Company: FRME
Filing Date: 2025-10-30
Form Type: 10-Q
Source: 0000712534-25-000197
Chunk: 202

Company: FIRST MERCHANTS CORP
Filing Date: 2025-10-30
Form: 10-Q
Item: Part I, Item 8
Chunk 202
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 same period of 2024.

Interest income on an FTE basis decreased $25.0 million year-over-year, primarily due to lower yields on variable rate loans following the Federal Open Market Committee's 100 basis point rate reduction in the second half of 2024 and 25 basis point cut in the third quarter of 2025. New and renewed loans yielded 6.95 percent for the nine months ended September 30, 2025 compared to 7.94 percent for the same period in 2024.  

Interest expense on deposits decreased $40.7 million, reflecting lower rates across all deposit categories. The total cost of interest-bearing liabilities decreased 41 basis points, to 2.83 percent for the nine months ended September 30, 2025, down from 3.24 percent for the same period in 2024. This reduction in funding costs more than offset the decline in asset yields and resulted in an 18 basis point improvement in the FTE net interest spread, which increased to 2.66 percent from 2.48 percent. 

47

PART I: FINANCIAL INFORMATIONITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following tables present the Corporation’s average balance sheet, interest income/interest expense, and the average rate as a percent of average earning assets/liabilities for the three and nine months ended September 30, 2025 and 2024.

 (Dollars in Thousands)Three Months EndedSeptember 30, 2025September 30, 2024Average BalanceInterest Income /ExpenseAverageRateAverage BalanceInterest Income /ExpenseAverageRateAssets: Interest-bearing deposits$229,271 $1,676 2.92 %$252,113 $2,154 3.42 %Federal Home Loan Bank stock47,278 1,092 9.24 41,730 855 8.20 Investment Securities: (1)Taxable1,567,594 8,288 2.11 1,789,526 9,263 2.07 Tax-Exempt (2)2,036,379 15,772 3.10 2,226,823 17,100 3.07 Total Investment Securities3,603,973 24,060 2.67 4,016,349 26,363 2.63 Loans