First Merchants (FRME) - 2025 Q2 - Quarterly Results

Performance Highlights First Merchants Corporation achieved strong Q2 2025 results, marked by significant year-over-year growth in net income and diluted EPS, driven by loan and deposit expansion, margin growth, and capital strength Q2 2025 Key Financial Results | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income to Common Stockholders | $56.4 million | $39.5 million | | Diluted EPS | $0.98 | $0.68 | - CEO Mark Hardwick highlighted the strength and resilience of the business model, citing momentum in loan and deposit growth, expanding margins, disciplined expense management, and a robust capital position as key drivers for delivering long-term shareholder value[2] - Key operational achievements in Q2 2025 include: - Loan Growth: Total loans grew $297.6 million, or 9.1% annualized, on a linked quarter basis[7] - Deposit Growth: Total deposits increased $335.6 million, or 9.3% annualized, on a linked quarter basis[7] - Capital Strength: Maintained a strong Common Equity Tier 1 (CET1) Capital Ratio of 11.35%[7] - Share Repurchases: Repurchased 582,486 shares for $22.1 million during the quarter, totaling 818,480 shares for $31.7 million year-to-date[7] Financial Results Analysis The corporation's financial health improved in Q2 2025, with total assets reaching $18.6 billion, driven by loan and deposit growth, increased net interest income, improved asset quality, and strong capital ratios Balance Sheet Analysis As of Q2 2025, total assets reached $18.6 billion, with loans growing to $13.3 billion and deposits to $14.8 billion, maintaining a stable loan-to-deposit ratio Key Balance Sheet Items (As of June 30, 2025) | Item | Amount | YoY Change | QoQ Change (Annualized) | | :--- | :--- | :--- | :--- | | Total Assets | $18.6 billion | - | - | | Total Loans | $13.3 billion | +5.2% | +9.1% | | Total Deposits | $14.8 billion | +1.6% | +9.3% | | Investments | $3.4 billion | -9.9% | -5.4% | - The loan-to-deposit ratio remained stable at 90.1% at the end of the quarter[6] Income Statement Analysis Q2 2025 net interest income rose to $133.0 million, driven by a 9 basis point expansion in net interest margin to 3.25%, while noninterest income remained stable and expenses slightly increased Q2 2025 Income Statement Highlights | Metric | Q2 2025 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $133.0 million | +3.5% | +2.1% | | Net Interest Margin (FTE) | 3.25% | +9 bps | +3 bps | | Noninterest Income | $31.3 million | Stable | +$1.3 million | | Noninterest Expense | $93.6 million | - | +$0.7 million | - The expansion in net interest margin was a result of higher yields on earning assets outpacing the increased yields on interest-bearing liabilities[9] Credit Quality Asset quality significantly improved in Q2 2025, with non-performing assets to total assets decreasing to 0.36% and a 1.47% Allowance for Credit Losses for loans Credit Quality Metrics (Q2 2025) | Metric | Value | | :--- | :--- | | Allowance for Credit Losses (ACL) - Loans | $195.3 million | | ACL as % of Total Loans | 1.47% | | Provision for Credit Losses | $5.6 million | | Net Charge-offs | $2.3 million | | Non-performing Assets to Total Assets | 0.36% | - The non-performing assets to total assets ratio improved by 11 basis points on a linked-quarter basis[8] Capital Position The Corporation maintained a strong capital and liquidity position, evidenced by a Common Equity Tier 1 capital ratio of 11.35% and a tangible common equity ratio of 8.92% Key Capital Ratios (Q2 2025) | Ratio | Value | | :--- | :--- | | Common Equity Tier 1 (CET1) Capital Ratio | 11.35% | | Total Risk-Based Capital Ratio | 13.06% | | Tangible Common Equity Ratio | 8.92% | Financial Statements This section provides detailed unaudited consolidated financial statements, including Balance Sheets, Statements of Income, and loan and deposit portfolio breakdowns, for a comprehensive financial overview Consolidated Balance Sheets As of June 30, 2025, total assets reached $18.6 billion, driven by increased net loans, with total liabilities at $16.2 billion and stockholders' equity at $2.35 billion Consolidated Balance Sheet Summary (in thousands) | | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Assets | $18,592,777 | $18,303,423 | | Net Loans | $13,101,443 | $12,450,113 | | Total Deposits | $14,797,578 | $14,569,070 | | Total Liabilities | $16,244,825 | $16,090,898 | | Total Stockholders' Equity | $2,347,952 | $2,212,525 | Consolidated Statements of Income Net income available to common stockholders for Q2 2025 significantly increased to $56.4 million, driven by higher net interest income and a substantially lower provision for credit losses Consolidated Income Statement Summary (Three Months Ended, in thousands) | | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net Interest Income | $133,014 | $128,571 | | Provision for credit losses | $5,600 | $24,500 | | Noninterest Income | $31,303 | $31,334 | | Noninterest Expenses | $93,598 | $91,413 | | Net Income Available to Common Stockholders | $56,363 | $39,456 | Loan and Deposit Composition As of June 30, 2025, the $13.3 billion loan portfolio was diversified, with commercial and industrial loans as the largest component, while the $14.8 billion deposit base was led by demand and savings deposits - The largest loan categories as of Q2 2025 were Commercial and industrial loans ($4.4B), Residential real estate ($2.4B), and Commercial real estate, non-owner occupied ($2.2B)[25] - The deposit base was led by Demand deposits ($7.8B) and Savings deposits ($5.0B), with the company holding $1.2 billion in total brokered deposits[26] Key Financial Ratios and Metrics Q2 2025 saw improved profitability ratios, with ROA at 1.23% and ROE at 9.63%, expanded Net Interest Margin, and significantly reduced net charge-offs and nonperforming assets Key Financial Ratios (Q2 2025 vs Q2 2024) | Ratio | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Return on Average Assets | 1.23% | 0.87% | | Return on Average Stockholders' Equity | 9.63% | 7.16% | | Net Interest Margin (FTE) | 3.25% | 3.16% | | Efficiency Ratio | 53.99% | 53.84% | | Net Charge-offs as % of Avg Loans (Ann.) | 0.07% | 1.26% | Asset Quality Trend | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Nonperforming Assets (NPA) | $67,535 K | $86,888 K | $66,730 K | | NPAs / Actual Assets % | 0.36% | 0.47% | 0.36% | Non-GAAP Financial Measures The company provides non-GAAP reconciliations, showing Q2 2025 GAAP and Adjusted Diluted EPS at $0.98, with FTE Net Interest Margin at 3.25% and Return on Tangible Common Equity at 14.49% - For Q2 2025, there were minimal adjustments between GAAP and Non-GAAP Net Income, resulting in both GAAP and Adjusted Diluted EPS being $0.98[29] Key Non-GAAP Metrics (Q2 2025) | Metric | Value | | :--- | :--- | | Net Interest Margin (FTE) | 3.25% | | Return on Tangible Common Equity | 14.49% | | Efficiency Ratio (Non-GAAP) | 53.99% | Conference Call and Company Information First Merchants Corporation will host a Q2 2025 earnings conference call on July 24, 2025, as a Muncie, Indiana-based financial holding company whose stock trades on NASDAQ under FRME, with standard forward-looking statement disclaimers - A conference call and webcast to discuss Q2 2025 earnings is scheduled for 9:00 a.m. (ET) on Thursday, July 24, 2025[12] - First Merchants Corporation is a financial holding company based in Muncie, Indiana, operating through its full-service bank charter, First Merchants Bank[14] - The release contains forward-looking statements subject to significant risks and uncertainties, and the company does not undertake any obligation to update them[17]