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Press Release

First Merchants Corporation Announces Third Quarter 2019 Results With the Addition of Monroe Bank and Trust

Company Release - 10/24/2019 8:00 AM ET

MUNCIE, Ind., Oct. 24, 2019 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported third quarter 2019 net income of $36.8 million compared to $41.1 million during the same period in 2018.  Earnings per share for the period totaled $.71 per share compared to third quarter 2018 results of $.83 per share.  Included in the third quarter results are $11.2 million, or $.17 per share, of one-time charges related to the closing of our acquisition of Monroe Bank & Trust on September 1, 2019.

Total assets equaled $12.3 billion as of quarter-end and loans totaled $8.3 billion.  The Corporation’s loan portfolio increased by $1.2 billion, or 17.1 percent, during the past twelve months.  Investments increased $864 million, or 53.2 percent, during the same period and now total $2.5 billion.  The acquisition of Monroe Bank & Trust accounted for $731 million of the increase in loans.  Total deposits equaled $9.8 billion as of quarter-end and increased by $2.1 billion, or 27.9 percent, since September 30, 2018.  Of the increase, Monroe Bank & Trust accounted for $1.1 billion.

The Corporation’s loan to deposit ratio now totals 85.1 percent and loan to asset ratio totals 67.4 percent.  Additionally, the Corporation’s total risk-based capital ratio equaled 14.37 percent, common equity tier 1 capital ratio equaled 12.14 percent, and the tangible common equity ratio totaled 9.95 percent.

Michael C. Rechin, President and Chief Executive Officer, stated, “First Merchants posted strong financial results as our local economies continue to flourish and our clients look to our bank for growth solutions.  The signature event for the quarter was the legal closing of the Monroe Bank & Trust transaction.  The merger extends our franchise with a community bank that enjoys a dominant market share position.  Our plan to operationally integrate Monroe Bank & Trust into First Merchants next month will accelerate our marketplace momentum into 2020 to include a reduction in our overall funding costs.”

Net-interest income for the quarter totaled $88.9 million, an increase of $2.4 million from third quarter 2018, even as net-interest margin declined by 43 basis points totaling 3.62 percent.  Yields on earning assets totaled 4.77 percent, a decline of 11 basis points of which nearly half was due to lower fair value accretion. The cost of supporting liabilities increased by 32 basis points and totaled 1.15 percent.

Non-interest income totaled $22.1 million for the quarter, a $2.6 million, or 13.3 percent increase from the third quarter of 2018. Customer specific line items accounted for $3.1 million of the increase, with derivative hedge income accounting for $909,000 of the growth.  Non-interest expense totaled $67.4 million up from the 2018 total of $55 million.  Of the $12.4 million increase from the third quarter of 2018, merger related expenses accounted for $11.2 million.

The Corporation’s provision expense for the quarter totaled $600,000 and net charge-offs were $1.3 million.  The allowance for loan losses reached $80.6 million as of September 30, 2019, up from $78.4 million as of September 30, 2018.  Non-accrual loans declined to $22.7 million as of quarter-end and the allowance is .97 percent of total loans and 1.16 percent of non-purchased loans.

CONFERENCE CALL

First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, October 24, 2019.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's third quarter earnings release. International callers please call +1 412-317-1073.  A replay of the call will be available until November 24, 2019. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529, Canada participants should dial 855-669-9658, or for International participants, dial +1 412-317-0088. The replay access code is 10134821.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme191024.html during the time of the call.  A replay of the web cast will be available until October 24, 2020.

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank.  The Bank also operates as First Merchants Private Wealth Advisors (as a division of First Merchants Bank).

First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company’s Internet web page (http://www.firstmerchants.com).

FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.

Forward-Looking Statements

This release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These statements include statements of First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity, credit and interest rate risks associated with the First Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, First Merchants’ past results of operations do not necessarily indicate its anticipated future results.


