Company: FRME
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0000712534-25-000117
Chunk: 71

Company: FIRST MERCHANTS CORP
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 1
Chunk 71
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 in average securities sold under repurchase agreements for the same period.  Additionally, average subordinated debt decreased $41.9 million for the three months ended March 31, 2025 when compared to the same period in 2024, due to the Corporation's redemption of $65.0 million of subordinated debt in the first and second quarters of 2024 and $30.0 million in the first quarter of 2025.

Interest Income/Expense and Average Yields

In the first quarter of 2025, FTE asset yields decreased 26 basis points compared to the same period in 2024 and was primarily due to the Federal Open Market Committee ("FOMC") decreasing interest rates a total of 100 basis points in the second half of 2024. This resulted in a decrease in interest income, on an FTE basis, of $13.1 million during the three months ended March 31, 2025 compared to the same period in 2024.  The Corporation's loan portfolio is 68.3 percent variable and repricing occurred when the FOMC decreased interest rates.  As a result, yields on new and renewed loans were 6.96 percent for the three months ended March 31, 2025 compared to 8.15 percent for the same period in 2024.  The Corporation also recognized fair value accretion income on purchased loans, which is included in interest income, of $1.1 million, which accounted for 3 basis points of net interest margin in the three months ended March 31, 2025.  Comparatively, the Corporation recognized $1.4 million of accretion income for the three months ended March 31, 2024, or 3 basis points of net interest margin.

Interest expense on deposits decreased $17.7 million for the three months ended March 31, 2025, or 52 basis points, when compared to the same period in 2024. The total cost of interest-bearing liabilities was 2.74 percent for the three months ended March 31, 2025 compared to 3.23 percent during the same period in 2024.  The total cost of interest-bearing liabilities decreased 49 basis points, which mitigated the 26 basis point decrease in asset yields and resulted in a 23 basis point increase in FTE net interest spread when compared to the same period in 2024.   The decrease in interest expense was primarily due to