martin noted nonperforming loans down 3bps to $68.9M, with charge-offs at 15bps of loans. 
- Highlighted strong credit metrics in sponsor finance (85% borrowers <3x leverage) and shared national credits (63% >1.5x FCF coverage). 
- Investment real estate portfolio at $3.1B maintained disciplined underwriting with 62.8% LTV on largest office loan.

**【Q&A Highlights】**
- **Expense Outlook**: CFO expects Q4 core expenses stable, with 2026 planning underway. 
- **Rate Impact**: 2H rate cuts could compress NIM 2bps per 25bp cut, but deposit repricing (e.g., $2.5B indexed deposits) may mitigate. 
- **M&A Strategy**: CEO prioritizes organic growth and First Savings integration, with no immediate M&A plans. 
- **Capital Deployment**: Buybacks ($36.5M YTD) and dividend returns 70%+ of earnings, with TCE ratio at 9.18%.


First Merchants Corporation (FRME) Q3 2025 Earnings Call Transcript

- **Revenue surge**: Q2 net income up 43% YoY to $56.4M, fueled by 9.1% loan growth and lower credit losses. 
- **Margin pressure**: Deposit costs rose 7bps Q/Q, but net interest margin held steady at 3.25%. 
- **Capital return**: $36.2M buybacks and $82.3M dividends YTD, with tangible book value +11.2%. 
- **Credit stability**: Net charge-offs at 0.07% annualized, with 82.7% of borrowers in core Midwest markets. 
- **Growth drivers**: $262M commercial loan growth (10% annualized) and $1.6M increase in fee income Y/Y.

**【CEO Summary Section】**
- **Strong financial performance**: Q2 net income of $56.4 million, up 43% YoY, driven by lower credit losses ($5.6M vs. $24.5M) and loan growth. 
- **Loan growth momentum**: 9.1% annualized loan growth, with $262M commercial growth (10% annualized) and $36M consumer growth. 
- **Capital management**: $22.1M share repurchases Q2, $31.7M YTD, with tangible common equity at 8.92%. 
- **M&A strategy**: Focus on organic growth first, with selective acquisitions; last deal completed 3 years ago. 

**【CFO Financial Commentary】**
- **Revenue growth**: Total revenues up 4% YTD, with net interest income +$2.7M and noninterest income +$1.3M. 
- **Expense control**: Noninterest expense up only $700K Q/Q, maintaining 54% efficiency ratio. 
- **Margin dynamics**: Net interest margin 3.25%, up 3bps Q/Q, but deposit costs rose 7bps to 2.3%. 
- **Capital returns**: $36.2M in buybacks and $82.3M dividends YTD, with tangible book value up 11.2%. 

**【CRO Credit Quality Update】**
- **Stable asset quality**: Net charge-offs 0.07% annualized, provision at $5.6M (vs. $24.5M prior year). 
- **Loan portfolio strength**: 82.7% of borrowers in Midwest, 95% of consumer loans with FICO >669. 
- **Key nonaccruals**: $12.9M multifamily construction loan and $6.8M brewery. 

**【Q&A Highlights】**
- **Margin outlook**: Expect modest compression (2bps per 25bp Fed cut) due to rising deposit costs and loan growth funding needs. 
- **Fee growth**: Noninterest income up mid-single digits expected, driven by mortgage sales and treasury management. 
- **Tech investments**: Upgraded platforms for account opening, treasury management, and private wealth; bankers now focus on client engagement. 
- **M&A activity**: Actively engaging with potential targets, but prioritizing organic growth. 
- **Tax impact**: New tax legislation may boost C&I loan demand, offsetting some tariff-related uncertainty.

First Merchants Corporation (FRME) Q2 2025 Earnings Call Transcript

- **Record Q1 Earnings**: $54.9 million net income, 15.6% YoY growth, fueled by 4.8% loan growth and 23bp ROA expansion.
- **Share Buyback Activism**: $100M repurchase program launched, with $10M executed to date.
- **Strong Capital Position**: 8.9% tangible common equity ratio, 11.5% common equity Tier 1 capital.
- **Profitability Drivers**: 3.22% net interest margin, 54.5% efficiency ratio, $30M noninterest income.
- **Credit Resilience**: 1.47% ACL coverage ratio, $22M NPA resolution without loss, stable pipeline.
- **Tariff Neutral**: No material credit stress identified, tariffs impacting inventory/receivables but not loan demand.
- **Mortgage Momentum**: Q1 gains up 50% YoY, 2025 pipeline supports double-digit growth.
- **Expense Discipline**: $3.4M QoQ savings, 1-3% 2025 expense growth guidance.


