SEC Filing | First Merchants Corporation

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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): July 27, 2017

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On July 27, 2017 First Merchants Corporation issued a press release to report its financial results for the second quarter ended June 30, 2017. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Current Report on Form 8-K, including Exhibit No. 99.1 hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section. The information in this Current Report shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(a) Not applicable.

(b) Not applicable.

(d) Exhibits.

Exhibit 99.1 Press Release, dated July 27, 2017, issued by First Merchants Corporation

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.

First Merchants Corporation

(Registrant)

By: /s/ Mark K. Hardwick

Mark K. Hardwick

Executive Vice President,

Chief Financial Officer and Chief Operating Officer

Dated: July 27, 2017

EXHIBIT INDEX


Exhibit No.	Description

99.1 Press Release, dated April 27, 2017, issued by First Merchants Corporation

Exhibit

N / E / W / S R / E / L / E / A / S / E

July 27, 2017

FOR IMMEDIATE RELEASE

For more information, contact:

David L. Ortega, First Vice President/Director of Investor Relations

765-378-8937

http://www.firstmerchants.com

SOURCE: First Merchants Corporation, Muncie, Indiana

FIRST MERCHANTS CORPORATION ANNOUNCES RECORD SECOND QUARTER 2017 RESULTS AND FRANCHISE ADDITIONS

First Merchants Corporation (NASDAQ - FRME) reported record second quarter 2017 net income of $24.1 million, compared to $20 million during the second quarter of 2016. Earnings per share for the period totaled a record $.57 per share, an increase of $.08 per share, or 16.3 percent, over the same period in 2016. Year-to-date net income totaled a record $47.3 million, compared to $37.7 million during the same period in 2016. Earnings per share for the six months ended June 30, 2017 totaled a record $1.13 per share, an increase of $.21 per share, or 22.8 percent, over the same period in 2016.

Michael C. Rechin, President and Chief Executive Officer, stated, “First Merchants produced record earnings for the second quarter of 2017. Integrated within our second quarter financial statements was the addition of The Arlington Bank on May 19th to include $232 million of total loans, $253 million of deposits and $2.5 million of one-time acquisition expenses. We are also pleased to have completed the closing of our acquisition of Independent Alliance Banks, Inc. on July 14th.” Rechin added, “Our momentum in organic growth and franchise expansion through acquisitions is very fulfilling. The quarter was very productive, including margin expansion, efficiency gains and leadership team additions. Our focus for the remainder of the year includes successful execution of our two upcoming integrations and welcoming new First Merchants’ clients to the same level of excellent service that our client base has come to expect.”

Total assets reached $7.8 billion as of quarter-end and loans totaled a record $5.6 billion, compared to $6.9 billion and $4.8 billion, as of June 30, 2016, representing increases of 13 and 17.2 percent, respectively. Total deposits reached record levels as well, totaling $6 billion as of June 30, 2017, representing an 11.3 percent increase. Of the increase in total loans and total deposits, The Arlington Bank acquisition represented 4.8 and 4.7 percent, respectively. Tangible common equity also increased to $732 million, or $16.97 per share, compared to $633 million or $15.53 per share as of June 30, 2016.

Net-interest income totaled a record $63.1 million for the quarter and reported net-interest margin increased by 9 basis points over the second quarter of 2016, totaling 3.95 percent. Yields on earning assets totaled 4.44 percent and the cost of supporting liabilities totaled .49 percent. When adjusted for fair value accretion, net-interest margin totaled 3.81 percent for the quarter, an increase of 16 basis points over the second quarter of 2016 and 9 basis points over the first quarter of 2017.

Non-interest income totaled $18.4 million for the quarter, up $2 million from the second quarter of 2016 total of $16.4 million. Earnings on the cash surrender value of life insurance accounted for $1.7 million of the increase.

Non-interest expense totaled $47.3 million for the quarter, an increase of $2.5 million from the second quarter of 2016. The increase was fully attributable to one-time merger related expenses.

