Dj First Merchants Corporation, Inst Holders, 3Q 2025 (Frme)

What Happened?

A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official boosted hopes for an interest rate cut. New York Fed President John Williams stated that he sees “room for a further adjustment” for interest rates in the near term. Following his speech, traders increased their bets on a rate cut, with the probability of a December reduction jumping from around 39% to over 70%, according to data from CME Group. The positive sentiment was also reflected in the bond market, where the yield on the 10-year Treasury, a benchmark for mortgage rates, eased following the comments.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Regional Banks company Western Alliance Bancorporation jumped 5.1%. Is now the time to buy Western Alliance Bancorporation? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company ServisFirst Bancshares jumped 5%. Is now the time to buy ServisFirst Bancshares? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company First Merchants jumped 5%. Is now the time to buy First Merchants? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Dime Community Bancshares jumped 5.1%. Is now the time to buy Dime Community Bancshares? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Dime Community Bancshares (DCOM)

Dime Community Bancshares’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 29 days ago when the stock dropped 7.2% on the news that the company reported third-quarter earnings that missed Wall Street's profit expectations. The regional lender posted adjusted earnings per share of $0.61, which fell short of analyst estimates of $0.69. While revenue for the quarter came in ahead of expectations at $115.6 million, up 32% from the previous year, and net interest income also topped forecasts, investors appeared to be more concerned with the bottom-line miss. The negative reaction suggests that the market weighed the earnings shortfall more heavily than the strong top-line performance, leading to a sell-off in the shares.

Dime Community Bancshares is down 10.2% since the beginning of the year, and at $27.25 per share, it is trading 25.5% below its 52-week high of $36.59 from December 2024. Investors who bought $1,000 worth of Dime Community Bancshares’s shares 5 years ago would now be looking at an investment worth $1,223.

As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the regional banks industry, including First Merchants and its peers.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

The 94 regional banks stocks we track reported a satisfactory Q3. As a group, revenues missed analysts’ consensus estimates by 1.1%.

While some regional banks stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.7% since the latest earnings results.

First Merchants

Dating back to 1893 when it first opened its doors in Indiana, First Merchants is a Midwest regional bank providing commercial, consumer, and wealth management services through branches in Indiana, Ohio, Michigan, and Illinois.

First Merchants reported revenues of $166.1 million, up 6.5% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a significant miss of analysts’ net interest income estimates and a narrow beat of analysts’ EPS estimates.

"Our strong year-to-date balance sheet and earnings performance underscore the strength and resilience of our business model. Our return on assets, return on tangible capital, and efficiency ratio are in the top-quartile relative to our peers, reflecting disciplined execution and operational excellence," said Mark Hardwick, Chief Executive Officer.

Unsurprisingly, the stock is down 3.5% since reporting and currently trades at $35.34.

Read our full report on First Merchants here, it’s free for active Edge members.

Best Q3: Customers Bancorp

Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.

Customers Bancorp reported revenues of $232.1 million, up 38.5% year on year, outperforming analysts’ expectations by 7%. The business had a stunning quarter with a solid beat of analysts’ net interest income estimates and an impressive beat of analysts’ revenue estimates.

However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $65.

Is now the time to buy Customers Bancorp? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: The Bancorp

Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.

The Bancorp reported revenues of $174.6 million, up 38.8% year on year, falling short of analysts’ expectations by 10%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and net interest income estimates.

As expected, the stock is down 23% since the results and currently trades at $59.45.

Read our full analysis of The Bancorp’s results here.

National Bank Holdings

Operating under familiar local brands like Community Banks of Colorado, Bank Midwest, and Bank of Jackson Hole, National Bank Holdings operates regional banks across Colorado, Kansas, Missouri, Wyoming, Texas, and other western states, offering commercial, business, and consumer banking services.