    
CONSOLIDATED BALANCE SHEETS   
(Dollars In Thousands)September 30,
 2019 2018
ASSETS   
Cash and cash equivalents$202,383  $142,501 
Interest-bearing time deposits230,101  66,763 
Investment securities2,489,420  1,625,251 
Loans held for sale7,910  3,022 
Loans8,299,260  7,088,071 
Less: Allowance for loan losses(80,571) (78,406)
Net loans8,218,689  7,009,665 
Premises and equipment113,446  93,728 
Federal Home Loan Bank stock28,736  24,588 
Interest receivable45,923  38,531 
Goodwill and other intangibles579,751  471,409 
Cash surrender value of life insurance286,747  223,865 
Other real estate owned7,156  8,859 
Tax asset, deferred and receivable15,187  25,933 
Other assets99,612  53,167 
TOTAL ASSETS$12,325,061  $9,787,282 
LIABILITIES   
Deposits:   
Noninterest-bearing$1,777,365  $1,464,190 
Interest-bearing7,988,086  6,168,962 
Total Deposits9,765,451  7,633,152 
Borrowings:   
Federal funds purchased  90,000 
Securities sold under repurchase agreements191,603  118,824 
Federal Home Loan Bank advances354,609  385,458 
Subordinated debentures and term loans138,630  138,408 
Total Borrowings684,842  732,690 
Interest payable7,855  5,920 
Other liabilities117,901  54,094 
Total Liabilities10,576,049  8,425,856 
STOCKHOLDERS' EQUITY   
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:   
Authorized -- 600 shares   
Issued and outstanding - 125 shares125  125 
Common Stock, $.125 stated value:   
Authorized -- 100,000,000 shares   
Issued and outstanding - 55,345,672 and 49,304,542 shares6,918  6,163 
Additional paid-in capital1,053,148  837,996 
Retained earnings663,173  552,551 
Accumulated other comprehensive income (loss)25,648  (35,409)
Total Stockholders' Equity1,749,012  1,361,426 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$12,325,061  $9,787,282 


    
CONSOLIDATED STATEMENTS OF INCOMEThree Months Ended Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts)September 30, September 30,
 2019 2018 2019 2018
INTEREST INCOME       
Loans receivable:       
Taxable$96,850  $88,479  $280,155  $251,409 
Tax-exempt4,500  3,761  12,897  10,989 
Investment securities:       
Taxable6,729  5,514  19,822  16,044 
Tax-exempt8,335  6,493  22,660  18,865 
Deposits with financial institutions1,363  270  3,022  1,034 
Federal Home Loan Bank stock355  283  1,028  950 
Total Interest Income118,132  104,800  339,584  299,291 
INTEREST EXPENSE       
Deposits24,830  13,685  67,511  34,852 
Federal funds purchased15  229  225  670 
Securities sold under repurchase agreements385  174  1,057  519 
Federal Home Loan Bank advances1,894  2,137  5,400  6,141 
Subordinated debentures and term loans2,076  2,089  6,315  6,136 
Total Interest Expense29,200  18,314  80,508  48,318 
NET INTEREST INCOME88,932  86,486  259,076  250,973 
Provision for loan losses600  1,400  2,300  5,563 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES88,332  85,086  256,776  245,410 
OTHER INCOME       
Service charges on deposit accounts6,107  5,619  16,639  15,434 
Fiduciary and wealth management fees4,429  3,673  12,178  11,064 
Card payment fees5,158  4,586  14,813  13,642 
Net gains and fees on sales of loans2,227  1,841  5,258  5,262 
Derivative hedge fees1,684  775  3,952  1,848 
Other customer fees450  452  1,230  1,349 
Earnings on cash surrender value of life insurance1,144  961  3,079  3,144 
Net realized gains on sales of available for sale securities393  1,285  3,376  4,016 
Other income524  335  1,918  1,520 
Total Other Income22,116  19,527  62,443  57,279 
OTHER EXPENSES       
Salaries and employee benefits38,942  32,936  104,679  97,354 
Net occupancy4,777  4,586  14,273  13,604 
Equipment4,030  3,483  11,789  10,707 
Marketing1,332  1,216  5,158  3,574 
Outside data processing fees4,435  3,422  12,048  9,848 
Printing and office supplies312  334  961  992 
Intangible asset amortization1,356  1,650  4,404  5,094 
FDIC assessments(668) 856  717  2,286 
Other real estate owned and foreclosure expenses294  455  2,362  1,219 
Professional and other outside services8,251  1,844  12,511  5,174 
Other expenses4,293  4,240  12,660  12,361 
Total Other Expenses67,354  55,022  181,562  162,213 
INCOME BEFORE INCOME TAX43,094  49,591  137,657  140,476 
Income tax expense6,337  8,478  21,027  23,050 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$36,757  $41,113  $116,630  $117,426 
Per Share Data:       
Basic Net Income Available to Common Stockholders$0.71  $0.83  $2.33  $2.38 
Diluted Net Income Available to Common Stockholders$0.71  $0.83  $2.32  $2.37 
Cash Dividends Paid$0.26  $0.22  $0.74  $0.62 
Average Diluted Shares Outstanding (in thousands)51,570  49,492  50,227  49,458 


