First Merchants Corporation research snapshot
FRME AI stock analysis reads First Merchants Corporation as a well-established Midwest regional bank with a 133-year history, $21.3 billion in assets, and a relationship-driven lending franchise across Indiana, Ohio, and Michigan. As of the August 3, 2026 close, the stock traded at $43.63 with a market cap near $2.74 billion on about 62.8 million shares. FY2025 produced revenue of about $641.7 million and net income of $224.1 million, or $3.88 in diluted EPS. H1 2026 adjusted EPS reached $1.77, and Q2 2026 reported net income of $43.5 million, or $0.70 GAAP diluted EPS and $0.74 adjusted EPS, below the $1.03 consensus. Two large commercial credits moved to non-accrual in Q2 and drove elevated provision expense, while core momentum stayed solid: net interest income rose $7.6 million linked quarter, net interest margin expanded to 3.38%, and adjusted pre-tax, pre-provision earnings grew 7.5% sequentially. The bank completed the First Savings acquisition integration, sold $271 million of mortgages, and repurchased about 1 million shares in the first half. The bullish case needs credit normalization, net interest margin stability, and loan growth to hold. The caution is that the FRME AI stock forecast depends on rate policy, Midwest economic conditions, and the resolution of the two non-accrual credits through the rest of 2026.
Current price
$43.63 close on August 3, 2026
Market cap
$2.74 billion using about 62.80 million shares outstanding, verified at 0.00% deviation with the Pineify financial_rigor.py market cap check
AI score
55 / 100
Rating
Midwest regional bank with $21.3 billion in assets, a 133-year operating history, a completed First Savings acquisition, expanding net interest margin near 3.38%, a 3.4% dividend yield, and two Q2 2026 commercial credit downgrades that keep credit watch elevated
Trend status
Price recovered to $43.63 after the July 2026 earnings-driven pullback, above the 50-day moving average near $42.16 and well above the 200-day average near $39.47, within a 52-week range of $34.66 to $45.33
Data cutoff (updated monthly)
August 4, 2026
Informational use only. This page is not investment advice.
| Dimension | Conclusion | Confidence |
|---|---|---|
| Business quality | First Merchants sells commercial and consumer banking services across Indiana, Ohio, and Michigan, including deposits, loans, treasury management, and wealth management through a community banking model with 126 banking centers. | High |
| Moat | The moat comes from local market relationships, a 133-year brand presence in the Midwest, sticky deposit relationships, and relationship-based lending. It narrows when large regionals or money-center banks compete on rate or technology in the same footprint. | Medium |
| Management | CEO Mark K. Hardwick leads a team that completed the First Savings integration, closed a $271 million mortgage loan sale, and returned capital through buybacks and dividends. The Q2 2026 outcome also includes two disappointing credit downgrades that management disclosed early with specific reserves, framing the main test as resolving those credits and holding credit discipline. | Medium |
| Financial trend | FY2025 revenue reached about $641.7 million with net income of $224.1 million and diluted EPS of $3.88. Q2 2026 reported net income of $43.5 million, or $0.70 GAAP diluted EPS and $0.74 adjusted EPS versus the $1.03 consensus, with net interest margin expanding to 3.38% and adjusted pre-tax, pre-provision earnings up 7.5% sequentially. | High |
| Valuation | At $43.63, trailing PE near 14.2x on about $3.08 TTM GAAP EPS sits above the regional bank peer median near 11x to 12x, while forward PE near 10.3x on FY2026 consensus EPS of $3.76 is more moderate. Price-to-book near 1.02x is near book value and 1.49x tangible book. The 3.4% dividend yield provides a partial floor. Valuation is fair but no longer distressed after the 2026 rally. | Medium |
| Technical trend | FRME rallied from the November 2025 low near $34.66 to the July 2026 high near $45.33, a gain of about 31%, then pulled back to $41.89 after Q2 earnings before recovering to $43.63. Price holds above the 50-day moving average near $42.16 and the 200-day average near $39.47, keeping the intermediate uptrend intact. | Medium |
| Risk level | Key risks are the two Q2 2026 non-accrual credits and full-year net charge-off guidance of 40 to 45 basis points, net interest margin sensitivity, commercial real estate exposure in secondary Midwest markets, competition from larger banks, regional economic concentration in the Midwest, and technology spending pressure. | High |
| AI confidence | Data confidence is high for reported financials and market data. Forecast confidence is medium because Q2 2026 adjusted EPS missed consensus by about 28% and the unresolved non-accrual credits create uncertainty about H2 2026 provision expense. | High data confidence |
