Core Insights - First Merchants (FRME) reported quarterly earnings of $1 per share, exceeding the Zacks Consensus Estimate of $0.90 per share, and showing an increase from $0.87 per share a year ago, resulting in an earnings surprise of 11.11% [1] - The company achieved revenues of $177.11 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 9.80% and increasing from $156.51 million year-over-year [2] - First Merchants has outperformed the S&P 500, gaining approximately 3.4% since the beginning of the year compared to the S&P 500's gain of 2.7% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.85 on revenues of $159 million, while the estimate for the current fiscal year is $3.55 on revenues of $652.8 million [7] - The estimate revisions trend for First Merchants is favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Banks - Midwest industry, to which First Merchants belongs, is currently ranked in the top 6% of over 250 Zacks industries, suggesting a strong performance potential [8] - Another company in the same industry, Heartland Financial (HTLF), is expected to report quarterly earnings of $1.03 per share, reflecting a year-over-year change of -2.8%, with revenues projected at $175.79 million, up 296.5% from the previous year [9]

Financial Performance - Fourth quarter 2024 net income available to common stockholders was $63.9 million, up from $42.0 million in Q4 2023, with diluted earnings per share increasing to $1.10 from $0.71[1][2] - Adjusted net income for Q4 2024 was $58.1 million, or $1.00 per share, compared to $53.4 million, or $0.90 per share in Q4 2023[2] - Net income for Q4 2024 was $64,349,000, up from $42,479,000 in Q4 2023, while net income for the year decreased to $201,402,000 from $223,786,000[20] - The company reported net charge-offs of $771,000 for Q4 2024, significantly lower than $3,148,000 in Q4 2023, with total charge-offs for the year at $49,377,000 compared to $25,643,000[21] - Adjusted Net Income Available to Common Stockholders for the twelve months ended December 31, 2024, was $203,315,000, down from $236,707,000 in 2023, a decrease of approximately 14.1%[29] Asset and Loan Growth - Total loans grew by $185.6 million, or 5.9% annualized, on a linked quarter basis, and by $368.1 million, or 2.9% year-over-year[3] - Total loans as of December 31, 2024, amounted to $12,757.7 million, with a net interest income of $208.9 million, resulting in an interest rate of 6.55%[27] - Commercial and industrial loans increased to $4,114,292,000 in Q4 2024, up from $4,041,217,000 in Q3 2024, a growth of 1.9%[25] - Total Loans increased to $12,634,324,000 for the twelve months ended December 31, 2024, up from $12,297,974,000, representing a growth of about 2.7%[28] Deposit Trends - Total deposits were $14.5 billion, decreasing by $299.8 million, or 2.0%, over the past twelve months, primarily due to the sale of Illinois branches[5] - Total deposits as of December 31, 2024, reached $14,521.6 million, an increase from $14,365.1 million on September 30, 2024, representing a growth of 1.1%[26] - Demand deposits increased to $7,980.1 million from $7,678.5 million, reflecting a growth of 3.9% quarter-over-quarter[26] - The company completed the sale of $267.4 million of deposits associated with the Illinois branch on December 6, 2024[26] Income and Expense Analysis - Noninterest income for the quarter totaled $42.7 million, an increase of $17.9 million compared to Q3 2024 and $16.3 million compared to Q4 2023[8] - Noninterest income for Q4 2024 increased to $42,742,000 from $26,444,000 in Q4 2023, with total noninterest income for the year rising to $125,580,000 from $105,602,000[20] - Total Noninterest Expenses rose to $96,289,000 in Q4 2024, compared to $94,629,000 in Q3 2024, reflecting a 1.8% increase[24] - Adjusted Non Interest Expense (Non-GAAP) for Q4 2024 was $94,291, slightly up from $91,915 in Q3 2024, showing a 2.5% increase[32] Capital and Efficiency Ratios - The Common Equity Tier 1 Capital Ratio stood at 11.43%, reflecting a strong capital position[2][10] - The efficiency ratio improved to 48.48% in Q4 2024 from 63.26% in Q4 2023, reflecting better cost management[21] - Efficiency Ratio (Non-GAAP) decreased to 48.48% in Q4 2024 from 53.76% in Q3 2024, indicating improved operational efficiency[32] - Total Average Stockholders' Equity (GAAP) increased to $2,312,270 in Q4 2024 from $2,251,547 in Q3 2024, a growth of 2.7%[31] Interest Income and Margin - Total interest income for Q4 2024 was $234,642,000, a slight decrease from $236,990,000 in Q4 2023, while total interest income for the year increased to $948,006,000 from $893,886,000[20] - Net interest income after provision for credit losses for Q4 2024 was $130,170,000, compared to $128,563,000 in Q4 2023, with a yearly total of $485,414,000 down from $541,900,000[20] - The net interest margin (FTE) for the three months ended December 31, 2024, was 3.28%, slightly up from 3.16% in the previous year[27] - The Net Interest Margin (FTE) for the twelve months ended December 31, 2024, was 3.19%, compared to 3.35% for the previous year, indicating a decline of 16 basis points[30]