        
FINANCIAL HIGHLIGHTS       
(Dollars in thousands)Three Months Ended Nine Months Ended
 September 30, September 30,
 2019 2018 2019 2018
NET CHARGE-OFFS$1,303  $537  $2,281  $2,189 
        
AVERAGE BALANCES:       
Total Assets$11,277,742  $9,756,680  $10,623,664  $9,610,219 
Total Loans7,773,328  7,099,694  7,464,910  6,962,460 
Total Earning Assets10,192,183  8,810,758  9,618,285  8,657,152 
Total Deposits8,922,222  7,603,625  8,397,056  7,466,187 
Total Stockholders' Equity1,596,595  1,358,904  1,502,474  1,331,867 
        
FINANCIAL RATIOS:       
Return on Average Assets1.30% 1.69% 1.46% 1.63%
Return on Average Stockholders' Equity9.21  12.10  10.35  11.76 
Return on Average Common Stockholders' Equity9.21  12.10  10.35  11.76 
Average Earning Assets to Average Assets90.37  90.30  90.54  90.08 
Allowance for Loan Losses as % of Total Loans0.97  1.11  0.97  1.11 
Net Charge-offs as % of Average Loans (Annualized)0.07  0.03  0.04  0.04 
Average Stockholders' Equity to Average Assets14.16  13.93  14.14  13.86 
Tax Equivalent Yield on Average Earning Assets4.77  4.88  4.84  4.73 
Interest Expense/Average Earning Assets1.15  0.83  1.12  0.74 
Net Interest Margin (FTE) on Average Earning Assets3.62  4.05  3.72  3.99 
Efficiency Ratio57.60  49.25  53.36  49.94 
Tangible Common Book Value Per Share$21.26  $18.16  $21.26  $18.16 


          
NON-PERFORMING ASSETS         
(Dollars In Thousands)September 30, June 30, March 31, December 31, September 30,
 2019 2019 2019 2018 2018
Non-Accrual Loans$22,728  $25,635  $27,949  $26,148  $20,421 
Renegotiated Loans576  640  709  1,103  968 
Non-Performing Loans (NPL)23,304  26,275  28,658  27,251  21,389 
Other Real Estate Owned7,156  1,131  1,877  2,179  8,859 
Non-Performing Assets (NPA)30,460  27,406  30,535  29,430  30,248 
90+ Days Delinquent82  209  134  1,855  50 
NPAs & 90 Day Delinquent$30,542  $27,615  $30,669  $31,285  $30,298 
          
Allowance for Loan Losses$80,571  $81,274  $80,902  $80,552  $78,406 
Quarterly Net Charge-offs1,303  128  850  (482) 537 
NPAs / Actual Assets %0.25% 0.26% 0.30% 0.30% 0.31%
NPAs & 90 Day / Actual Assets %0.25% 0.26% 0.30% 0.32% 0.31%
NPAs / Actual Loans and OREO %0.37% 0.36% 0.42% 0.41% 0.43%
Allowance for Loan Losses / Actual Loans (%)0.97% 1.08% 1.11% 1.11% 1.11%
Net Charge-offs as % of Average Loans (Annualized)0.07% 0.01% 0.05% (0.03)% 0.03%


