First Merchants (FRME) Q3 2025 Earnings Transcript

Core Insights - The company is enhancing its fee income through the introduction of SBA loans and first lien HELOCs, with $8 million in SBA originations in 2025 and over $100 million by First Savings [1][3] - The acquisition of First Savings Financial Group, announced on September 25, adds approximately $2.4 billion in assets and expands the company's presence in Southern Indiana [3][5] - The company reported a 9% loan growth for the quarter, with earnings per share at $0.98 and a return on assets (ROA) of 1.22% [3][4] Financial Performance - Year-to-date net income reached $167.5 million, a 23.5% increase from the previous year, with earnings per share up 25.5% to $2.90 [5] - The efficiency ratio was reported at 55%, indicating strong operational performance [3] - Total revenues in Q3 showed growth in both net interest income and noninterest income, leading to pretax pre-provision earnings of $70.5 million [15] Loan and Deposit Growth - The company achieved $268 million in commercial loan growth for the quarter, with a year-to-date total of $699 million [8] - Consumer segment deposits increased by $96 million, with non-maturity categories growing at nearly 5% annualized [10][11] - The total loan portfolio yield increased to 6.4%, driven by loan originations and refinances [17] Asset Quality - Nonperforming assets (NPA) plus loans 90 days past due totaled 0.51%, down from 0.62% a year ago [6] - The allowance for credit losses (ACL) was robust, with a coverage ratio of 1.43% [17][24] - The company reported net charge-offs of $5.1 million for the quarter, maintaining strong credit quality across its portfolios [17][24] Strategic Outlook - The company is focused on building a community bank model in Southern Indiana, leveraging past successful acquisitions [2] - There is confidence in maintaining loan growth and increasing market share, with stable pipelines for the fourth quarter [9][40] - The company plans to continue optimizing its balance sheet and exploring opportunities for higher-yielding assets [35][67]