NasdaqGS:FRME

Stock Analysis Report

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Executive Summary

First Merchants Corporation operates as the financial holding company for First Merchants Bank that provides community banking services. More Details

Rewards

Trading at 2.1% below our estimate of its fair value

Pays a reliable dividend of 2.62%

Risk Analysis

No risks detected for FRME from our risk checks.


Snowflake Analysis

Flawless balance sheet established dividend payer.


Similar Companies

Share Price & News

How has First Merchants's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: FRME is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: FRME's weekly volatility (7%) has been stable over the past year.


Market Performance


7 Day Return

-4.3%

FRME

-5.3%

US Banks

1.4%

US Market


1 Year Return

-2.8%

FRME

-8.4%

US Banks

22.6%

US Market

Return vs Industry: FRME exceeded the US Banks industry which returned -7.2% over the past year.

Return vs Market: FRME underperformed the US Market which returned 22.8% over the past year.


Shareholder returns

FRMEIndustryMarket
7 Day-4.3%-5.3%1.4%
30 Day11.8%9.9%4.9%
90 Day46.1%29.9%14.6%
1 Year0.5%-2.8%-5.0%-8.4%25.4%22.6%
3 Year-1.1%-8.7%-2.1%-10.5%46.8%37.0%
5 Year104.3%81.7%82.1%59.0%132.0%106.1%

Long-Term Price Volatility Vs. Market

How volatile is First Merchants's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is First Merchants undervalued compared to its fair value and its price relative to the market?

2.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: FRME ($39.62) is trading below our estimate of fair value ($40.47)

Significantly Below Fair Value: FRME is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: FRME is poor value based on its PE Ratio (14.3x) compared to the US Banks industry average (12.3x).

PE vs Market: FRME is good value based on its PE Ratio (14.3x) compared to the US market (21.1x).


Price to Earnings Growth Ratio

PEG Ratio: FRME is poor value based on its PEG Ratio (9.4x)


Price to Book Ratio

PB vs Industry: FRME is overvalued based on its PB Ratio (1.2x) compared to the US Banks industry average (1x).


Next Steps

Future Growth

How is First Merchants forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

1.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FRME's forecast earnings growth (1.5% per year) is below the savings rate (2%).

Earnings vs Market: FRME's earnings (1.5% per year) are forecast to grow slower than the US market (21.6% per year).

High Growth Earnings: FRME's earnings are forecast to grow, but not significantly.

Revenue vs Market: FRME's revenue (2.1% per year) is forecast to grow slower than the US market (10.5% per year).

High Growth Revenue: FRME's revenue (2.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: FRME's Return on Equity is forecast to be low in 3 years time (7.5%).


Next Steps

Past Performance

How has First Merchants performed over the past 5 years?

20.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FRME has high quality earnings.

Growing Profit Margin: FRME's current net profit margins (35.2%) are lower than last year (37.3%).


Past Earnings Growth Analysis

Earnings Trend: FRME's earnings have grown significantly by 20.6% per year over the past 5 years.

Accelerating Growth: FRME's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: FRME had negative earnings growth (-4.5%) over the past year, making it difficult to compare to the Banks industry average (-4.3%).


Return on Equity

High ROE: FRME's Return on Equity (8.3%) is considered low.


Next Steps

Financial Health

How is First Merchants's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet


Financial Institutions Analysis

Asset Level: FRME's Assets to Equity ratio (7.5x) is low.

Allowance for Bad Loans: FRME has a sufficient allowance for bad loans (213%).

Low Risk Liabilities: 92% of FRME's liabilities are made up of primarily low risk sources of funding.

Loan Level: FRME has an appropriate level of Loans to Assets ratio (66%).

Low Risk Deposits: FRME's Loans to Deposits ratio (84%) is appropriate.

Level of Bad Loans: FRME has an appropriate level of bad loans (0.6%).


Next Steps

Dividend

What is First Merchants's current dividend yield, its reliability and sustainability?

2.62%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: FRME's dividend (2.62%) is higher than the bottom 25% of dividend payers in the US market (1.37%).

High Dividend: FRME's dividend (2.62%) is low compared to the top 25% of dividend payers in the US market (3.86%).


