IntrinsicIntrinsic
← All summaries

FIRST MERCHANTS CORP

FRME
Financials & Chart →

Business Summary

First Merchants Corporation operates as a financial holding company headquartered in Muncie, Indiana, with its business activities currently limited to one significant business segment, which is community banking. The Corporation conducts its banking operations through First Merchants Bank, a wholly-owned subsidiary that opened for business in Muncie, Indiana in March 1893. The Bank includes 111 banking locations in Indiana, Ohio, and Michigan, and also operates First Merchants Private Wealth Advisors as a division. In addition to its branch network, the Corporation offers comprehensive electronic and mobile delivery channels to its customers.

The Bank faces substantial competition across all areas of its operations from a variety of competitors, many of which are larger and have more financial resources. Such competitors primarily include national, regional and internet banks within the various markets in which the Bank operates, though the Bank also competes with smaller community banks that seek to offer similar service levels. The Bank also faces competition from many other types of institutions, including savings and loans associations, credit unions, finance companies, brokerage firms, insurance companies, and other financial intermediaries. The Bank believes that the most important criteria to its targeted clients when selecting a bank include the quality of customer service and convenient access to a broad array of financial products, and that many of its targeted clients prefer to deal with an institution that favors local decision making.

Through the Bank, the Corporation offers a broad range of commercial and consumer banking services. The commercial banking team offers a full spectrum of debt capital, treasury management services and depository products. The consumer banking group offers a variety of consumer deposit and lending products. The mortgage banking team offers consumer mortgage solutions to assist with the purchase, refinance, construction or renovation of residential properties. Private Wealth Advisors offers personal wealth management services with expertise in investment management, private banking, fiduciary estate and financial planning. All inter-company transactions are eliminated during the preparation of consolidated financial statements.

The Corporation's commercial banking team offers a full spectrum of debt capital, treasury management services and depository products. The consumer banking group offers a variety of consumer deposit and lending products. The mortgage banking team offers consumer mortgage solutions to assist with the purchase, refinance, construction or renovation of residential properties. Private Wealth Advisors offers personal wealth management services with expertise in investment management, private banking, fiduciary estate and financial planning.

The Corporation's loan portfolio is composed of several major categories. Commercial and industrial loans totaled $4,478,282 as of December 31, 2025, representing 32.4 percent of total loans. Agricultural land, production and other loans to farmers totaled $283,125 , representing 2.1 percent of total loans. Real estate loans included construction loans of $804,775 (5.8 percent ), commercial real estate non-owner occupied loans of $2,338,666 (17.0 percent ), commercial real estate owner occupied loans of $1,237,100 (9.0 percent ), residential loans of $2,420,310 (17.5 percent ), and home equity loans of $710,980 (5.2 percent ). Individuals' loans for household and other personal expenditures totaled $155,436 (1.1 percent ), and public finance and other commercial loans totaled $1,363,033 (9.9 percent ). The total loan portfolio was $13,791,707 as of December 31, 2025.

On February 1, 2026, the Corporation completed the acquisition of First Savings Financial Group, Inc., an Indiana corporation, pursuant to the Agreement and Plan of Merger dated as of September 24, 2025. First Savings was headquartered in Jeffersonville, Indiana and had 16 banking centers serving the southern Indiana market and had total assets of $2.4 billion (unaudited), total loans of $1.9 billion (unaudited), and total deposits of $1.7 billion (unaudited) as of December 31, 2025. For the year ended December 31, 2025, the Corporation recorded merger-related expenses of $0.8 million related to the First Savings acquisition. On March 18, 2025, the Board of Directors approved a stock repurchase program of up to 2,927,000 shares of the Corporation's outstanding common stock, provided that the total aggregate investment in shares repurchased under the program may not exceed $100.0 million . The Corporation repurchased 1.2 million shares of its common stock pursuant to the repurchase program during 2025, for total consideration of $46.9 million . As of December 31, 2025, approximately 1.7 million shares remained available for repurchase under the program, with an aggregate remaining authorization of $53.1 million .