Core Insights - First Merchants Corporation reported a strong fourth quarter for 2024, with significant increases in net income, core earnings, net interest margin (NIM), and return on assets (ROA) [2][3]. Financial Performance - The net income available to common stockholders for Q4 2024 was $63.9 million, up from $42.0 million in Q4 2023, resulting in diluted earnings per share of $1.10 compared to $0.71 in the previous year [3][11]. - Adjusted net income, excluding non-core items, was $58.1 million or $1.00 per share, compared to $53.4 million or $0.90 in Q4 2023 [3][11]. - Net interest income for the quarter was $134.4 million, reflecting a 2.5% increase from the prior quarter and a 3.3% increase from Q4 2023 [9][11]. - Noninterest income totaled $42.7 million, a significant increase of $17.9 million from Q3 2024 and $16.3 million from Q4 2023 [10][11]. Asset and Loan Growth - Total assets at the end of Q4 2024 were $18.3 billion, with total loans amounting to $12.9 billion, representing a year-over-year growth of $368.1 million or 2.9% [5][11]. - Loans grew by $185.6 million or 5.9% annualized on a linked quarter basis, primarily driven by commercial loans [5][11]. Deposit Trends - Total deposits were $14.5 billion, down by $299.8 million or 2.0% year-over-year, largely due to the sale of Illinois branches [7][11]. - Excluding the impact of branch sales, deposits declined by $32.4 million in 2024, but increased by $156.5 million or 4.4% annualized on a linked quarter basis [7][11]. Credit Quality - The allowance for credit losses on loans was $192.8 million, or 1.50% of total loans, with non-performing assets to total assets at 0.43%, an increase from 0.35% in the prior quarter [8][22]. - Net charge-offs for the quarter were $0.8 million, with a provision for loans of $5.7 million recorded [8][11]. Capital Position - The Corporation maintained a strong capital position with a Common Equity Tier 1 Capital Ratio of 11.43% and a Tangible Common Equity to Tangible Assets Ratio of 8.81% [11][12].

Core Viewpoint - First Merchants (FRME) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in a company's earnings picture, with the Zacks Consensus Estimate reflecting EPS estimates from sell-side analysts [1][2]. - Changes in future earnings potential, as shown by earnings estimate revisions, are strongly correlated with near-term stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [4]. Business Outlook - The upgrade suggests an improvement in First Merchants' underlying business, which could lead to increased investor interest and a potential rise in stock price [5]. - For the fiscal year ending December 2024, First Merchants is expected to earn $3.38 per share, representing a decrease of 13.1% from the previous year, although analysts have raised their estimates by 0.1% over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [7]. - The upgrade to Zacks Rank 2 places First Merchants in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Viewpoint - First Merchants Corporation is set to report its fourth quarter 2024 financial results on January 30, 2025, and will host a conference call and webcast for investors [1]. Group 1: Financial Reporting - The fourth quarter 2024 financial results will be reported on January 30, 2025 [1]. - A conference call and webcast will take place at 11:30 a.m. (ET) on the same day [1]. - Participants can register for the call to receive a phone number and access code [1]. Group 2: Company Overview - First Merchants Corporation is a financial holding company based in Muncie, Indiana [2]. - The company operates one full-service bank charter, known as First Merchants Bank, which also includes a division for wealth management [2]. Group 3: Stock Information - First Merchants Corporation's common stock is traded on the NASDAQ under the symbol FRME [3]. - Stock quotations are available in daily newspapers and on the company's website [3].

