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First Merchants Corporation Announces Second Quarter 2022 Earnings per Share

07/26/2022

MUNCIE, Ind., July 26, 2022 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)

Second Quarter 2022 Highlights:

  • Net income available to common stockholders was $38.5 million and diluted earnings per common share totaled $.63, compared to $55.6 million and $1.03 in the second quarter of 2021, and $48.6 million and $.91 in the first quarter of 2022.
  • Completed legal closing on the acquisition of Level One Bancorp, Inc. (“Level One”) on April 1, 2022.
  • Adjusted net income1 was $60.0 million and adjusted diluted earnings per share1 totaled $1.01, compared to $48.2 million and $.89 in the second quarter of 2021, and $47.3 million and $.88 in the first quarter of 2022.
  • Total loans grew $2.0 billion during the second quarter which included $1.6 billion from the acquisition of Level One. Excluding the forgiveness of $59.2 million in Paycheck Protection Program (“PPP”) loans, organic loan growth totaled $468.3 million or 20.1% annualized on a linked quarter basis.
  • Total deposits grew $1.7 billion during the second quarter which included $1.9 billion from the acquisition of Level One reflecting a decline in deposit balances of $265.9 million or 8.2% annualized on a linked quarter basis.
  • Nonaccrual loans totaled $46.0 million compared to $42.7 million on a linked quarter basis
  • Net interest income totaled $128.7 million, an increase of $26.4 million or 25.8% on a linked quarter basis

Mark Hardwick, Chief Executive Officer, stated, “First Merchants is encouraged by second quarter annualized organic loan growth of 20 percent combined with core margin expansion of 22 basis points. The legal close of Level One was a key accomplishment of our second quarter improving our prospects for future growth.”

Second Quarter Financial Results

First Merchants Corporation (the “Corporation”) has reported second quarter 2022 net income available to common stockholders of $38.5 million compared to $55.6 million during the same period in 2021. Diluted earnings per common share for the period totaled $.63 per share compared to the second quarter of 2021 result of $1.03 per share. Current quarter results included acquisition costs of $29.3 million resulting in a reduction of $.38 of diluted earnings per common share. The acquisition costs primarily consist of employee retention bonuses and severance, contract termination charges, professional fees, and current expected credit losses (“CECL”) Day 1 provision expense.

Total assets equaled $17.8 billion as of quarter-end and loans totaled $11.4 billion. Total loans increased $2.3 billion during the past twelve months. The acquisition of Level One contributed $1.6 billion of loans. Excluding acquired loans, the Corporation experienced organic loan growth of $1.1 billion, or 12.1 percent, during the past twelve months. This was offset by the forgiveness of PPP loans of $426.4 million. PPP loans accounted for $32.9 million of the period end loan portfolio balance. Investments increased $481.7 million, or 11.6 percent, during the last twelve months and now total $4.6 billion.

Total deposits equaled $14.6 billion as of quarter-end and increased by $2.4 billion over the past twelve months. The acquisition of Level One contributed $1.9 billion in deposits resulting in $436.7 million or 3.6% in organic deposit growth. The balance sheet growth mix resulted in an increase in the loan to deposit ratio of 3.4% over the past twelve months with the current quarter ratio ending at 78.3 percent.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $226.3 million as of quarter-end, or 1.98 percent of total loans, an increase of $30.3 million over prior quarter due to the acquisition of Level One. The ACL increased $16.6 million for CECL Day 1 purchased credit deteriorated (PCD) loans and provision expense of $14.0 million was recorded for CECL Day 1 non-PCD loans. Additionally, provision expense of $2.8 million was recorded for CECL Day 1 unfunded commitments, which increased other liabilities. Net loan charge-offs for the quarter totaled $0.3 million. No provision expense was recorded during the quarter or during the last twelve months other than CECL Day 1 expense. Non-performing assets to total assets were 0.30% for the second quarter of 2022, a decrease of nine basis points compared to 0.39% in the second quarter of 2021.

