First Merchants (FRME) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $48.7 million ($0.84 per share), with adjusted EPS of $0.95 excluding a $9.1 million securities loss.

• Year-to-date net income was $135.6 million ($2.31 per share), with adjusted EPS of $2.48.

• Announced sale of five Illinois branches, exiting suburban Chicago, with $9.2 million in loans and $287.7 million in deposits reclassified as held for sale.

• Completed four major technology initiatives, enhancing digital and private wealth platforms.

• Repurchased 1.5 million shares (~$50 million) and redeemed $65 million of subordinated debt year-to-date.

Financial highlights

• Total assets were $18.3 billion at quarter end; loans $12.7 billion, deposits $14.4 billion, assets under advisement $5.6 billion.

• Net interest income for Q3 2024 was $131.1 million, up $2.5 million sequentially; net interest margin rose to 3.23%, up 7 bps quarter-over-quarter.

• Tangible book value per share increased to $26.64, up 19% year-over-year and $1.54 from prior quarter.

• Efficiency ratio improved to 53.76% in Q3 2024.

• Noninterest income was $24.9 million, down due to $9.1 million in securities losses.

Outlook and guidance

• Illinois branch sale expected to close in Q4 2024, with anticipated $20–$25 million gain and proceeds supporting balance sheet restructuring.

• Management expects continued organic growth in 2025, strong capital and liquidity, and is open to well-priced inorganic opportunities.

• Net interest income is expected to grow in 2025, with stable net interest margin targeted despite potential Fed rate cuts.

• Fee income guidance for H2 2024 remains in the $30–$32 million range, with mortgage gains expected to decline seasonally in Q4.

• About 50% of time deposit portfolio matures in Q4 and will reprice at lower rates.