First Merchants Stock Earnings Reports

First Merchants reported Q1 net income of $27.7 million ($0.45 diluted) but adjusted EPS of $1.03 after removing a $17 million acquisition expense and a $29.8 million mortgage mark-to-market related to repositioning $357 million of mortgages to held-for-sale. The First Savings acquisition legally closed Feb 1, adding Southern Indiana and contributing two months of results; integration is on track for the May 15 operational integration. Management reiterated confidence in mid-single-digit loan growth for 2026, citing strong commercial pipelines and record production in real estate and asset-based lending. The $357 million mortgage repositioning will provide liquidity to pay down higher-cost deposits immediately and be redeployed into higher-yielding commercial loans (management cited 6%+ yields) over time. Net interest margin was 3.35% (up 6 bps QoQ), helped by disciplined deposit pricing and a meaningful decline in deposit costs (rate paid on deposits down 23 bps to 2.09%). Asset quality remains stable and idiosyncratic; net charge-offs were $10.3 million and the allowance ended the quarter at $212.5 million (coverage 1.39%). Capital remains strong (CET1 11.22%, tangible common equity 9% after the deal), the company repurchased shares ($24.9M in Q1, $27.6M YTD) and expects to remain active in buybacks. Management expects accretion/fair-value accretion of roughly $2M+ per full quarter from First Savings and cost synergies to lower the combined expense run rate to roughly $111M–$114M quarterly as synergies phase in, with legacy FMC expenses guided to a 3%–5% increase year-over-year. Overall outlook: integration progressing well, margin modestly improving in coming quarters (a few bps lift), continued disciplined capital deployment, and optimistic view on 2026 organic growth and fee income expansion.