| Investment certainty | FRME screens as a reasonably run regional bank with a completed acquisition, an expanding margin, a near book value valuation, and a growing dividend. Certainty is medium because the two non-accrual credits, charge-off guidance, and rate policy direction keep earnings outcomes in a wide range. | Medium |
FRME AI stock forecast
The FRME AI stock forecast uses a normalized base EPS of $3.60, between the $3.88 FY2025 GAAP result and the $3.76 FY2026 consensus adjusted estimate, to reflect elevated provision expense from the two non-accrual credits. Using a 3-year model with EPS growth inputs of 8%, 4%, and negative 6% and terminal PE multiples of 14x, 11x, and 8x, the audited model produced a bullish value near $63.50, a base value near $44.50, and a bearish value near $23.90. These are scenario ranges, not price promises. The base case sits near the current price, suggesting the market is pricing a stabilizing credit picture and moderate earnings recovery without a large re-rating.
$58 to $66
More likely if the two non-accrual credits resolve with contained losses, net charge-offs stay near the low end of the 40 to 45 basis point guidance, net interest margin keeps expanding as loan yields hold above portfolio yield near 6.11%, loan growth stays mid-single digit, and the market re-rates FRME toward 13x to 14x normalized earnings.
$42 to $48
More likely if net interest income keeps growing at a high single digit to low double digit pace, provision expense normalizes after the Q2 spike, the two credits produce moderate charge-offs through H2 2026, and the market values FRME near 11x to 12x normalized EPS in the current $42 to $48 zone.
$22 to $27
More likely if the two non-accrual credits produce larger losses than reserved, full-year net charge-offs exceed 45 basis points, commercial real estate migration spreads beyond the known credits, Midwest economic conditions weaken, or the market re-rates regional banks toward 8x depressed earnings.
FRME AI technical analysis
FRME AI technical analysis uses market data available around the August 3, 2026 close. FRME closed at $43.63 after recovering from the post-earnings pullback low near $41.89 on July 23, 2026. The 52-week range is $34.66 to $45.33, with the high set on July 16, 2026. The 50-day moving average sits at $42.16 and the 200-day moving average at $39.47, both below the current price. RSI is near 54.4, roughly neutral. The stock has a beta of 0.85, so it tends to move less than the broad market.
| Level | Value | Why it matters |
|---|---|---|
| Current price | $43.63 | Close on August 3, 2026 from stockanalysis.com, which sources from S&P Global Market Intelligence. |
| Immediate support | $42.00 to $42.16 | The 50-day moving average near $42.16 and the round $42 level mark the first downside zone after the earnings recovery. |
| Secondary support | $40.00 to $41.90 | The July 23, 2026 post-earnings close near $41.89 and the psychological $40 level form the next reference zone, roughly matching the late June consolidation. |
| Near resistance | $44.00 to $44.60 | The July 1 to July 21 highs clustered near $44.3 to $44.6 mark immediate overhead supply ahead of the 52-week high. |
| 52-week high resistance | $45.33 | The July 16, 2026 high near $45.33 is the most important upside reference. A break above it on volume would signal trend continuation. |
| 50-day moving average | $42.16 | From stockanalysis.com statistics. Price holding above this level supports the intermediate uptrend. |
| 200-day moving average | $39.47 | From stockanalysis.com statistics. The 200-day average sits well below price after the rally from the November 2025 low near $34.66. |
| 52-week low support | $34.66 | The November 2025 low is the deepest downside reference and would only matter in a severe credit or macro scenario for regional banks. |
| Momentum | RSI near 54.4 | From stockanalysis.com statistics. RSI cooled from overbought territory near the July high and is now roughly neutral, suggesting consolidation rather than a trend reversal. |
| Volume | Average volume about 482,000 shares per day | The 20-day average volume from stockanalysis.com is about 482,000 shares, with an elevated 1.2 million-share day on the July 23 earnings reaction. FRME is a lower-liquidity regional bank, so position sizing should account for wider spreads. |
| Volatility | Beta 0.85 | From stockanalysis.com statistics. FRME has historically moved less than the broad market, which can reduce both upside and downside swing ranges. |
| Invalidation | Close below $40.00 | A decisive break below $40.00 would take out the July pullback low zone and move toward the 200-day moving average near $39.47, weakening the intermediate uptrend and calling for risk reduction in trend-following setups. |
FRME AI trading strategy
The FRME AI trading strategy below is a rules-based research framework, not personal advice. It connects price action with the two non-accrual credit resolutions, net charge-off guidance, net interest margin, provision expense, loan growth, Midwest economic data, Fed rate policy, and peer regional bank valuations.