The Corporation reported net income available to common stockholders for the year ended 2025 of $224.1 million and diluted earnings per common share of $3.88 , compared to $199.5 million and $3.41 for the year ended 2024. Total assets equaled $19.0 billion as of December 31, 2025, an increase of $713.1 million , or 3.9 percent , from December 31, 2024. Net interest income was $536,013 for 2025 compared to $521,114 for 2024. Noninterest income was $126,934 for 2025 compared to $125,580 for 2024. Noninterest expense was $382,583 for 2025 compared to $379,266 for 2024.

Business Outlook

The Corporation anticipates that it will continue its policy of geographic expansion of its banking business through the acquisition of banks whose operations are consistent with its banking philosophy. Management routinely explores opportunities to acquire financial institutions and other financial services-related businesses and to enter into strategic alliances to expand the scope of the Corporation's services and customer base. Future acquisitions and divestitures will be driven by a disciplined financial evaluation process and will be consistent with the Corporation's strategy of community banking, client relationships and consistent quality earnings. As with previous acquisitions, the consideration paid in future acquisitions may be in the form of cash or First Merchants common stock, or a combination thereof.

The Corporation completed the acquisition of First Savings Financial Group, Inc. on February 1, 2026, which had 16 banking centers serving the southern Indiana market and had total assets of $2.4 billion (unaudited), total loans of $1.9 billion (unaudited), and total deposits of $1.7 billion (unaudited) as of December 31, 2025. The Corporation engaged in this transaction with the objective that the transaction would be accretive to earnings and add to the existing market area in Indiana that has a demographic profile consistent with many of the current Midwest markets served by the Bank.

The Corporation's commercial banking team offers a full spectrum of debt capital, treasury management services and depository products. The consumer banking group offers a variety of consumer deposit and lending products. The mortgage banking team offers consumer mortgage solutions to assist with the purchase, refinance, construction or renovation of residential properties. Private Wealth Advisors offers personal wealth management services with expertise in investment management, private banking, fiduciary estate and financial planning.

The Corporation's net interest margin on an FTE basis increased 6 basis points to 3.25 percent for the year ended December 31, 2025 compared to 3.19 percent for the same period in 2024. The net interest margin improved driven by a 35 basis point reduction in the cost of interest-bearing liabilities to 2.82 percent from 3.17 percent . The efficiency ratio was 54.54 percent for 2025 compared to 53.55 percent for 2024.

As of December 31, 2025, the Corporation and its subsidiaries had 2,086 full-time equivalent employees . The Bank set a goal in 2025 to maintain a 20 percent or lower voluntary turnover rate and achieved an overall turnover rate of 18 percent in 2025. The Corporation offers an education assistance program and in 2025, over 55 employees participated in this program. Training completion rates were very high related to required development at 99.7 percent completion for required courses.

On March 18, 2025, the Board of Directors of the Corporation approved a stock repurchase program of up to 2,927,000 shares of the Corporation's outstanding common stock, provided that the total aggregate investment in shares repurchased under the program may not exceed $100.0 million . The Corporation repurchased 1.2 million shares of its common stock pursuant to the repurchase program during 2025, for total consideration of $46.9 million . As of December 31, 2025, approximately 1.7 million shares remained available for repurchase under the program, with an aggregate remaining authorization of $53.1 million . The Corporation has traditionally paid a quarterly dividend to common stockholders, with cash dividends paid to common stockholders of $1.43 in 2025 compared to $1.39 in 2024.

The Corporation's business activities and earnings are affected by general business conditions in the United States and abroad, including short-term and long-term interest rates, inflation, monetary supply, fluctuations in both debt and equity capital markets, and the strength of the United States economy and the state and local economies in which the Corporation operates. The Corporation's offices are primarily located in Indiana, Ohio and Michigan. Worsening economic conditions in these market areas could negatively impact the financial condition, results of operations and stock price of the Corporation. Changes in the domestic interest rate environment could affect the Corporation's net interest income as well as the valuation of assets and liabilities.

The Corporation is subject to extensive regulation under federal and state laws, and changes in the laws, regulations and policies governing banks and financial services companies could alter the Corporation's business environment and adversely affect operations. The Corporation and the Bank are heavily regulated at the federal and state levels, and Congress and state legislatures and federal and state agencies continually review banking laws, regulations and policies for possible changes. The Corporation's FDIC insurance premiums may increase, and special assessments could be made, which might negatively impact its results of operations.