National Bank Holdings reported revenues of $108.9 million, up 2.7% year on year. This print beat analysts’ expectations by 3.9%. Aside from that, it was a mixed quarter as it also produced an impressive beat of analysts’ revenue estimates but a significant miss of analysts’ net interest income estimates.

The stock is down 3.5% since reporting and currently trades at $35.73.

Read our full, actionable report on National Bank Holdings here, it’s free for active Edge members.

Amalgamated Financial

Founded in 1923 by labor unions seeking a financial institution aligned with worker values, Amalgamated Financial (NASDAQGM:AMAL) operates a values-oriented bank that provides commercial banking, trust services, and investment management to socially responsible organizations and individuals.

Amalgamated Financial reported revenues of $86.41 million, up 6.6% year on year. This number surpassed analysts’ expectations by 3.7%. It was a strong quarter as it also produced a solid beat of analysts’ revenue estimates and an impressive beat of analysts’ net interest income estimates.

The stock is up 3.8% since reporting and currently trades at $27.70.

Read our full, actionable report on Amalgamated Financial here, it’s free for active Edge members.

First Merchants’ third quarter results met Wall Street’s revenue expectations, with management pointing to robust loan growth and a resilient balance sheet as key themes. CEO Mark Hardwick highlighted the 9% annualized loan growth and deposit mix improvements, noting, “We delivered another 9% loan growth quarter… and the efficiency ratio was 55%, which is consistent with the high performance we strive for.” The acquisition of First Savings Financial Group was a prominent topic, as leadership emphasized its potential to enhance fee income and expand in Southern Indiana. Management also cited a disciplined approach to deposit pricing and relationship-building as contributors to performance, even as deposit costs edged up to remain competitive.

Is now the time to buy FRME? Find out in our full research report (it’s free for active Edge members).

First Merchants (FRME) Q3 CY2025 Highlights:

• Revenue: $166.1 million vs analyst estimates of $165.6 million (6.5% year-on-year growth, in line)
• Adjusted EPS: $0.99 vs analyst estimates of $0.96 (2.9% beat)
• Adjusted Operating Income: $72.24 million vs analyst estimates of $77.68 million (43.5% margin, 7% miss)
• Market Capitalization: $2.11 billion

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From First Merchants’s Q3 Earnings Call

• Damon Del Monte (KBW): Del Monte pressed on expense outlook and core expense growth post-merger. CFO Michele Kawiecki projected Q4 expenses in line with Q3, with disciplined cost control as integration progresses and more clarity on 2026 guidance expected next quarter.
• Nathan Race (Piper Sandler): Race inquired about deposit pricing trends and the impact of additional rate cuts. Kawiecki said competition remains intense but expects more rationality as further rate cuts materialize, and confirmed the bank can flexibly reprice about $2.5 billion in indexed deposits.
• Race (Piper Sandler): Race also questioned plans for the acquired triple net lease portfolio. CEO Mark Hardwick explained the portfolio provides strategic optionality to hold or sell, depending on relative yields and loan growth in the legacy bank.
• Daniel Tamayo (Raymond James): Tamayo asked about the sustainability of strong C&I loan growth. President Michael Stewart described current growth as “core bread and butter” activity with no unusual drivers, and expects momentum to continue based on current pipelines.
• Brian Martin (Janney): Martin explored margin sensitivity and asset optimization. Kawiecki detailed the expected repricing of fixed-rate loans and ongoing use of securities portfolio roll-off to fund higher-yielding loans, while noting First Savings will reduce the bank’s overall asset sensitivity.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace and success of integrating First Savings Financial Group, including the rollout of its SBA lending platform across new markets; (2) trends in deposit costs and the bank’s ability to defend net interest margin amid potential rate cuts; and (3) sustained loan growth and credit quality stability, especially in light of ongoing competitive and macroeconomic pressures. The impact of major competitor consolidation in Michigan and Kentucky will also be key.

First Merchants currently trades at $36.60, in line with $36.60 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).

High-Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return).

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