Capital Adequacy - Common Equity Tier 1 Capital Ratio stands at 11.25% and Tangible Common Equity to Tangible Assets Ratio at 8.76%[205] - As of September 30, 2024, the total risk-based capital ratio for First Merchants Corporation is 13.18%, while First Merchants Bank's ratio is 12.66%[267] - First Merchants Corporation's Tier 1 capital to risk-weighted assets ratio stands at 11.41%, and First Merchants Bank's ratio is 11.41% as of September 30, 2024[267] - The common equity tier 1 capital ratio for First Merchants Corporation is 11.35%, and for First Merchants Bank, it is 11.80% as of September 30, 2024[267] - The tangible common equity to tangible assets ratio for First Merchants Corporation improved to 8.76% at September 30, 2024, up from 8.40% at December 31, 2023[269] - The Corporation's total risk-based capital was $1,994,480 thousand as of September 30, 2024, with net risk-weighted assets of $15,132,640 thousand[267] - The Corporation began a five-year phase-out of $13.0 million in tier 2 capital as defined in the Basel III capital rules[263] Financial Performance - Net income available to common stockholders for Q3 2024 was $48.7 million, or $0.84 per diluted share, down from $55.9 million, or $0.94 per diluted share in Q3 2023[207] - Adjusted earnings per diluted share for Q3 2024 totaled $0.95, compared to $0.96 in Q3 2023 and $0.68 in Q2 2024[208] - Noninterest income for the three months ended September 30, 2024, totaled $24.9 million, a decrease of $3.0 million or 10.7% compared to the same period in 2023, primarily due to $9.1 million in losses on sales of available for sale securities[246] - For the nine months ended September 30, 2024, noninterest income increased to $82.8 million, a rise of $3.7 million or 4.6% compared to the same period in 2023, driven by increases in net gains and fees on sales of loans and fiduciary and wealth management fees[247] - Noninterest expense for the nine months ended September 30, 2024, totaled $283.0 million, an increase of $2.8 million or 1.0% compared to the same period in 2023, with FDIC assessments rising by $4.2 million[249] Asset and Loan Quality - Total loans amounted to $12.65 billion, with commercial and industrial loans at $3.43 billion, agricultural loans at $199.83 million, and real estate loans totaling $8.55 billion[274][276] - Non-accrual loans increased to $59.1 million, up $5.5 million from December 31, 2023, primarily due to a $11.4 million rise in non-accrual balances in commercial real estate, non-owner occupied[278] - Loans 90 days or more delinquent and still accruing rose to $14.1 million, an increase of $13.9 million from December 31, 2023, driven mainly by one relationship totaling $13.0 million[279] - Net charge-offs for the three months ended September 30, 2024, totaled $6.7 million, compared to $20.4 million for the same period in 2023[286] - The provision for credit losses for the nine months ended September 30, 2024, was $31.5 million, compared to $2.0 million for the same period in 2023[286] - The total nonperforming assets, including non-accrual loans and loans 90 days or more delinquent, amounted to $78.44 million, up from $58.58 million at December 31, 2023[281][282] Deposits and Borrowings - Total deposits decreased by $456.4 million, or 4.1% annualized, from December 31, 2023, primarily due to $287.7 million of deposits reclassified as held for sale[215] - Average account balance within the deposit portfolio was $34,000 as of September 30, 2024[216] - Total borrowings increased by $52.3 million as of September 30, 2024, primarily due to an increase in federal funds purchased and FHLB advances[217] - Average interest-bearing deposits increased by $674.0 million for the nine months ended September 30, 2024 compared to the same period in 2023[234] - Total available remaining borrowing capacity from the FHLB and Federal Reserve at September 30, 2024, was $762.6 million and $1.1 billion, respectively[291] Interest Income and Margin - Net interest margin for Q3 2024 is 3.23%, compared to 3.16% in Q2 2024 and 3.29% in Q3 2023[205][224] - Net interest income accounted for 82.4% of revenues for the nine months ended September 30, 2024[228] - Interest expense on deposits increased by $86.9 million for the nine months ended September 30, 2024, or 80 basis points compared to the same period in 2023[240] - Average earning assets increased by $42.7 million for the three months ended September 30, 2024, driven by average loan growth of $392.5 million[231] - The Corporation's net interest income simulation modeling indicates a 4.4% increase for a rising 200 basis points scenario compared to a 4.0% increase as of December 31, 2023[302] - For a rising 100 basis points scenario, the estimated net interest income is projected to increase by 3.3% as of September 30, 2024, up from 2.1% as of December 31, 2023[302] - In a falling 100 basis points scenario, the Corporation anticipates a decrease of (1.7)% in net interest income as of September 30, 2024, compared to a decrease of (5.0)% as of December 31, 2023[302] - The projected decrease in net interest income for a falling 200 basis points scenario is (3.5)% as of September 30, 2024, compared to (7.8)% as of December 31, 2023[302] Liquidity Management - The Corporation's liquidity is primarily derived from core deposit growth, loan principal payments, and the sale and maturity of investment securities[289] - The Corporation's liquidity and interest sensitivity position as of September 30, 2024, is deemed adequate to achieve optimum interest margins while mitigating interest rate risk[296] - Management utilizes GAP/Interest Rate Sensitivity Reports and Net Interest Income Simulation Modeling, which are constructed and monitored quarterly[296] - The interest rate scenarios used for analysis do not necessarily reflect management's view of future market movements but measure potential volatility in earnings[297] - The Corporation's asset liability process evaluates simulated net interest income under three interest rate scenarios: base, rising, and falling[297] Taxation - Income tax expense for the three months ended September 30, 2024, was $7.2 million on pre-tax net income of $56.3 million, compared to $9.0 million on pre-tax income of $65.4 million for the same period in 2023[250] - The effective income tax rate for the three months ended September 30, 2024, was 12.7%, down from 13.8% in the same period in 2023, primarily due to a larger portion of tax-exempt interest income[252] Internal Controls - There have been no material changes in the Corporation's internal control over financial reporting during the last fiscal quarter[308]