Stability and Growth of Payments

Stable Dividend: FRME's dividends per share have been stable in the past 10 years.

Growing Dividend: FRME's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (37.4%), FRME's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: FRME's dividends in 3 years are forecast to be well covered by earnings (39.5% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

9.1yrs

Average management tenure


CEO

Mark Hardwick (49 yo)

no data

Tenure

US$993,691

Compensation

Mr. Mark K. Hardwick, C.P.A., serves as Chief Executive Officer at First Merchants Corporation since January 01, 2021. He served as an Executive Vice President of First Merchants Corporation since December...


CEO Compensation Analysis

Compensation vs Market: Mark's total compensation ($USD993.69K) is below average for companies of similar size in the US market ($USD3.86M).

Compensation vs Earnings: Mark's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Mark Hardwick
Chief Executive Officerno dataUS$993.69k0.17%
$ 3.8m
Michael Stewart
Presidentno dataUS$909.66k0.13%
$ 2.8m
Stephan Fluhler
Senior VP & Chief Information Officer6.67yrsUS$523.96k0.038%
$ 822.9k
Michael Rechin
Advisor & Director15.08yrsUS$1.70m0.22%
$ 4.7m
John Martin
Executive VP & Chief Credit Officer11.58yrsUS$709.32k0.076%
$ 1.6m
Michele Kawiecki
Executive VPno datano data0.021%
$ 454.2k
Nicole Weaver
VP & Director of Corporate Administrationno datano datano data
Brian Hunt
Secretary & Legal Counsel3yrsno datano data
Karen Evens
VP & Director of Marketing15.92yrsno datano data
Steven Harris
Senior Vice President & Director of Human Resources4.25yrsno data0.015%
$ 328.9k
Jeffrey Lorentson
Senior VP & Chief Risk Officer13.58yrsUS$165.10k0.025%
$ 533.8k
Julie Crabtree
Corporate Controller & First VPno datano datano data

9.1yrs

Average Tenure

54yo

Average Age

Experienced Management: FRME's management team is seasoned and experienced (9.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Michael Rechin
Advisor & Director15.08yrsUS$1.70m0.22%
$ 4.7m
Jean Wojtowicz
Independent Director17yrsUS$113.49k0.067%
$ 1.4m
William Hoy
Independent Director13.25yrsUS$105.09k0.054%
$ 1.2m
Charles Schalliol
Independent Chairman of the Board13.75yrsUS$149.62k0.090%
$ 1.9m
H. Chaffin
Director1.17yrsno data0.067%
$ 1.4m
Gary Lehman
Independent Director9.67yrsUS$113.09k0.078%
$ 1.7m
Patrick Sherman
Independent Director11.67yrsUS$103.42k0.087%
$ 1.9m
F. Halderman
Independent Director7.17yrsUS$108.76k0.025%
$ 548.2k
Michael Becher
Independent Director8.58yrsUS$113.19k0.027%
$ 588.8k
Michael Marhenke
Independent Director3.17yrsUS$96.01k0.066%
$ 1.4m
Michael Fisher
Independent Director3.92yrsUS$96.99k0.0091%
$ 196.5k
Clark Kellogg
Independent Director1.42yrsUS$53.60k0.0061%
$ 130.5k

9.1yrs

Average Tenure

65yo

Average Age

Experienced Board: FRME's board of directors are considered experienced (9.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: FRME insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

First Merchants Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: First Merchants Corporation
  • Ticker: FRME
  • Exchange: NasdaqGS
  • Founded: 1893
  • Industry: Regional Banks
  • Sector: Banks
  • Market Cap: US$2.150b
  • Shares outstanding: 54.26m
  • Website: https://www.firstmerchants.com

Number of Employees


Location

  • First Merchants Corporation
  • 200 East Jackson Street
  • Muncie
  • Indiana
  • 47305-2814
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FRMENasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDJun 1989
FM5BST (Boerse-Stuttgart)YesCommon StockDEEURJun 1989

Biography

First Merchants Corporation operates as the financial holding company for First Merchants Bank that provides community banking services. It accepts time, savings, and demand deposits; and provides consumer...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/01/21 23:47
End of Day Share Price2021/01/21 00:00
Earnings2020/09/30
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.