Watch for FRME to hold above the $42.00 to $42.16 support zone and reclaim the $45.33 52-week high on above-average volume while the Q2 2026 non-accrual credits resolve with contained losses and net interest margin keeps expanding.
A close below $40.00, net charge-offs running above the 45 basis point guidance, or a further negative revision to forward EPS estimates should reduce trend-following confidence.
If FRME pulls back toward the $40.00 to $42.00 zone near the 50-day moving average without deterioration in the two known credits or dividend safety, compare the entry with the audited base and bearish scenarios before treating the move as an opportunity.
Do not treat every regional bank selloff as an entry if the rate outlook is causing structural net interest margin damage or if credit losses spread beyond the known non-accrual credits.
Track the resolution of the wireless retailer and roofing contractor non-accrual credits, quarterly net charge-offs versus the 40 to 45 basis point guidance, net interest margin, non-accrual loans, classified loans, tangible book value per share near $29.80, efficiency ratio, and quarterly dividend declarations.
Position sizing should reflect that FRME is a smaller regional bank with less geographic and product diversification than larger regionals or money-center banks.
Investment research summary
Customers bank with First Merchants for local relationship-based lending and deposit services in Indiana, Ohio, and Michigan. The bank earns net interest income from the spread between loan yields and deposit costs, plus fee income from treasury management, wealth management, and mortgage banking.
First Merchants benefits from a 133-year brand, deep local relationships, sticky deposit franchises in secondary Midwest markets, community-based lending expertise, and the expanded Southern Indiana footprint from the First Savings acquisition. The moat can narrow if larger banks compete aggressively on technology and rate in its footprint.
The thesis fails if the two Q2 2026 non-accrual credits produce losses beyond the specific reserves, net charge-offs exceed the 45 basis point guidance, commercial real estate migration spreads, net interest margin compresses despite the asset-sensitive balance sheet, or management over-expands outside its core competency. A Midwest recession would stress both the loan book and deposit franchise.
Mark Hardwick and the team completed the First Savings integration, closed a $271 million mortgage sale, and returned capital through about 1 million buyback shares and a rising dividend in H1 2026. They disclosed the two Q2 credit downgrades early and reserved specifically against them. The main test is resolving those credits and holding net charge-offs within the 40 to 45 basis point guidance for the rest of 2026.
Regional banks face net interest margin pressure and deposit competition from larger institutions and fintechs, plus regulatory costs. The industry also benefits from deposit inertia, long-standing customer relationships, and the essential nature of community lending in markets where national banks have less presence. First Merchants currently reports margin expansion to 3.38% and mid-single-digit loan growth guidance.
At $43.63, FRME trades near the audited base case value of $44.50, near book value of about $43 per share, and about 1.49x tangible book. The dividend yield of 3.4% provides a partial return floor. Margin of safety is moderate: valuation is not distressed after the 2026 rally, and credit normalization after the two Q2 non-accrual credits could take several quarters.
