News Release Details

First Merchants Corporation Announces Second Quarter 2023 Earnings Per Share

07/25/2023

First Merchants Corporation (NASDAQ - FRME)

Second Quarter 2023 Highlights:

  • Net income available to common stockholders was $60.4 million and diluted earnings per common share totaled $1.02, compared to $38.5 million and $.63 in the second quarter of 2022, and $63.6 million and $1.07 in the first quarter of 2023.
  • Adjusted net income1 was $60.4 million and adjusted diluted earnings per share1 totaled $1.02, compared to $60.0 million and $1.01 in the second quarter of 2022, and $63.6 million and $1.07 in the first quarter of 2023.
  • Strong capital position with Common Equity Tier 1 Capital Ratio of 11.07 percent
  • Total loans grew $46.7 million, or 1.5 percent annualized on a linked quarter basis, and $163.2 million, or 5.4 percent annualized when excluding non-relationship based commercial loan sales that occurred during the quarter of $116.6 million.
  • Total deposits declined $122.1 million, or 3.3 percent annualized on a linked quarter basis
  • Nonaccrual loans totaled $69.2 million compared to $46.6 million on a linked quarter basis
  • The efficiency ratio totaled 52.21 percent for the quarter

MUNCIE, Ind., July 25, 2023 (GLOBE NEWSWIRE) -- Mark Hardwick, Chief Executive Officer, stated, “We are pleased to report our second quarter 2023 results. Performance remains healthy and strong and our teams continue to meet the demands of our communities and client base.”

Second Quarter Financial Results:

First Merchants Corporation (the “Corporation) has reported second quarter 2023 net income available to common stockholders of $60.4 million compared to $38.5 million during the same period in 2022. Diluted earnings per common share for the period totaled $1.02 per share compared to the second quarter of 2022 result of $.63 per share. Prior year results included acquisition costs related to the acquisition of Level One of $29.3 million resulting in a reduction of $.38 of diluted earnings per common share.

Total assets equaled $18.0 billion as of quarter-end and loans totaled $12.3 billion. During the past twelve months, total loans grew by $1.0 billion, or 9.2 percent and were offset by the non-relationship based commercial loan sale of $116.6 million and PPP loan forgiveness of $29.6 million. On a linked quarter basis, loans grew $163.2 million, or 5.4 percent, when excluding the loan sale that occurred during the quarter of $116.6 million.

Investments, totaling $3.9 billion, decreased $738.5 million, or 16.0 percent, during the last twelve months and decreased $165.9 million, or 16.4 percent annualized on a linked quarter basis. The decline during the quarter was primarily due to $101.0 million of bond sales.

Total deposits equaled $14.6 billion as of quarter-end and increased by $10.3 million over the past twelve months. Total deposits declined $122.1 million, or 3.3 percent annualized on a linked quarter basis. The loan to deposit ratio for the current quarter ended at 84.3 percent.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $221.1 million as of quarter-end, or 1.80 percent of total loans, a decrease of $5.1 million from prior year. Loan charge-offs, net of recoveries, for the quarter totaled $1.9 million. No provision expense was recorded during the quarter or during the last twelve months. Non-performing assets to total assets were 0.43 percent for the second quarter of 2023, an increase of 13 basis points compared to 0.30 percent in the second quarter of 2022.

Net-interest income, totaling $137.8 million for the quarter, declined $6.3 million, or 4.4 percent, compared to prior quarter and increased $9.2 million, or 7.1 percent compared to the second quarter of 2022. Stated net-interest margin on a tax equivalent basis, totaling 3.39 percent, declined by 19 basis points compared to the first quarter of 2023 but increased 11 basis points compared to the second quarter of 2022. Net-interest margin, excluding the impact of fair value accretion and PPP loans, totaled 3.34 percent, a decrease of 18 basis points compared to 3.52 percent for the first quarter of 2023 but an increase of 15 basis points from the second quarter of 2022. During the quarter, increased deposit costs and mix offset the increase in earning asset yields reducing net-interest margin.

Non-interest income, totaling $26.3 million for the quarter, increased $1.3 million or 5.3 percent compared to the first quarter of 2023 but decreased $2.0 million from the second quarter of 2022. The increase over first quarter of 2023 was driven primarily by higher gains on the sales of loans and BOLI death benefit gains.

