First Merchants (US:FRME)2025-10-30 19:08Financial Performance - Adjusted net income available to common stockholders for Q3 2025 was $57.0 million, up from $55.6 million in Q3 2024, with adjusted diluted earnings per share increasing to $0.99 from $0.95[193] - Noninterest income (GAAP) rose to $32.5 million for the three months ended September 30, 2025, compared to $24.9 million in the same period of 2024[216] - Noninterest income for the nine months ended September 30, 2025, totaled $93.8 million, reflecting a $11.0 million, or 13.3%, increase compared to the same period in 2024[2] - Noninterest expense for the three months ended September 30, 2025, was $96.6 million, a $1.9 million, or 2.0%, increase from the third quarter of 2024[3] - Income tax expense for the three months ended September 30, 2025, was $8.5 million on pre-tax income of $65.3 million, resulting in an effective tax rate of 13.0%[4] Asset and Loan Growth - Total assets as of September 30, 2025, reached $18.8 billion, reflecting an increase of $499.7 million or 2.7% from December 31, 2024[194] - The total loan portfolio increased by $741.3 million, or 7.7% on an annualized basis, since December 31, 2024, with commercial and industrial loans comprising 33.8% of the total[196] - Average total loans rose by $722.2 million, or 5.7%, reaching $13.4 billion, driven by increases in commercial loans and tax-exempt loans[215] - Total loans increased by $736.8 million from December 31, 2024, reaching $13.6 billion at September 30, 2025[270] Deposits and Borrowings - Total deposits amounted to $14.9 billion, an increase of $348.4 million or 3.2% on an annualized basis from December 31, 2024, driven by increases in money market and savings deposits[199] - Total borrowings increased by $19.7 million as of September 30, 2025, mainly due to a $100.1 million rise in federal funds purchased[201] - Total borrowings from the Federal Home Loan Bank (FHLB) were $798.6 million, with remaining borrowing capacity from the FHLB and Federal Reserve at $781.2 million and $5.2 billion, respectively[278] Credit Quality - The allowance for credit losses on loans (ACL - Loans) was $194.5 million, representing 1.43% of total loans, a slight decrease from 1.50% at December 31, 2024[197] - Nonaccrual loans decreased to $65.7 million as of September 30, 2025, down $8.0 million from December 31, 2024, primarily due to declines in construction and commercial real estate loans[197] - Loans 90 days or more delinquent and still accruing totaled $1.9 million, a decrease of $4.0 million from December 31, 2024[264] - The Corporation's nonperforming assets and loans 90 days or more delinquent totaled $68.9 million, down from $84.6 million at December 31, 2024[266] - Net charge-offs for the three months ended September 30, 2025, were $5.1 million, compared to $6.7 million for the same period in 2024[271] Capital and Equity - Tangible common stockholders' equity to tangible assets ratio improved to 9.18% as of September 30, 2025, from 8.81% at December 31, 2024[210] - As of September 30, 2025, the Corporation had $25.0 million of outstanding preferred stock, with dividends declared of $46.88 per share during the period[5] - The Corporation maintained all regulatory capital ratios above the "well-capitalized" definition, ensuring financial stability[203] - As of September 30, 2025, the Bank met all capital adequacy requirements to be considered well capitalized under Basel III capital rules[8] Interest Income and Expense - Net interest income on a fully taxable equivalent (FTE) basis for Q3 2025 was $139.9 million, compared to $137.0 million in Q3 2024, with a net interest margin (FTE) of 3.24%[209] - Net interest income on an FTE basis increased by 2.1% to $139.9 million for the three months ended September 30, 2025[221] - Interest expense on deposits decreased by $40.7 million, reflecting lower rates across all deposit categories for the nine months ended September 30, 2025[227] - The total cost of interest-bearing liabilities decreased by 41 basis points to 2.83% for the nine months ended September 30, 2025[227] Liquidity Management - The Corporation's liquidity management ensures adequate liquid funds are available to meet financial commitments, monitored by the asset/liability committee[275] - The Corporation's liquidity and interest sensitivity position remained adequate to achieve optimum interest margins while avoiding undue interest rate risk as of September 30, 2025[284] - The Corporation's core deposit growth is a primary source of liability-funded liquidity, with deposits without stated maturity totaling $12.81 billion[279] - The Corporation's total cash requirements at September 30, 2025, amounted to $16.05 billion, with $14.85 billion due in one year or less[279] Stock Repurchase and Tax - The Corporation's stock repurchase program, approved in January 2021, allowed for the repurchase of up to 3,333,000 shares, with a total investment cap of $100.0 million[6] - The Corporation recorded an excise tax of $32,000 for the three months ended September 30, 2025, related to stock repurchases[7] - The effective income tax rates for the nine months ended September 30, 2025, and 2024, were 12.7% and 11.6%, respectively[9] Interest Rate Sensitivity - The net interest income simulation modeling indicates a potential increase of 3.9% in net interest income with a 200 basis points rise in interest rates from the base case scenario[289] - The comparative analysis of interest rate scenarios shows a decrease in net interest income of (5.2)% with a 200 basis points fall from the base case[289]