First Merchants (NASDAQ:FRME) Falls Short of Q4 CY2025 Revenue Projections

First Merchants (FRME) Q4 2025 Earnings Overview

First Merchants, a regional bank listed on NASDAQ as FRME, reported fourth quarter 2025 results that fell short of Wall Street’s revenue projections. The company posted $172.2 million in sales, representing an 11.5% decrease compared to the same period last year. However, adjusted earnings per share reached $0.98, surpassing analyst expectations by 3%.

Curious if First Merchants is a good investment opportunity right now?

Highlights from Q4 2025

• Net Interest Income: $139.1 million, closely matching the $139.6 million forecast (up 3.5% year-over-year)
• Net Interest Margin: 3.3%, slightly above the 3.2% estimate (outperforming by 8.6 basis points)
• Total Revenue: $172.2 million, just under the $173.1 million expectation (down 11.5% year-over-year, missing by 0.5%)
• Efficiency Ratio: 54.5%, better than the projected 55.2% (a 68.3 basis point improvement)
• Adjusted EPS: $0.98, topping the $0.95 consensus (a 3% beat)
• Tangible Book Value per Share: $30.18, exceeding the $29.71 estimate (up 13% year-over-year, a 1.6% beat)
• Market Capitalization: $2.20 billion

CEO Mark Hardwick commented, “First Merchants achieved record double-digit earnings and strong loan growth in 2025. Our robust capital, liquidity, and credit positions set us up well for future success.”

About First Merchants

Founded in Indiana in 1893, First Merchants operates as a regional bank across the Midwest, offering commercial, personal, and wealth management services through branches in Indiana, Ohio, Michigan, and Illinois.

Revenue Trends

Bank earnings are primarily driven by net interest income—the difference between lending rates and deposit costs—and fee-based revenue from services and financial products. Over the past five years, First Merchants’ revenue has grown at a modest 6.5% annualized rate, which lags behind industry standards and serves as a weak foundation for further analysis.

First Merchants Quarterly Revenue

While long-term growth is crucial, recent shifts in interest rates and market dynamics can impact performance. Over the last two years, the company’s revenue has stagnated, indicating a slowdown in demand.

First Merchants Year-On-Year Revenue Growth

This quarter, First Merchants reported an 11.5% year-over-year decline in revenue, missing analyst expectations and generating $172.2 million in sales.

Revenue Composition

Over the past five years, net interest income has accounted for 78.2% of First Merchants’ total revenue, highlighting the importance of its lending operations.

First Merchants Quarterly Net Interest Income as % of Revenue

Market participants tend to focus on net interest income growth, as non-interest income is often seen as less reliable and more volatile.

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Tangible Book Value Per Share (TBVPS)

Banks are fundamentally balance sheet-driven businesses, and their valuations often reflect the strength and growth of their book value over time. Tangible book value per share (TBVPS) is a key metric, as it removes intangible assets and provides a clear view of the company’s net worth per share. While traditional metrics like EPS can be affected by mergers and accounting changes, TBVPS offers a more stable measure.

First Merchants’ TBVPS has increased at a modest 4.6% annual rate over the past five years. Notably, growth has accelerated recently, with TBVPS rising 10% annually over the last two years, moving from $24.96 to $30.18 per share.

First Merchants Quarterly Tangible Book Value per Share

Looking ahead, consensus forecasts suggest TBVPS will grow by just 3.5% over the next year, reaching $31.23—a relatively slow pace.

Summary of Q4 Results

First Merchants exceeded expectations for tangible book value per share in the latest quarter, while revenue came in slightly below and EPS slightly above analyst projections. Overall, the quarter was somewhat subdued, and the stock price remained steady at $38.02 following the announcement.

Is First Merchants a compelling buy at its current valuation? While the most recent quarter provides some insight, it’s only one factor in assessing the company’s long-term prospects. Evaluating both business quality and valuation is essential for investment decisions.