          
CONSOLIDATED BALANCE SHEETS         
(Dollars In Thousands)September 30, June 30, March 31, December 31, September 30,
 2019 2019 2019 2018 2018
ASSETS         
Cash and cash equivalents$202,383  $128,185  $115,878  $139,247  $142,501 
Interest-bearing time deposits230,101  129,614  70,672  36,963  66,763 
Investment securities2,489,420  2,092,924  1,862,659  1,632,582  1,625,251 
Loans held for sale7,910  5,854  3,330  4,778  3,022 
Loans8,299,260  7,511,370  7,299,320  7,224,467  7,088,071 
Less: Allowance for loan losses(80,571) (81,274) (80,902) (80,552) (78,406)
Net loans8,218,689  7,430,096  7,218,418  7,143,915  7,009,665 
Premises and equipment113,446  91,767  91,863  93,420  93,728 
Federal Home Loan Bank stock28,736  24,588  24,588  24,588  24,588 
Interest receivable45,923  45,150  40,931  40,881  38,531 
Goodwill and other intangibles579,751  466,736  468,256  469,784  471,409 
Cash surrender value of life insurance286,747  226,241  225,928  224,939  223,865 
Other real estate owned7,156  1,131  1,877  2,179  8,859 
Tax asset, deferred and receivable15,187  12,340  16,094  23,668  25,933 
Other assets99,612  83,231  70,431  47,772  53,167 
TOTAL ASSETS$12,325,061  $10,737,857  $10,210,925  $9,884,716  $9,787,282 
LIABILITIES         
Deposits:         
Noninterest-bearing$1,777,365  $1,353,165  $1,381,183  $1,447,907  $1,464,190 
Interest-bearing7,988,086  6,966,163  6,666,615  6,306,686  6,168,962 
Total Deposits9,765,451  8,319,328  8,047,798  7,754,593  7,633,152 
Borrowings:         
Federal funds purchased  75,000  20,000  104,000  90,000 
Securities sold under repurchase agreements191,603  119,674  111,783  113,512  118,824 
Federal Home Loan Bank advances354,609  460,042  345,013  314,986  385,458 
Subordinated debentures and term loans138,630  138,574  138,519  138,463  138,408 
Total Borrowings684,842  793,290  615,315  670,961  732,690 
Interest payable7,855  6,740  7,313  5,607  5,920 
Other liabilities117,901  116,863  84,651  45,295  54,094 
Total Liabilities10,576,049  9,236,221  8,755,077  8,476,456  8,425,856 
STOCKHOLDERS' EQUITY         
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:         
Authorized -- 600 shares         
Issued and outstanding125  125  125  125  125 
Common Stock, $.125 stated value:         
Authorized -- 100,000,000 shares         
Issued and outstanding6,918  6,182  6,179  6,169  6,163 
Additional paid-in capital1,053,148  841,365  839,919  840,052  837,996 
Retained earnings663,173  639,362  611,220  583,336  552,551 
Accumulated other comprehensive income (loss)25,648  14,602  (1,595) (21,422) (35,409)
Total Stockholders' Equity1,749,012  1,501,636  1,455,848  1,408,260  1,361,426 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$12,325,061  $10,737,857  $10,210,925  $9,884,716  $9,787,282 
          


