First Merchants (FRME) AI Stock Analysis

• Market Cap: $2.23B
• Dividend Yield: 3.72%
• Average Volume (3M): 263.29K
• Price to Earnings (P/E): 9.6
• Beta (1Y): 0.80
• 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: 232,167
• 30 Day Avg. Volume: 263,286
• 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: 1.47
• Enterprise Value/Revenue: 3.16
• Enterprise Value/Gross Profit: 5.21
• Enterprise Value/Ebitda: 10.58
• 1Y Price Target: $48.00
• Price Target Upside: 26.05% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 4.06
• Revenue Forecast (FY): $781.38M

• Rating: 81 Outperform
• Price Target: $45.00 ▲(18.17% Upside)

FRME’s score is driven primarily by strong financial performance and an attractive valuation (low P/E with a solid dividend yield). Technicals are constructive with price above key moving averages, while the earnings call and recent merger approval add confidence in growth plans, tempered by deposit cost and margin-pressure risks.

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: 38.08
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 38.08 is below the 20-day moving average (MA) of 38.11, above the 50-day MA of 37.25, and above the 200-day MA of 37.42, indicating a neutral trend. The MACD of 0.12 indicates Positive momentum. The RSI at 51.85 is Neutral, neither overbought nor oversold. The STOCH value of 55.26 is Neutral, 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	81 Outperform	$2.23B	9.65	9.90%	3.72%	-1.76%	32.44%
BANR	79 Outperform	$2.25B	12.02	10.28%	2.97%	6.98%	15.08%
FBNC	75 Outperform	$2.39B	24.11	6.39%	1.69%	-5.72%	-3.86%
NBTB	74 Outperform	$2.29B	14.52	8.87%	3.33%	11.63%	5.58%
CUBI	74 Outperform	$2.69B	15.90	8.99%	―	-0.37%	-20.30%
SYBT	69 Neutral	$2.03B	15.02	13.69%	1.88%	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 clears final approval for First Savings merger

First Merchants Corporation announced that on January 15, 2026, it received a non-objection from the Federal Reserve Bank of Chicago to its waiver request tied to the pending merger with First Savings Financial Group, Inc., clearing the last remaining regulatory hurdle. The transaction, governed by a merger agreement signed on September 24, 2025, had already secured approvals from the Federal Deposit Insurance Corporation, the Indiana Department of Financial Institutions, the boards of both companies in September 2025, and First Savings’ shareholders on December 19, 2025; with all regulatory and corporate approvals in place, the parties now expect the merger to become effective on February 1, 2026, subject only to customary closing conditions, positioning First Merchants for an expanded footprint and enhanced scale in its regional banking markets.

The most recent analyst rating on (FRME) stock is a Buy with a $44.00 price target. To see the full list of analyst forecasts on First Merchants stock, see the FRME Stock Forecast page.

First Merchants Declares Quarterly Dividend on Preferred Stock

On January 12, 2026, First Merchants Corporation announced that its board of directors 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 depositary share, payable on February 16, 2026, to stockholders of record as of January 30, 2026. The decision underscores the bank holding company’s continued commitment to returning capital to holders of its preferred securities, signaling stability in its capital management strategy and providing income visibility for preferred shareholders.

The most recent analyst rating on (FRME) stock is a Buy with a $42.00 price target. To see the full list of analyst forecasts on First Merchants stock, see the FRME Stock Forecast page.

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.

The most recent analyst rating on (FRME) stock is a Buy with a $46.00 price target. To see the full list of analyst forecasts on First Merchants stock, see the FRME Stock Forecast page.