Risk Factors

The Corporation's allowances for credit losses may not be adequate to cover actual losses, as the determination of appropriate levels involves a high degree of subjectivity and judgment, and the Corporation adopted the CECL model on January 1, 2021, which substantially changed how it calculates allowances. The Corporation had goodwill of $712.0 million recorded on its Consolidated Balance Sheet as of December 31, 2025, and a write-down of all or part of this goodwill could materially reduce net income and net worth. Changes in the domestic interest rate environment could affect net interest income and the valuation of assets and liabilities, and the Corporation's operations are dependent to a large degree on net interest income, which is the difference between interest income from loans and investments and interest expense on deposits and borrowings. The Corporation's wholesale funding sources may prove insufficient to replace deposits or support future growth, and as of December 31, 2025, uninsured deposits totaled 28.6 percent of total deposits. Acquisitions may not produce revenue enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties, as the Corporation regularly explores opportunities to acquire banks and other financial institutions.

Management Priorities

Management's discussion and analysis conveys a tone of disciplined financial management and strategic growth, emphasizing the completion of the First Savings acquisition on February 1, 2026, which had total assets of $2.4 billion (unaudited), total loans of $1.9 billion (unaudited), and total deposits of $1.7 billion (unaudited) as of December 31, 2025, with the objective that the transaction would be accretive to earnings. Key strategic priorities include geographic expansion through disciplined acquisitions, maintaining strong capital ratios with the Corporation being well capitalized based on required Basel III Minimum Capital ratios, and optimizing the balance sheet as evidenced by the repositioning of the investment securities portfolio in 2024 and the stock repurchase program approved on March 18, 2025 for up to 2,927,000 shares not to exceed $100.0 million . Management also emphasizes credit quality, noting that the allowance for credit losses on loans totaled $195.6 million as of December 31, 2025 and equaled 1.42 percent of total loans, and that the Corporation continued to maintain all regulatory capital ratios in excess of the regulatory definition of well-capitalized.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Loan Portfolio
  2. [2] Item 1, Business — Loan Portfolio
  3. [3] Item 1, Business — Loan Portfolio
  4. [4] Item 1, Business — Loan Portfolio
  5. [5] Item 1, Business — Loan Portfolio
  6. [6] Item 1, Business — Loan Portfolio
  7. [7] Item 1, Business — Loan Portfolio
  8. [8] Item 1, Business — Loan Portfolio
  9. [9] Item 1, Business — Loan Portfolio
  10. [10] Item 1, Business — Loan Portfolio
  11. [11] Item 1, Business — Loan Portfolio
  12. [12] Item 1, Business — Loan Portfolio
  13. [13] Item 1, Business — Loan Portfolio
  14. [14] Item 1, Business — Loan Portfolio
  15. [15] Item 1, Business — Loan Portfolio
  16. [16] Item 1, Business — Loan Portfolio
  17. [17] Item 1, Business — Loan Portfolio
  18. [18] Item 1, Business — Loan Portfolio
  19. [19] Item 1, Business — Loan Portfolio
  20. [20] Item 1, Business — Business Developments
  21. [21] Item 1, Business — Business Developments
  22. [22] Item 1, Business — Business Developments
  23. [23] Item 1, Business — Business Developments
  24. [24] Item 5, Market for Registrant's Common Equity — Purchases of Equity Securities
  25. [25] Item 5, Market for Registrant's Common Equity — Purchases of Equity Securities
  26. [26] Item 7, MD&A — Capital
  27. [27] Item 7, MD&A — Capital
  28. [28] Item 5, Market for Registrant's Common Equity — Purchases of Equity Securities
  29. [29] Item 7, MD&A — Capital
  30. [30] Item 7, MD&A — Results of Operations - 2025