**【CEO Summary Section】**
- First Quarter 2025 net income of $54.9 million, up 15.6% YoY, driven by 4.8% annualized loan growth and 23-basis point increase in return on assets.
- Total assets of $18.4 billion, with $13 billion in loans and $14.5 billion in deposits.
- Board approves $100 million share repurchase program, with $10 million executed to date.
- Tangible common equity ratio of 8.9%, above target levels, supporting strategic flexibility.

**【CFO Financial Commentary】**
- GAAP EPS of $0.94, up 17.5% YoY, with core EPS growth of 10.6% after adjusting for prior year integration costs.
- Net interest margin of 3.22%, stable on a normalized basis despite day count impact.
- Noninterest income of $30 million, with mortgage gains up 50% YoY.
- Expense management results in 54.54% efficiency ratio, down $3.4 million QoQ.

**【Credit Officer Update】**
- Loan portfolio yield of 6.21%, with new loans priced at 6.96%.
- Allowance for credit losses of $192 million (1.47% coverage ratio), well above peer levels.
- Nonaccrual loans of $91.2 million, with $22 million multifamily NPA scheduled for resolution without loss.
- Pipeline remains strong, with C&amp;I revolver usage up due to reduced client cash balances.

**【Q&A Highlights】**
- **Tariff Impact**: Minimal direct credit stress identified, but tariffs influencing inventory and receivables.
- **Mortgage Growth**: Q1 gains 50% higher YoY, with strong pipeline for 2025.
- **Expense Guidance**: 1-3% growth over 2024 base, supported by disciplined cost control.
- **Margin Outlook**: Stable at 3.22% with potential for modest expansion if Fed cuts rates.
- **M&amp;A Strategy**: Focused on organic growth, with no new acquisitions planned in 2025.
- **Capital Deployment**: Using securities portfolio runoff to fund loan growth, with $214 million in 2025 cash flows.
- **Credit Quality**: Classified loans at 2.78%, with 15 basis points of annualized charge-offs.
- **Share Repurchases**: $10 million executed to date, with $90 million remaining under program.


First Merchants (FRME)-24 Apr 25-2025 Q1 Earnings call transcript

- **Q4 Strong Performance**: 6% loan growth, 5bps NIM expansion, and $1.10 EPS highlight resilient execution amid macro challenges.
- **2025 Growth Drivers**: Mid-single-digit loan growth, 7.12% new loan yields, and $270M maturing securities to fuel margin expansion.
- **Cost Discipline**: 2025 expense growth capped at 3%, with deposit beta guiding cost management.
- **Strategic Focus**: Core market expansion in Michigan and CRE growth (multi-family, industrial) alongside disciplined capital returns.

**【CEO Summary Section】**
- **Q4 2024 Highlights**: Revenue growth driven by 6% quarterly loan growth, net interest margin expanded by 5 basis points to 6.55%, and EPS of $1.10 (including a $20M gain from branch sales). Full-year net income was $200M, up 12% YoY.
- **Strategic Initiatives**: Completed 5 branch sales, upgraded tech platforms (Terafina, InnoTrust), and reduced non-core assets. 2025 focus on core markets (Indiana, Ohio, Michigan) with minimal distractions.
- **Financial Health**: Tangible book value per share grew 25% over two years to $26.78, and efficiency ratio improved to 53.6%.

**【CFO Financial Commentary】**
- **Net Interest Income**: $140.2M (FTE), up $3.2M QoQ, driven by declining funding costs (deposit beta 46%) and higher new loan yields (7.12%).
- **Non-Interest Income**: $34.4M (normalized), with strong mortgage and wealth management fees. Full-year non-interest income grew 10%.
- **Expense Management**: Q4 expenses up 1.8% YoY, with 2025 guidance for 1-3% growth. Core efficiency ratio maintained below 54%.
- **Capital Position**: Common equity Tier 1 ratio at 11.43%, supporting strategic flexibility.

**【Q&A Key Highlights】**
- **Margin Outlook**: 2025 net interest margin expansion expected via repricing of $270M in maturing securities and strong new loan yields. Deposit beta will guide cost management.
- **Loan Growth**: 6% Q4 growth (C&I +3%, CRE +80M), with 2025 targets for mid-single-digit growth. Michigan market expansion and CRE opportunities (multi-family, industrial) key drivers.
- **Deposit Strategy**: Reduced maturity deposits by $430M YoY, focusing on core operating accounts. Q4 deposit cost decline of 31bps to 2.43%.
- **Capital Allocation**: Share buybacks and dividends ($138M in 2024) prioritized when trading below historical multiples. M&A focus on core states with accretive opportunities.
- **Credit Quality**: Stable with 1.5% ACL coverage. 2025 charge-off expectations remain below 20bps, supported by strong underwriting and sponsor finance portfolio stability.

FRME

FRME fundamentals

Earnings Call

You can ask Aime