First Merchants Corporation (FRME): Business Model Canvas [Dec-2025 Updated]

You're digging into the mechanics of a successful regional bank, and frankly, First Merchants Corporation (FRME) offers a sharp case study in disciplined growth, especially following their $241.3 million First Savings Financial Group acquisition. We've broken down their Business Model Canvas, showing how they drive value primarily through relationship-based Commercial & Industrial loan growth-a key activity fueling their $18.8 billion asset base as of Q3 2025-while maintaining a top-quartile efficiency ratio of 55.09%. If you want to see the precise resources, like their $13.6 billion loan portfolio, and the revenue streams, like the $133.7 million in Net Interest Income they booked in Q3 2025, that underpin this strategy, the details are laid out right here for your analysis.

First Merchants Corporation (FRME) - Canvas Business Model: Key Partnerships

You're looking at the critical relationships First Merchants Corporation (FRME) relies on to execute its strategy as of late 2025. These partnerships are key to growth, especially following major corporate actions.

The most significant recent partnership is the definitive merger agreement with First Savings Financial Group, announced on September 25, 2025, valued at approximately $241.3 million in an all-stock transaction. This deal brings in First Savings' 16 banking centers in southern Indiana and adds about $2.4 billion in total assets to the combined entity, which will then boast approximately $21 billion in assets and 127 branches across Indiana, Michigan, and Ohio.

For this major transaction, First Merchants Corporation engaged external experts to help navigate the deal structure and regulatory environment. Here's a look at the advisory firms involved in the M&A activity:

The ownership structure highlights a heavy reliance on institutional capital. As of the latest reporting cycle ending September 2025, institutional ownership stood at 76.6%, though other data points suggest overall institutional ownership is at 73.92%. This means the vast majority of the company's equity is managed by large funds, giving them substantial influence over capital allocation decisions.

The top institutional holders as of September 30, 2025, control significant blocks of shares:

• VANGUARD GROUP INC: 6.08 million shares, representing 10.53% of the company.
• BlackRock, Inc.: 4.57 million shares.
• DIMENSIONAL FUND ADVISORS LP: 3.38 million shares.
• EARNEST PARTNERS LLC: 2.45 million shares.
• STATE STREET CORP: 2.06 million shares.

To maintain its operational backbone and support digital transformation, First Merchants Corporation partners with technology vendors. While specific vendor names tied directly to First Merchants Corporation's 2025 core banking system are not explicitly detailed in recent filings, industry leaders for Core Banking Solutions (CBS) implementation include firms like Infosys Finacle, which is cited as a market leader, and implementation specialists such as Hutech Solutions. These systems help enable real-time services and increase transaction processing capacity.

The bank's community focus is supported by local engagement across its operational footprint. The combined entity serves customers across Indiana, Ohio, and Michigan. This local presence necessitates partnerships with community organizations to maintain the personal service model that First Merchants Bank emphasizes.

Finance: draft 13-week cash view by Friday.

First Merchants Corporation (FRME) - Canvas Business Model: Key Activities

You're looking at the core engine driving First Merchants Corporation's performance as of late 2025. These are the specific actions management focuses on to generate value, and the numbers show where the effort is concentrated.

Commercial & Industrial (C&I) loan origination and servicing is clearly a major driver. The total loan portfolio grew by $926.9 million, or 7.3%, over the twelve months ending September 30, 2025. On a linked-quarter basis, that's a significant acceleration, adding $288.8 million, which annualizes to 8.7% growth. This expansion was defintely concentrated in the commercial space, with C&I loans growing by approximately $268 million, or 10.6%, during the third quarter alone. To give you context on the portfolio mix, C&I loans made up 33.8% of the total loan portfolio as of Q3 2025.

The activity around Strategic M&A and integration is a forward-looking key activity. First Merchants Corporation announced the definitive agreement to acquire First Savings Financial Group, Inc. on September 25, 2025. This deal is set to add approximately $2.4 billion in assets from First Savings (based on June 30, 2025 figures). The total transaction value was approximately $241.3 million in an all-stock exchange. Once closed, expected in the first quarter of 2026, the combined entity will hold combined assets of approximately $21.0 billion.

