3.45% Dividend Yield, 14 Years of Dividend Hikes – A Midwest Relationship Bank Built to Grind Out Profits
Not a “story stock” bank—this one is a spreadsheet bank: deposits, loans, credit quality, and cost control drive the whole outcome. It grows by keeping funding stable, underwriting tight, and expenses predictable, then letting net interest income and customer fees do the work. The dividend streak is the public proof that management prefers repeatable progress over quarter‑to‑quarter theatrics, and the only real question is whether that operating discipline holds when credit and rates stop being friendly.
First Merchants (FRME)
Financial Score: 88 / 99
Quick Tip
To keep your portfolio strong, stay on top of the financials for each company you hold. Solid companies mean better returns, so be sure to check in on their quarterly and annual numbers.Interesting stocks usually score 80+ on the Financial Scale, with top players hitting 90+. If that score dips below 80, it might be a good time to consider cutting ties before things take a turn.First Merchants ended December 31, 2025 with total assets of $19.0 billion and loans of $13.8 billion, while total deposits were $15.3 billion (specifically $15.294855 billion). Deposit mix at quarter‑end was $7.770473 billion demand deposits and $5.481785 billion savings deposits, plus $603.690 million in time deposits of $100,000 or less, $915.293 million in time deposits of $100,000 or more, and $523.614 million of brokered CDs (with total brokered deposits of $1.5 billion). On capital, Common Equity Tier 1 was 11.70% and tangible common equity to tangible assets was 9.38%, framing a “strong-capital” starting point for growth and credit cycles.
Dividend: 3.45% yield, 14 raises, and a 36.53% payout
FRME’s dividend metrics are: 3.45% dividend yield, $1.44 annual dividend, 14 consecutive years of dividend growth, and +38.00% dividend growth over the last five years. The payout ratio is 36.53%, which is low for a bank dividend and leaves a large earnings buffer for credit costs and retained capital. Practically, that means the dividend does not require perfect execution every quarter to remain covered, and it also gives management flexibility to keep investing in growth.
Business and reporting: Q4 2025, dated Jan 26, 2026
For the quarter ended December 31, 2025 (reported January 26, 2026), net income available to common stockholders was $56.6 million and diluted EPS was $0.99, versus $63.9 million and $1.10 in Q4 2024. Net interest income was $139.064 million, fully taxable equivalent net interest margin was 3.29%, and net interest income included a $3.3 million interest recovery from the successful resolution of a nonaccrual commercial real estate loan. Noninterest income was $33.106 million, noninterest expense was $99.522 million, and the efficiency ratio was 54.52% for the quarter.
Growth: balance sheet expansion plus a $2.4B acquisition closing
Loan growth in the release was quantified two ways: loans grew $197.4 million linked‑quarter (5.8% annualized) and $938.8 million over the last twelve months (7.3%). Deposit growth also came with two hard numbers: deposits increased $424.9 million linked‑quarter (11.4% annualized) and $773.2 million over the last twelve months (5.3%), while the loan‑to‑deposit ratio declined to 90.3% from 91.6% in the prior quarter. The company also stated it received regulatory approval to acquire First Savings Financial Group, Inc., adding approximately $2.4 billion in assets and expanding presence into Southern Indiana and the Louisville MSA, with closing expected February 1, 2026.
Fun Fact: A single resolved nonaccrual loan created a $3.3M interest recovery
Q4 2025 net interest income benefited from an interest recovery of $3.3 million tied to the successful resolution of a nonaccrual commercial real estate loan. That’s a rare “credit win” you can actually point to in dollars: the asset moved from non‑earning status to resolution and directly lifted the quarter’s net interest income. It’s small relative to the total balance sheet, but it’s a clean signal that problem credits can move in the right direction and show up in reported results.
Final Take – Solid score, but below‑90 means watch the metrics
Dividend facts: 3.45% yield, $1.44 annual dividend, 36.53% payout ratio, 14 years of dividend hikes, and +38.00% 5‑year dividend growth. Q4 2025 facts: $56.6 million net income available to common, $0.99 diluted EPS, $139.064 million net interest income, 3.29% FTE net interest margin, $33.106 million noninterest income, $99.522 million noninterest expense, 54.52% efficiency ratio, and a $3.3 million interest recovery. Financial Score: 88 — strong, but not bulletproof; because it’s below 90, the company’s metrics deserve closer ongoing monitoring, since truly elite companies typically score above 90.
Someone’s sitting in the shade today because someone planted a tree a long time ago. ― Warren Buffett.
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