CONSOLIDATED STATEMENTS OF INCOME         
(Dollars In Thousands, Except Per Share Amounts)September 30, June 30, March 31, December 31, September 30,
 2019 2019 2019 2018 2018
INTEREST INCOME         
Loans receivable:         
Taxable$96,850  $92,824  $90,481  $91,092  $88,479 
Tax-exempt4,500  4,244  4,153  3,873  3,761 
Investment securities:         
Taxable6,729  6,998  6,095  5,553  5,514 
Tax-exempt8,335  7,454  6,871  6,644  6,493 
Deposits with financial institutions1,363  784  875  1,207  270 
Federal Home Loan Bank stock355  335  338  284  283 
Total Interest Income118,132  112,639  108,813  108,653  104,800 
INTEREST EXPENSE         
Deposits24,830  23,087  19,594  16,690  13,685 
Federal funds purchased15  117  93  48  229 
Securities sold under repurchase agreements385  342  330  243  174 
Federal Home Loan Bank advances1,894  1,692  1,814  1,691  2,137 
Subordinated debentures and term loans2,076  2,123  2,116  2,097  2,089 
Total Interest Expense29,200  27,361  23,947  20,769  18,314 
NET INTEREST INCOME88,932  85,278  84,866  87,884  86,486 
Provision for loan losses600  500  1,200  1,664  1,400 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES88,332  84,778  83,666  86,220  85,086 
OTHER INCOME         
Service charges on deposit accounts6,107  5,437  5,095  5,516  5,619 
Fiduciary and wealth management fees4,429  3,931  3,818  3,842  3,673 
Card payment fees5,158  4,829  4,826  4,393  4,586 
Net gains and fees on sales of loans2,227  1,736  1,295  1,767  1,841 
Derivative hedge fees1,684  1,487  781  645  775 
Other customer fees450  341  439  511  452 
Earnings on cash surrender value of life insurance1,144  946  989  1,074  961 
Net realized gains on sales of available for sale securities393  1,843  1,140  253  1,285 
Other income524  1,064  330  1,179  335 
Total Other Income22,116  21,614  18,713  19,180  19,527 
OTHER EXPENSES         
Salaries and employee benefits38,942  32,709  33,028  34,350  32,936 
Net occupancy4,777  4,469  5,027  4,737  4,586 
Equipment4,030  4,117  3,642  3,627  3,483 
Marketing1,332  2,752  1,074  1,107  1,216 
Outside data processing fees4,435  3,929  3,684  3,367  3,422 
Printing and office supplies312  334  315  433  334 
Intangible asset amortization1,356  1,520  1,528  1,625  1,650 
FDIC assessments(668) 678  707  634  856 
Other real estate owned and foreclosure expenses294  903  1,165  251  455 
Professional and other outside services8,251  2,376  1,884  3,002  1,844 
Other expenses4,293  3,800  4,567  4,605  4,240 
Total Other Expenses67,354  57,587  56,621  57,738  55,022 
INCOME BEFORE INCOME TAX43,094  48,805  45,758  47,662  49,591 
Income tax expense6,337  7,749  6,941  5,949  8,478 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$36,757  $41,056  $38,817  $41,713  $41,113 
          
Per Share Data:         
Basic Net Income Available to Common Stockholders$0.71  $0.83  $0.79  $0.85  $0.83 
Diluted Net Income Available to Common Stockholders$0.71  $0.83  $0.78  $0.85  $0.83 
Cash Dividends Paid$0.26  $0.26  $0.22  $0.22  $0.22 
Average Diluted Shares Outstanding (in thousands)51,570  49,550  49,541  49,511  49,492 
FINANCIAL RATIOS:         
Return on Average Assets1.30% 1.56% 1.54% 1.68% 1.69%
Return on Average Stockholders' Equity9.21  11.10  10.86  12.10  12.10 
Return on Average Common Stockholders' Equity9.21  11.10  10.86  12.10  12.10 
Average Earning Assets to Average Assets90.37  90.66  90.60  90.41  90.30 
Allowance for Loan Losses as % of Total Loans0.97  1.08  1.11  1.11  1.11 
Net Charge-offs as % of Average Loans (Annualized)0.07  0.01  0.05  (0.03) 0.03 
Average Stockholders' Equity to Average Assets14.16  14.09  14.18  13.90  13.93 
Tax Equivalent Yield on Average Earning Assets4.77  4.86  4.89  4.97  4.88 
Interest Expense/Average Earning Assets1.15  1.15  1.05  0.93  0.83 
Net Interest Margin (FTE) on Average Earning Assets3.62  3.71  3.84  4.04  4.05 
Efficiency Ratio57.60  51.00  51.18  50.97  49.25 
Tangible Common Book Value Per Share$21.26  $21.01  $20.07  $19.12  $18.16 


