First Merchants (FRME)
NASDAQ:FRME
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First Merchants
(NASDAQ:FRME)
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Rating:65Neutral
Price Target:
$43.00
▲(4.52% Upside)
Action:Reiterated
Date:05/21/26
FRME scores as a moderate-quality setup: solid core profitability and constructive earnings-call guidance/capital actions are tempered by weakening cash-flow trend, rising leverage, and currently soft/neutral technical momentum. Valuation is reasonable but not compelling, with the dividend yield providing partial support.
Positive Factors
Capital strength
A CET1 ratio of 11.22% and ~9% tangible common equity provide a durable regulatory and economic buffer that supports lending capacity, buybacks and dividends. This capital flexibility allows management to pursue growth and return capital while meeting regulatory expectations over the next several quarters.
Negative Factors
Free cash flow deterioration
A dramatic year-over-year FCF decline signals volatility in internal cash generation and reduces financial flexibility. Even with positive absolute cash flow, the sharp negative growth can constrain capital returns, reinvestment and buffer for loan loss provisions during adverse cycles.
Read all positive and negative factors
Positive Factors
Negative Factors
Capital strength
A CET1 ratio of 11.22% and ~9% tangible common equity provide a durable regulatory and economic buffer that supports lending capacity, buybacks and dividends. This capital flexibility allows management to pursue growth and return capital while meeting regulatory expectations over the next several quarters.
Read all positive factors
First Merchants (FRME) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.53B
Dividend Yield3.72%
Average Volume (3M)342.39K
Price to Earnings (P/E)21.0
Beta (1Y)0.83
Revenue Growth0.97%
EPS Growth-4.32%
CountryUS
Employees2,120
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)3.42
Shares Outstanding63,022,740
10 Day Avg. Volume300,867
30 Day Avg. Volume342,394
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 Cap1.61
Enterprise Value/Revenue3.87
Enterprise Value/Gross Profit6.41
Enterprise Value/Ebitda16.66
Forecast
1Y Price Target
$49.50Price Target Upside20.32% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)3.88
Revenue Forecast (FY)$803.74M
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 esta...
How the Company Makes Money
First Merchants makes money primarily through banking spread and fee-based businesses. (1) Net interest income: The largest revenue driver for most regional banks, generated from the difference between interest earned on interest-earning assets (n...
First Merchants Earnings Call Summary
Earnings Call Date:Apr 22, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 28, 2026
Earnings Call Sentiment Positive
The call conveyed constructive momentum: core revenue and margin trends improved, acquisition integration is progressing with less dilution than expected, deposit mix and NII rose, and asset quality is described as contained. Negative items were largely one-time or transitional (acquisition expenses, a mortgage MTM charge, and a few idiosyncratic charge-offs), and management articulated clear actions and timelines for liquidity redeployment and cost synergies. Balanced against manageable credit items and temporary mark losses, the positive operating and capital developments outweigh the lowlights.Positive Updates
Size and Scale Expansion
Total assets of $21.1 billion, loans of $15.3 billion and deposits of $16.5 billion following the February 1 First Savings acquisition; network now operates 127 banking centers.
Negative Updates
Reported Earnings Impacted by One-Time Items
Reported net income was $27.7 million, or $0.45 per diluted share, which included $17 million of one-time acquisition-related expenses and a $29.8 million mark-to-market charge tied to mortgage repositioning.
Read all updates
Q1-2026 Updates
Positive
Negative
Size and Scale Expansion
Total assets of $21.1 billion, loans of $15.3 billion and deposits of $16.5 billion following the February 1 First Savings acquisition; network now operates 127 banking centers.