  31. [31] Item 7, MD&A — Financial Highlights
  32. [32] Item 7, MD&A — Results of Operations - 2025
  33. [33] Item 7, MD&A — Financial Highlights
  34. [34] Item 7, MD&A — Results of Operations - 2025
  35. [35] Item 7, MD&A — Results of Operations - 2025
  36. [36] Item 7, MD&A — Results of Operations - 2025
  37. [37] Item 7, MD&A — Financial Highlights
  38. [38] Item 7, MD&A — Financial Highlights
  39. [39] Item 7, MD&A — Financial Highlights
  40. [40] Item 7, MD&A — Financial Highlights
  41. [41] Item 7, MD&A — Financial Highlights
  42. [42] Item 7, MD&A — Financial Highlights
  43. [43] Item 1, Business — Business Developments
  44. [44] Item 1, Business — Business Developments
  45. [45] Item 1, Business — Business Developments
  46. [46] Item 7, MD&A — Net Interest Income
  47. [47] Item 7, MD&A — Net Interest Income
  48. [48] Item 7, MD&A — Net Interest Income
  49. [49] Item 7, MD&A — Net Interest Income
  50. [50] Item 7, MD&A — Financial Highlights
  51. [51] Item 7, MD&A — Financial Highlights
  52. [52] Item 1, Business — Human Capital
  53. [53] Item 1, Business — Human Capital
  54. [54] Item 1, Business — Human Capital
  55. [55] Item 1, Business — Human Capital
  56. [56] Item 5, Market for Registrant's Common Equity — Purchases of Equity Securities
  57. [57] Item 5, Market for Registrant's Common Equity — Purchases of Equity Securities
  58. [58] Item 7, MD&A — Capital
  59. [59] Item 7, MD&A — Capital
  60. [60] Item 5, Market for Registrant's Common Equity — Purchases of Equity Securities
  61. [61] Item 7, MD&A — Capital
  62. [62] Item 7, MD&A — Financial Highlights
  63. [63] Item 7, MD&A — Financial Highlights
  64. [64] Item 1A, Risk Factors
  65. [65] Item 7, MD&A — Results of Operations - 2025
  66. [66] Item 1, Business — Business Developments
  67. [67] Item 1, Business — Business Developments
  68. [68] Item 1, Business — Business Developments
  69. [69] Item 5, Market for Registrant's Common Equity — Purchases of Equity Securities
  70. [70] Item 5, Market for Registrant's Common Equity — Purchases of Equity Securities
  71. [71] Item 7, MD&A — Results of Operations - 2025
  72. [72] Item 7, MD&A — Results of Operations - 2025
  73. [73] Item 7, MD&A — Financial Highlights
  74. [74] Item 7, MD&A — Financial Highlights
  75. [75] Item 7, MD&A — Financial Highlights
  76. [76] Item 7, MD&A — Financial Highlights
  77. [77] Item 7, MD&A — Financial Highlights
  78. [78] Item 7, MD&A — Financial Highlights
  79. [79] Item 7, MD&A — Financial Highlights
  80. [80] Item 7, MD&A — Financial Highlights
  81. [81] Item 7, MD&A — Financial Highlights
  82. [82] Item 7, MD&A — Financial Highlights
  83. [83] Item 7, MD&A — Noninterest Income
  84. [84] Item 7, MD&A — Noninterest Income
  85. [85] Item 7, MD&A — Financial Highlights
  86. [86] Item 7, MD&A — Financial Highlights
  87. [87] Item 7, MD&A — Financial Highlights
  88. [88] Item 7, MD&A — Financial Highlights
  89. [89] Item 7, MD&A — Financial Highlights
  90. [90] Item 7, MD&A — Financial Highlights
  91. [91] Item 7, MD&A — Financial Highlights
  92. [92] Item 7, MD&A — Financial Highlights
  93. [93] Item 7, MD&A — Financial Highlights
  94. [94] Item 7, MD&A — Financial Highlights
  95. [95] Item 7, MD&A — Financial Highlights
  96. [96] Item 7, MD&A — Financial Highlights
  97. [97] Item 7, MD&A — Financial Highlights
  98. [98] Item 7, MD&A — Financial Highlights
  99. [99] Item 7, MD&A — Financial Highlights
  100. [100] Item 7, MD&A — Financial Highlights
  101. [101] Item 7, MD&A — Financial Highlights
  102. [102] Item 7, MD&A — Financial Highlights
  103. [103] Item 7, MD&A — Financial Highlights
  104. [104] Item 7, MD&A — Financial Highlights
  105. [105] Item 7, MD&A — Financial Highlights
  106. [106] Item 7, MD&A — Financial Highlights
  107. [107] Item 7, MD&A — Financial Highlights
  108. [108] Item 7, MD&A — Financial Highlights
  109. [109] Item 1, Business — Business Developments

Analysis on 6/21/2026