Non-interest expense totaled $92.6 million for the quarter, a decline of $1.1 million from the first quarter of 2023. The decrease was from lower salaries and employee benefits, partially offset by increases in FDIC assessments and other real estate owned and foreclosure expense.

The Corporation’s total risk-based capital ratio equaled 13.48 percent, common equity tier 1 capital ratio equaled 11.07 percent, and the tangible common equity ratio totaled 7.99 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 11:30 a.m. (ET) on Tuesday, July 25, 2023.

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/BIc7becea7282048a2b5559e10b25ca4af)

In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/athyqu7i) during the time of the call. A replay of the webcast will be available until July 25, 2024.

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 (including the ability to grow and maintain core deposits and retain large, uninsured deposits), 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,
    2023       2022  
ASSETS      
Cash and due from banks $ 108,975     $ 212,559  
Interest-bearing deposits   219,480       136,702  
Investment securities, net of allowance for credit losses of $245,000 and $245,000   3,891,491       4,630,030  
Loans held for sale   27,297       9,060  
Loans   12,270,233       11,397,417  
Less: Allowance for credit losses - loans   (221,147 )     (226,275 )
Net loans   12,049,086       11,171,142  
Premises and equipment   114,402       117,757  
Federal Home Loan Bank stock   41,842       38,111  
Interest receivable   89,784       68,728  
Goodwill and other intangibles   743,465       753,649  
Cash surrender value of life insurance   307,020       323,013  
Other real estate owned   7,685       6,521  
Tax asset, deferred and receivable   113,724       114,965  
Other assets   254,161       198,255  
TOTAL ASSETS $ 17,968,412     $ 17,780,492  
LIABILITIES      
Deposits:      
Noninterest-bearing $ 2,636,017     $ 3,435,331  
Interest-bearing   11,945,138       11,135,538  
Total Deposits   14,581,155       14,570,869  
Borrowings:      
Federal funds purchased         100,000  
Securities sold under repurchase agreements   152,472       186,468  
Federal Home Loan Bank advances   723,480       598,865  
Subordinated debentures and other borrowings   151,325       151,299  
Total Borrowings   1,027,277       1,036,632  
Interest payable   13,595       2,978  
Other liabilities   200,820       192,372  
Total Liabilities   15,822,847       15,802,851  
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       25,000  
Common Stock, $.125 stated value:      
Authorized -- 100,000,000 shares      
Issued and outstanding - 59,297,148 and 59,059,866 shares   7,412       7,383  
Additional paid-in capital   1,233,593       1,226,378  
Retained earnings   1,097,399       917,311  
Accumulated other comprehensive loss   (217,964 )     (198,556 )
Total Stockholders' Equity   2,145,565       1,977,641  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,968,412     $ 17,780,492  

 