          
LOANS         
(Dollars In Thousands)September 30, June 30, March 31, December 31, September 30,
 2019 2019 2019 2018 2018
Commercial and industrial loans$2,034,311  $1,877,042  $1,788,628  $1,726,664  $1,655,569 
Agricultural production financing and other loans to farmers90,462  83,452  80,357  92,404  88,504 
Real estate loans:         
Construction670,138  624,548  542,501  545,729  668,608 
Commercial and farmland3,144,649  2,821,689  2,838,798  2,832,102  2,699,629 
Residential1,155,403  993,802  976,668  966,421  965,893 
Home equity601,335  548,006  536,208  528,157  517,303 
Individuals' loans for household and other personal expenditures131,246  98,384  108,216  99,788  98,709 
Public finance and other commercial loans471,716  464,447  427,944  433,202  393,856 
Loans8,299,260  7,511,370  7,299,320  7,224,467  7,088,071 
Allowance for loan losses(80,571) (81,274) (80,902) (80,552) (78,406)
NET LOANS$8,218,689  $7,430,096  $7,218,418  $7,143,915  $7,009,665 


DEPOSITS         
(Dollars In Thousands)September 30, June 30, March 31, December 31, September 30,
 2019 2019 2019 2018 2018
Demand deposits$5,183,971  $4,309,473  $4,101,156  $3,985,178  $3,870,816 
Savings deposits2,808,745  2,358,720  2,338,266  2,282,701  2,212,675 
Certificates and other time deposits of $100,000 or more731,693  720,536  670,199  593,592  602,002 
Other certificates and time deposits811,780  729,392  704,527  646,682  625,341 
Brokered deposits229,262  201,207  233,650  246,440  322,318 
TOTAL DEPOSITS$9,765,451  $8,319,328  $8,047,798  $7,754,593  $7,633,152 


        
CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS       
(Dollars in Thousands)           
 For the Three Months Ended
 September 30, 2019 September 30, 2018
 Average Balance Interest
 Income /
Expense
 Average
Rate
 Average Balance Interest
 Income /
Expense
 Average
Rate
Assets:           
Interest-bearing time deposits$262,082  $1,363  2.06% $52,027  $270  2.08%
Federal Home Loan Bank stock24,633  355  5.76  24,588  283  4.60 
Investment Securities: (1)           
Taxable1,104,612  6,729  2.44  857,507  5,514  2.57 
Tax-Exempt (2)1,027,528  10,551  4.11  776,942  8,219  4.23 
Total Investment Securities2,132,140  17,280  3.24  1,634,449  13,733  3.36 
Loans held for sale21,913  274  5.00  11,038  142  5.15 
Loans: (3)           
Commercial5,674,956  77,370  5.45  5,226,284  71,223  5.45 
Real Estate Mortgage822,874  9,518  4.63  739,356  8,383  4.54 
Installment715,428  9,688  5.42  655,738  8,731  5.33 
Tax-Exempt (2)538,157  5,696  4.23  467,278  4,761  4.08 
Total Loans7,773,328  102,546  5.28  7,099,694  93,240  5.25 
Total Earning Assets10,192,183  121,544  4.77% 8,810,758  107,526  4.88%
Net unrealized gain (loss) on securities available for sale30,353      (15,245)    
Allowance for loan losses(80,918)     (77,763)    
Cash and cash equivalents143,266      128,557     
Premises and equipment99,021      94,422     
Other assets893,837      815,951     
Total Assets$11,277,742      $9,756,680     
Liabilities:           
Interest-bearing deposits:           
Interest-bearing deposits$3,134,675  $9,285  1.18% $2,399,477  $4,909  0.82%
Money market deposits1,307,647  3,766  1.14  1,062,154  1,551  0.58 
Savings deposits1,244,859  2,523  0.80  1,081,369  1,500  0.55 
Certificates and other time deposits1,736,759  9,256  2.11  1,536,697  5,725  1.49 
Total Interest-bearing Deposits7,423,940  24,830  1.33  6,079,697  13,685  0.90 
Borrowings660,107  4,370  2.59  741,092  4,629  2.50 
Total Interest-bearing Liabilities8,084,047  29,200  1.43  6,820,789  18,314  1.07 
Noninterest-bearing deposits1,498,282      1,523,928     
Other liabilities98,818      53,059     
Total Liabilities9,681,147      8,397,776     
Stockholders' Equity1,596,595      1,358,904     
Total Liabilities and Stockholders' Equity$11,277,742  29,200    $9,756,680  18,314   
Net Interest Income (FTE)  $92,344      $89,212   
Net Interest Spread (FTE) (4)    3.34%     3.81%
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    4.77%     4.88%
Interest Expense / Average Earning Assets    1.15%     0.83%
Net Interest Margin (FTE) (5)    3.62%     4.05%
            
