UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): November 10, 2016
Commission File Number 0-17071
FIRST MERCHANTS CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA | 35-1544218 |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
200 East Jackson Street
P.O. Box 792
Muncie, IN 47305-2814
(Address of principal executive offices, including zip code)
(765) 747-1500
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01. Regulation FD Disclosure.
The executive officers of First Merchants Corporation intend to use the material filed herewith, in whole or in part, in one or more meetings with investors and analysts. A copy of the investor presentation is attached hereto as Exhibit 99.1.
First Merchants Corporation does not intend for this Item 7.01 or Exhibit 99.1 to be treated as "filed" for purposes of the Securities Exchange Act of 1934, as amended, or incorporated into its filings under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
(d) (99.1) First Merchants Corporation Investor Presentation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
DATE: November 10, 2016
FIRST MERCHANTS CORPORATION
By: /s/ Mark K. Hardwick
Mark K. Hardwick
Executive Vice President,
Chief Financial Officer and Chief Operating Officer
FIRST MERCHANTS
CORPORATION
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
NASDAQ: FRME
Michael C. Rechin Mark K. Hardwick Michael J. Stewart John J. Martin
President Executive Vice President Executive Vice President Executive Vice President
Chief Executive Officer Chief Financial Officer Chief Banking Officer Chief Credit Officer
Chief Operating Officer
®
3rd Quarter 2016
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
www.firstmerchants.com
2
The Corporation may make forward-looking statements about its relative business outlook. These
forward-looking statements and all other statements made during this meeting that do not concern
historical facts are subject to risks and uncertainties that may materially affect actual results. Specific
forward-looking statements include, but are not limited to, any indications regarding the financial
services industry, the economy and future growth of the balance sheet or income statement. Please
refer to our press releases, Form 10-Qs and 10-Ks concerning factors that could cause actual results to
differ materially from any forward-looking statements.
Non-GAAP Financial Measures
These slides contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP
financial measure is a numerical measure of the registrant’s historical or future financial performance,
financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect
of excluding amounts, that are included in the most directly comparable measure calculated and
presented in accordance with GAAP in the statement of income, balance sheet or statement of cash
flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that
have the effect of including amounts, that are excluded from the most directly comparable measure so
calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in
the United States. Pursuant to the requirements of Regulation G, First Merchants Corporation has
provided reconciliations within the slides, as necessary, of the non-GAAP financial measure to the most
directly comparable GAAP financial measure.
Forward-Looking Statement ®
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Why Invest in First Merchants?
www.firstmerchants.com
3
®
Financial Highlights
Assets $7,022,352
Loans, Net $4,910,388
Deposits $5,444,240
Tangible Common Equity $640,897
TCE/TA 9.48%
2016 Net Income – YTD $58,758
2016 ROAA – YTD 1.15%
2016 ROATCE - YTD 12.97%
NPAs/Loans + OREO 0.97%
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Company Profile (as of 9/30/2016)
www.firstmerchants.com
4
Market Information
Common Shares Outstanding $40,799,025
Market Cap $ 1,091,374
Dividend Yield 1.87%
Price/Tangible Book Value 1.69x
Price/LTM EPS 14.9x
Price/2016 Est. EPS 13.9x
Leadership Team – First Merchants
Name/Title
Michael C. Rechin, President & CEO
Mark K. Hardwick, EVP, Chief Financial Officer &
Chief Operating Officer
Michael J. Stewart, EVP & Chief Banking Officer
John J. Martin, EVP & Chief Credit Officer
First Merchants
First Merchants Bank, formed in 1893, celebrating its
123rd anniversary.
First Merchants Corporation, organized in 1982, is the
largest financial services holding company
headquartered in Central Indiana
®
($ in Thousands)
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Our Franchise
www.firstmerchants.com
5
First Merchants Corporation
operates more than 100 locations
in 27 Indiana counties, 2 Ohio
counties, and 2 Illinois counties
Key Market Profiles
Loans Deposits
$2,176M Indianapolis $1,542M
940M Muncie 1,559M
643M Munster 981M
573M Lafayette 1,005M
642M Columbus 357M
(as of September 30, 2016)
®
County Region/Type Market Position Market % $ Deposits
Delaware County, IN Muncie (Established) 1 46.17% $ 893,981
Jasper County, IN Lafayette (Established) 1 31.26% 198,089
White County, IN Lafayette (Established) 1 33.24% 159,014
Shelby County, IN Indianapolis (Growth) 1 19.18% 103,239
Jay County, IN Muncie (Established) 1 44.32% 91,506
Union County, IN Muncie (Established) 1 43.39% 47,973
Tippecanoe County, IN Lafayette (Established) 2 20.91% 510,925
Madison County, IN Indianapolis (Growth) 2 24.59% 325,704
Henry County, IN Muncie (Established) 2 37.87% 238,625
Wabash County, IN Muncie (Established) 2 14.87% 54,790
Hendricks County, IN Indianapolis (Growth) 3 11.33% 240,483
Adams County, IN Muncie (Established) 3 16.69% 104,959
Randolph County, IN Muncie (Established) 3 7.61% 63,409
Clinton County, IN Lafayette (Established) 3 13.77% 60,689
Morgan County, IN Indianapolis (Growth) 4 11.59% 98,643
Hancock County, IN Indianapolis (Growth) 4 8.61% 80,930
Carroll County, IN Lafayette (Established) 4 10.66% 32,907
Brown County, IN Indianapolis (Growth) 4 19.11% 18,656
Lake County, IN Lafayette (Established) 5 7.83% 670,030
Hamilton County, IN Indianapolis (Growth) 5 6.37% 522,258
Johnson County, IN Indianapolis (Growth) 5 7.23% 142,769
Fayette County, IN Muncie (Established) 5 8.47% 26,526
Miami County, IN Muncie (Established) 5 7.99% 31,331
Sub Total $4,717,436
First Merchants Total $5,447,848
Key FMC Deposit Market Share
FDIC Data June 30, 2016
6 THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
First Merchants Strategy
www.firstmerchants.com
7
Commercial Bank
• Lending Engine
Supported by Consumer Retail Bank
• Deposit Engine
Growth
• Organic
• Growth by Acquisition
®
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
First Merchants Strategy
www.firstmerchants.com
8
Commercial Bank
• Located in Prime Growth Commercial Banking Markets
• Indianapolis, Indiana
• Columbus, Ohio
• Lafayette, Indiana
• Northwest Indiana
• Hire the Best Talent Supported with the Finest:
• Sales Management Process
• Lending and Cash Management Services
• Revenue-Based Incentive System
®
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
First Merchants Strategy
www.firstmerchants.com
9
Consumer Retail Bank
• Diversely Located in Stable Rural and Growth Metro
Markets
• Supported by:
• Talented Customer Service Oriented Banking Center
and Call Center Professionals
• State-of-the-Art Deposit and CRM Systems
• Highly Usable Online Banking System
• Widely Available Mobile Banking System
• Customer Service and Relationship Growth-Oriented
Incentive System
®
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
First Merchants Strategy
www.firstmerchants.com
10
“Service-driven alternative to super-regional bank competitors.