CONSOLIDATED STATEMENTS OF INCOME Three Months Ended   Six Months Ended
(Dollars In Thousands, Except Per Share Amounts) June 30,   June 30,
    2023       2022       2023       2022
INTEREST INCOME              
Loans receivable:              
Taxable $ 186,256     $ 106,787     $ 358,609     $ 185,862
Tax-exempt   7,760       5,990       15,469       11,694
Investment securities:              
Taxable   8,886       10,372       17,973       18,882
Tax-exempt   14,279       17,212       30,349       33,087
Deposits with financial institutions   3,164       610       3,801       840
Federal Home Loan Bank stock   1,020       175       1,562       321
Total Interest Income   221,365       141,146       427,763       250,686
INTEREST EXPENSE              
Deposits   73,201       8,485       123,886       12,779
Federal funds purchased   123       76       1,420       76
Securities sold under repurchase agreements   979       134       1,827       223
Federal Home Loan Bank advances   6,815       1,774       13,879       2,992
Subordinated debentures and other borrowings   2,412       2,016       4,797       3,675
Total Interest Expense   83,530       12,485       145,809       19,745
NET INTEREST INCOME   137,835       128,661       281,954       230,941
Provision for credit losses - loans         16,755             16,755
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES   137,835       111,906       281,954       214,186
NON-INTEREST INCOME              
Service charges on deposit accounts   7,813       7,690       15,172       14,109
Fiduciary and wealth management fees   7,397       7,634       15,259       14,966
Card payment fees   4,537       5,175       9,709       10,898
Net gains and fees on sales of loans   3,632       3,226       6,031       5,425
Derivative hedge fees   672       1,444       1,820       2,362
Other customer fees   742       662       1,259       1,072
Earnings on cash surrender value of life insurance   2,096       1,308       3,384       3,004
Net realized gains (losses) on sales of available for sale securities   (1,392 )     90       (2,963 )     656
Other income   822       1,048       1,645       1,682
Total Non-Interest Income   26,319       28,277       51,316       54,174
NON-INTEREST EXPENSES              
Salaries and employee benefits   54,753       56,041       112,212       98,560
Net occupancy   6,674       6,648       13,933       12,835
Equipment   6,181       6,720       12,307       11,800
Marketing   1,102       1,414       2,411       2,150
Outside data processing fees   6,604       4,881       12,717       9,244
Printing and office supplies   434       381       817       726
Intangible asset amortization   2,182       2,303       4,379       3,669
FDIC assessments   2,740       2,924       4,136       5,116
Other real estate owned and foreclosure expenses   916       (266 )     898       298
Professional and other outside services   4,660       10,267       8,358       13,220
Other expenses   6,347       6,000       14,145       12,020
Total Non-Interest Expenses   92,593       97,313       186,313       169,638
INCOME BEFORE INCOME TAX   71,561       42,870       146,957       98,722
Income tax expense   10,699       3,879       22,016       11,145
NET INCOME   60,862       38,991       124,941       87,577
Preferred stock dividends   469       469       938       469
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 60,393     $ 38,522     $ 124,003     $ 87,108
Per Share Data:              
Basic Net Income Available to Common Stockholders $ 1.02     $ 0.64     $ 2.09     $ 1.55
Diluted Net Income Available to Common Stockholders $ 1.02     $ 0.63     $ 2.09     $ 1.54
Cash Dividends Paid to Common Stockholders $ 0.34     $ 0.32     $ 0.66     $ 0.61
Average Diluted Common Shares Outstanding (in thousands)   59,448       59,308       59,446       56,516

 

FINANCIAL HIGHLIGHTS              
(Dollars in thousands) Three Months Ended   Six Months Ended
  June 30,   June 30,
    2023       2022       2023       2022  
NET CHARGE-OFFS (RECOVERIES) $ 1,905     $ 263     $ 2,130     $ (324 )
               
AVERAGE BALANCES:              
Total Assets $ 18,170,649     $ 17,778,221     $ 18,096,832     $ 16,627,804  
Total Loans   12,369,673       11,175,188       12,253,176       10,220,860  
Total Earning Assets   16,968,465       16,435,747       16,896,834       15,355,265  
Total Deposits   14,719,913       14,809,528       14,572,480       13,819,111  
Total Stockholders' Equity   2,139,877       2,021,123       2,111,658       1,956,532  
               
FINANCIAL RATIOS:              
Return on Average Assets   1.34 %     0.88 %     1.38 %     1.05 %
Return on Average Stockholders' Equity   11.29       7.62       11.74       8.90  
Return on Tangible Common Stockholders' Equity   18.04       12.91       18.91       13.98  
Average Earning Assets to Average Assets   93.38       92.45       93.37       92.35  
Allowance for Credit Losses - Loans as % of Total Loans   1.80       1.98       1.80       1.98  
Net Charge-offs as % of Average Loans (Annualized)   0.06       0.01       0.03       (0.01 )
Average Stockholders' Equity to Average Assets   11.78       11.37       11.67       11.77  
Tax Equivalent Yield on Average Earning Assets   5.36       3.58       5.21       3.42  
Interest Expense/Average Earning Assets   1.97       0.30       1.73       0.26  
Net Interest Margin (FTE) on Average Earning Assets   3.39       3.28       3.48       3.16  
Efficiency Ratio   52.21       58.45       51.96       55.90  
Tangible Common Book Value Per Share $ 23.34     $ 20.45     $ 23.34     $ 20.45  

 

NON-PERFORMING ASSETS                  
(Dollars In Thousands) June 30,   March 31,   December 31,   September 30,   June 30,
    2023       2023       2022       2022       2022  
Non-Accrual Loans $ 69,240     $ 46,576     $ 42,324     $ 43,508     $ 45,970  
Troubled Debt Restructures (TDR)               224       195       233  
Non-Performing Loans (NPL)   69,240       46,576       42,548       43,703       46,203  
Other Real Estate Owned and Repossessions   7,685       7,777       6,431       6,454       6,521  
Non-Performing Assets (NPA)   76,925       54,353       48,979       50,157       52,724  
90+ Days Delinquent   428       7,032       1,737       764       592  
NPAs & 90 Day Delinquent $ 77,353     $ 61,385     $ 50,716     $ 50,921     $ 53,316  
                   