Net-interest income totaling $128.7 million for the quarter, continued to grow with an increase of $26.4 million, or 25.8 percent, over prior quarter, and an increase of $24.4 million, or 23.4 percent compared to the second quarter of 2021. Stated net-interest margin on a tax equivalent basis, totaling 3.28 percent, increased by 25 basis points compared to the first quarter of 2022 and six basis points compared to the second quarter of 2021. Net-interest margin excluding the impact of fair value accretion and PPP loans totaled 3.19%, an increase of 22 basis points compared to 2.97% for the first quarter of 2022 and an increase of 19 basis points from the second quarter of 2021. During the quarter, net-interest margin expanded 35 basis points from growth in the loan portfolio and higher loan and investment portfolio yields offset by a 10 basis point increase in funding costs.

Non-interest income, totaling $28.3 million for the quarter, increased $2.4 million or 9.2% compared to the first quarter of 2022. The increase was driven by higher services charges on deposits, gains on the sales of loans and derivative hedge fees. Non-interest income declined $2.6 million from the second quarter of 2021 due primarily to a decline on gains on the sale of loans driven by lower origination volume.

Non-interest expense totaled $97.3 million for the quarter, an increase of $25.0 million from the first quarter of 2022, and an increase of $28.0 million over the second quarter of 2021. Acquisition costs totaling $12.5 million were incurred during the quarter of which $10.0 million were one-time charges, $3.0 million reflected in salaries and benefits and $7.0 million in professional and other outside services.

The Corporation’s total risk-based capital ratio equaled 12.73 percent, common equity tier 1 capital ratio equaled 10.27 percent, and the tangible common equity ratio totaled 7.04 percent. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

1 See “Non-GAAP Financial Information” for reconciliation

CONFERENCE CALL

First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 10:30 a.m. (ET) on Tuesday, July 26, 2022.

To access via phone, participants will need to register using the following link where they will be provided a phone number and access code: (https://register.vevent.com/register/BI36331b98cb7441deb05fe5de007c8125)

In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/944s4zom) during the time of the call. A replay of the webcast will be available until July 26, 2023.

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 and Level One Bank (as divisions 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)June 30,
  2022   2021 
ASSETS   
Cash and due from banks$212,559  $167,596 
Interest-bearing deposits 136,702   438,863 
Investment securities, net of allowance for credit losses of $245,000 and $245,000 4,630,030   4,148,314 
Loans held for sale 9,060   18,582 
Loans 11,397,417   9,121,250 
Less: Allowance for credit losses - loans (226,275)  (199,775)
Net loans 11,171,142   8,921,475 
Premises and equipment 117,757   103,822 
Federal Home Loan Bank stock 38,111   28,736 
Interest receivable 68,728   54,173 
Goodwill and other intangibles 753,649   573,786 
Cash surrender value of life insurance 323,013   294,462 
Other real estate owned 6,521   601 
Tax asset, deferred and receivable 114,965   36,924 
Other assets 198,255   135,763 
TOTAL ASSETS$17,780,492  $14,923,097 
LIABILITIES   
Deposits:   
Noninterest-bearing$3,435,331  $2,479,853 
Interest-bearing 11,135,538   9,723,547 
Total Deposits 14,570,869   12,203,400 
Borrowings:   
Federal funds purchased 100,000    
Securities sold under repurchase agreements 186,468   146,904 
Federal Home Loan Bank advances 598,865   334,243 
Subordinated debentures and other borrowings 151,299   118,498 
Total Borrowings 1,036,632   599,645 
Interest payable 2,978   2,929 
Other liabilities 192,372   245,323 
Total Liabilities 15,802,851   13,051,297 
STOCKHOLDERS' EQUITY   
Preferred Stock, $1,000 par value, $1,000 liquidation value:   
Authorized -- 600 cumulative shares   
Issued and outstanding - 125 cumulative shares 125   125 
Preferred Stock, Series A, no par value, $2,500 liquidation preference:   
Authorized -- 10,000 non-cumulative perpetual shares   
Issued and outstanding - 10,000 non-cumulative perpetual shares 25,000    
Common Stock, $.125 stated value:   
Authorized -- 100,000,000 shares   
Issued and outstanding - 59,059,866 and 53,972,386 shares 7,383   6,747 
Additional paid-in capital 1,226,378   1,009,182 
Retained earnings 917,311   795,666 
Accumulated other comprehensive income (198,556)  60,080 
Total Stockholders' Equity 1,977,641   1,871,800 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$17,780,492  $14,923,097 



