Want to see FRME full AI Analyst Report?
Top Page
First Merchants
(NASDAQ:FRME)
Select Model
Select Model
Rating:71Outperform
Price Target:
$48.00
▲(11.16% Upside)
Action:Reiterated
Date:08/01/26
FRME scores 71 driven primarily by solid financial performance and cash generation, supported by a constructive multi-month price trend and reasonable valuation with a ~3.36% dividend yield. The score is tempered by the earnings-call-flagged credit deterioration (large provision, higher expected net charge-offs, and increased nonperforming/classified assets) and the softer ROE/leverage trends highlighted in the financial statements.
Positive Factors
Strong cash generation and FCF coverage
Consistent operating cash flow (~$315M TTM) and robust free cash flow (+~12%) that fully cover net income indicate high earnings quality. This durable cash generation supports organic loan growth, funds capital returns and buybacks, and provides a buffer to absorb credit losses or fund opportunistic investments over the next several quarters.
Negative Factors
Large specific provision for problem credits
A sizable $33M provision (including $29.7M of specific reserves) tied to two borrower relationships signals realized credit stress. Large, relationship-specific reserves can be a precursor to sustained elevated provisioning or charge-offs, pressuring earnings and reducing internal capital over several quarters if additional problem credits emerge.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation and FCF coverage
Consistent operating cash flow (~$315M TTM) and robust free cash flow (+~12%) that fully cover net income indicate high earnings quality. This durable cash generation supports organic loan growth, funds capital returns and buybacks, and provides a buffer to absorb credit losses or fund opportunistic investments over the next several quarters.
Read all positive factors
First Merchants (FRME) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.72B
Dividend Yield3.32%
Average Volume (3M)495.36K
Price to Earnings (P/E)14.0
Beta (1Y)0.78
Revenue Growth5.05%
EPS Growth-19.06%
CountryUS
Employees2,086
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)3.14
Shares Outstanding62,801,422
10 Day Avg. Volume556,837
30 Day Avg. Volume495,363
Financial Highlights & Ratios
PEG Ratio0.68
Price to Book (P/B)0.88
Price to Sales (P/S)2.06
P/FCF Ratio7.63
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$50.50Price Target Upside16.95% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)3.46
Revenue Forecast (FY)$807.16M
First Merchants Business Overview & Revenue Model
Company Description
First Merchants Corporation operates as a financial holding entity, primarily conducting its business through its subsidiary, First Merchants Bank. This institution delivers a full spectrum of community banking solutions. It accepts various types ...
How the Company Makes Money
First Merchants primarily earns money through traditional banking spread and fee-based businesses. The largest revenue driver is net interest income: the bank collects interest on earning assets such as commercial loans (including commercial and i...
First Merchants Earnings Call Summary
Earnings Call Date:Jul 22, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 27, 2026
Earnings Call Sentiment Neutral
The call presented a mix of solid operational momentum — including NIM expansion, strong loan production, revenue growth, successful integration of First Savings, improved liquidity, and resumed buybacks — alongside material, relationship-specific credit deterioration that required a sizeable provision and is expected to drive higher net charge-offs for 2026. Management characterized the credit issues as isolated and the broader portfolio as performing within expectations. Given the meaningful positive trends in revenue, margins, balance sheet repositioning and capital return capacity, but balanced by the notable near-term credit headwinds and increased NPAs/classified loans, the overall tone is balanced with cautious optimism.Positive Updates
Scale and Franchise Expansion
Operating footprint of 126 banking centers following the First Savings acquisition; total assets $21.3B, loans $15.5B and deposits $16.8B, demonstrating expanded geographic and balance sheet scale.
Negative Updates
Two Significant Credits Moved to Nonaccrual
Two commercial credits were placed on nonaccrual (a $28.1M participation in a syndicated wireless retail credit and a $13.7M sponsor-financed roofing contractor loan), prompting specific reserves and negatively impacting Q2 results.
Read all updates
Q2-2026 Updates
Positive
Negative
Scale and Franchise Expansion
Operating footprint of 126 banking centers following the First Savings acquisition; total assets $21.3B, loans $15.5B and deposits $16.8B, demonstrating expanded geographic and balance sheet scale.