Allowance for Credit Losses - Loans $ 221,147     $ 223,052     $ 223,277     $ 226,702     $ 226,275  
Quarterly Net Charge-offs (Recoveries)   1,905       225       2,674       (427 )     263  
NPAs / Actual Assets %   0.43 %     0.30 %     0.27 %     0.28 %     0.30 %
NPAs & 90 Day / Actual Assets %   0.43 %     0.34 %     0.28 %     0.29 %     0.30 %
NPAs / Actual Loans and OREO %   0.63 %     0.44 %     0.41 %     0.43 %     0.46 %
Allowance for Credit Losses - Loans / Actual Loans (%)   1.80 %     1.82 %     1.86 %     1.94 %     1.98 %
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)   0.06 %     0.01 %     0.12 %   (0.01)        %     0.01 %

 

CONSOLIDATED BALANCE SHEETS                  
(Dollars In Thousands) June 30,   March 31,   December 31,   September 30,   June 30,
    2023       2023       2022       2022       2022  
ASSETS                  
Cash and due from banks $ 108,975     $ 125,818     $ 122,594     $ 119,532     $ 212,559  
Interest-bearing deposits   219,480       352,695       126,061       179,593       136,702  
Investment securities, net of allowance for credit losses   3,891,491       4,057,389       4,263,788       4,294,768       4,630,030  
Loans held for sale   27,297       9,408       9,094       25,394       9,060  
Loans   12,270,233       12,241,461       12,003,894       11,650,002       11,397,417  
Less: Allowance for credit losses - loans   (221,147 )     (223,052 )     (223,277 )     (226,702 )     (226,275 )
Net loans   12,049,086       12,018,409       11,780,617       11,423,300       11,171,142  
Premises and equipment   114,402       115,857       117,118       116,306       117,757  
Federal Home Loan Bank stock   41,842       41,878       38,525       38,056       38,111  
Interest receivable   89,784       85,515       85,070       71,605       68,728  
Goodwill and other intangibles   743,465       745,647       747,844       750,713       753,649  
Cash surrender value of life insurance   307,020       309,090       308,311       306,932       323,013  
Other real estate owned   7,685       7,777       6,431       6,454       6,521  
Tax asset, deferred and receivable   113,724       103,070       111,222       142,110       114,965  
Other assets   254,161       206,355       221,631       244,222       198,255  
TOTAL ASSETS $ 17,968,412     $ 18,178,908     $ 17,938,306     $ 17,718,985     $ 17,780,492  
LIABILITIES                  
Deposits:                  
Noninterest-bearing $ 2,636,017     $ 2,964,355     $ 3,173,417     $ 3,356,651     $ 3,435,331  
Interest-bearing   11,945,138       11,738,932       11,209,328       11,078,174       11,135,538  
Total Deposits   14,581,155       14,703,287       14,382,745       14,434,825       14,570,869  
Borrowings:                  
Federal funds purchased         20       171,560       185,000       100,000  
Securities sold under repurchase agreements   152,472       179,067       167,413       194,482       186,468  
Federal Home Loan Bank advances   723,480       823,577       823,674       643,769       598,865  
Subordinated debentures and other borrowings   151,325       151,312       151,298       151,301       151,299  
Total Borrowings   1,027,277       1,153,976       1,313,945       1,174,552       1,036,632  
Interest payable   13,595       11,979       7,530       4,971       2,978  
Other liabilities   200,820       187,218       199,316       197,971       192,372  
Total Liabilities   15,822,847       16,056,460       15,903,536       15,812,319       15,802,851  
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       25,000       25,000       25,000       25,000  
Common Stock, $.125 stated value:                  
Authorized -- 100,000,000 shares                  
Issued and outstanding   7,412       7,407       7,396       7,393       7,383  
Additional paid-in capital   1,233,593       1,231,532       1,228,626       1,226,695       1,226,378  
Retained earnings   1,097,399       1,057,298       1,012,774       961,542       917,311  
Accumulated other comprehensive loss   (217,964 )     (198,914 )     (239,151 )     (314,089 )     (198,556 )
Total Stockholders' Equity   2,145,565       2,122,448       2,034,770       1,906,666       1,977,641  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,968,412     $ 18,178,908     $ 17,938,306     $ 17,718,985     $ 17,780,492  
                   