Core deposit gathering and liability management is crucial for funding that loan growth. As of September 30, 2025, total deposits stood at $14.9 billion. Over the preceding twelve months, total deposits grew by $504.9 million, which is a 3.5% increase year-over-year. The bank maintains a strong funding profile; as of Q3 2025, 90% of deposits were classified as core deposits.

For the fee-based side of the business, Wealth Management and Private Banking services contribute through noninterest income. Noninterest income for the third quarter of 2025 totaled $32.5 million. Looking back to Q1 2025, the wealth management division was already managing $5.8 billion in assets under advisement.

Finally, the operational activity of cost control is quantified by Maintaining a top-quartile efficiency ratio. For the third quarter of 2025, the reported efficiency ratio was 55.09%. If you strip out the $0.9 million in non-core charges, the ratio improves to 54.56%, or even 54.36% on an adjusted basis, according to another report.

Here's a quick look at some key Q3 2025 performance metrics that reflect these activities:

The company also highlights its capital strength, which supports these operational activities:

• Common Equity Tier 1 Capital Ratio: 11.34%
• Tangible Common Equity to Tangible Assets Ratio: 9.18%
• Loan to Deposit Ratio: 91.6%

First Merchants Corporation (FRME) - Canvas Business Model: Key Resources

You're looking at the core assets that power First Merchants Corporation's business engine as of late 2025. These aren't just line items; they are the tangible and intangible foundations that allow the bank to operate and compete in the Midwest financial landscape.

The balance sheet strength is a primary resource. As of the third quarter of 2025, First Merchants Corporation reported Total Assets of $18.8 billion. This scale is supported by a very strong capital buffer, which is crucial for absorbing potential economic shocks. The Common Equity Tier 1 (CET1) Ratio stood at a robust 11.34% at the end of Q3 2025. This ratio clearly shows the bank is well-capitalized relative to its risk-weighted assets.

The primary earning asset, the loan book, is substantial. The Loan portfolio totaled $13.6 billion as of Q3 2025. What's more, this portfolio showed strong momentum, growing by $288.8 million, or an 8.7% annualized rate, on a linked-quarter basis. This growth, especially in the commercial segment, is a key driver of future revenue.

Here's a quick look at the core financial metrics underpinning these resources from Q3 2025:

Physical presence remains a vital resource for community banking. First Merchants Corporation, the largest financial holding company based in Central Indiana, has expanded its footprint to include more than 111 banking center locations across Indiana, Michigan, and Ohio as of September 30, 2025. This network provides direct access to customers across its core Midwest markets. To be fair, another data point suggests 116 branches across four states, including Illinois.

The human capital, especially in specialized lending and governance, is another critical resource. You have to look at the leadership experience here:

• Executive Team Quality: The Executive Team is rated an 'A+' by employees, ranking in the Top 5% of similar-sized companies.
• CEO Tenure: CEO Mark K. Hardwick has been in the role since 2021, with a longer history at the company dating back to 1997.
• Management Experience: The management team carries an average tenure of approximately 4.9 years.
• Credit Expertise: Key personnel like Executive Vice President and Chief Credit Officer John J. Martin are in place to manage the growing loan book.

This combination of deep institutional knowledge and strong capital acts as the bedrock for their strategy.

First Merchants Corporation (FRME) - Canvas Business Model: Value Propositions

You're looking at the core value First Merchants Corporation delivers to its clients and the market as of late 2025. It's built on a foundation of deep regional presence and disciplined execution, which translates directly into tangible financial results for borrowers and investors alike.

A primary value driver is the focus on relationship-based commercial loan growth. This isn't just about volume; it's about earning business through dedicated service. For instance, in the third quarter of 2025, total loans grew by $288.8 million on a linked-quarter basis, which is an annualized increase of 8.7%. This growth was heavily weighted toward the Commercial & Industrial segment, showing that the relationship focus is working in key lending areas.