Read all positive updates
Company Guidance
Management reiterated mid‑single‑digit loan growth for 2026, expects to complete the sale of $357M of mortgages (WAC 3.46%) by end‑Q2 and use proceeds to pay down higher‑cost deposits (~3.80%) and redeploy into commercial loans yielding 6%+ over an 18–24 month period; they see net interest margin edging up a few basis points from the Q1 NIM of 3.35% (Q1 was down ~5 bps from day‑count), with loan portfolio yield at 6.09% and new/renewed loans averaging 6.18%. Other forward metrics: fair‑value accretion run‑rate ~ $2M+/quarter, Q2 noninterest income expected ~3–4% above Q1’s normalized $35.6M, legacy expense growth guided to +3–5% YoY with a post‑synergy quarterly run‑rate target of $111–$114M (exit savings in back half), effective tax rate ~13%, continued active buybacks ( >700k shares repurchased / $27.6M YTD) while maintaining tangible common equity around 9% and CET1 of 11.22%; management also noted potential Basel III RWA relief of ~50–80 bps.First Merchants Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
71
Positive
Cash Flow
58
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.05B | 1.05B | 1.05B | 999.49M | 712.95M | 555.96M |
| Gross Profit | 635.94M | 640.17M | 591.01M | 647.50M | 611.39M | 520.00M |
| EBITDA | 244.57M | 288.54M | 258.58M | 270.94M | 267.49M | 251.49M |
| Net Income | 198.82M | 226.00M | 201.40M | 223.79M | 222.09M | 205.53M |
Balance Sheet | ||||||
| Total Assets | 21.07B | 19.03B | 18.31B | 18.41B | 17.94B | 15.45B |
| Cash, Cash Equivalents and Short-Term Investments | 1.47B | 1.49B | 1.77B | 2.18B | 2.23B | 2.99B |
| Total Debt | 1.64B | 999.93M | 1.16B | 1.03B | 1.31B | 634.25M |
| Total Liabilities | 18.40B | 16.56B | 16.01B | 16.16B | 15.90B | 13.54B |
| Stockholders Equity | 2.67B | 2.47B | 2.30B | 2.25B | 2.03B | 1.91B |
Cash Flow | ||||||
| Free Cash Flow | 280.54M | 283.65M | 266.21M | 258.83M | 284.29M | 215.34M |
| Operating Cash Flow | 280.54M | 283.65M | 266.21M | 258.83M | 284.29M | 215.34M |
| Investing Cash Flow | -245.33M | -773.82M | -252.42M | -344.43M | -462.69M | -1.48B |
| Financing Cash Flow | -23.23M | 486.72M | -38.82M | 75.65M | 133.84M | 1.24B |
First Merchants Technical Analysis
Positive
41.14
Price Trends
39.36
Positive
39.24
Positive
38.30
Positive
Market Momentum
-0.04
Positive
52.10
Neutral
46.77
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 41.14 is above the 20-day moving average (MA) of 40.02, above the 50-day MA of 39.36, and above the 200-day MA of 38.30, indicating a bullish trend. The MACD of -0.04 indicates Positive momentum. The RSI at 52.10 is Neutral, neither overbought nor oversold. The STOCH value of 46.77 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 |
|---|---|---|---|---|---|---|---|
81 Outperform | $2.20B | 9.44 | 10.66% | 2.97% | 3.87% | 16.71% | |
79 Outperform | $2.37B | 10.86 | 9.83% | 3.33% | 17.46% | 16.00% | |
75 Outperform | $2.10B | 13.31 | 13.58% | 1.88% | 9.58% | 17.44% | |
74 Outperform | $2.45B | 12.48 | 7.47% | 1.69% | 3.15% | 38.23% | |
73 Outperform | $2.55B | 8.49 | 13.62% | ― | 9.32% | 97.60% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
65 Neutral | $2.53B | 20.98 | 8.03% | 3.72% | 0.97% | -4.32% |
* Financial Sector Average
FRME
First Merchants
40.11
3.75
10.32%
BANR
Banner
64.65
3.96
6.53%
FBNC
First Bancorp
59.24
18.75
46.32%
NBTB
NBT Bancorp
45.57
4.69
11.47%
SYBT
Stock Yards Bancorp
71.02
-1.64
-2.25%
CUBI
Customers Bancorp
75.44
24.12
47.00%
First Merchants Corporate Events
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...
Dividends
First Merchants Declares Quarterly Dividend on Preferred Shares
Positive
Apr 16, 2026
On April 16, 2026, First Merchants Corporation announced that its board declared a quarterly cash dividend of $46.88 per share on its 7.50% Non‑Cumulative Perpetual Preferred Stock Series A, equivalent to $0.4688 per NASDAQ‑listed FRME...
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.