 

CONSOLIDATED STATEMENTS OF INCOME                  
(Dollars In Thousands, Except Per Share Amounts) June 30,   March 31,   December 31,   September 30,   June 30,
    2023       2023       2022       2022       2022  
INTEREST INCOME                  
Loans receivable:                  
Taxable $ 186,256     $ 172,353     $ 156,102     $ 128,504     $ 106,787  
Tax-exempt   7,760       7,709       6,930       6,500       5,990  
Investment securities:                  
Taxable   8,886       9,087       9,417       10,055       10,372  
Tax-exempt   14,279       16,070       17,033       17,261       17,212  
Deposits with financial institutions   3,164       637       959       704       610  
Federal Home Loan Bank stock   1,020       542       541       314       175  
Total Interest Income   221,365       206,398       190,982       163,338       141,146  
INTEREST EXPENSE                  
Deposits   73,201       50,685       33,516       16,644       8,485  
Federal funds purchased   123       1,297       808       418       76  
Securities sold under repurchase agreements   979       848       541       372       134  
Federal Home Loan Bank advances   6,815       7,064       4,932       3,493       1,774  
Subordinated debentures and other borrowings   2,412       2,385       2,229       2,105       2,016  
Total Interest Expense   83,530       62,279       42,026       23,032       12,485  
NET INTEREST INCOME   137,835       144,119       148,956       140,306       128,661  
Provision for credit losses - loans                           16,755  
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES   137,835       144,119       148,956       140,306       111,906  
NON-INTEREST INCOME                  
Service charges on deposit accounts   7,813       7,359       7,097       7,165       7,690  
Fiduciary and wealth management fees   7,397       7,862       7,501       7,221       7,634  
Card payment fees   4,537       5,172       4,533       4,776       5,175  
Net gains and fees on sales of loans   3,632       2,399       2,087       2,543       3,226  
Derivative hedge fees   672       1,148       326       700       1,444  
Other customer fees   742       517       362       501       662  
Earnings on cash surrender value of life insurance   2,096       1,288       1,515       6,655       1,308  
Net realized gains (losses) on sales of available for sale securities   (1,392 )     (1,571 )     57       481       90  
Other income (loss)   822       823       672       (425 )     1,048  
Total Non-Interest Income   26,319       24,997       24,150       29,617       28,277  
NON-INTEREST EXPENSES                  
Salaries and employee benefits   54,753       57,459       52,331       56,002       56,041  
Net occupancy   6,674       7,259       6,638       6,738       6,648  
Equipment   6,181       6,126       6,148       5,997       6,720  
Marketing   1,102       1,309       3,157       2,401       1,414  
Outside data processing fees   6,604       6,113       5,611       6,827       4,881  
Printing and office supplies   434       383       390       472       381  
Intangible asset amortization   2,182       2,197       2,303       2,303       2,303  
FDIC assessments   2,740       1,396       2,295       2,824       2,924  
Other real estate owned and foreclosure expenses   916       (18 )     197       328       (266 )
Professional and other outside services   4,660       3,698       3,961       4,461       10,267  
Other expenses   6,347       7,798       6,668       8,025       6,000  
Total Non-Interest Expenses   92,593       93,720       89,699       96,378       97,313  
INCOME BEFORE INCOME TAX   71,561       75,396       83,407       73,545       42,870  
Income tax expense   10,699       11,317       12,647       9,793       3,879  
NET INCOME   60,862       64,079       70,760       63,752       38,991  
Preferred stock dividends   469       469       468       469       469  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 60,393     $ 63,610     $ 70,292     $ 63,283     $ 38,522  
Per Share Data:                  
Basic Net Income Available to Common Stockholders $ 1.02     $ 1.07     $ 1.20     $ 1.08     $ 0.64  
Diluted Net Income Available to Common Stockholders $ 1.02     $ 1.07     $ 1.19     $ 1.08     $ 0.63  
Cash Dividends Paid to Common Stockholders $ 0.34     $ 0.32     $ 0.32     $ 0.32     $ 0.32  
Average Diluted Common Shares Outstanding (in thousands)   59,448       59,441       59,384       59,339       59,308  
FINANCIAL RATIOS:                  
Return on Average Assets   1.34 %     1.42 %     1.59 %     1.43 %     0.88 %
Return on Average Stockholders' Equity   11.29       12.21       14.36       12.54       7.62  
Return on Tangible Common Stockholders' Equity   18.04       19.82       24.21       20.85       12.91  
Average Earning Assets to Average Assets   93.38       93.35       93.66       92.90       92.45  
Allowance for Credit Losses - Loans as % of Total Loans   1.80       1.82       1.86       1.94       1.98  
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)   0.06       0.01       0.12       (0.01 )     0.01  
Average Stockholders' Equity to Average Assets   11.78       11.56       10.98       11.36       11.37  
Tax Equivalent Yield on Average Earning Assets   5.36       5.06       4.73       4.11       3.58  
Interest Expense/Average Earning Assets   1.97       1.48       1.01       0.56       0.30  
Net Interest Margin (FTE) on Average Earning Assets   3.39       3.58       3.72       3.55       3.28  
Efficiency Ratio   52.21       51.72       48.60       53.34       58.45  
Tangible Common Book Value Per Share $ 23.34     $ 22.93     $ 21.45     $ 19.26     $ 20.45  