CONSOLIDATED STATEMENTS OF INCOMEThree Months Ended Six Months Ended
(Dollars In Thousands, Except Per Share Amounts)June 30, June 30,
  2022   2021   2022   2021 
INTEREST INCOME       
Loans receivable:       
Taxable$106,787  $87,002  $185,862  $172,107 
Tax-exempt 5,990   5,545   11,694   10,884 
Investment securities:       
Taxable 10,372   7,440   18,882   14,135 
Tax-exempt 17,212   13,071   33,087   25,456 
Deposits with financial institutions 610   129   840   243 
Federal Home Loan Bank stock 175   88   321   266 
Total Interest Income 141,146   113,275   250,686   223,091 
INTEREST EXPENSE       
Deposits 8,485   5,823   12,779   12,023 
Federal funds purchased 76   2   76   4 
Securities sold under repurchase agreements 134   75   223   162 
Federal Home Loan Bank advances 1,774   1,452   2,992   2,894 
Subordinated debentures and other borrowings 2,016   1,659   3,675   3,316 
Total Interest Expense 12,485   9,011   19,745   18,399 
NET INTEREST INCOME 128,661   104,264   230,941   204,692 
Provision for credit losses - loans 16,755      16,755    
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 111,906   104,264   214,186   204,692 
OTHER INCOME       
Service charges on deposit accounts 7,690   5,596   14,109   10,860 
Fiduciary and wealth management fees 7,634   7,510   14,966   13,932 
Card payment fees 5,175   4,159   10,898   8,526 
Net gains and fees on sales of loans 3,226   8,325   5,425   12,311 
Derivative hedge fees 1,444   943   2,362   1,260 
Other customer fees 662   368   1,072   736 
Earnings on cash surrender value of life insurance 1,308   1,205   3,004   2,541 
Net realized gains on sales of available for sale securities 90   1,761   656   3,560 
Other income 1,048   1,017   1,682   1,249 
Total Other Income 28,277   30,884   54,174   54,975 
OTHER EXPENSES       
Salaries and employee benefits 56,041   42,438   98,560   81,249 
Net occupancy 6,648   5,615   12,835   12,106 
Equipment 6,720   4,848   11,800   9,878 
Marketing 1,414   1,122   2,150   2,246 
Outside data processing fees 4,881   4,698   9,244   8,942 
Printing and office supplies 381   313   726   596 
Intangible asset amortization 2,303   1,464   3,669   2,821 
FDIC assessments 2,924   1,461   5,116   2,829 
Other real estate owned and foreclosure expenses (266)  178   298   912 
Professional and other outside services 10,267   2,976   13,220   5,519 
Other expenses 6,000   4,182   12,020   8,295 
Total Other Expenses 97,313   69,295   169,638   135,393 
INCOME BEFORE INCOME TAX 42,870   65,853   98,722   124,274 
Income tax expense 3,879   10,294   11,145   19,246 
NET INCOME 38,991   55,559   87,577   105,028 
Preferred stock dividends 469      469    
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$38,522  $55,559  $87,108  $105,028 
Per Share Data:       
Basic Net Income Available to Common Stockholders$0.64  $1.03  $1.55  $1.95 
Diluted Net Income Available to Common Stockholders$0.63  $1.03  $1.54  $1.94 
Cash Dividends Paid to Common Stockholders$0.32  $0.29  $0.61  $0.55 
Average Diluted Common Shares Outstanding (in thousands) 59,308   54,184   56,516   54,159 



FINANCIAL HIGHLIGHTS       
(Dollars in thousands)Three Months Ended Six Months Ended
 June 30, June 30,
  2022   2021   2022   2021 
NET CHARGE-OFFS (RECOVERIES)$263  $1,307  $(324) $4,928 
        
AVERAGE BALANCES:       
Total Assets$17,778,221  $14,758,597  $16,627,804  $14,503,087 
Total Loans 11,175,188   9,282,524   10,220,860   9,259,600 
Total Earning Assets 16,435,747   13,558,956   15,355,265   13,292,617 
Total Deposits 14,809,528   12,125,153   13,819,111   11,848,075 
Total Stockholders' Equity 2,021,123   1,846,037   1,956,532   1,843,250 
        
