First Merchants Corp (NASDAQ: FRME) stock soared 5.34% on Friday, following the release of its strong fourth quarter 2024 earnings results and an optimistic outlook for 2025. The company reported robust loan growth and improved profitability metrics, driven by strategic initiatives and favorable market conditions.

The key highlights from First Merchants' Q4 2024 earnings report include:

• Earnings per share (EPS) of $1.10, or $1.00 after adjusting for a $20 million gain and an $11.6 million bond loss.
• Loan growth of 6% for the quarter, aligning with 2025 expectations, and 3% growth for the full year 2024.
• Net interest margin improvement of 5 basis points from Q3 to Q4, contributing to a 4% increase in pre-tax pre-provision net revenue.
• Tangible common equity ratio of 8.81%, with tangible book value per share rising by 25% over the last two years.
• Successful completion of strategic initiatives, including technology upgrades and the sale of non-core branches, positioning the company for focused growth in core markets.

The strong performance was driven by several factors, including robust loan growth in the commercial and industrial (C&I) segment, improved deposit mix, and effective cost management, resulting in a low efficiency ratio of 53.6% for the quarter.

Looking ahead, First Merchants expressed optimism about its growth prospects for 2025, supported by favorable market conditions, particularly in the manufacturing sector and the company's expanding presence in the Michigan market. Additionally, the company's strong capital position provides flexibility for potential acquisitions within its core markets of Indiana, Ohio, and Michigan, should attractive opportunities arise.

However, challenges remain, including ongoing credit risk concerns and high input costs impacting the agribusiness segment. The company's allowance for credit losses remains elevated at $192.8 million, with a coverage ratio of 1.5%, reflecting the need for caution in the current economic environment.

Overall, First Merchants' strong Q4 results and positive outlook for 2025 have been well-received by investors, as evidenced by the significant stock price surge on Friday.