 

LOANS                  
(Dollars In Thousands) June 30,   March 31,   December 31,   September 30,   June 30,
    2023       2023       2022       2022       2022  
Commercial and industrial loans $ 3,531,395     $ 3,502,204     $ 3,437,126     $ 3,330,529     $ 3,297,477  
Agricultural land, production and other loans to farmers   230,003       219,598       241,793       221,954       214,904  
Real estate loans:                  
Construction   949,918       960,979       835,582       828,923       745,983  
Commercial real estate, non-owner occupied   2,379,819       2,375,410       2,407,475       2,299,272       2,423,185  
Commercial real estate, owner occupied   1,179,739       1,244,117       1,246,528       1,268,567       1,264,563  
Residential   2,248,473       2,185,943       2,096,655       1,990,668       1,813,297  
Home equity   614,366       621,354       630,632       621,619       586,108  
Individuals' loans for household and other personal expenditures   172,896       172,389       175,211       173,225       157,264  
Public finance and other commercial loans   963,624       959,467       932,892       915,245       894,636  
Loans   12,270,233       12,241,461       12,003,894       11,650,002       11,397,417  
Allowance for credit losses - loans   (221,147 )     (223,052 )     (223,277 )     (226,702 )     (226,275 )
NET LOANS $ 12,049,086     $ 12,018,409     $ 11,780,617     $ 11,423,300     $ 11,171,142  

 

DEPOSITS                  
(Dollars In Thousands) June 30,   March 31,   December 31,   September 30,   June 30,
    2023     2023     2022     2022     2022
Demand deposits $ 8,045,455   $ 8,422,387   $ 8,448,797   $ 8,534,950   $ 8,785,889
Savings deposits   4,530,255     4,499,487     4,657,140     5,054,490     4,875,880
Certificates and other time deposits of $100,000 or more   1,160,303     1,040,379     742,539     443,588     436,942
Other certificates and time deposits   680,965     574,886     468,712     381,365     446,973
Brokered certificates of deposits   164,177     166,148     65,557     20,432     25,185
TOTAL DEPOSITS $ 14,581,155   $ 14,703,287   $ 14,382,745   $ 14,434,825   $ 14,570,869

 

