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- **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

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

FRMEP

FRMEP fundamentals

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