First Merchants Corporation (NASDAQ:FRME) Accelerates Growth After First Savings Merger

Merger-related scale and a steady dividend profile position First Merchants for near-term operational accretion while technicals show short-term selling pressure. Fundamental metrics present an under-valued posture versus the company’s cash-flow and book anchors.

Recent News

On February 1, 2026 First Merchants completed its merger with First Savings Financial Group, expanding deposit and loan footprints in southern Indiana; the companies expect integration during Q2 2026. On January 15, 2026 the Federal Reserve Bank of Chicago issued a non-objection clearing the last major regulatory hurdle. The board approved a quarterly cash dividend of $0.36 per share on February 9, 2026.

Technical Analysis

Directional indicators: ADX at 23.09 signals an emerging trend while DI- at 27.02 increases and DI+ at 18.52 decreases, indicating directional pressure favors sellers; that pressure counters the valuation case and raises the chance of further near-term downside unless buyers reassert momentum.

MACD: MACD sits at -0.50 and trends downward below its signal line (signal 0.02), indicating continuing bearish momentum; a MACD cross back above the signal line would mark a shift toward bullish momentum.

MRO: MRO equals -22.86 and trends lower, indicating price below the oscillator’s target and therefore technical potential for upward mean reversion; that implies a technical catalyst for a bounce even while directional momentum remains negative.

RSI: RSI at 49.43 and decreasing shows market demand near equilibrium but leaning lower; combined with falling short-term EMAs (12-day EMA decreasing) price retains a mildly bearish near-term profile relative to moving averages and Ichimoku baselines around $38–$39.

Price & volatility context: Close of $37.39 trades below the 20-, 50-, and 200-day averages and beneath the super-trend upper band at $39.32, reinforcing resistance in the $39–$40 area. Volume at 609,373 exceeds 10-, 50-, and 200-day averages, indicating elevated participation during this technical consolidation.

 


Fundamental Analysis

Earnings and cash flow: Reported EPS of $0.98 versus an estimate of $0.95 produced a 3.16% EPS surprise; the report date ended 2025-12-31 with the filing dated 2026-01-26. Operating cash flow and free cash flow both register at $80,712,000 and $80,712,000 respectively, with free cash flow yield of 3.74% (free cash flow yield QoQ down 5.98% but YoY up 28.405%), supporting the company’s ability to fund dividends and buybacks.

Profitability and returns: Return on assets equals 0.302% and return on equity equals 2.337%, both lower than typical large-bank benchmarks but roughly in line with regional peer return-on-assets averages; QoQ and YoY returns declined (ROA QoQ -0.658%, ROA YoY -13.96%; ROE QoQ -1.724%, ROE YoY -17.216%), reflecting margin pressure despite revenue growth.

Growth and revenue: Total revenue of $172,170,000 and YoY revenue growth of 50.338% contrast with flat quarter-over-quarter revenue; that strong annual revenue growth drives part of the valuation uplift while short-term QoQ stagnation signals integration- and seasonality-driven variability.

Capital structure and liquidity: Total assets $19,025,101,000, cash $280,458,000, total equity $2,441,542,000 and debt-to-equity 0.35067 (debt-to-equity QoQ -2.233%, YoY -12.73%) indicate modest leverage and improving capital mix. Book value per share stands at $42.87; tangible equity metrics remain supportive of the current dividend and capital return capacity.

Market multiples and relative measures: P/E at 38.63 sits slightly above the industry peer median but below the industry peer mean; forward P/E at 32.84 shows projected multiple compression. Price-to-book equals 0.88, below the industry peer mean and median, suggesting a discount to peers on a book basis. PEG ratios display negative values due to reported near-term EPS dynamics; WMDST values the stock as under-valued.

Dividend profile: Quarterly cash dividend $0.36 yields approximately 0.99% with a dividend payout ratio of 37.31% and dividend coverage of 268.05%, indicating sustainable coverage from current earnings and cash flow.

MOST-RECENT QUARTERLY REPORT
REPORT PERIOD ENDING: 2025-12-31
REPORT DATE: 2026-01-26
NEXT REPORT DATE: 2026-04-27
CASH FLOW  Begin Period Cash Flow 88.1 M
 Operating Cash Flow 80.7 M
 Capital Expenditures
 Change In Working Capital -6.13 M
 Dividends Paid -21.29 M
 Cash Flow Delta -3.92 M
 End Period Cash Flow 84.2 M
 