Deliver superior service with presence close to the customer for . . . ”
“We specialize in our communities”
Retail Banking
Mortgage Banking
Commercial Banking
• Business Banking
• Commercial & Industrial
• Agriculture
• Specialty Finance
• Healthcare Services
• Real Estate
• Cash Management Services
Private Wealth Advisory (private banking, investment management, personal trust,
brokerage, and retirement)
®
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
11
WEALTH
ADVISORY
MORTGAGE COMMERCIAL
BANKING
RETAIL
BANKING
Supported by LOB Strategies
Indianapolis
Higher Growth
Brown, Hamilton,
Hancock, Hendricks,
Johnson, Madison,
Marion, Morgan,
Shelby Counties
Columbus, OH
Higher Growth
Franklin County, OH
Lafayette
Established
Carroll, Clinton,
Jasper, Montgomery,
Tippecanoe, White
Counties
Muncie
Established
Adams, Delaware,
Fayette, Henry, Jay,
Miami, Randolph,
Union, Wabash,
Wayne Counties, IN
Butler, County, OH
Munster
Higher Growth
Lake & Porter, IN
Cook & DuPage, IL
Vision, Mission, Culture Statement, Core Values, Business Model
How We Deliver ®
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Organic Growth Opportunities
Exists in All Directions
www.firstmerchants.com
12
Lafayette MSA
Entered: 2002
Total Population: 217,817
Deposit Market Share: 18.18%
Indianapolis MSA
Entered: 1998
Total Population: 2,017,134
Deposit Market Share: 3.41%
Columbus, Ohio MSA
Entered: 2003
Total Population: 2,058,417
Deposit Market Share: .55%
Northwest Indiana MSA*
Entered: 2013
Total Population: 687,070
Deposit Market Share: 13.72%
*Includes Jasper, Lake, and Porter counties
®
LEGACY MARKET
Muncie MSA
Established: 1893
Total Population:
116,511
Current Market
Share: 46.17%
13
Ranked Best in the Midwest
for Business*
AAA Credit Rating**
1st in the Nation for Small Business Growth
1st Nationally for Cost of Doing Business
1st Nationally for Highway Accessibility
1st in the Midwest/8th Nationally for Low Taxes
2nd Nationally for Availability of Skilled Labor
2nd Best City in the Nation for Recent Graduates
(Indianapolis)
Home to the 2nd Largest Global Fed Ex Air Hub
Regulatory Climate Ranks 2nd in the Nation
4th Nationally for Cost of Living
8th Best State for Business
Indiana
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
*IEDC
**S&P, Moody’s & Fitch
14
Delaware County, IN*
Rank
Branches
Deposits
Mkt.
Share
1 First Merchants Corporation 12 893,981 46.17%
2 Mutual First Financial 9 476,957 24.63%
3 J.P. Morgan Chase 4 220,534 11.39%
4 Old National Bancorp 7 206,538 10.67%
5 Star Financial Group 3 136,933 7.07%
6 Woodforest Financial Group 1 1,391 0.07%
Market Total 38 $1,936,334
Projected HHI & Pop. Change 2017-2022
*SNL Financial FDIC Summary of Deposits as of June 30, 2016
Notable Major Employers
Located 58 miles northeast of Indianapolis in the east central portion of the
state
Described by several national studies as a typical American community,
Delaware County offers the advantages of larger cities without the hassles
and costs associated with living in major metropolitan areas.
Easy access to the top 100 markets in the country, Muncie-Delaware
County has a diverse economic landscape
Ranked #27, Forbes Best Small Places for Business and Careers
Workforce experienced in life science, advanced manufacturing, 21st
century logistics and information technology
Home to Ball State University
Muncie Market
®
7.27%
8.00% 8.01%
3.77%
2.11%
0.15%
U.S. Indiana Delaware Co.
HHI Pop.
7.27%
8.00%
8.97%
3.77%
2.11%
7.34%
U.S. Indiana Hamilton Co.
HHI Pop.
Projected HHI & Pop. Change 2017-2022
15
Hamilton County, IN**
Rank
Branches
Deposits
Mkt.