Read all positive updates
Company Guidance
Management guided to mid-single-digit loan growth through the end of 2026 while assuming no further Fed moves (expecting net interest margin to tick up a couple basis points in H2); they plan to redeploy bond cash flows (expected rolloffs of $156.2M at ~2.69%) and the $271M mortgage-sale proceeds into higher-yielding loans (loan portfolio yield 6.11%, new/renewed loans 6.28%). They reiterated quarterly expense run-rate guidance of $111–$114M (organic expense growth 3–5% annually) and expect noninterest income to be up ~10% year-over-year; tax guidance is ~13% effective rate. Credit guidance reflects a $33M provision this quarter (including $29.7M specific reserves), an allowance of $241.6M (coverage 1.56%), Q2 net charge-offs of $3.9M and an anticipated full‑year 2026 net charge‑off rate of roughly 40–45 bps driven largely by two known credits. Capital and liquidity posture remains supportive of buybacks and growth (total assets $21.3B, loans $15.5B, deposits $16.8B, tangible common equity 8.99%, tangible book $29.80 up $0.46 linked quarter; YTD repurchases ~1M shares for $38.3M with a $100M authorization).First Merchants Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
68
Positive
Cash Flow
75
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.09B | 1.05B | 1.05B | 999.49M | 712.95M | 555.96M |
| Gross Profit | 640.32M | 640.17M | 591.01M | 647.50M | 611.39M | 520.00M |
| EBITDA | 229.02M | 288.54M | 258.58M | 270.94M | 267.49M | 251.49M |
| Net Income | 185.97M | 226.00M | 201.40M | 223.79M | 222.09M | 205.53M |
Balance Sheet | ||||||
| Total Assets | 21.35B | 19.03B | 18.31B | 18.41B | 17.94B | 15.45B |
| Cash, Cash Equivalents and Short-Term Investments | 3.91B | 1.49B | 1.77B | 2.18B | 2.23B | 2.99B |
| Total Debt | 1.60B | 999.93M | 1.16B | 1.03B | 1.31B | 634.25M |
| Total Liabilities | 18.65B | 16.56B | 16.01B | 16.16B | 15.90B | 13.54B |
| Stockholders Equity | 2.70B | 2.47B | 2.30B | 2.25B | 2.03B | 1.91B |
Cash Flow | ||||||
| Free Cash Flow | 314.90M | 283.65M | 266.21M | 258.83M | 284.29M | 215.34M |
| Operating Cash Flow | 314.90M | 283.65M | 266.21M | 258.83M | 284.29M | 215.34M |
| Investing Cash Flow | -365.68M | -773.82M | -252.42M | -344.43M | -462.69M | -1.48B |
| Financing Cash Flow | 55.88M | 486.72M | -38.82M | 75.65M | 133.84M | 1.24B |
First Merchants Technical Analysis
Positive
43.18
Price Trends
42.69
Positive
41.15
Positive
39.29
Positive
Market Momentum
0.11
Positive
56.06
Neutral
64.15
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FRME, the sentiment is Positive. The current price of 43.18 is below the 20-day moving average (MA) of 43.22, above the 50-day MA of 42.69, and above the 200-day MA of 39.29, indicating a bullish trend. The MACD of 0.11 indicates Positive momentum. The RSI at 56.06 is Neutral, neither overbought nor oversold. The STOCH value of 64.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FRME.
First Merchants Risk Analysis
First Merchants disclosed 31 risk factors in its most recent earnings report. First Merchants reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
First Merchants Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $2.78B | 13.06 | 11.26% | 2.82% | 14.46% | 46.91% | |
75 Outperform | $2.64B | 16.88 | 13.56% | 1.56% | 9.30% | 15.23% | |
72 Outperform | $2.50B | 12.15 | 10.65% | 2.85% | 2.89% | 15.51% | |
71 Outperform | $2.72B | 13.96 | 7.26% | 3.36% | 5.05% | -19.06% | |
70 Outperform | $2.82B | 9.84 | 13.57% | ― | 11.55% | 103.48% | |
68 Neutral | $2.74B | 20.60 | 8.01% | 1.50% | 4.15% | 36.83% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
FRME
First Merchants
43.70
6.26
16.71%
BANR
Banner
74.01
12.28
19.89%
FBNC
First Bancorp
66.34
15.00
29.20%
NBTB
NBT Bancorp
53.56
12.84
31.53%
SYBT
Stock Yards Bancorp
85.06
11.97
16.37%
CUBI
Customers Bancorp
83.58
17.70
26.87%
First Merchants Corporate Events
Dividends
First Merchants Declares Quarterly Dividend on Preferred Shares
Positive
Jul 13, 2026
On July 13, 2026, First Merchants Corporation announced that its board declared a quarterly cash dividend on its 7.50% Non-Cumulative Perpetual Preferred Stock Series A, paying $46.88 per share, or $0.4688 per depositary share. The dividend applie...
Business Operations and StrategyStock Buyback
First Merchants Announces New $100 Million Share Buyback
Positive
Jun 24, 2026
On June 24, 2026, First Merchants Corporation’s board authorized a new stock repurchase program covering up to 3,125,000 shares of common stock, capped at a total investment of $100 million, or about 5% of its outstanding shares. The buyback...
Executive/Board ChangesShareholder Meetings
First Merchants Shareholders Reelect Board, Approve Executive Pay
Positive
May 20, 2026
At its annual meeting of shareholders held on May 19, 2026, First Merchants’ investors re-elected nine directors, including Susan W. Brooks, Mung Chiang and Larry W. Myers, to one-year terms ending with the 2027 shareholder meeting. The voti...
Dividends
First Merchants Declares Quarterly Cash Dividend to Shareholders
Positive
May 19, 2026
On May 19, 2026, First Merchants Corporation announced that its board declared a cash dividend of $0.37 per common share, reinforcing its practice of returning capital to shareholders. The dividend is scheduled to be paid on June 19, 2026, to comm...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.