From The Motley Fool · Motley Fool Transcribing · · 2m
First Merchants Q3 2026 Earnings Results
First Merchants reports 11% higher net income and 3.44% net interest margin as CEO steps down.
In brief
First Merchants reports 11% higher net income and 3.44% net interest margin as CEO steps down. First Merchants (FRME) reported Q3 2026 net income of $67.8 million, 11% higher than 2025, with CEO Mark Hardwick retiring and President Mike Stewart taking over. Originally reported by The Motley Fool.
Q3 2026 Results
First Merchants reported net income of $67.8 million, or $1.09 per diluted share, representing an 11% increase from Q3 2025.
Net Interest Margin
Net interest margin expanded to 3.44%, increasing 6 basis points from the prior quarter and 20 basis points from Q3 2025.
Loan Portfolio Growth
Loan portfolio reached $15.6 billion with 1.8% annualized linked-quarter growth.
Deposit Growth
Deposits grew 4.2% annualized linked-quarter to $16.9 billion, driven by private wealth and consumer banking.
Nonperforming Assets
Nonperforming assets remained stable at 0.57% of total assets, unchanged from 56 basis points in Q2 2026.
Credit Losses
Net charge-offs totaled $29.4 million, or 75 basis points of average loans annualized, primarily from two commercial credits.
Capital Position
Total risk-based capital ratio increased to 13.58%, up from 13.06% in the prior quarter.
Share Repurchases
Company repurchased $12 million in common stock during Q3 2026, bringing year-to-date total to $50.3 million.
CEO Transition
CEO Mark Hardwick will retire at end of 2026, with President Mike Stewart taking over as chief executive.
Loan Yield
Yield on new and renewed loans reached 6.34% during Q3 2026, providing a tailwind for portfolio yield.
Credit Guidance
Credit loss guidance narrowed to 38 to 40 basis points for full year 2026, down from previous range.
Marketing Strategy
Company increased marketing investment, resulting in higher-than-guided noninterest expense this quarter.
Deposit Pricing
Rate paid on deposits increased 9 basis points to 2.16% during Q3 2026.
Subordinated Debt
Completed $100 million subordinated debt issuance in late September 2026, adding 60 basis points to risk-based capital ratio.
Tangible Equity
Tangible common equity ratio decreased to 8.83% due to interest rate impacts on accumulated other comprehensive loss.
Q4 Outlook
Management expects loan growth to return to mid-single digit rate in Q4 2026 as credit exits diminish.
The key point
First Merchants (FRME) reported Q3 2026 net income of $67.8 million, 11% higher than 2025, with CEO Mark Hardwick retiring and President Mike Stewart taking over.