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS            
(Dollars in Thousands)                      
  For the Three Months Ended
  June 30, 2023   June 30, 2022
  Average Balance   Interest
Income /
Expense
  Average
Rate
  Average Balance   Interest
Income /
Expense
  Average
Rate
ASSETS                      
Interest-bearing deposits $ 343,253   $ 3,164   3.69 %   $ 329,626   $ 610   0.74 %
Federal Home Loan Bank stock   41,873     1,020   9.74       38,111     175   1.84  
Investment Securities:(1)                      
Taxable   1,876,676     8,886   1.89       2,189,193     10,372   1.90  
Tax-exempt(2)   2,336,990     18,075   3.09       2,703,629     21,788   3.22  
Total Investment Securities   4,213,666     26,961   2.56       4,892,822     32,160   2.63  
Loans held for sale   19,328     300   6.21       28,491     315   4.42  
Loans:(3)                      
Commercial   8,605,339     150,766   7.01       8,134,050     85,867   4.22  
Real estate mortgage   2,031,136     20,345   4.01       1,458,317     12,657   3.47  
Installment   831,775     14,844   7.14       772,610     7,948   4.11  
Tax-exempt(2)   882,095     9,823   4.45       781,720     7,582   3.88  
Total Loans   12,369,673     196,078   6.34       11,175,188     114,369   4.09  
Total Earning Assets   16,968,465     227,223   5.36 %     16,435,747     147,314   3.58 %
Total Non-Earning Assets   1,202,184             1,342,474        
TOTAL ASSETS $ 18,170,649           $ 17,778,221        
LIABILITIES                      
Interest-Bearing Deposits:                      
Interest-bearing deposits $ 5,546,232   $ 34,574   2.49 %   $ 5,372,474   $ 4,569   0.34 %
Money market deposits   2,766,876     18,684   2.70       3,024,560     2,130   0.28  
Savings deposits   1,724,816     3,884   0.90       1,966,054     916   0.19  
Certificates and other time deposits   1,883,998     16,059   3.41       948,799     870   0.37  
Total Interest-Bearing Deposits   11,921,922     73,201   2.46       11,311,887     8,485   0.30  
Borrowings   1,110,486     10,329   3.72       818,851     4,000   1.95  
Total Interest-Bearing Liabilities   13,032,408     83,530   2.56       12,130,738     12,485   0.41  
Noninterest-bearing deposits   2,797,991             3,497,641        
Other liabilities   200,373             128,719        
Total Liabilities   16,030,772             15,757,098        
STOCKHOLDERS' EQUITY   2,139,877             2,021,123        
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,170,649     83,530       $ 17,778,221     12,485    
Net Interest Income (FTE)     $ 143,693           $ 134,829    
Net Interest Spread (FTE)(4)         2.80 %           3.17 %
                       
Net Interest Margin (FTE):                      
Interest Income (FTE) / Average Earning Assets         5.36 %           3.58 %
Interest Expense / Average Earning Assets         1.97 %           0.30 %
Net Interest Margin (FTE)(5)         3.39 %           3.28 %
                       
(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 2023 and 2022. These totals equal $5,858 and $6,168 for the three months ended June 30, 2023 and 2022, 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, 2023   June 30, 2022
  Average
Balance
  Interest
Income /
Expense
  Average
Rate
  Average
Balance
  Interest
Income /
Expense
  Average
Rate
Assets:                      
Interest-bearing deposits $ 258,504   $ 3,801   2.94 %   $ 406,698   $ 840   0.41 %
Federal Home Loan Bank stock   40,821     1,562   7.65       33,040     321   1.94  
Investment Securities:(1)                      
Taxable   1,900,247     17,973   1.89       2,074,074     18,882   1.82  
Tax-exempt(2)   2,444,086     38,416   3.14       2,620,593     41,882   3.20  
Total Investment Securities   4,344,333     56,389   2.60       4,694,667     60,764   2.59  
Loans held for sale   21,952     660   6.01       18,181     355   3.91  
Loans:(3)                      
Commercial   8,544,945     290,428   6.80       7,504,740     150,545   4.01  
Real estate mortgage   1,972,680     38,736   3.93       1,191,075     20,497   3.44  
Installment   836,088     28,785   6.89       741,994     14,465   3.90  
Tax-exempt(2)   877,511     19,581   4.46       764,870     14,803   3.87  
Total Loans   12,253,176     378,190   6.17       10,220,860     200,665   3.93  
Total Earning Assets   16,896,834     439,942   5.21 %     15,355,265     262,590   3.42 %
Total Non-Earning Assets   1,199,998             1,272,539        
Total Assets $ 18,096,832           $ 16,627,804        
Liabilities:                      
Interest-Bearing deposits:                      
Interest-bearing deposits $ 5,405,696   $ 59,237   2.19 %   $ 5,200,923   $ 6,977   0.27 %
Money market deposits   2,756,519     32,261   2.34       2,770,904     3,002   0.22  
Savings deposits   1,775,233     6,849   0.77       1,917,005     1,357   0.14  
Certificates and other time deposits   1,676,291     25,539   3.05       813,482     1,443   0.35  
Total Interest-Bearing Deposits   11,613,739     123,886   2.13       10,702,314     12,779   0.24  
Borrowings   1,201,392     21,923   3.65       718,270     6,966   1.94  
Total Interest-Bearing Liabilities   12,815,131     145,809   2.28       11,420,584     19,745   0.35  
Noninterest-bearing deposits   2,958,741             3,116,797        
Other liabilities   211,302             133,891        
Total Liabilities   15,985,174             14,671,272        
Stockholders' Equity   2,111,658             1,956,532        
Total Liabilities and Stockholders' Equity $ 18,096,832     145,809       $ 16,627,804     19,745    
Net Interest Income (FTE)     $ 294,133           $ 242,845    
Net Interest Spread (FTE)(4)         2.93 %           3.07 %
                       