First Merchants Corporation offers comprehensive financial services for businesses and consumers across its footprint in Indiana, Ohio, and Michigan. The business model is diversified across distinct service lines, which you can see here:

• Commercial Banking
• Consumer Banking
• Mortgage Banking
• Private Wealth Advisors

This breadth allows the institution to be a full-service partner. As of the end of the third quarter of 2025, the total asset size stood at $18.8 billion.

The execution of this model results in strong profitability. You can see the discipline in the key performance indicators from the third quarter of 2025, which clearly supports the value proposition of reliable returns:

The ROA of 1.22% annualized in Q3 2025 places First Merchants Corporation in the top-quartile relative to its peers, which is a direct result of disciplined execution.

Underpinning the commercial success is a deep community commitment and local decision-making. Headquartered in Muncie, Indiana, the bank emphasizes its regional focus, recently announcing the acquisition of First Savings Financial Group to expand its presence into Southern Indiana and the Louisville MSA. The CEO has explicitly stated the commitment to supporting clients and communities, which is a core part of the value offered over larger, more centralized institutions.

Finally, the offering includes full-service Wealth Management and Trust offerings through First Merchants Private Wealth Advisors. This division provides expert-led solutions for intergenerational financial prosperity. To give you a sense of the scale managed by this division, as of Q1 2025, the bank managed $5.8 billion in assets under advisement. Furthermore, the firm's latest 13F filing in September 2025 disclosed 224 equity positions with a total market value of $3 billion.

Finance: draft a comparison table of Q1 2025 vs Q3 2025 ROA by next Tuesday.

First Merchants Corporation (FRME) - Canvas Business Model: Customer Relationships

First Merchants Corporation emphasizes a relationship-driven approach, blending personalized service with modern digital access across its footprint in Indiana, Ohio, and Michigan. The bank operates more than 111 banking center locations as of September 30, 2025, supporting its community-centric model.

Dedicated Commercial Relationship Managers

The focus on commercial lending, which drove portfolio expansion with Commercial & Industrial (C&I) loans growing $66M in Q4 2024 and loan growth accelerating in 2025, suggests a strong reliance on dedicated relationship managers for business clients. This personalized approach is key to securing the loan growth management targeted for mid-to-high single digits in 2025. The bank also announced the addition of a Director of Nonprofit Services in November 2025, further segmenting its relationship management expertise.

Community-based, in-person service model

First Merchants Corporation positions itself as a community bank, prioritizing local needs over a broad, one-size-fits-all national approach. This model is supported by a significant commitment to local investment; the bank has a five-year Community Benefits Plan, through 2025, committing to lend or invest $1.4 billion to communities of color and to low- and moderate-income (LMI) borrowers and communities. The bank offers localized services, including tailored financial products and support for local industry, which is the hallmark of this relationship style. Customer service support is available weekdays from 8 a.m. - 8 p.m. ET and Saturdays from 9 a.m. - 3 p.m. ET.

High-touch Private Banking for affluent clients

The Private Wealth Advisors division provides a high-touch service for affluent clients and institutions. While specific 2025 Assets Under Management (AUM) figures aren't explicitly stated for late 2025, as of late 2024, First Merchants Private Wealth Advisors managed over $4 billion in assets and advised on over $8 billion in assets. This segment is a key revenue driver, contributing 28% of the Noninterest Income stream in the second quarter of 2025. The firm has been investing in technology, like implementing the SS&C Trust Suite in late 2024, to ensure scalability for its high-touch client base.

Self-service digital and mobile banking platforms

First Merchants Corporation supports its in-person model with robust digital capabilities, offering a mobile app for on-the-go banking. The company has been upgrading its technology, including its online and account origination platforms, to simplify the client experience as part of its 2025 strategic focus. The strength of these digital channels helps maintain core relationship balances even as the bank manages its overall deposit mix.

