First Merchants (FRME) AI Stock Analysis

• Market Cap: $2.25B
• Dividend Yield: 3.68%
• Average Volume (3M): 241.68K
• Price to Earnings (P/E): 9.7
• Beta (1Y): 0.81
• Revenue Growth: -1.76%
• EPS Growth: 32.44%
• Country: US
• Employees: 2,120
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 0.98
• Shares Outstanding: 57,825,020
• 10 Day Avg. Volume: 298,818
• 30 Day Avg. Volume: 241,678
• PEG Ratio: -1.35
• Price to Book (P/B): 1.01
• Price to Sales (P/S): 2.21
• P/FCF Ratio: 8.74
• Enterprise Value/Market Cap: 1.46
• Enterprise Value/Revenue: 3.16
• Enterprise Value/Gross Profit: 5.21
• Enterprise Value/Ebitda: 10.58
• 1Y Price Target: $47.33
• Price Target Upside: 21.70% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): 3.85
• Revenue Forecast (FY): $682.37M

• Rating: 80 Outperform
• Price Target: $43.00 ▲(10.57% Upside)

First Merchants Corporation shows strong financial performance and strategic growth initiatives, particularly through acquisitions. The stock's valuation is attractive, and technical indicators suggest positive momentum. While rising deposit costs and interest rate sensitivity pose risks, the overall outlook remains positive.

Positive Factors

Strategic Acquisition

This acquisition expands First Merchants' asset base and market presence, enhancing growth potential and fee income diversification.

Loan Growth

Strong loan growth indicates effective market penetration and demand for First Merchants' lending services, supporting revenue expansion.

Revenue and Earnings Growth

Consistent revenue and earnings growth reflect robust business operations and effective management strategies, enhancing long-term profitability.

Negative Factors

Rising Deposit Costs

Increasing deposit costs can pressure net interest margins, potentially impacting profitability if not managed effectively.

Interest Rate Sensitivity

Sensitivity to interest rate changes may lead to margin compression, affecting earnings stability in a fluctuating rate environment.

Rising Debt Levels

Rising debt levels can strain financial flexibility and increase risk, necessitating careful management to maintain balance sheet health.

First Merchants Business Overview & Revenue Model

Company Description

First Merchants Corporation operates as the financial holding company for First Merchants Bank that provides community banking services. It accepts time, savings, and demand deposits; and provides consumer, commercial, agri-business, and real estate mortgage loans, as well as public finance. The company also offers personal and corporate trust; brokerage and private wealth management; and letters of credit, repurchase agreements, and other corporate services. It operates 109 banking locations in Indiana, Illinois, Ohio, and Michigan counties. The company also offers its services through electronic and mobile delivery channels. First Merchants Corporation was founded in 1893 and is headquartered in Muncie, Indiana.

How the Company Makes Money

First Merchants generates revenue primarily through net interest income and non-interest income. Net interest income is derived from the difference between the interest earned on loans and the interest paid on deposits. The bank offers a variety of loans, including commercial, residential, and consumer loans, which contribute significantly to its interest income. Non-interest income comes from services such as wealth management fees, mortgage origination fees, and transaction fees from services like treasury management and merchant services. Additionally, the bank may engage in partnerships with other financial service providers, which can enhance its offerings and generate additional revenue streams. Overall, the company's diversified product portfolio and focus on customer service drive its financial performance.

First Merchants Financial Statement Overview

Summary

First Merchants demonstrates solid profitability with a strong net profit margin and return on equity. However, challenges in revenue growth and cash flow management slightly detract from its financial performance.

Income Statement

First Merchants shows strong profitability with a consistent net profit margin of over 21% in TTM, despite a slight decline in revenue. The gross profit margin remains robust at nearly 60%. However, the negative revenue growth rate in the TTM period indicates potential challenges in revenue generation.

Balance Sheet

The company maintains a moderate debt-to-equity ratio of 0.49, indicating a balanced approach to leverage. The return on equity is healthy at 9.72%, reflecting efficient use of equity. However, the equity ratio is not explicitly calculated, which could provide additional insights into financial stability.