Share
1 First Internet Bancorp 1 1,397,573 17.05%
2 JPMorgan Chase & Co. 15 1,339,119 16.34%
3 Merchants Bancorp 2 1,119,000 13.65%
4 PNC Financial Services Group 12 566,061 6.91%
5 First Merchants Corporation 12 522,258 6.37%
6 Lakeland Financial Corp 3 520,349 6.35%
7 Fifth Third Bancorp 7 465,152 5.68%
8 Huntington Bancshares 12 408,965 4.99%
9 Bank of Montreal 9 359,542 4.39%
10 KeyCorp 7 271,393 3.31%
Market Total 117 $8,195,095
Indianapolis metropolitan area includes four of the five fastest-
growing counties in Indiana and 10 of the 11 fastest-growing cities
and towns with populations of at least 5,000*
The 2015 population estimates released by the U.S. Census Bureau
show suburban Hamilton County’s population grew 13% over the last
five years*
Indiana’s population has grown 2% since 2010*
Indiana’s population growth outpaced those of neighboring states
Illinois, Kentucky, Michigan and Ohio*
With 862,781 residents, Indianapolis was the nation’s 14th largest city*
*IBJ.com
**SNL Financial FDIC Summary of Deposits as of June 30, 2016
Notable Major Employers
Indianapolis Market
®
7.27%
8.00%
3.77% 3.77%
2.11%
5.19%
U.S. Indiana Tippecanoe Co.
HHI Pop.
16
Tippecanoe County, IN**
Rank
Branches
Deposits
Mkt.
Share
1 JPMorgan Chase & Co. 6 $ 701,835 28.72%
2 First Merchants Corporation 9 510,925 20.91%
3 Regions Financial Corp 7 296,336 12.13%
4 Old National Bancorp 5 257,117 10.52%
5 Lafayette Community Bancorp 4 149,577 6.12%
6 First Bancshares, Inc. 4 125,097 5.12%
7 Huntington Bancshares, Inc. 4 123,337 5.05%
8 Fifth Third Bancorp 3 86,976 3.56%
9 1st Source Corp 3 66,711 2.73%
10 Salin Bancshares 3 47,662 1.95%
Market Total 57 $ 2,443,556
Ranked #1 in Indiana and #8 nationally, Fortune, Best Place for Small
Business, based on cost of business, jobs growth, educational achievements
Ranked #2, Forbes Best Small Places for Business and Careers
Ranked #2 in Indiana for STEM job density, with 13.6% of the workforce,
topping the state’s 10.9% & national average of 11.9% (Lafayette up 70.6%
since 2001, with 4,850 new jobs)**
Ranked #17 of 200, New Geography, Best Cities for Manufacturing
Home to Purdue University
Projected HHI & Pop. Change 2017-2022
Notable Major Employers
*SNL Financial FDIC Summary of Deposits as of June 30, 2016
**Indianapolis Business Journal
Lafayette Market
®
17
Lake County, IN*
Rank
Branches
Deposits
Mkt.
Share
1 JPMorgan Chase & Co. 24 $ 1,812,142 21.17%
2 First Bancshares, Inc. 29 1,790,048 20.91%
3 First Midwest Bancorp 21 1,015,796 11.87%
4 Northwest Indiana Bancorp 15 731,032 8.54%
5 First Merchants Corporation 11 670,030 7.83%
6 First Financial Bancorp 7 652,030 7.62%
7 Fifth Third Bancorp 13 499,788 5.84%
8 Bank of Montreal 15 478,887 5.59%
9 PNC Financial Services Group 4 172,235 2.01%
10 AMB Financial Corp 4 172,143 2.01%
Market Total 163 $ 8,560,942
Indiana’s second-most populous market
Benefit from its Chicago proximity
Continue to produce finest steels, refine the cleanest fuels and deliver
the best products to the Midwest**
New investments by world-class companies like BP, Pratt Industries,
Alcoa Howmet, Urschel Labs and Monosol**
Lakefront being revitalized through the Marquette Plan and
assistance of the Regional Development Authority**
7.27%
8.00% 8.16%
3.77%
2.11%
-0.54%
U.S. Indiana Lake County
HHI Pop.
Notable Major Employers
*SNL Financial FDIC Summary of Deposits as of June 30, 2016
**www.nwiforum.org/nwi-becoming-an-economic powerhouse
Northwest Indiana Market
®
Projected HHI & Pop. Change 2017-2022
18
Second-most populous county in Ohio
Within 600 miles of 60% of All U.S. and Canadian Population
Ranked 2nd in CNBC’s 2010 study of state transportation systems for
its infrastructure, vitality, quality roads, and ability to cost-effectively
ship goods by land, air, and water**
Home to Ohio State University
7.27%
8.07% 7.59%
3.77%
0.89%
5.04%
U.S. Ohio Franklin County
HHI Pop.
Projected HHI & Pop. Change 2017-2022
Notable Major Employers
*SNL Financial FDIC Summary of Deposits as of June 30, 2016
**http://jobs-ohio.com/manufacturing/
Franklin County, OH*
Rank
Branches
Deposits
Mkt.