FINANCIAL RATIOS:       
Return on Average Assets 0.88%  1.51%  1.05%  1.45%
Return on Average Stockholders' Equity 7.62   12.04   8.90   11.40 
Return on Average Common Stockholders' Equity 7.72   12.04   8.96   11.40 
Average Earning Assets to Average Assets 92.45   91.87   92.35   91.65 
Allowance for Credit Losses - Loans as % of Total Loans 1.98   2.19   1.98   2.19 
Net Charge-offs as % of Average Loans (Annualized) 0.01   0.06   (0.01)  0.11 
Average Stockholders' Equity to Average Assets 11.37   12.51   11.77   12.71 
Tax Equivalent Yield on Average Earning Assets 3.58   3.49   3.42   3.51 
Interest Expense/Average Earning Assets 0.30   0.27   0.26   0.28 
Net Interest Margin (FTE) on Average Earning Assets 3.28   3.22   3.16   3.23 
Efficiency Ratio 58.45   48.91   55.90   49.54 
Tangible Common Book Value Per Share$20.45  $24.15  $20.45  $24.15 



NON-PERFORMING ASSETS         
(Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
  2022   2022   2021   2021   2021 
Non-Accrual Loans$45,970  $42,698  $43,062  $51,502  $57,556 
Renegotiated Loans 233   141   329   439   629 
Non-Performing Loans (NPL) 46,203   42,839   43,391   51,941   58,185 
Other Real Estate Owned and Repossessions 6,521   6,271   558   698   601 
Non-Performing Assets (NPA) 52,724   49,110   43,949   52,639   58,786 
90+ Days Delinquent 592   2,085   963   157   183 
NPAs & 90 Day Delinquent$53,316  $51,195  $44,912  $52,796  $58,969 
          
Allowance for Credit Losses - Loans$226,275  $195,984  $195,397  $199,972  $199,775 
Quarterly Net Charge-offs (Recoveries) 263   (587)  4,575   (197)  1,307 
NPAs / Actual Assets % 0.30%  0.32%  0.28%  0.35%  0.39%
NPAs & 90 Day / Actual Assets % 0.30%  0.33%  0.29%  0.35%  0.40%
NPAs / Actual Loans and OREO % 0.46%  0.52%  0.47%  0.58%  0.64%
Allowance for Credit Losses - Loans / Actual Loans (%) 1.98%  2.09%  2.11%  2.21%  2.19%
Net Charge-offs as % of Average Loans (Annualized) 0.01%  (0.03)%  0.20%  (0.01)%  0.06%



CONSOLIDATED BALANCE SHEETS         
(Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
  2022   2022   2021   2021   2021 
ASSETS         
Cash and due from banks$212,559  $148,277  $167,146  $169,261  $167,596 
Interest-bearing deposits 136,702   395,262   474,154   369,447   438,863 
Investment securities, net of allowance for credit losses 4,630,030   4,489,263   4,524,353   4,445,516   4,148,314 
Loans held for sale 9,060   3,938   11,187   5,990   18,582 
Loans 11,397,417   9,356,241   9,241,861   9,041,576   9,121,250 
Less: Allowance for credit losses - loans (226,275)  (195,984)  (195,397)  (199,972)  (199,775)
Net loans 11,171,142   9,160,257   9,046,464   8,841,604   8,921,475 
Premises and equipment 117,757   105,883   105,655   104,814   103,822 
Federal Home Loan Bank stock 38,111   26,422   28,736   28,736   28,736 
Interest receivable 68,728   56,081   57,187   53,079   54,173 
Goodwill and other intangibles 753,649   569,494   570,860   572,323   573,786 
Cash surrender value of life insurance 323,013   291,881   291,041   291,825   294,462 
Other real estate owned 6,521   6,271   558   698   601 
Tax asset, deferred and receivable 114,965   73,422   35,641   39,504   36,924 
Other assets 198,255   138,807   140,167   137,928   135,763 
TOTAL ASSETS$17,780,492  $15,465,258  $15,453,149  $15,060,725  $14,923,097 
LIABILITIES         
Deposits:         
Noninterest-bearing$3,435,331  $2,745,235  $2,709,646  $2,554,323  $2,479,853 
Interest-bearing 11,135,538   10,160,718   10,022,931   9,794,366   9,723,547 
Total Deposits 14,570,869   12,905,953   12,732,577   12,348,689   12,203,400 
Borrowings:         
Federal funds purchased 100,000             
Securities sold under repurchase agreements 186,468   169,697   181,577   183,589   146,904 
Federal Home Loan Bank advances 598,865   308,960   334,055   334,149   334,243 
Subordinated debentures and other borrowings 151,299   118,677   118,618   118,558   118,498 
Total Borrowings 1,036,632   597,334   634,250   636,296   599,645 
Interest payable 2,978   3,589   2,762   3,736   2,929 
Other liabilities 192,372   150,749   170,989   203,914   245,323 
Total Liabilities 15,802,851   13,657,625   13,540,578   13,192,635   13,051,297 
STOCKHOLDERS' EQUITY         
Preferred Stock, $1,000 par value, $1,000 liquidation value:         
Authorized -- 600 cumulative shares         
Issued and outstanding - 125 cumulative shares 125   125   125   125   125 
Preferred Stock, Series A, no par value, $2,500 liquidation preference:         
Authorized -- 10,000 non-cumulative perpetual shares         
Issued and outstanding - 10,000 non-cumulative perpetual shares 25,000             
Common Stock, $.125 stated value:         
Authorized -- 100,000,000 shares         
Issued and outstanding 7,383   6,678   6,676   6,689   6,747 
Additional paid-in capital 1,226,378   987,404   985,818   988,659   1,009,182 
Retained earnings 917,311   897,818   864,839   832,728   795,666 
Accumulated other comprehensive income (198,556)  (84,392)  55,113   39,889   60,080 
Total Stockholders' Equity 1,977,641   1,807,633   1,912,571   1,868,090   1,871,800 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$17,780,492  $15,465,258  $15,453,149  $15,060,725  $14,923,097 
          



