First Merchants piled on $932.8M of deposits, and paid $5.6M more to hold them

First Merchants stuffed nearly a billion dollars of additional interest‑bearing deposits into the balance sheet and the market barely noticed, the stock closed at $43.23 with essentially no one‑day move.

The recent run has the shares up 14.2% over six months and 9.0% over the last year, so a big operational data point can land with a thud rather than a boom.

"Interest expense on deposits increased $5.6 million compared to the prior year period, reflecting a $932.8 million increase in average interest‑bearing deposit balances, partially offset by lower deposit pricing across all deposit categories." (First Merchants Corporation / 10‑Q / 2026‑07‑31)

Put plainly: the bank collected $932.8 million more in interest‑bearing deposits year‑over‑year and that extra scale translated into $5.6 million more in deposit interest costs, even though the price (the rates paid) across deposit types moved lower.

That's the arithmetic investors are being asked to parse. An increase in deposit balances multiplies whatever rate the bank pays, so a big volume gain can raise expense dollars even while the average rate falls. Management has flagged credit and interest rates repeatedly in filings, this is a repeat theme across five documents.

The tension is simple and mechanical: growth in interest‑bearing liabilities versus the unit cost of funding. More deposits give the bank more cash to loan or invest; more cash also means more absolute interest paid unless the new dollars are priced near zero. Here, the net move was $5.6 million higher expense on $932.8 million of new balances.

How that balances against asset yields matters for margins, and that’s a numbers game the 10‑Q makes explicit without commentary. First Merchants’ filings sit in a peer group that includes LKFN and PRU for filing similarity; those names have run similar funding conversations in recent reports.

For now the market’s response is muted, a quiet close at $43.23 and a steady multi‑month run. The filings hand investors a tidy piece of arithmetic to monitor: deposit volume moved a lot; deposit pricing moved down; expense dollars moved up. Whether that combination shows up as a tilt in net interest margin, loan growth, or provisioning will be visible only in subsequent filings, not in this single line.

Average interest‑bearing deposits increased $932.8 million year‑over‑year and interest expense on deposits rose $5.6 million, per the company's 10‑Q.