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 after 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.

• Tangible book value per share increased 19% year-over-year and 38% over two years, reaching $26.64.

• Announced sale of five Illinois branches, exiting the suburban Chicago market, with $9.2 million in loans and $287.7 million in deposits reclassified as held for sale; closing expected in Q4 2024.

• Completed four major technology initiatives, enhancing digital channels 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: $18.3 billion; total loans: $12.7 billion; total 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 but down year-over-year; net interest margin (FTE) was 3.23%, up 7 bps sequentially.

• Efficiency ratio improved to 53.76% in Q3 2024.

• Noninterest income for Q3 2024 was $24.9 million, down due to $9.1 million in realized securities losses.

• Anticipated $20–$25 million gain on Illinois branch sale in Q4.

Outlook and guidance

• Illinois branch sale expected to close in December 2024, allowing reprioritization of core markets and new customer acquisition strategies.

• Management expects continued strong capital and liquidity positions, stable net interest margin in Q4, and net interest income growth in 2025 even if margin compresses.

• Non-interest income guidance for H2 2024 remains $30–$32 million per quarter, excluding one-time items.