Share
1 Huntington Bancshares 70 $ 19,176,982 39.51%
2 JP Morgan Chares & Co 49 12,524,687 25.80%
3 PNC Financial Services Group 42 5,243,661 10.80%
4 Fifth Third Bancorp 42 4,775,613 9.84%
5 U. S. Bancorp 34 1,282,621 2.64%
6 Key Corp 21 1,171,856 2.41%
7 Wells Fargo & Co 1 802,026 1.65%
8 Heartland BancCorp 11 508,956 1.05%
9 WesBanco Inc. 10 466,849 .96%
10 First Financial Bancorp 6 458,581 .94%
12 First Merchants Corporation 7 325,171 0.67%
Market Total 330 $ 48,539,002
Columbus, Ohio Market
®
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Growth Through Acquisition
www.firstmerchants.com
19
Experienced Acquirer
Expand in Current High-Growth Markets
Extend into Additional High-Growth Markets
Add to Franchise with Stable Deposit Gathering Markets
®
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
20
FIRST MERCHANTS
ACQUISITION EXPERIENCE
1893-2016
®
21
Continuous Relationship Building
Complete and Thorough Due Diligence Process
Demonstrated Pricing Discipline:
• Average Price to TBV of 129%
• Average EPS Accretion within One Year
• Average TBV Earn-back of 2.8 Years
Detailed Project Managed Integration Process
Single Charter Operating Environment
Scalable Technology and Operations Center
FIRST MERCHANTS
ACQUISITION PROCESS
®
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Operational Delivery Highlights
www.firstmerchants.com
22
Daleville Operations Facility
Strategic differentiator in support of growth and scalability
Operational services execution “hub” focusing on value creation
Functional focus:
• Operations • Credit Administration
• Risk Management • Technology
• Project Management • Vendor Management
Located off interstate, less than an hour north of Indianapolis, IN
60,000+ square feet of flexible space
Strategic Vendor Partners
®
Retail Households: 145K
Online Banking/Digital Channel
• Consumer: 62K Users
• 810K logins monthly
• 12K bill pay users
• 74K payments monthly
Cash Management Annual Volume
• Automated Clearing House (ACH)
• # Originated: 2M Items ($5B)
• # Received: 12M Items ($17B)
• Mobile: 26K Users
• 22 average logins per month
• 80% average active user rate
• Domestic Wires
• # Originated: 33K Items ($9B)
• # Received: 31K Items ($14B)
• Business: 9K Users
• 10% use ACH/Wire/Positive Pay
• International Wires
• # Originated: 4K Items ($207M)
• # Received: 530 Items ($8M)
• Total ATMS: 124
Total Debit Cards
• 137K active cards
• 3M monthly card swipes
• $100M in monthly volume
• Commercial Remote Deposit Capture
• 462 businesses using solution
• 117K deposits annually
• 1.3M items deposited annually
• $2.7B in total deposits
23
Operational Delivery Highlights
Customer, Digital Channel & Transaction Activity
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
24
3rd Quarter 2016 Highlights
Record Net Income of $21.1 Million, a 23.4% Increase over 3Q2015
Earnings Per Share of $0.51, a 13.3% Increase over 3Q2015; Highest in Company’s History
Total Assets Crossed the $7 Billion Level and Grew by 13.5% over 3Q2015
$280 Million of Organic Loan Growth for the Year Reflects an 8% Annualized Growth Rate
Net Interest Margin Stays Strong; Expanding to 3.94%
1.22% Return on Average Assets
Efficiency Ratio of 55.12%
®
“Record Level Performance Metrics”
25
Total Assets
($ in Millions)
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
2014 2015 Q1-’16 Q2-’16 Q3-’16
1. Investments $1,181 $1,277 $1,271 $1,298 $1,300
2. Loans Held for Sale 7 10 4 19 1
3. Loans 3,925 4,694 4,710 4,791 4,974
4. Allowance (64) (62) (62) (62) (63)
5. CD&I & Goodwill 219 260 262 261 260
6. BOLI 169 201 201 201 202
7. Other 387 381 413 398 348
8. Total Assets $5,824 $6,761 $6,799 $6,906 $7,022
9. Annualized Asset Growth 16.1% 5.1%
®
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
Commercial &
Industrial
23.0%
Commercial
Real Estate
Owner-Occupied
10.5%
Commercial
Real Estate
Non-Owner
Occupied
25.4%
Construction Land
& Land
Development
7.4%
Agricultural
Land
3.1%
Agricultural
Production
1.9%
Other
Commercial
4.2%
Residential
Mortgage
14.9%
Home
Equity
8.0%
Other
Consumer
1.6%
QTD Yield = 4.64%
YTD Yield = 4.59%
Total Loans = $5.0 Billion
Loan and Yield Detail
(as of 9/30/2016)
26
®
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
Mortgage-
Backed
Securities
32%
Collateralized
