First Merchants Corporation (FRME): A Bull Case Theory

We came across a bullish thesis on First Merchants Corporation (FRME) on Substack by Serhio MaxDividends. In this article, we will summarize the bulls’ thesis on FRME. First Merchants Corporation (FRME)’s share was trading at $39.18 as of May 20^th. FRME’s trailing and forward P/E were 11.04 and 11.07 respectively according to Yahoo Finance.

First Merchants Corp. (FRME), a $2.16 billion regional bank headquartered in Muncie, Indiana, recently increased its quarterly dividend by 2.9% to $0.36 per share, reflecting a forward yield of 3.67%. In Q1 2025, the company reported net income of $54.9 million, or $0.94 EPS, up from $0.85 the previous year, supported by a growing loan book which expanded by $154.9 million (4.8% annualized). Total assets reached $18.4 billion despite a 1.6% decline in deposits, partly due to the sale of five Illinois branches. Net interest income was $130.3 million with a net interest margin of 3.22%.

First Merchants also returned capital through $10 million in share repurchases and redeemed $30 million in subordinated debt. The bank maintains a strong CET1 capital ratio of 11.5% and an efficient cost structure with a 54.54% efficiency ratio. These results demonstrate solid financial health, consistent growth, and a shareholder-friendly approach, making First Merchants an attractive regional banking investment. Also, check out what we found about this Texas-based regional bank – Cullenost Bankers Inc.

First Merchants Corporation (FRME) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 16 hedge fund portfolios held FRME at the end of the fourth quarter which was 13 in the previous quarter. While we acknowledge the risk and potential of FRME as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FRME but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.