Company: FRME
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0000712534-25-000058
Chunk: 205

Company: FIRST MERCHANTS CORP
Filing Date: 2025-02-24
Form: 10-K
Item: Item 7
Chunk 205
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18.2 million in the average balance of subordinated debt, repurchase agreements and fed funds purchased, respectively. The Corporation redeemed $65.0 million of subordinated debt in the first half of 2024 which contributed to the decrease in the average balance of subordinated debt. The decreases in repurchase agreements and fed funds purchased were due primarily to the Corporation utilizing liquidity to pay down borrowings in 2024. 

Interest Income/Expense and Average Yields

FTE net interest income decreased $24.9 million, or 4.4 percent, during the year ended December 31, 2024 compared to the year ended December 31, 2023. FTE interest income increased $58.7 million, or 7.5 percent, compared to the same period in 2023 but was more than offset by a $78.4 million, or 22.5 percent increase in total interest expense.  The increase in FTE interest income was primarily due to a shift in the earning asset mix from securities to loans as well as a 29 basis point increase in the yield earned on earning assets. Most notably, the yield earned on loans increased 29 basis points in 2024 compared to 2023.

The increase in total interest expense was primarily due to an $80.0 million, or 26.1 percent, increase in interest-bearing deposits coupled with a 54 basis point increase in the rate paid on those deposits.  Interest costs increased during 2024 due to continued deposit pricing pressure and deposit portfolio mix changes due to customers migrating from noninterest-bearing deposit products into interest-bearing deposit products.

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PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table presents the Corporation’s average balance sheet, interest income/interest expense, and the average rate as a percent of average earning assets/liabilities for the years ended December 31, 2024, 2023 and 2022.

 Average BalanceInterest Income /ExpenseAverageRateAverage BalanceInterest Income /ExpenseAverageRateAverage BalanceInterest Income /ExpenseAverageRate(Dollars in Thousands)202420232022Assets:     Interest-bearing deposits$418,163 $16,992 4.06 %$431,581 $17,719 4.11 %$296,863 $2,503 0.84 %Federal Home Loan Bank stock