Proactive management of deposit costs with clients

Managing deposit costs is a stated priority, which involves active management of client deposit relationships to optimize funding costs. The bank focuses on building core deposit relationships while actively managing higher-cost categories like public funds and maturity deposits. The total cost of deposits declined by 20 basis points to 2.23% in the first quarter of 2025. This proactive management contributed to margin stability expectations for 2025. Total deposits stood at $14.9 billion as of the third quarter of 2025.

Here's a look at the deposit composition as reported in Q2 2025, which reflects the success of managing these client funding relationships:

Customer-related fees, a direct measure of transactional engagement, totaled $29.4 million in Q2 2025, marking an increase of $2.3 million over the prior quarter. This fee income stream, which also includes service charges at 27% of Noninterest Income, shows the value derived from the active client base.

The relationship strategy is clearly tied to financial outcomes; management expressed confidence in continuing to reduce deposit costs in 2025, noting December 2024 costs were at 2.33%.

• Customer-Related Fees (Q2 2025): $29.4 million
• Increase in Customer-Related Fees (QoQ): $2.3 million
• Total Assets (Q3 2025): $18.8 billion
• Loan to Deposit Ratio (Q3 2025): 91.6%

If onboarding takes 14+ days, churn risk rises.

Finance: draft 13-week cash view by Friday.

First Merchants Corporation (FRME) - Canvas Business Model: Channels

You're looking at how First Merchants Corporation gets its products and services-from basic checking to complex commercial loans-into the hands of its customers as of late 2025. The channel strategy balances a strong physical presence with necessary digital tools, especially as the company integrates its recent acquisition.

Physical branch network (expanding into Louisville MSA)

First Merchants Corporation maintains a significant physical footprint across Indiana, Michigan, and Ohio. As of the third quarter of 2025, the Corporation operated more than 111 banking center locations across these core states. This network is set for an immediate expansion due to the announced acquisition of First Savings Financial Group, Inc., which is expected to close in the first quarter of 2026.

This transaction is key for channel growth, specifically entering the Louisville, Kentucky, market. First Savings adds 16 bank branches in southern Indiana, with 12 of those branches situated within the greater Louisville Metropolitan Statistical Area (MSA). Once the integration is complete, the combined First Merchants banner will operate 127 branches across Indiana, Michigan, and Ohio. This move positions First Merchants to compete in the Louisville MSA, which represents a $45 billion deposit market where First Savings currently holds a 3% share.

Here is a look at the physical footprint, current and projected:

Digital and mobile banking applications

The bank actively uses technology to serve customers, having completed upgrades to its online banking platforms, mobile apps, and real-time wire systems. This digital focus helps streamline operations and enhance customer experience. The wealth management division also utilizes digital channels, managing $5.8 billion in assets under advisement as of the first quarter of 2025. While specific late-2025 mobile adoption rates aren't public, the historical trend showed a nearly 20% increase in digital banking activity since the start of the pandemic.

• Upgraded online banking platforms.
• Mobile apps for on-the-go account management.
• Virtual connection options for business bankers.

Commercial Loan Production Offices

First Merchants Corporation supports its commercial lending efforts through dedicated centers and offices, which are distinct from full-service banking centers. These locations focus on relationship-based business banking and lending solutions. For instance, the bank operates a South Bend Commercial Lending Center and a Commercial Lending Center in Wyandotte, MI. Historically, First Merchants had a plan to open five new branches or loan production offices as part of a $1.4 billion community investment initiative. The First Savings acquisition also bolsters SBA lending capacity, which was a significant area for them, having closed $111 million in 7(a) loans in their 2025 fiscal year so far, compared to First Merchants' just under $8 million.

Customer Service Center (call center)

For customers needing direct support outside of a branch visit, First Merchants provides a centralized service channel. You can reach the general support line at 1.866.833.0050. The Wealth Management team, which handles specialized advisory services, is staffed weekdays from 8 a.m. until 6:00 p.m. EST. The bank emphasizes that its bankers are ready to listen attentively and work with clients to find solutions.

ATM network access

The physical network is supplemented by an ATM network that the bank has committed to enhancing across its footprint. Customers can only make ATM deposits at First Merchants Bank ATM machine locations. While the exact number of ATMs as of late 2025 isn't explicitly stated, the bank provides a locator tool for customers to find these access points alongside their banking centers.