(1)  Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
(2)  Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2019 and 2018.  These totals equal $3,412 and $2,726 for the three months ended September 30, 2019 and 2018, respectively.
(3)  Non accruing loans have been included in the average balances.
(4)  Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5)  Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.


       
CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS      
(Dollars in Thousands)           
 For the Nine Months Ended
 September 30, 2019 September 30, 2018
 Average Balance Interest
 Income /
Expense
 Average
Rate
 Average Balance Interest
 Income /
Expense
 Average
Rate
Assets:           
Interest-bearing time deposits$184,640  $3,022  2.18% $76,570  $1,034  1.80%
Federal Home Loan Bank stock24,603  1,028  5.57  24,521  950  5.17 
Investment Securities: (1)           
Taxable1,021,102  19,822  2.59  840,425  16,044  2.55 
Tax-Exempt (2)923,030  28,684  4.14  753,176  23,880  4.23 
Total Investment Securities1,944,132  48,506  3.33  1,593,601  39,924  3.34 
Loans held for sale13,618  512  5.01  9,520  363  5.08 
Loans: (3)           
Commercial5,469,377  224,766  5.48  5,116,405  200,886  5.24 
Real Estate Mortgage778,778  26,526  4.54  732,469  25,174  4.58 
Installment686,055  28,351  5.51  637,140  24,986  5.23 
Tax-Exempt (2)517,082  16,325  4.21  466,926  13,910  3.97 
Total Loans7,464,910  296,480  5.30  6,962,460  265,319  5.08 
Total Earning Assets9,618,285  349,036  4.84% 8,657,152  307,227  4.73%
Net unrealized gain on securities available for sale12,856      (11,616)    
Allowance for loan losses(81,172)     (76,944)    
Cash and cash equivalents130,587      129,181     
Premises and equipment94,628      94,897     
Other assets848,480      817,549     
Total Assets$10,623,664      $9,610,219     
Liabilities:           
Interest-bearing deposits:           
Interest-bearing deposits$2,921,762  $24,844  1.13% $2,236,644  $12,013  0.72%
Money market deposits1,222,860  10,057  1.10  1,077,792  4,270  0.53 
Savings deposits1,187,173  7,315  0.82  1,041,600  3,214  0.41 
Certificates and other time deposits1,652,141  25,295  2.04  1,504,851  15,355  1.36 
Total Interest-bearing Deposits6,983,936  67,511  1.29  5,860,887  34,852  0.79 
Borrowings636,295  12,997  2.72  754,054  13,466  2.38 
Total Interest-bearing Liabilities7,620,231  80,508  1.41  6,614,941  48,318  0.97 
Noninterest-bearing deposits1,413,120      1,605,300     
Other liabilities87,839      58,111     
Total Liabilities9,121,190      8,278,352     
Stockholders' Equity1,502,474      1,331,867     
Total Liabilities and Stockholders' Equity$10,623,664  80,508    $9,610,219  48,318   
Net Interest Income (FTE)  $268,528      $258,909   
Net Interest Spread (FTE) (4)    3.43%     3.76%
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    4.84%     4.73%
Interest Expense / Average Earning Assets    1.12%     0.74%
Net Interest Margin (FTE) (5)    3.72%     3.99%
            
(1)  Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
(2)  Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2019 and 2018.  These totals equal $9,452 and $7,936 for the nine months ended September 30, 2019 and 2018, respectively.
(3)  Non accruing loans have been included in the average balances.           
(4)  Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5)  Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.


For more information, contact:
Nicole M. Weaver, Vice President and Director of Corporate Administration
765-521-7619
http://www.firstmerchants.com

SOURCE: First Merchants Corporation, Muncie, Indiana 

FMC Logo with trademark.jpg

Source: First Merchants Corporation

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