Assessing First Merchants (FRME) Valuation After Annual Earnings Highlight Net Income Growth And Higher Net Charge Offs

Simply Wall St.

Feb 08

AdvertisementAnnual results put First Merchants in focus First Merchants (FRME) has captured investor attention after reporting full year 2025 earnings, with higher net interest income and net income,...

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This suggests...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"FRME":"第一招商股份"},"translate_title":"年度收益后评估First Merchants(FRME)估值凸显净利润增长和净冲销增加","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"FRME":1.5},"content_text":"AdvertisementAnnual results put First Merchants in focus First Merchants (FRME) has captured investor attention after reporting full year 2025 earnings, with higher net interest income and net income, alongside a quarter that included increased net charge offs. See our latest analysis for First Merchants. That annual report appears to have caught the market’s eye, with the share price at US$42.34 and a 90 day share price return of 17.55% alongside a 5 year total shareholder return of 21%. This suggests recent momentum has picked up compared to the longer term. If this bank’s recent move has you thinking about where else capital could work harder, it might be worth broadening your search and checking out 22 top founder-led companies. With earnings per share at US$3.88 and the stock at US$42.34, First Merchants is not obviously expensive on recent results; however, rising net charge offs complicate the picture. Is there genuine value here, or is the market already pricing in future growth? Most Popular Narrative: 9.6% Undervalued First Merchants latest close at $42.34 sits below the most followed fair value estimate of $46.83, putting the spotlight on what is driving that gap.  Rapid migration and economic growth in core Midwest markets is associated with strong, broad-based loan demand, evidenced by high single digit loan growth and a robust commercial pipeline. This is cited as suggesting further revenue acceleration if regional population and business expansion trends persist. Increased small business formation and entrepreneurial activity across the region is also presented as supporting heightened demand for business banking and treasury services, which in turn is described as positioning the company for continued core deposit growth, higher market share, and expanding fee income.  Read the complete narrative. Want to see what kind of Midwest growth story is used to justify that valuation gap? The narrative emphasizes compound revenue gains, stable margins, and a richer earnings multiple that banks do not usually command. Curious which assumptions are used to carry the $46.83 fair value estimate through to 2028? The full narrative lays out the numbers behind that valuation. Result: Fair Value of $46.83 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this hinges on funding and credit not biting too hard, as higher deposit costs or pressure from commercial real estate could quickly test that upbeat narrative. Find out about the key risks to this First Merchants narrative.  Build Your Own First Merchants Narrative If you see the assumptions differently or prefer to work from the raw numbers yourself, you can build your own view in a few minutes by starting with Do it your way. A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding First Merchants. Looking for more investment ideas? If this story has sharpened your thinking, do not stop here. Use the Simply Wall St screener to line up your next set of candidates.  Spot potential value plays early by scanning our 53 high quality undervalued stocks that pair quality fundamentals with prices that may not fully reflect them. Prioritise resilience first and see which companies pass the test in our 86 resilient stocks with low risk scores built around lower risk scores. Hunt for off the radar opportunities using our screener containing 24 high quality undiscovered gems where solid businesses have yet to attract wide attention.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: AI Stock Screener & AlertsOur new AI Stock Screener scans the market every day to uncover opportunities.• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.Explore Now for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"dataReport","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"}}}