INCOME STATEMENT REVENUE
 Total Revenue 172.2 M
 Forward Revenue 48.8 M
COSTS
 Cost Of Revenue
 Depreciation 4.2 M
 Depreciation and Amortization 5.7 M
 Research and Development
 Total Operating Expenses
PROFITABILITY
 Gross Profit
 EBITDA
 EBIT
 Operating Income
 Interest Income 237.4 M
 Interest Expense 98.4 M
 Net Interest Income 139.1 M
 Income Before Tax 65.5 M
 Tax Provision 8.4 M
 Tax Rate 12.875 %
 Net Income 57.1 M
 Net Income From Continuing Operations 57.1 M
EARNINGS
 EPS Estimate 0.95
 EPS Actual 0.98
 EPS Difference 0.03
 EPS Surprise 3.158 %
 Forward EPS 1.14
 
BALANCE SHEET ASSETS
 Total Assets 19.0 B
 Intangible Assets 725.8 M
 Net Tangible Assets 1.7 B
 Total Current Assets
 Cash and Short-Term Investments
 Cash 280.5 M
 Net Receivables 93.4 M
 Inventory
 Long-Term Investments
LIABILITIES
 Accounts Payable 18.2 M
 Short-Term Debt
 Total Current Liabilities
 Net Debt 575.7 M
 Total Debt 856.2 M
 Total Liabilities 16.6 B
EQUITY
 Total Equity 2.4 B
 Retained Earnings 1.4 B
VALUATION & PER-SHARE METRICS EQUITY & PER-SHARE METRICS
 Book Value Per-Share 42.87
 Shares Outstanding 56.952 M
 Revenue Per-Share 3.02
VALUATION
 Market Capitalization 2.2 B
 Enterprise Value 3.0 B
 Enterprise Multiple
Enterprise Multiple QoQ
Enterprise Multiple YoY
Enterprise Multiple IPRWA
 EV/R 17.496
CAPITAL STRUCTURE
 Asset To Equity 7.792
 Asset To Liability 1.149
 Debt To Capital 0.26
 Debt To Assets 0.045
Debt To Assets QoQ -1.142 %
Debt To Assets YoY -10.054 %
Debt To Assets IPRWA high: 0.094
median: 0.052
mean: 0.048
FRME: 0.045
low: -0.0
 Debt To Equity 0.351
Debt To Equity QoQ -2.233 %
Debt To Equity YoY -12.73 %
Debt To Equity IPRWA high: 1.415
mean: 0.47
median: 0.466
FRME: 0.351
low: -0.002
PRICE-BASED VALUATION
 Price To Book (P/B) 0.883
Price To Book QoQ -4.138 %
Price To Book YoY -13.065 %
Price To Book IPRWA high: 2.361
mean: 1.299
median: 1.218
FRME: 0.883
low: 0.013
 Price To Earnings (P/E) 38.631
Price To Earnings QoQ -0.54 %
Price To Earnings YoY -26.503 %
Price To Earnings IPRWA high: 73.773
mean: 44.37
FRME: 38.631
median: 38.44
low: 30.108
 PE/G Ratio -38.249
 Price To Sales (P/S) 12.523
Price To Sales QoQ -5.391 %
Price To Sales YoY -15.033 %
Price To Sales IPRWA high: 28.081
mean: 13.824
median: 12.952
FRME: 12.523
low: 0.123
FORWARD MULTIPLES
Forward P/E 32.838
Forward PE/G -32.513
Forward P/S 44.19
EFFICIENCY OPERATIONAL
 Operating Leverage
ASSET & SALES
 Asset Turnover Ratio 0.009
Asset Turnover Ratio QoQ 2.477 %
Asset Turnover Ratio YoY 6.184 %
Asset Turnover Ratio IPRWA high: 0.015
mean: 0.01
median: 0.01
FRME: 0.009
low: 0.006
 Receivables Turnover 1.887
Receivables Turnover Ratio QoQ 3.562 %
Receivables Turnover Ratio YoY 10.418 %
Receivables Turnover Ratio IPRWA high: 4.133
mean: 2.638
median: 2.491
FRME: 1.887
low: 0.968
 Inventory Turnover
Inventory Turnover Ratio QoQ
Inventory Turnover Ratio YoY
Inventory Turnover Ratio IPRWA
 Days Sales Outstanding (DSO) 48.356
CASH CYCLE
 Cash Conversion Cycle Days (CCC)
Cash Conversion Cycle Days QoQ
Cash Conversion Cycle Days YoY
Cash Conversion Cycle Days IPRWA
CAPITAL DEPLOYMENT
 Cash Conversion Ratio
 CapEx To Revenue
 CapEx To Depreciation
 