CONSOLIDATED STATEMENTS OF INCOME         
(Dollars In Thousands, Except Per Share Amounts)June 30, March 31, December 31, September 30, June 30,
  2022   2022   2021   2021   2021 
INTEREST INCOME         
Loans receivable:         
Taxable$106,787  $79,075  $80,583  $85,319  $87,002 
Tax-exempt 5,990   5,704   5,635   5,591   5,545 
Investment securities:         
Taxable 10,372   8,510   8,028   7,788   7,440 
Tax-exempt 17,212   15,875   15,411   14,464   13,071 
Deposits with financial institutions 610   230   173   218   129 
Federal Home Loan Bank stock 175   146   163   168   88 
Total Interest Income 141,146   109,540   109,993   113,548   113,275 
INTEREST EXPENSE         
Deposits 8,485   4,294   5,589   5,707   5,823 
Federal funds purchased 76      1      2 
Securities sold under repurchase agreements 134   89   75   77   75 
Federal Home Loan Bank advances 1,774   1,218   1,389   1,389   1,452 
Subordinated debentures and other borrowings 2,016   1,659   1,666   1,660   1,659 
Total Interest Expense 12,485   7,260   8,720   8,833   9,011 
NET INTEREST INCOME 128,661   102,280   101,273   104,715   104,264 
Provision for credit losses - loans 16,755             
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 111,906   102,280   101,273   104,715   104,264 
OTHER INCOME         
Service charges on deposit accounts 7,690   6,419   6,462   6,249   5,596 
Fiduciary and wealth management fees 7,634   7,332   7,078   7,352   7,510 
Card payment fees 5,175   5,723   3,937   4,156   4,159 
Net gains and fees on sales of loans 3,226   2,199   3,423   3,955   8,325 
Derivative hedge fees 1,444   918   1,562   1,028   943 
Other customer fees 662   410   361   393   368 
Earnings on cash surrender value of life insurance 1,308   1,696   2,051   2,468   1,205 
Net realized gains on sales of available for sale securities 90   566   358   1,756   1,761 
Other income 1,048   634   615   1,144   1,017 
Total Other Income 28,277   25,897   25,847   28,501   30,884 
OTHER EXPENSES         
Salaries and employee benefits 56,041   42,519   42,432   43,314   42,438 
Net occupancy 6,648   6,187   5,644   5,576   5,615 
Equipment 6,720   5,080   4,994   4,529   4,848 
Marketing 1,414   736   1,840   1,676   1,122 
Outside data processing fees 4,881   4,363   4,581   4,794   4,698 
Printing and office supplies 381   345   356   265   313 
Intangible asset amortization 2,303   1,366   1,463   1,463   1,464 
FDIC assessments 2,924   2,192   1,862   1,552   1,461 
Other real estate owned and foreclosure expenses (266)  564   171   (91)  178 
Professional and other outside services 10,267   2,953   3,627   2,767   2,976 
Other expenses 6,000   6,020   5,466   5,539   4,182 
Total Other Expenses 97,313   72,325   72,436   71,384   69,295 
INCOME BEFORE INCOME TAX 42,870   55,852   54,684   61,832   65,853 
Income tax expense 3,879   7,266   6,951   9,062   10,294 
NET INCOME 38,991   48,586   47,733   52,770   55,559 
Preferred stock dividends 469             
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$38,522  $48,586  $47,733  $52,770  $55,559 
Per Share Data:         
Basic Net Income Available to Common Stockholders$0.64  $0.91  $0.89  $0.98  $1.03 
Diluted Net Income Available to Common Stockholders$0.63  $0.91  $0.89  $0.98  $1.03 
Cash Dividends Paid to Common Stockholders$0.32  $0.29  $0.29  $0.29  $0.29 
Average Diluted Common Shares Outstanding (in thousands) 59,308   53,616   53,660   53,960   54,184 
FINANCIAL RATIOS:         
Return on Average Assets 0.88%  1.26%  1.25%  1.41%  1.51%
Return on Average Stockholders' Equity 7.62   10.28   10.10   11.17   12.04 
Return on Average Common Stockholders' Equity 7.72   10.28   10.10   11.17   12.04 
Average Earning Assets to Average Assets 92.45   92.23   91.86   91.57   91.87 
Allowance for Credit Losses - Loans as % of Total Loans 1.98   2.09   2.11   2.21   2.19 
Net Charge-offs (Recoveries) as % of Average Loans (Annualized) 0.01   (0.03)  0.20   (0.01)  0.06 
Average Stockholders' Equity to Average Assets 11.37   12.23   12.36   12.59   12.51 
Tax Equivalent Yield on Average Earning Assets 3.58   3.23   3.29   3.46   3.49 
Interest Expense/Average Earning Assets 0.30   0.20   0.25   0.26   0.27 
Net Interest Margin (FTE) on Average Earning Assets 3.28   3.03   3.04   3.20   3.22 
Efficiency Ratio 58.45   52.79   53.49   51.18   48.91 
Tangible Common Book Value Per Share$20.45  $23.26  $25.21  $24.31  $24.15 