Mortgage
Obligations
21%
U. S. Agencies
3%
Corporate
Obligations
1%
Tax-Exempt
Municipals
43%
Investment Portfolio
(as of 9/30/2016)
$1.3 Billion
Modified duration of 4.1 years
Tax equivalent yield of 3.69%
Net unrealized gain of $53.3 Million
27
2014 2015 Q1-’16 Q2-’16 Q3-’16
1. Customer Non-Maturity Deposits $3,523 $4,096 $4,140 $4,269 $4,290
2. Customer Time Deposits 784 880 841 820 795
3. Brokered Deposits 334 314 330 319 359
4. Borrowings 290 446 420 435 500
5. Other Liabilities 44 51 79 53 55
6. Hybrid Capital 122 123 122 122 122
7. Common Equity 727 851 867 888 901
8. Total Liabilities and Capital $5,824 $6,761 $6,799 $6,906 $7,022
Total Liabilities and Capital
($ in Millions)
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
28
®
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
Deposit Detail
(as of 09/30/2016)
QTD Cost = .38%
YTD Cost = .39%
Total = $5.4 Billion
29
Demand Deposits
50%
Savings Deposits
28%
Certificates &
Time Deposits of
>$100,000
6%
Certificates &
Time Deposits of
<$100,000
9% Brokered
Deposits
7%
11.16%
11.40%
11.37%
11.22%
11.31% 11.49% 11.42% 11.39%
11.05%
8.97% 9.06%
9.21%
8.95%
9.17% 9.08% 9.26%
9.43% 9.48%
15.21%
15.34%
15.12%
14.92% 14.85% 14.94% 14.79% 14.67%
14.18%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
12.00%
13.00%
14.00%
15.00%
16.00%
17.00%
18.00%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
Total Risk-Based Capital Ratio (Target = 13.50%)
Common Equity Tier 1 Capital Ratio (Target = 10.00%)
Tangible Common Equity Ratio (TCE) (Target = 8.50%) 30
Capital Ratios
(Target)
(Target)
(Target)
®
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
31
Net Interest Margin
®
($ in Millions) Q3 - '14 Q4 - '14 Q1 - '15 Q2 - '15 Q3 - '15 Q4 - '15 Q1 - '16 Q2 - '16 Q3 - '16
Net Interest Income - FTE $ 49.9 $ 49.2 $ 49.2 $ 51.7 $ 53.3 $ 53.2 $ 57.6 $ 59.2 $ 61.1
Fair Value Accretion $ 3.5 $ 1.4 $ 2.2 $ 2.2 $ 2.0 $ 1.9 $ 2.5 $ 3.2 $ 3.8
Tax Equivalent Yield on Earning
Assets 4.41% 4.26% 4.24% 4.26% 4.30% 4.20% 4.28% 4.30% 4.37%
Cost of Supporting Liabilities 0.43% 0.46% 0.46% 0.45% 0.45% 0.45% 0.45% 0.44% 0.43%
Net Interest Margin 3.98% 3.80% 3.78% 3.81% 3.85% 3.75% 3.83% 3.86% 3.94%
3.98%
3.80% 3.78%
3.81% 3.85%
3.75%
3.83% 3.86%
3.94%
3.71% 3.69% 3.61% 3.65%
3.71%
3.62%
3.66% 3.65%
3.70%
2.60%
2.80%
3.00%
3.20%
3.40%
3.60%
3.80%
4.00%
4.20%
$34
$38
$42
$46
$50
$54
$58
$62
Q3 - '14 Q4 - '14 Q1 - '15 Q2 - '15 Q3 - '15 Q4 - '15 Q1 - '16 Q2 - '16 Q3 - '16
Net Interest Income - FTE ($millions) Net Interest Margin Net Interest Margin - Adjusted for Fair Value Accretion
31
32
Non-Interest Income
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
–
–
–
–
–
–
–
–
–
–
–
2014 2015 Q1-’16 Q2-’16 Q3-’16
1. Service Charges on Deposit Accounts $15.7 $16.2 $ 4.1 $ 4.4 $ 4.7
2. Wealth Management Fees 11.7 11.3 3.1 3.0 3.3
3. Insurance Commission Income 7.4 4.1
4. Card Payment Fees 11.8 13.4 3.8 3.8 3.8
5. Cash Surrender Value of Life Ins 3.7 2.9 1.5 1.3 0.6
6. Gains on Sales Mortgage Loans 4.9 6.5 1.5 1.7 2.0
7. Securities Gains/Losses 3.6 2.7 1.0 0.7 0.8
8. Gain on Sale of Insurance Subsidiary 8.3
9. Gain on Cancellation of Trust Preferred Debt 1.3
10. Other 3.0 3.1 0.8 1.5 1.7
11. Total $61.8 $69.8 $15.8 $16.4 $16.9
($ in Millions)
33
Non-Interest Expense
2014 2015 Q1-’16 Q2-’16 Q3-’16
1. Salary & Benefits $ 96.5 $101.9 $27.3 $25.6 $26.7
2. Premises & Equipment 23.2 25.5 7.3 7.3 7.3
3. Core Deposit Intangible Amortization 2.4 2.8 1.0 1.0 1.0
4. Professional & Other Outside Services 8.1 9.9 2.2 1.5 1.2
5. OREO/Credit-Related Expense 3.4 3.9 0.7 0.9 0.6
6. FDIC Expense 3.7 3.7 1.0 1.0 0.5
7. Outside Data Processing 7.3 7.1 2.1 2.0 2.4
8. Marketing 3.5 3.5 0.7 0.9 0.6
9. Other 15.8 16.5 4.1 4.7 3.8
10. Non-Interest Expense $163.9 $174.8 $46.4 $44.9 $44.1
($ in Millions)
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
34
2014 2015 Q1-’16 Q2-’16 Q3-’16
1. Net Interest Income $ 187.0 $ 196.4 $ 54.5 $ 56.0 $ 57.7
2. Provision for Loan Losses (2.6) (0.4) (0.6) (0.8) (1.9)
3. Net Interest Income after Provision 184.4 196.0 53.9 55.2 55.8
4. Non-Interest Income 61.8 69.8 15.8 16.4 16.9
5. Non-Interest Expense (163.9) (174.8) (46.4) (44.9) (44.1)
6. Income before Income Taxes 82.3 91.0 23.3 26.7 28.6
7. Income Tax Expense (22.1) (25.6) (5.6) (6.7) (7.5)