Cash Flow

Operating cash flow to net income ratio is low, suggesting potential cash flow management issues. Free cash flow growth has been negative recently, which could impact future liquidity. However, the free cash flow to net income ratio remains stable at 1.0, indicating adequate cash generation relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.04B	1.05B	999.49M	712.95M	555.96M	558.43M
Gross Profit	629.61M	591.01M	647.50M	611.39M	520.00M	433.38M
EBITDA	310.20M	258.58M	270.94M	267.49M	251.49M	180.98M
Net Income	233.28M	201.40M	223.79M	222.09M	205.53M	148.60M
Balance Sheet
Total Assets	18.81B	18.31B	18.41B	17.94B	15.45B	14.07B
Cash, Cash Equivalents and Short-Term Investments	686.69M	1.77B	2.18B	2.23B	2.99B	2.50B
Total Debt	1.18B	1.16B	1.03B	1.31B	634.25M	684.91M
Total Liabilities	16.40B	16.01B	16.16B	15.90B	13.54B	12.19B
Stockholders Equity	2.41B	2.30B	2.25B	2.03B	1.91B	1.88B
Cash Flow
Free Cash Flow	270.44M	266.21M	258.83M	284.29M	215.34M	204.81M
Operating Cash Flow	270.44M	266.21M	258.83M	284.29M	215.34M	204.81M
Investing Cash Flow	-724.61M	-252.42M	-344.43M	-462.69M	-1.48B	-1.55B
Financing Cash Flow	457.53M	-38.82M	75.65M	133.84M	1.24B	1.36B

First Merchants Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 38.89
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 38.89 is above the 20-day moving average (MA) of 37.04, above the 50-day MA of 36.43, and above the 200-day MA of 37.56, indicating a bullish trend. The MACD of 0.71 indicates Negative momentum. The RSI at 67.45 is Neutral, neither overbought nor oversold. The STOCH value of 87.51 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FRME.

First Merchants Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FRME	80 Outperform	$2.25B	9.72	9.90%	3.68%	-1.76%	32.44%
BANR	79 Outperform	$2.27B	12.13	10.28%	2.90%	6.98%	15.08%
FBNC	75 Outperform	$2.22B	22.44	6.39%	1.69%	-5.72%	-3.86%
NBTB	74 Outperform	$2.30B	14.61	8.87%	3.21%	11.63%	5.58%
CUBI	74 Outperform	$2.50B	15.12	8.99%	―	-0.37%	-20.30%
SYBT	69 Neutral	$2.03B	15.06	13.69%	1.85%	11.74%	26.27%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%

First Merchants Corporate Events

First Merchants Announces Cash Dividend for Shareholders

On November 14, 2025, First Merchants Corporation announced a cash dividend of $0.36 per common share, payable on December 19, 2025, to shareholders recorded by December 5, 2025. This announcement reflects the company’s ongoing commitment to providing returns to its shareholders and may influence investor confidence and market perception.

First Merchants Announces Quarterly Cash Dividend

On October 15, 2025, First Merchants Corporation announced a quarterly cash dividend of $46.88 per share on its 7.50% Non-Cumulative Perpetual Preferred Stock Series A, with a payment of $0.4688 per depositary share. The dividend is scheduled for payment on November 14, 2025, to stockholders recorded by October 31, 2025, reflecting the company’s ongoing commitment to shareholder returns.

First Merchants Announces Merger with First Savings

On September 24, 2025, First Merchants Corporation and First Savings Financial Group announced a merger agreement where First Savings will merge into First Merchants in an all-stock transaction valued at approximately $241.3 million. This merger, expected to close in the first quarter of 2026, aims to strengthen First Merchants’ presence in southern Indiana and enhance its growth potential through diversified loan offerings. The merger will result in a combined entity with assets of approximately $21 billion and 127 branches across Indiana, Michigan, and Ohio, positioning First Merchants as the second largest financial holding company headquartered in Indiana.