LOANS         
(Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
  2022   2022   2021   2021   2021 
Commercial and industrial loans$3,297,477  $2,826,660  $2,714,565  $2,573,615  $2,671,076 
Agricultural land, production and other loans to farmers 214,904   209,077   246,442   240,686   235,020 
Real estate loans:         
Construction 745,983   552,975   523,066   521,889   491,200 
Commercial real estate, non-owner occupied 2,423,185   2,073,197   2,135,459   2,150,387   2,263,497 
Commercial real estate, owner occupied 1,264,563   974,521   986,720   952,441   953,501 
Residential 1,813,297   1,226,695   1,159,127   1,154,373   1,127,442 
Home equity 586,108   512,641   523,754   531,307   489,997 
Individuals' loans for household and other personal expenditures 157,264   147,593   146,092   135,093   130,819 
Public finance and other commercial loans 894,636   832,882   806,636   781,785   758,698 
Loans 11,397,417   9,356,241   9,241,861   9,041,576   9,121,250 
Allowance for credit losses - loans (226,275)  (195,984)  (195,397)  (199,972)  (199,775)
NET LOANS$11,171,142  $9,160,257  $9,046,464  $8,841,604  $8,921,475 


DEPOSITS         
(Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
  2022   2022   2021   2021   2021 
Demand deposits$8,785,889  $7,806,033  $7,704,190  $7,317,399  $7,261,603 
Savings deposits 4,875,880   4,444,417   4,334,802   4,301,483   4,157,552 
Certificates and other time deposits of $100,000 or more 436,942   252,033   273,379   283,396   304,394 
Other certificates and time deposits 446,973   380,293   389,752   404,010   423,922 
Brokered deposits 25,185   23,177   30,454   42,401   55,929 
TOTAL DEPOSITS$14,570,869  $12,905,953  $12,732,577  $12,348,689  $12,203,400 