Source-backed data
Every metric below includes a source and last verification date.
| Metric | Value | Source | Last verified |
|---|---|---|---|
| FRME quote reference | Close of $43.63 on August 3, 2026, up 1.14% | stockanalysis.com, which sources from S&P Global Market Intelligence | August 4, 2026 |
| Market capitalization verification | $2.74 billion calculated from $43.63 x 62.80 million shares; Pineify financial_rigor.py deviation versus reported market cap was 0.00% | Pineify financial_rigor.py and stockanalysis.com | August 4, 2026 |
| Shares outstanding | About 62.80 million shares outstanding on stockanalysis.com; macrotrends reports a market cap of $2.719 billion consistent with the same share base | stockanalysis.com and macrotrends.net | August 4, 2026 |
| FY2025 revenue and net income | FY2025 revenue about $641.70 million; net income about $224.13 million; diluted EPS about $3.88 | stockanalysis.com financials and macrotrends.net EPS data. Note macrotrends reports a gross-revenue definition around $1.05 billion, a bank accounting convention gap versus the net-revenue basis used here | August 4, 2026 |
| TTM revenue, net income and EPS | TTM revenue about $642 million; TTM net income about $184.09 million; TTM diluted EPS about $3.08; trailing PE near 14.2x | stockanalysis.com statistics and overview | August 4, 2026 |
| Q2 2026 earnings results | Q2 2026 reported net income $43.5 million, or $0.70 GAAP diluted EPS; adjusted EPS $0.74 versus the $1.03 consensus; revenue $196.1 million versus $202.7 million consensus; net interest margin 3.38%; TBVPS $29.80; CET1 11.16% | Q2 2026 earnings call transcript and TheFly earnings summary | August 4, 2026 |
| H1 2026 earnings | H1 2026 adjusted EPS of $1.77 excluding the first quarter mortgage loan sale loss and acquisition-related expenses; year-to-date adjusted pre-tax, pre-provision earnings of $163.3 million, up 18.2% year over year | Q2 2026 earnings call transcript | August 4, 2026 |
| Q2 2026 credit quality | Two non-accrual credits of $28.1 million and $13.7 million drove provision of $33.0 million including $29.7 million of specific reserves; non-accrual loans $118.2 million; NPAs plus 90 days past due $129.5 million, 0.83% of loans; classified loans $393.3 million; full-year 2026 net charge-off guidance of 40 to 45 basis points | Q2 2026 earnings call transcript | August 4, 2026 |
| Book value and tangible book value | Book value per share about $42.96; price-to-book ratio near 1.02x; price-to-tangible-book ratio near 1.49x, consistent with the reported TBVPS of $29.80 | stockanalysis.com statistics and Q2 2026 earnings release | August 4, 2026 |
| Dividend and yield | Annual dividend of $1.48 per share, paid quarterly at $0.37 per share; forward yield near 3.39%; 14 years of dividend growth; payout near 38% of FY2025 EPS and about 48% of TTM EPS | stockanalysis.com statistics and dividend history | August 4, 2026 |
| Balance sheet and liquidity | Total assets of about $21.3 billion; loans about $15.5 billion; deposits about $16.8 billion; tangible common equity ratio 8.99%; a $271 million mortgage loan sale added liquidity in Q2 2026 | Q2 2026 earnings call transcript and press materials | August 4, 2026 |
| Analyst ratings | Consensus Buy from 6 analysts with an average price target near $48 and a range of $45 to $51. Piper Sandler maintains Buy with a $51 target as of July 27, 2026, and KBW reiterates Buy with a $50 target as of July 24, 2026 | stockanalysis.com forecast page, which sources from S&P Global and TipRanks | August 4, 2026 |
| Technical indicators | 52-week range $34.66 to $45.33; 50-day moving average $42.16; 200-day moving average $39.47; RSI near 54.4; beta 0.85; 20-day average volume about 482,000 shares; short interest about 2.58% of shares outstanding | stockanalysis.com statistics and price history | August 4, 2026 |
| Forward guidance | Management expects no Fed rate change assumption for H2 2026 with margin up a couple of basis points, non-interest income up about 10% for the full year, total expense run rate between $111 million and $114 million per quarter, an effective tax rate near 13%, and mid-single-digit loan growth | Q2 2026 earnings call transcript | August 4, 2026 |
This FRME AI stock analysis is an informational research tool only and is not investment advice, tax advice, or a recommendation to buy or sell any security. Forecast scenarios are based on available public data as of August 4, 2026, and can be wrong if First Merchants execution, the two non-accrual credit resolutions, net charge-offs, net interest margin, loan growth, Midwest economic conditions, regulation, competition, or market valuation changes.
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