CAPITAL, LIQUIDITY & COVERAGE CAPITAL STRUCTURE
 Total Capital 3.3 B
 Net Invested Capital 3.3 B
 Invested Capital 3.3 B
 Net Tangible Assets 1.7 B
 Net Working Capital
LIQUIDITY
 Cash Ratio
 Current Ratio
Current Ratio QoQ
Current Ratio YoY
Current Ratio IPRWA
 Quick Ratio
Quick Ratio QoQ
Quick Ratio YoY
Quick Ratio IPRWA
COVERAGE & LEVERAGE
 Debt To EBITDA
 Cost Of Debt 9.71 %
 Interest Coverage Ratio
Interest Coverage Ratio QoQ
Interest Coverage Ratio YoY
Interest Coverage Ratio IPRWA
 Operating Cash Flow Ratio
TIMING / LIQUIDITY
 Days Payables Outstanding (DPO)
DIVIDENDS
 Dividend Coverage Ratio 2.68
 Dividend Payout Ratio 0.373
 Dividend Rate 0.37
 Dividend Yield 0.01
PERFORMANCE GROWTH
 Asset Growth Rate 1.135 %
 Revenue Growth 1.111 %
Revenue Growth QoQ 0.0 %
Revenue Growth YoY 50.338 %
Revenue Growth IPRWA high: 23.369 %
mean: 3.469 %
median: 1.779 %
FRME: 1.111 %
low: -10.947 %
 Earnings Growth -1.01 %
Earnings Growth QoQ -199.02 %
Earnings Growth YoY -94.95 %
Earnings Growth IPRWA high: 44.444 %
mean: 3.014 %
FRME: -1.01 %
median: -3.03 %
low: -25.0 %
MARGINS
 Gross Margin
Gross Margin QoQ
Gross Margin YoY
Gross Margin IPRWA
 EBIT Margin
EBIT Margin QoQ
EBIT Margin YoY
EBIT Margin IPRWA
 Return On Sales (ROS)
Return On Sales QoQ
Return On Sales YoY
Return On Sales IPRWA
CASH FLOW
 Free Cash Flow (FCF) 80.7 M
 Free Cash Flow Yield 3.743 %
Free Cash Flow Yield QoQ -5.978 %
Free Cash Flow Yield YoY 28.405 %
Free Cash Flow Yield IPRWA high: 6.244 %
FRME: 3.743 %
median: 2.306 %
mean: 2.186 %
low: -1.861 %
 Free Cash Growth -7.82 %
Free Cash Growth QoQ -112.388 %
Free Cash Growth YoY -35.585 %
Free Cash Growth IPRWA high: 176.765 %
mean: 0.132 %
FRME: -7.82 %
median: -9.484 %
low: -234.402 %
 Free Cash To Net Income 1.414
 Cash Flow Margin 33.974 %
 Cash Flow To Earnings 1.025
VALUE & RETURNS
 Economic Value Added 0.05
 Return On Assets (ROA) 0.302 %
Return On Assets QoQ -0.658 %
Return On Assets YoY -13.96 %
Return On Assets IPRWA high: 0.645 %
mean: 0.311 %
median: 0.311 %
FRME: 0.302 %
low: 0.027 %
 Return On Capital Employed (ROCE)
 Return On Equity (ROE) 0.023
Return On Equity QoQ -1.724 %
Return On Equity YoY -17.216 %
Return On Equity IPRWA high: 0.047
mean: 0.029
median: 0.028
FRME: 0.023
low: 0.003
 DuPont ROE 2.363 %
 Return On Invested Capital (ROIC)
Return On Invested Capital QoQ
Return On Invested Capital YoY
Return On Invested Capital IPRWA

Six-Week Outlook

Merger completion and regulatory clearance represent a near-term fundamental positive that can support mid-cycle earnings accretion as integration progresses. Technically, rising DI- and a declining MACD favor continued near-term selling pressure, while a negative MRO signals potential for mean reversion toward the $38–$40 resistance zone if momentum indicators stabilize. Expect elevated volume and choppy trading as integration details and first-quarter guidance arrive; watch for a MACD cross above its signal and a reversal in DI+ to indicate a clearer shift toward price recovery. Given current multiples, the company’s under-valued designation rests on cash-flow yield and book-value support even while short-term technicals favor caution.

About First Merchants Corporation

First Merchants Corporation (NASDAQ:FRME) develops a comprehensive range of financial services through its subsidiary, First Merchants Bank. Established in 1893 and headquartered in Muncie, Indiana, the company maintains a strong presence across the Midwest with numerous locations in Indiana, Illinois, Ohio, and Michigan. First Merchants delivers community banking services tailored to both individual and business clients, offering a variety of deposit accounts such as time, savings, and demand deposits. The company provides an extensive selection of loan products, including consumer, commercial, agri-business, and real estate mortgage loans. In addition to traditional banking services, First Merchants extends its offerings to encompass personal and corporate trust services, brokerage, and private wealth management, ensuring a comprehensive approach to financial health. To meet the evolving demands of its customers, First Merchants integrates modern banking conveniences, including electronic and mobile delivery channels. By prioritizing financial stability and personalized service, First Merchants Corporation continues to drive growth and support community development throughout the regions it serves.



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