First Merchants Corporation (FRME) - Canvas Business Model: Customer Segments

You're looking at the core client base for First Merchants Corporation (FRME) as of late 2025. This isn't just a list; these are the groups driving the balance sheet, especially the loan growth you see in their filings. First Merchants Corporation, the largest financial holding company based in Central Indiana, focuses its operations across Indiana, Michigan, and Ohio. As of September 30, 2025, the total asset size stood at $18.8 billion.

The customer segments are served through First Merchants Bank and First Merchants Private Wealth Advisors, operating across more than 111 banking center locations in their core Midwest markets.

Commercial & Industrial (C&I) businesses (primary loan growth driver)

This is where the action is for loan expansion. The overall loan portfolio remains heavily weighted toward commercial business, making up approximately 75% of total loans as of mid-2025. The C&I segment is consistently cited as the primary driver of this growth. For instance, in the second quarter of 2025, commercial loan growth was strong at an annualized rate of 10.7%. Specifically, C&I loans increased by $147 million in Q2 2025, following a $248 million increase in Q1 2025, often tied to funding capital expenditure (CapEx) and M&A pipelines.

Retail consumers in Indiana, Ohio, and Michigan

Retail consumers form the base for consumer banking and mortgage activities. While commercial lending drives the portfolio composition, consumer loans still saw positive momentum, growing by $36 million or 4.4% in the second quarter of 2025. The consumer deposit base is also critical, though commercial deposits saw larger fluctuations. The bank is focused on providing attentive financial solutions to these diverse communities.

Small to mid-sized businesses (SMBs)

SMBs are largely captured within the broader Commercial Banking segment, which includes C&I and other business lending. The growth in C&I loans reflects activity from these businesses seeking financing for expansion. The bank explicitly mentions local bankers who know your small business as part of its offering.

High-net-worth individuals (Wealth Management clients)

This group is served by First Merchants Private Wealth Advisors. They seek more than just one-off transactions, focusing on estate planning and comprehensive financial management. As of the first quarter of 2025, the wealth management division managed $5.8 billion in assets under advisement. Wealth management is also a significant contributor to fee income, alongside service charges.

Real estate developers and investors

This group falls under the commercial lending umbrella, specifically the Investment Real Estate (IRE) portfolio. While C&I is the primary growth engine, the IRE portfolio saw a decline of $96 million in Q1 2025, which was offset by C&I growth. The bank maintains a disciplined underwriting approach in this area amid market dynamics.

Here's a quick look at how the major segments stack up based on recent financial reporting:

The focus on the Midwest markets-Indiana, Ohio, and Michigan-is clear, as the bank continues to expand its presence there, including a pending strategic acquisition announced in Q3 2025 that adds exposure to Southern Indiana and the Louisville MSA.

• Geographic Core: Indiana, Ohio, and Michigan.
• Total Assets: $18.8 billion.
• Total Loans: $13.3 billion.
• Commercial Loan Growth Driver: C&I pipeline funding.
• Wealth Management Focus: Estate planning and legacy securing.

First Merchants Corporation (FRME) - Canvas Business Model: Cost Structure

You're looking at the expenses First Merchants Corporation incurs to run its business as of late 2025, which is heavily influenced by the competitive deposit environment and recent strategic moves like the First Savings acquisition.

Interest expense on deposits (rising due to competitive dynamics)

The cost of funding is a major component, and you see the pressure from competitive dynamics in the deposit rates. For the first quarter of 2025, the Interest Expense on Interest-bearing Deposits was reported at $\text{\$89,835 thousand}$. By the third quarter of 2025, the total cost of deposits had climbed, increasing $\text{14 basis points}$ to reach $\text{2.44%}$. This trend shows that attracting and retaining deposits costs more now.