8. Net Income Avail. for Distribution $ 60.2 $ 65.4 $ 17.7 $ 20.0 $ 21.1
9. EPS $ 1.65 $ 1.72 $ 0.43 $ 0.49 $ 0.51
10. Efficiency Ratio 62.44% 61.19% 61.78% 57.33% 55.12%
Earnings
($ in Millions)
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
35
Per Share Results
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
2015 Q1 Q2 Q3 Q4 Total
1. Earnings Per Share $ .43 $ .47 $ .45 $ .37 $ 1.72
2. Dividends $ .08 $ .11 $ .11 $ .11 $ .41
3. Tangible Book Value $13.96 $14.15 $14.59 $ 14.68
2016 Q1 Q2 Q3 Q4 Total
1. Earnings Per Share $ .43 $ .49 $ .51 – $ 1.43
2. Dividends $ .11 $ .14 $ .14 – $ .39
2. Tangible Book Value $15.02 $15.53 $15.86 –
$9.21 $9.64
$10.95
$12.17
$13.65
$14.68
$15.86
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Dividends and Tangible Book Value
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
.08
www.firstmerchants.com
®
.01
.03
.05
.11
.14
2.09%
Forward
Dividend
Yield
27.5%
Dividend
Payout Ratio
=
Quarterly Dividends Tangible Book Value
36
37
Asset Quality Summary
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
($ in Millions)
2014 2015 Q1-'16 Q2-'16 Q3-'16 $ %
1. Non-Accrual Loans 48.8$ 31.4$ 36.7$ 33.6$ 34.1$ 0.5$ 1.5%
2. Other Real Estate 19.3 17.3 15.6 13.2 10.2 (3.0) (22.7%)
3. Renegotiated Loans 2.0 1.9 1.0 4.3 4.0 (0.3) (7.0%)
4. 90+ Days Delinquent Loans 4.6 0.9 1.0 0.4 1.6 1.2 300.0%
5. Total NPAs & 90+ Days Delinquent 74.7$ 51.5$ 54.3$ 51.5$ 49.9$ (1.6)$ (3.1%)
6. NPAs & 90+ Days/Loans & ORE 1.9% 1.1% 1.2% 1.1% 1.0%
7. Classified Assets 191.8$ 171.8$ 170.9$ 173.2$ 173.4$ 0.2$ 0.1%
8. Criticized Assets (includes
Classified) 253.6$ 275.0$ 305.8$ 297.6$ 305.8$ 8.2$ 2.8%
Change
Linked Quarter
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 Q1-'14 Q2-'14 Q3-'14 Q4-'14 Q1-'15 Q2-'15 Q3-'15 Q4-'15 Q1-'16 Q2-'16 Q3-'16
Cumulative Loan
Income
Cumulative Offset
Charge-Offs
Remaining Fair
Value Adjustment
38
ALLL and Fair Value Summary
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
16.3%
43.8%
39.9%
($ in Millions) Q3-'15 Q4-'15 Q1-'16 Q2-'16 Q3-'16
1. Allowance for Loan Losses (ALLL) 62.9$ 62.5$ 62.1$ 62.2$ 63.5$
2. Fair Value Adjustment (FVA) 37.9 47.0 47.1 42.3 37.9
3. Total ALLL plus FVA 100.8$ 109.5$ 109.2$ 104.5$ 101.4$
4. Specific Reserves 2.0$ 1.8$ 1.4$ 2.1$ 1.6$
5. Purchased Loans plus FVA 674.5 965.4 917.6 863.4 771.6
6. ALLL/Non-Accrual Loans 192.8% 199.0% 169.1% 185.3% 186.1%
7. ALLL/Non-purchased Loans 1.70% 1.65% 1.62% 1.56% 1.50%
8. ALLL/Loans 1.45% 1.33% 1.32% 1.29% 1.28%
9. ALLL & FVA/Total Loan Balances plus FVA
1
2.31% 2.31% 2.29% 2.15% 2.02%
1 Management uses this Non-GAAP measure to demonstrate coverage and credit risk
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
www.firstmerchants.com
39
-50
0
50
100
150
200
250
First Merchants Corporation SNL U.S. Bank Russell 2000
Total Return Performance
®
12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15
%
9/30/16
40
FMC Strategy and Tactics Overview
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
Looking Forward . . .
®
Continue to Win in our Markets – Geographic Community-Based Banking Model
Increase Focus on Treasury Management Services for Deposit and Fee Generation
Exploit Back-Office Infrastructure for Efficiency and Operating Leverage
Mergers and Acquisitions as a Core Competency
Build or Acquire Specialty Finance Businesses and Lending Verticals
Persistent Focus on Banking Center Optimization in Alignment with Digital
Channels Migration
Capital Optimization
41
Why Invest in First Merchants?
Attractive and Growing Earnings Stream
One of SNL’s Top 25 Best-Performing Regional Banks in 2015
2nd Largest Indiana Bank with an Energized and Experienced
Management Team
Attractive Long-Term Deposit Market Shares
Commercial Presence that Creates a Client Preference
State-of-the-Art Technology and Operations Center
Successful Acquisition and Integration Track Record
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
42
D. A. Davidson
FIG Partners
Keefe, Bruyette & Woods, Inc.
Piper Jaffray
Sandler O’Neill + Partners, L.P.
Stephens, Inc.
Research Coverage
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
43
Contact Information
First Merchants Corporation common stock is
traded on the NASDAQ Global Select Market
under the symbol FRME.