Financial Data and Key Metrics Changes - Total assets reached $18.3 billion, total loans at $12.7 billion, total deposits at $14.4 billion, and assets under advisement at $5.6 billion [5] - Earnings per share for the quarter totaled $0.84, or $0.95 after adjusting for a $9.1 million loss from the sale of securities [5] - Tangible book value per share increased by $4.21 or 19% year-over-year, reaching $26.64 [6] - Adjusted net interest margin improved by 7 basis points quarter-over-quarter, supporting a sub-55% efficiency ratio for the quarter [6] Business Line Data and Key Metrics Changes - Total loans grew by 0.5% on an annualized basis during the quarter, with commercial and industrial (C&I) loans growing by 1% [8][9] - The investment real estate portfolio declined over 11% throughout 2024, with a slowdown in the decline to just over $20 million in Q3 [10] - The consumer portfolio grew more than 1.5%, driven primarily by private banking and HELOC portfolios [12] Market Data and Key Metrics Changes - Total deposits grew at a 2.3% annualized rate for the quarter, with a decline of only 1.5% for the full year [13] - The commercial segment saw deposit growth despite a reduction of over $170 million in public fund balances [13] Company Strategy and Development Direction - The company is focused on organic growth in 2025 and is open to well-priced inorganic growth opportunities [4] - Completed four major technology initiatives to enhance customer acquisition strategies and improve client experiences [7] - The strategy includes a shift towards core deposit accounts, reducing focus on higher-cost public funds and time deposits [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth momentum and the potential for higher earnings in the future due to balance sheet restructuring [5][6] - The company anticipates a $20 million to $25 million gain from the sale of branches in Q4, which will support future growth [5] - Management remains cautious about the impact of interest rate cuts on net interest income but is focused on maintaining growth [30][31] Other Important Information - The company has a strong capital position with a common equity Tier 1 ratio of 11.25% and a tangible common equity ratio of 8.76% [21] - The allowance for credit losses at quarter-end was $187.8 million, with a coverage ratio of 1.48% [18] Q&A Session Summary Question: Impact of security sales on net interest income for 2025 - Management is still budgeting for 2025 and will provide better guidance in January, but expects some margin compression in a declining rate environment [30] Question: Loan growth expectations for Q4 and 2025 - C&I growth is expected to continue in Q4, with overall loan growth projected in the mid-single digits for 2025 [39][41] Question: Increase in classified loans - The increase was primarily in investment real estate and some pressure within the C&I portfolio due to higher rates [44] Question: M&A environment and potential targets - The company is interested in banks in Indiana, Iowa, and Michigan that are underperforming and have potential for growth post-acquisition [61] Question: Tax rate expectations - The tax rate is expected to be between 13% and 14% going forward [64]

First Merchants (FRME) reported $155.98 million in revenue for the quarter ended September 2024, representing a year-over-year decline of 3.3%. EPS of $0.95 for the same period compares to $0.94 a year ago.The reported revenue represents a surprise of -2.85% over the Zacks Consensus Estimate of $160.55 million. With the consensus EPS estimate being $0.91, the EPS surprise was +4.40%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to d ...

First Merchants (FRME) came out with quarterly earnings of $0.95 per share, beating the Zacks Consensus Estimate of $0.91 per share. This compares to earnings of $0.94 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 4.40%. A quarter ago, it was expected that this bank would post earnings of $0.78 per share when it actually produced earnings of $0.68, delivering a surprise of -12.82%.Over the last four quarters, the company has ...

MUNCIE, Ind., Oct. 24, 2024 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) Third Quarter 2024 Highlights: Net income available to common stockholders was $48.7 million and diluted earnings per common share totaled $0.84, compared to $55.9 million and $0.94 in the third quarter of 2023, and $39.5 million and $0.68 in the second quarter of 2024.   Excluding the loss from repositioning of the available for sale securities portfolio, adjusted net income was $55.6 million or $0.95 per share for ...