Net Interest Margin (FTE):                      
Interest Income (FTE) / Average Earning Assets         5.21 %           3.42 %
Interest Expense / Average Earning Assets         1.73 %           0.26 %
Net Interest Margin (FTE)(5)         3.48 %           3.16 %
                       
(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 2023 and 2022. These totals equal $12,179 and $11,904 for the six months ended June 30, 2023 and 2022, 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,
    2023       2023       2022       2022       2022       2023       2022  
Net Income Available to Common Stockholders - GAAP $ 60,393     $ 63,610     $ 70,292     $ 63,283     $ 38,522     $ 124,003     $ 87,108  
Adjustments:                          
PPP loan income   (9 )     (25 )     (109 )     (323 )     (891 )     (34 )     (2,775 )
Acquisition-related expenses               413       3,417       12,549             12,701  
Acquisition-related provision expense                           16,755             16,755  
Tax on adjustment   2       6       (75 )     (759 )     (6,967 )     8       (6,542 )
Adjusted Net Income Available to Common Stockholders - Non-GAAP $ 60,386     $ 63,591     $ 70,521     $ 65,618     $ 59,968     $ 123,977     $ 107,247  
                           
Average Diluted Common Shares Outstanding (in thousands)   59,448       59,441       59,384       59,339       59,308       59,446       56,516  
                           
Diluted Earnings Per Common Share - GAAP $ 1.02     $ 1.07     $ 1.19     $ 1.08     $ 0.63     $ 2.09     $ 1.54  
Adjustments:                          
PPP loan income               (0.01 )           (0.01 )           (0.05 )
Acquisition-related expenses               0.01       0.05       0.22             0.22  
Acquisition-related provision expense                           0.30             0.30  
Tax on adjustment                     (0.01 )     (0.13 )           (0.12 )
Adjusted Diluted Earnings Per Common Share - Non-GAAP $ 1.02     $ 1.07     $ 1.19     $ 1.12     $ 1.01     $ 2.09     $ 1.89  

 

RETURN ON TANGIBLE COMMON EQUITY - NON-GAAP
(Dollars In Thousands) Three Months Ended   Six Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,   June 30,   June 30,
    2023       2023       2022       2022       2022       2023       2022  
Total Average Stockholders' Equity (GAAP) $ 2,139,877     $ 2,083,125     $ 1,958,041     $ 2,018,156     $ 2,021,123     $ 2,111,658     $ 1,956,532  
Less: Average Preferred Stock   (25,125 )     (25,125 )     (25,125 )     (25,125 )     (25,125 )     (25,125 )     (12,625 )
Less: Average Intangible Assets, Net of Tax   (737,489 )     (739,190 )     (741,632 )     (744,069 )     (745,614 )     (738,334 )     (656,042 )
Average Tangible Common Equity, Net of Tax (Non-GAAP) $ 1,377,263     $ 1,318,810     $ 1,191,284     $ 1,248,962     $ 1,250,384     $ 1,348,199     $ 1,287,865  
                           
Net Income Available to Common Stockholders (GAAP) $ 60,393     $ 63,610     $ 70,292     $ 63,283     $ 38,521     $ 124,003     $ 87,108  
Plus: Intangible Asset Amortization, Net of Tax   1,724       1,734       1,819       1,819       1,820       3,458       2,898  
Tangible Net Income (Non-GAAP) $ 62,117     $ 65,344     $ 72,111     $ 65,102     $ 40,341     $ 127,461     $ 90,006  
                           
Return on Tangible Common Equity (Non-GAAP)   18.04 %     19.82 %     24.21 %     20.85 %     12.91 %     18.91 %     13.98 %

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