Additional information can be found at
www.FIRSTMERCHANTS.COM
Investor inquiries:
David L. Ortega
Investor Relations
Telephone: 765.378.8937
dortega@firstmerchants.com
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
44
Appendix
®
45
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
Appendix – Non-GAAP Reconciliation ®
CAPITAL RATIOS (dollars in thousands):
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Total Risk-Based Capital Ratio
Total Stockholders' Equity (GAAP) 684,553 726,827 739,658 749,955 766,984 850,509 867,263 887,550 900,865
Adjust for Accumulated Other Comprehensive (Income) Loss a (4,150) 1,630 1,915 6,490 3,614 1,362 (2,066) (7,035) (3,924)
Less: Preferred Stock
(125)
(125)
(125)
(125)
(125)
(125)
(125)
Add: Qualifying Capital Securities 55,000 55,000 56,827 56,827 51,827 55,776 55,236 55,296 55,355
Less: Tier 1 Capital Deductions (4,381) (2,371) (3,418) (2,516) (1,999) (1,828) (1,440)
Less: Disallowed Goodwill and Intangible Assets (200,992) (218,755) (205,818) (208,980) (208,749) (247,006) (250,367) (249,932) (249,541)
Less: Disallowed Servicing Assets
(166)
(167)
Less: Disallowed Deferred Tax Assets (1,786) (1,581) (1,144) (1,677) (2,998) (2,743) (2,161)
Total Tier 1 Capital (Regulatory) $ 534,245 $ 564,535 $ 586,290 $ 600,215 $ 608,989 $ 656,323 $ 664,944 $ 681,183 $ 699,029
Qualifying Subordinated Debentures 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000
Allowance for Loan Losses includible in Tier 2 Capital 53,803 55,972 58,688 60,865 62,012 62,453 62,086 62,186 63,456
Total Risk-Based Capital (Regulatory) $ 653,048 $ 685,507 $ 709,978 $ 726,080 $ 736,001 $ 783,776 $ 792,030 $ 808,369 $ 827,485
Net Risk-Weighted Assets (Regulatory) $ 4,292,495 $ 4,469,765 $ 4,695,073 $ 4,865,157 $ 4,956,737 $ 5,247,617 $ 5,355,827 $ 5,511,557 $ 5,836,806
Total Risk-Based Capital Ratio (Regulatory) 15.21% 15.34% 15.12% 14.92% 14.85% 14.94% 14.79% 14.67% 14.18%
Common Equity Tier 1 Capital Ratio
Total Tier 1 Capital (Regulatory) $ 534,245 $ 564,535 $ 586,290 $ 600,215 $ 608,989 $ 656,323 $ 664,944 $ 681,183 $ 699,029
Less: Qualified Capital Securities (55,000) (55,000) (56,827) (56,827) (51,827) (55,776) (55,236) (55,296) (55,355)
Add: Additional Tier 1 Capital Deductions 4,381 2,371 3,418 2,516 1,999 1,828 1,440
Less: Preferred Stock
(125)
(125)
Common Equity Tier 1 Capital (Regulatory) $ 479,120 $ 509,410 $ 533,844 $ 545,759 $ 560,580 $ 603,063 $ 611,707 $ 627,715 $ 645,114
Net Risk-Weighted Assets (Regulatory) $ 4,292,495 $ 4,469,765 $ 4,695,073 $ 4,865,157 $ 4,956,737 $ 5,247,617 $ 5,355,827 $ 5,511,557 $ 5,836,806
Common Equity Tier 1 Capital Ratio (Regulatory) 11.16% 11.40% 11.37% 11.22% 11.31% 11.49% 11.42% 11.39% 11.05%
a Includes net unrealized gains or losses on securities available for sale, net gains or losses on cash flow hedges, and amounts resulting from the application of the applicable accounting guidance
for defined benefit and other postretirement plans.
46
Appendix – Non-GAAP Reconciliation
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
TANGIBLE COMMON EQUITY RATIO (dollars in thousands):
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Total Stockholders' Equity (GAAP) $ 684,553 $ 726,827 $ 739,658 $ 749,955 $ 766,984 $ 850,509 $ 867,263 $ 887,550 $ 900,865
Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125)
Less: Intangible Assets (200,991) (218,755) (218,033) (220,196) (219,503) (259,764) (261,799) (260,822) (259,844)
Tangible Common Equity (non-GAAP) $ 483,437 $ 507,947 $ 521,500 $ 529,634 $ 547,356 $ 590,620 $ 605,339 $ 626,603 $ 640,896
Total Assets (GAAP) $ 5,591,383 $ 5,824,127 $ 5,877,521 $ 6,140,308 $ 6,189,797 $ 6,761,003 $ 6,798,539 $ 6,906,418 $ 7,022,352
Less: Intangibles Assets (200,991) (218,755) (218,033) (220,196) (219,503) (259,764) (261,799) (260,822) (259,844)
Tangible Assets (non-GAAP) $ 5,390,392 $ 5,605,372 $ 5,659,488 $ 5,920,112 $ 5,970,294 $ 6,501,239 $ 6,536,740 $ 6,645,596 $ 6,762,508
Tangible Common Equity Ratio (non-GAAP) 8.97% 9.06% 9.21% 8.95% 9.17% 9.08% 9.26% 9.43% 9.48%
TANGIBLE COMMON EQUITY PER SHARE
(dollars in thousands):
4Q10 4Q11 4Q12 4Q13 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Total Stockholders' Equity (GAAP) $ 454,408 $ 514,467 $ 552,236 $ 634,923 $ 726,827 $ 739,658 $ 749,955 $ 766,984 $ 850,509 $ 867,263 $ 887,550 $ 900,865
Less: Preferred Stock
(67,880)
(90,783)
(90,908)
(125)