Personnel expenses (salaries and incentives)

Salaries and benefits are a significant, recurring cost. For the third quarter of 2025, First Merchants Corporation reported $\text{\$57,317 thousand}$ for Salaries and employee benefits. Looking at the year-to-date through Q3 2025, this expense category totaled $\text{\$166,826 thousand}$.

Data processing and technology infrastructure costs

Technology is a necessary investment, but it shows up as a recurring operating cost. Outside data processing fees for the third quarter of 2025 were $\text{\$6,943 thousand}$. This followed a quarter where noninterest expense rose due to higher data processing costs. Management has been focused on upgrades to platforms like account origination and online systems, which are part of this cost base.

Occupancy and equipment costs for 100+ banking centers

Maintaining the physical footprint-over $\text{100 banking centers}$-involves fixed costs for space and hardware. Following the announced acquisition, the combined entity is projected to operate $\text{127 branches}$ across Indiana, Michigan, and Ohio. Here's a breakdown of the recent quarterly costs for the existing structure:

It's clear these occupancy and equipment costs are relatively stable quarter-over-quarter.

Acquisition and integration expenses (e.g., First Savings)

Strategic growth through acquisition brings one-time and short-term integration costs. First Merchants Corporation announced the all-stock acquisition of First Savings Financial Group, valued at approximately $\text{\$241.3 million}$. For the third quarter of 2025, noninterest expense specifically included $\text{\$0.9 million}$ related to severance and acquisition costs. The integration is targeted for completion during the second quarter of 2026.

You need to track those integration costs closely as they hit the expense line item.

• Salaries and employee benefits (Q3 2025): $\text{\$57,317 thousand}$
• Net Occupancy (Q3 2025): $\text{\$7,057 thousand}$
• Equipment (Q3 2025): $\text{\$6,998 thousand}$
• Outside data processing fees (Q3 2025): $\text{\$6,943 thousand}$
• Acquisition-related severance and costs (Q3 2025): $\text{\$0.9 million}$

Finance: draft 13-week cash view by Friday.

First Merchants Corporation (FRME) - Canvas Business Model: Revenue Streams

You're looking at how First Merchants Corporation actually brings in the money, which for a bank like FRME, boils down to two main buckets: the interest they earn and the fees they charge. As of late 2025, specifically looking at the third quarter results, the core engine is definitely the lending side.

Net Interest Income (NII) is the big one, representing the difference between the interest First Merchants Corporation earns on its assets, like loans, and the interest it pays out on liabilities, like deposits. For Q3 2025, this key metric came in at $133.7 million. This shows the primary value capture mechanism for the business. The Net Interest Margin (NIM) for the quarter was reported at 3.24% (fully tax equivalent), which management noted was essentially stable compared to the prior quarter.

The foundation of that NII is the loan book. As of the end of Q3 2025, the total loan portfolio for First Merchants Corporation stood at $13.6 billion. This portfolio saw significant expansion, growing by $288.8 million, or 8.7% annualized, on a linked quarter basis. Growth was primarily noted in the Commercial & Industrial segment. This entire portfolio generates the interest income component of the NII.

Here's a quick look at the scale of the asset base driving that interest revenue:

The second major revenue stream is Noninterest Income, which hit $32.5 million in Q3 2025. This figure was up 30.6% from the third quarter of 2024, though linked-quarter growth was more modest at 3.8%. This income is derived from various fee-based services that don't involve direct lending interest.

The components making up this Noninterest Income are crucial for diversification. You want to see these fee lines holding steady or growing, as they are less sensitive to interest rate swings than NII. The key fee-based drivers for First Merchants Corporation include:

• Treasury Management fees
• Card Payment fees
• Wealth Management and Trust service fees

Honestly, customer-related fees were reported as stable on a linked quarter basis in Q3 2025, which is a good sign of consistent service revenue. The year-over-year increase in total Noninterest Income was partially due to realized losses on securities sales in the prior year period, so you have to look past that one-time event to see the true fee-based performance. The total revenue picture for the quarter, combining NII and Noninterest Income, supported pre-tax, pre-provision earnings of $70.5 million.

Finance: draft Q4 2025 fee income projection by next Tuesday.