First Merchants (NASDAQ:FRME) Shares Gap Down on Disappointing Earnings

First Merchants Corporation (NASDAQ:FRME) shares gapped down prior to trading on Thursday following a weaker than expected earnings announcement. The stock had previously closed at $43.75, but opened at $39.60. First Merchants shares last traded at $41.0330, with a volume of 76,847 shares changing hands.

The bank reported $0.74 earnings per share for the quarter, missing the consensus estimate of $1.02 by ($0.28). The company had revenue of $202.49 million for the quarter, compared to analyst estimates of $202.78 million. First Merchants had a return on equity of 9.02% and a net margin of 17.05%.

First Merchants Increases Dividend

The company also recently disclosed a quarterly dividend, which was paid on Friday, June 19th. Shareholders of record on Friday, June 5th were paid a dividend of $0.37 per share. This is an increase from First Merchants’s previous quarterly dividend of $0.36. The ex-dividend date was Friday, June 5th. This represents a $1.48 annualized dividend and a yield of 3.5%. First Merchants’s dividend payout ratio (DPR) is presently 43.53%.

Trending Headlines about First Merchants

Here are the key news stories impacting First Merchants this week:

• Positive Sentiment: Management highlighted margin gains in the Q2 earnings call, suggesting some improvement in profitability trends. First Merchants Balances Margin Gains With Credit Strain
• Neutral Sentiment: First Merchants released its Q2 2026 earnings call transcript and presentation, which likely provided more detail on loan growth, credit quality, and outlook. First Merchants Corporation (FRME) Q2 2026 Earnings Call Transcript
• Neutral Sentiment: The company also published its Q2 2026 earnings presentation for investors reviewing the quarter’s operating trends and guidance. First Merchants Corporation 2026 Q2 – Results – Earnings Call Presentation
• Negative Sentiment: Q2 earnings came in below expectations, with EPS of $0.74 versus estimates near $1.02-$1.03, and revenue also slightly missed consensus. First Merchants stock page
• Negative Sentiment: Reports around the release pointed to ongoing credit strain, which may be weighing on investor sentiment despite the margin improvement. First Merchants Balances Margin Gains With Credit Strain

Wall Street Analyst Weigh In

FRME has been the subject of several research reports. Piper Sandler boosted their price target on First Merchants from $49.00 to $51.00 and gave the stock an “overweight” rating in a research report on Friday, June 26th. Weiss Ratings cut shares of First Merchants from a “buy (b)” rating to a “hold (c+)” rating in a research note on Monday, May 18th. Finally, Wall Street Zen raised shares of First Merchants from a “sell” rating to a “hold” rating in a report on Sunday, May 17th. Two investment analysts have rated the stock with a Buy rating and four have given a Hold rating to the stock. Based on data from MarketBeat.com, First Merchants currently has an average rating of “Hold” and an average target price of $49.00.

Insider Transactions at First Merchants

In other First Merchants news, Director Larry W. Myers sold 10,000 shares of the firm’s stock in a transaction on Thursday, June 11th. The stock was sold at an average price of $41.50, for a total value of $415,000.00. Following the completion of the sale, the director directly owned 99,751 shares of the company’s stock, valued at $4,139,666.50. This trade represents a 9.11% decrease in their position. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available through this hyperlink. 1.77% of the stock is currently owned by insiders.

Institutional Investors Weigh In On First Merchants

A number of institutional investors and hedge funds have recently added to or reduced their stakes in the business. Tudor Investment Corp ET AL grew its stake in shares of First Merchants by 121.1% in the third quarter. Tudor Investment Corp ET AL now owns 98,523 shares of the bank’s stock valued at $3,714,000 after buying an additional 53,953 shares in the last quarter. Y Intercept Hong Kong Ltd lifted its stake in First Merchants by 892.3% during the 1st quarter. Y Intercept Hong Kong Ltd now owns 84,049 shares of the bank’s stock worth $3,255,000 after acquiring an additional 75,579 shares in the last quarter. Versor Investments LP acquired a new position in First Merchants during the 4th quarter worth about $1,874,000. SG Americas Securities LLC boosted its holdings in First Merchants by 66.6% during the 4th quarter. SG Americas Securities LLC now owns 50,226 shares of the bank’s stock valued at $1,882,000 after acquiring an additional 20,070 shares during the period. Finally, Denali Advisors LLC boosted its holdings in First Merchants by 13.6% during the 4th quarter. Denali Advisors LLC now owns 205,200 shares of the bank’s stock valued at $7,691,000 after acquiring an additional 24,600 shares during the period. Hedge funds and other institutional investors own 73.92% of the company’s stock.

First Merchants Stock Performance

The company has a market capitalization of $2.64 billion, a price-to-earnings ratio of 13.43 and a beta of 0.84. The company has a debt-to-equity ratio of 0.52, a quick ratio of 0.92 and a current ratio of 0.94. The firm has a 50-day simple moving average of $41.77 and a two-hundred day simple moving average of $40.30.

About First Merchants

First Merchants Corporation, through its subsidiary First Merchants Bank, offers a comprehensive suite of banking and financial services to individuals, businesses and public sector clients. The company’s core business activities include retail and commercial banking, lending, treasury and cash management, and wealth advisory services. With a focus on relationship banking, First Merchants seeks to deliver tailored solutions for deposit accounts, loan financing and other credit products.

On the consumer side, First Merchants provides checking and savings accounts, certificates of deposit, personal and mortgage loans, and electronic banking conveniences.