(125)
(125)
(125)
(125)
(125)
(125)
(125)
(125)
Less: Intangible Assets
(154,019)
(150,471)
(149,529)
(202,767) (218,755) (218,033)
(220,196)
(219,503)
(259,764)
(261,799) (260,822) (259,844)
Tax Benefit
2,907
2,224
2,249
4,973
6,085
5,849
5,619
5,388
6,278
6,753 6,453 6,204
Tangible Common Equity, Net of Tax
(non-GAAP) $ 235,416 $ 275,437 $ 314,048 $ 437,004 $ 514,032 $ 527,349 $ 535,253 $ 552,744 $ 596,898 $ 612,092 $ 633,056 $ 647,100
Shares Outstanding
25,574,251 28,559,707
28,692,616
35,921,761 37,669,948 37,781,488
37,824,649 37,873,921 40,664,258 40,749,340 40,772,896 40,799,025
Tangible Common Equity per Share (non-
GAAP) $ 9.21 $ 9.64 $ 10.95 $ 12.17 $ 13.65 $ 13.96 $ 14.15 $ 14.59 $ 14.68 $ 15.02 $ 15.53 $ 15.86
47
Appendix – Non-GAAP Reconciliation
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
EFFICIENCY RATIO (dollars in thousands):
2014 2015 1Q16 2Q16 3Q16
Non Interest Expense (GAAP) $ 164,008 $ 174,806 $ 46,475 $ 44,835 $ 44,115
Less: Core Deposit Intangible Amortization (2,445) (2,835) (978) (977) (978)
Less: OREO and Foreclosure Expenses (3,462) (3,956) (751) (915) (637)
Adjusted Non Interest Expense (non-GAAP) 158,101 168,015 44,746 42,943 42,500
Net Interest Income (GAAP) 187,037 196,404 54,455 55,962 57,682
Plus: Fully Taxable Equivalent Adjustment 7,921 10,975 3,136 3,256 3,402
Net Interest Income on a Fully Taxable Equivalent Basis (non-GAAP) 194,958 207,379 57,591 59,218 61,084
Non Interest Income (GAAP) 61,816 69,868 15,837 16,385 16,861
Less: Investment Securities Gains (Losses) (3,581) (2,670) (997) (706) (839)
Adjusted Non Interest Income (non-GAAP) 58,235 67,198 14,840 15,679 16,022
Adjusted Revenue (non-GAAP) 253,193 274,577 72,431 74,897 77,106
Efficiency Ratio (non-GAAP) 62.44% 61.19% 61.78% 57.33% 55.12%
ALLOWANCE AS A PERCENTAGE OF NON-PURCHASED LOANS (dollars in thousands):
3Q15 4Q15 1Q16 2Q16 3Q16
Loans Held for Sale (GAAP) $ 1,943 $ 9,894 $ 3,628 $ 18,854 $ 1,482
Loans (GAAP) 4,321,715 4,693,822 4,709,907 4,791,429 4,973,844
Total Loans 4,323,658 4,703,716 4,713,535 4,810,283 4,975,326
Less: Purchased Loans (636,581) (917,589) (870,507) (821,158) (733,715)
Non-Purchased Loans (non-GAAP) $ 3,687,077 $ 3,786,127 $ 3,843,028 $ 3,989,125 $ 4,241,611
Allowance for Loan Losses (GAAP) $ 62,861 $ 62,453 $ 62,086 $ 62,186 $ 63,456
Fair Value Adjustment (FVA) (GAAP) 37,922 47,057 47,104 42,291 37,898
Allowance plus FVA (non-GAAP) $ 100,783 $ 109,510 $ 109,190 $ 104,477 $ 101,354
Total Loans $ 4,323,658 $ 4,703,716 $ 4,713,535 $ 4,810,283 $ 4,975,326
Fair Value Adjustment (FVA) (GAAP) 37,922 47,057 47,104 42,291 37,898
Total Loans plus FVA (non-GAAP) $ 4,361,580 $ 4,750,773 $ 4,760,639 $ 4,852,574 $ 5,013,224
Allowance as a Percentage of Non-Purchased Loans (non-GAAP) 1.70% 1.65% 1.62% 1.56% 1.50%
Allowance plus FVA as a Percentage of Total Loans plus FVA (non-GAAP) 2.31% 2.31% 2.29% 2.15% 2.02%
48
Appendix – Non-GAAP Reconciliation
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
®
CONSTRUCTION AND INVESTMENT REAL ESTATE CONCENTRATIONS (dollars in thousands):
1Q16 2Q16 3Q16
Total Risk-Based Capital (Subsidiary Bank Only)
Total Stockholders' Equity (GAAP) $ 945,283 $ 967,099 $ 972,182
Adjust for Accumulated Other Comprehensive (Income) Loss 1 (4,566) (9,699) (6,332)
Less: Preferred Stock (125) (125) (125)
Less: Tier 1 Capital Deductions (1,805) (1,427) (889)
Less: Disallowed Goodwill and Intangible Assets (249,919) (249,484) (249,093)
Less: Disallowed Deferred Tax Assets (2,708) (2,141) (1,334)
Total Tier 1 Capital (Regulatory) 686,160 704,223 714,409
Allowance for Loan Losses includible in Tier 2 Capital 62,086 62,186 63,456
Total Risk-Based Capital (Regulatory) $ 748,246 $ 766,409 $ 777,865
Construction, Land and Land Development Loans $ 391,621 $ 352,980 $ 368,241
Concentration as a % of the Bank's Risk-Based Capital 52.3% 46.1% 47.3%
Construction, Land and Land Development Loans $ 391,621 $ 352,980 $ 368,241
Investment Real Estate Loans 1,107,288 1,178,660 1,264,304
Total Construction and Investment RE Loans $ 1,498,909 $ 1,531,640 $ 1,632,545
Concentration as a % of the Bank's Risk-Based Capital 200.4% 199.8% 209.9%
1 Includes net unrealized gains or losses on securities available for sale, net gains or losses on cash flow hedges, and amounts resulting from the
application of the applicable accounting guidance for defined benefit and other postretirement plans.