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS      
(Dollars in Thousands)           
 For the Three Months Ended
 June 30, 2022 June 30, 2021
 Average
Balance
 Interest
Income /
Expense
 Average
Rate
 Average
Balance
 Interest
Income /
Expense
 Average
Rate
Assets:           
Interest-bearing deposits$329,626 $610 0.74% $545,752 $129 0.09%
Federal Home Loan Bank stock 38,111  175 1.84   28,736  88 1.22 
Investment Securities:(1)           
Taxable 2,189,193  10,372 1.90   1,732,367  7,440 1.72 
Tax-Exempt(2) 2,703,629  21,788 3.22   1,969,577  16,546 3.36 
Total Investment Securities 4,892,822  32,160 2.63   3,701,944  23,986 2.59 
Loans held for sale 28,491  315 4.42   25,039  237 3.79 
Loans:(3)           
Commercial 8,134,050  85,867 4.22   6,953,227  70,886 4.08 
Real Estate Mortgage 1,458,317  12,657 3.47   912,662  9,488 4.16 
Installment 772,610  7,948 4.11   659,515  6,391 3.88 
Tax-Exempt(2) 781,720  7,582 3.88   732,081  7,019 3.84 
Total Loans 11,175,188  114,369 4.09   9,282,524  94,021 4.05 
Total Earning Assets 16,435,747  147,314 3.58%  13,558,956  118,224 3.49%
Total Non-Earning Assets 1,342,474      1,199,641    
Total Assets$17,778,221     $14,758,597    
Liabilities:           
Interest-bearing deposits:           
Interest-bearing deposits$5,372,474 $4,569 0.34% $4,745,181 $3,560 0.30%
Money market deposits 3,024,560  2,130 0.28   2,337,143  796 0.14 
Savings deposits 1,966,054  916 0.19   1,740,233  462 0.11 
Certificates and other time deposits 948,799  870 0.37   812,370  1,005 0.49 
Total Interest-bearing Deposits 11,311,887  8,485 0.30   9,634,927  5,823 0.24 
Borrowings 818,851  4,000 1.95   644,702  3,188 1.98 
Total Interest-bearing Liabilities 12,130,738  12,485 0.41   10,279,629  9,011 0.35 
Noninterest-bearing deposits 3,497,641      2,490,226    
Other liabilities 128,719      142,705    
Total Liabilities 15,757,098      12,912,560    
Stockholders' Equity 2,021,123      1,846,037    
Total Liabilities and Stockholders' Equity$17,778,221  12,485   $14,758,597  9,011  
Net Interest Income (FTE)  $134,829     $109,213  
Net Interest Spread (FTE)(4)    3.17%     3.14%
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    3.58%     3.49%
Interest Expense / Average Earning Assets    0.30%     0.27%
Net Interest Margin (FTE)(5)    3.28%     3.22%
            
(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. Annualized amounts are computed using a 30/360 day basis.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2022 and 2021. These totals equal $6,168 and $4,949 for the three months ended June 30, 2022 and 2021, 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 Six Months Ended
 June 30, 2022 June 30, 2021
 Average
Balance
 Interest
Income /
Expense
 Average
Rate
 Average
Balance
 Interest
Income /
Expense
 Average
Rate
Assets:           
Interest-bearing deposits$406,698 $840 0.41% $493,791 $243 0.10%
Federal Home Loan Bank stock 33,040  321 1.94   28,736  266 1.85 
Investment Securities:(1)           
Taxable 2,074,074  18,882 1.82   1,613,847  14,135 1.75 
Tax-Exempt(2) 2,620,593  41,882 3.20   1,896,643  32,223 3.40 
Total Investment Securities 4,694,667  60,764 2.59   3,510,490  46,358 2.64 
Loans held for sale 18,181  355 3.91   20,572  393 3.82 
Loans:(3)           
Commercial 7,504,740  150,545 4.01   6,915,234  140,060 4.05 
Real Estate Mortgage 1,191,075  20,497 3.44   943,830  18,774 3.98 
Installment 741,994  14,465 3.90   666,870  12,880 3.86 
Tax-Exempt(2) 764,870  14,803 3.87   713,094  13,777 3.86 
Total Loans 10,220,860  200,665 3.93   9,259,600  185,884 4.01 
Total Earning Assets 15,355,265  262,590 3.42%  13,292,617  232,751 3.51%
Total Non-Earning Assets 1,272,539      1,210,470    
Total Assets$16,627,804     $14,503,087    
Liabilities:           
Interest-bearing deposits:           
Interest-bearing deposits$5,200,923 $6,977 0.27% $4,681,439 $7,269 0.31%
Money market deposits 2,770,904  3,002 0.22   2,212,425  1,631 0.15 
Savings deposits 1,917,005  1,357 0.14   1,700,601  938 0.11 
Certificates and other time deposits 813,482  1,443 0.35   835,722  2,185 0.52 
Total Interest-bearing Deposits 10,702,314  12,779 0.24   9,430,187  12,023 0.25 
Borrowings 718,270  6,966 1.94   659,826  6,376 1.93 
Total Interest-bearing Liabilities 11,420,584  19,745 0.35   10,090,013  18,399 0.36 
Noninterest-bearing deposits 3,116,797      2,417,888    
Other liabilities 133,891      151,936    
Total Liabilities 14,671,272      12,659,837    
Stockholders' Equity 1,956,532      1,843,250    
Total Liabilities and Stockholders' Equity$16,627,804  19,745   $14,503,087  18,399  
Net Interest Income (FTE)  $242,845     $214,352  
Net Interest Spread (FTE)(4)    3.07%     3.15%
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    3.42%     3.51%
Interest Expense / Average Earning Assets    0.26%     0.28%
Net Interest Margin (FTE)(5)    3.16%     3.23%
            
(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. Annualized amounts are computed using a 30/360 day basis.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2022 and 2021. These totals equal $11,904 and $9,660 for the six months ended June 30, 2022 and 2021, 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.



ADJUSTED EPS EXCLUDING PAYCHECK PROTECTION PROGRAM ("PPP") AND ACQUISITION-RELATED EXPENSES - NON-GAAP
(Dollars In Thousands, Except Per Share Amounts)Three Months Ended Six Months Ended
 June 30, March 31, December 31, September 30, June 30, June 30, June 30,
  2022   2022   2021   2021   2021   2022   2021 
Net Income Available to Common Shareholders - GAAP$38,522  $48,586  $47,733  $52,770  $55,559  $87,108  $105,028 
Adjustments:             
PPP loan income (891)  (1,884)  (3,721)  (8,211)  (9,725)  (2,775)  (18,968)
Acquisition-related expenses 12,549   152            12,701    
Acquisition-related provision expense 16,755               16,755    
Tax on adjustment (6,967)  425   912   2,013   2,385   (6,542)  4,651 
Adjusted Net Income Available to Common Stockholders - Non-GAAP$59,968  $47,279  $44,924  $46,572  $48,219  $107,247  $90,711 
              
Average Diluted Common Shares Outstanding (in thousands) 59,308   53,616   53,660   53,960   54,184   56,516   54,159 
              
Diluted Earnings Per Common Share - GAAP$0.63  $0.91  $0.89  $0.98  $1.03  $1.54  $1.94 
Adjustments:             
PPP loan income (0.01)  (0.04)  (0.07)  (0.15)  (0.18)  (0.05)  (0.35)
Acquisition-related expenses 0.22               0.22    
Acquisition-related provision expense 0.30               0.30    
Tax on adjustment (0.13)  0.01   0.02   0.04   0.04   (0.12)  0.08 
Adjusted Diluted Earnings Per Common Share - Non-GAAP$1.01  $0.88  $0.84  $0.87  $0.89  $1.89  $1.67 
              


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

 


  • First Merchants Corporation

    200 East Jackson Street
    P.O. Box 792
    Muncie, IN 47305-2814

    (765) 747-1500

  • Investor Relations Contact

    Nicole M. Weaver
    765.521.7619 or
    800.262.4261, Ext. 47619

    nweaver@firstmerchants.com

  • Shareholder Relations Contact

    Cindy Holaday
    765.741.7278 or
    800.262.4261, Ext. 27278

    shareholderrelations
    @firstmerchants.com

  • Transfer Agent

    Broadridge
    PO Box 1342
    Brentwood, NY 11717-0718
    (888) 401-4448

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