The Corporation’s provision expense totaled $2.9 million compared to $790,000 during the same period in 2016. The increase in provision expense provided allowance coverage for organic loan growth. The allowance for loan losses now totals $70.5 million as of June 30, 2017, up from $62.2 million as of June 30, 2016. Non-accrual loans totaled $27.3 million as of quarter-end, down from $33.6 million a year ago. The allowance is 1.25 percent of total loans and 1.45 percent of non-purchased loans.

As of June 30, 2017, the Corporation’s total risk-based capital ratio equaled 14.01 percent, common equity tier 1 capital ratio equaled 11.11 percent, and the tangible common equity ratio totaled 9.68 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, July 27, 2017.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's second quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until August 27, 2017. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529 or for International participants, dial +1 412-317-0088. The replay passcode is 10107738.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme170727.html during the time of the call. A replay of the web cast will be available until July 27, 2018.

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 is comprised of First Merchants Bank, which also operates as Lafayette Bank & Trust, The Arlington Bank and iAB Financial Bank and First Merchants Private Wealth Advisors which operates as a division of First Merchants Bank.

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

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

Forward-Looking Statements

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

* * * *



CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	June 30,
	2017			2016
ASSETS
Cash and cash equivalents	$	142,650		$	120,471
Interest-bearing time deposits	48,305			62,533
Investment securities	1,343,323			1,297,801
Loans held for sale	4,036			18,854
Loans	5,613,144			4,791,429
Less: Allowance for loan losses	(70,471		)	(62,186		)
Net loans	5,542,673			4,729,243
Premises and equipment	92,637			95,170
Federal Home Loan Bank stock	19,015			18,096
Interest receivable	27,597			23,351
Core deposit intangibles and goodwill	309,686			260,821
Cash surrender value of life insurance	200,125			201,417
Other real estate owned	11,893			13,219
Tax asset, deferred and receivable	27,331			32,547
Other assets	35,758			32,895
TOTAL ASSETS	$	7,805,029		$	6,906,418
LIABILITIES
Deposits:
Noninterest-bearing	$	1,398,237		$	1,253,747
Interest-bearing	4,618,867			4,153,807
Total Deposits	6,017,104			5,407,554
Borrowings:
Federal funds purchased	134,608			20,000
Securities sold under repurchase agreements	127,884			140,777
Federal Home Loan Bank advances	312,715			268,579
Subordinated debentures and term loans	128,742			127,678
Total Borrowings	703,949			557,034
Interest payable	3,477			3,051
Other liabilities	45,383			51,229
Total Liabilities	6,769,913			6,018,868
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding - 125 shares	125			125
Common Stock, $.125 stated value:
Authorized -- 100,000,000 and 50,000,000 shares ⁽¹⁾
Issued and outstanding - 43,153,509 and 40,772,896 shares	5,394			5,097
Additional paid-in capital	593,904			505,725
Retained earnings	434,309			369,568
Accumulated other comprehensive loss	1,384			7,035
Total Stockholders' Equity	1,035,116			887,550
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,805,029		$	6,906,418

⁽¹⁾On May 1, 2017, the shareholders of First Merchants Corporation approved an amendment to the Articles of Incorporation to increase the number of shares of common stock authorized to issue from 50,000,000 to 100,000,000 shares.



CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended				Six Months Ended
(Dollars In Thousands, Except Per Share Amounts)	June 30,				June 30,
	2017		2016		2017		2016
INTEREST INCOME
Loans receivable:
Taxable	$	59,386	$	52,099	$	115,743	$	102,588
Tax-exempt	2,492		1,465		4,825		2,780
Investment securities:
Taxable	4,180		4,202		8,488		8,530
Tax-exempt	5,091		4,583		10,094		9,092
Deposits with financial institutions	114		122		158		228
Federal Reserve and Federal Home Loan Bank stock	204		233		393		713
Total Interest Income	71,467		62,704		139,701		123,931
INTEREST EXPENSE
Deposits	5,137		4,039		9,261		8,102
Federal funds purchased	103		7		331		35
Securities sold under repurchase agreements	110		92		198		192
Federal Home Loan Bank advances	1,177		818		2,155		1,614
Subordinated debentures and term loans	1,840		1,786		3,657		3,571
Total Interest Expense	8,367		6,742		15,602		13,514
NET INTEREST INCOME	63,100		55,962		124,099		110,417
Provision for loan losses	2,875		790		5,260		1,340
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	60,225		55,172		118,839		109,077
OTHER INCOME
Service charges on deposit accounts	4,438		4,416		8,612		8,561
Fiduciary activities	2,609		2,376		5,249		4,870
Other customer fees	5,406		4,695		10,269		9,754
Earnings on cash surrender value of life insurance	2,971		1,297		3,869		2,773
Net gains and fees on sales of loans	1,617		1,717		2,892		3,177
Net realized gains on sales of available for sale securities	567		706		1,165		1,703
Other income	826		1,178		1,224		1,384
Total Other Income	18,434		16,385		33,280		32,222
OTHER EXPENSES
Salaries and employee benefits	27,076		25,570		52,808		52,907
Net occupancy	3,965		4,059		8,181		8,081
Equipment	2,907		3,243		5,714		6,481
Marketing	792		851		1,357		1,588
Outside data processing fees	3,086		2,025		5,702		4,094
Printing and office supplies	275		369		539		733
Core deposit amortization	991		977		1,894		1,955
FDIC assessments	579		1,002		1,149		1,952
Other real estate owned and foreclosure expenses	731		915		1,262		1,666
Professional and other outside services	3,266		1,478		5,000		3,640
Other expenses	3,648		4,346		6,809		8,213
Total Other Expenses	47,316		44,835		90,415		91,310
INCOME BEFORE INCOME TAX	31,343		26,722		61,704		49,989
Income tax expense	7,207		6,716		14,375		12,290
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	24,136	$	20,006	$	47,329	$	37,699
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.57	$	0.50	$	1.14	$	0.93
Diluted Net Income Available to Common Stockholders	$	0.57	$	0.49	$	1.13	$	0.92
Cash Dividends Paid	$	0.18	$	0.14	$	0.33	$	0.25
Average Diluted Shares Outstanding (in thousands)	42,244		40,969		41,735		40,941



FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
NET CHARGE-OFFS	$	629		$	690		$	826		$	1,607

AVERAGE BALANCES:
Total Assets	$	7,571,789		$	6,857,839		$	7,395,450		$	6,800,577
Total Loans	5,436,961			4,739,079			5,309,311			4,704,323
Total Earning Assets	6,812,451			6,131,438			6,670,358			6,075,878
Total Deposits	5,930,532			5,440,148			5,761,384			5,368,719
Total Stockholders' Equity	983,096			876,116			948,769			868,884

FINANCIAL RATIOS:
Return on Average Assets	1.28		%	1.17		%	1.28		%	1.11		%
Return on Average Stockholders' Equity	9.82			9.13			9.98			8.68
Return on Average Common Stockholders' Equity	9.82			9.14			9.98			8.68
Average Earning Assets to Average Assets	89.97			89.41			90.20			89.34
Allowance for Loan Losses as % of Total Loans	1.25			1.29			1.25			1.29
Net Charge-offs as % of Average Loans (Annualized)	0.05			0.06			0.03			0.07
Average Stockholders' Equity to Average Assets	12.98			12.78			12.83			12.78
Tax Equivalent Yield on Earning Assets	4.44			4.30			4.43			4.29
Cost of Supporting Liabilities	0.49			0.44			0.47			0.44
Net Interest Margin (FTE) on Earning Assets	3.95			3.86			3.96			3.85
Efficiency Ratio	53.61			57.33			53.13			59.52
Tangible Common Book Value Per Share	$	16.97		$	15.53		$	16.97		$	15.53



NON-PERFORMING ASSETS
(Dollars In Thousands)	June 30,			March 31,			December 31,			September 30,			June 30,
	2017			2017			2016			2016			2016
Non-Accrual Loans	$	27,347		$	27,920		$	29,998		$	34,105		$	33,565
Renegotiated Loans	384			876			4,747			3,940			4,299
Non-Performing Loans (NPL)	27,731			28,796			34,745			38,045			37,864
Other Real Estate Owned	11,893			8,293			8,966			10,242			13,219
Non-Performing Assets (NPA)	39,624			37,089			43,711			48,287			51,083
90+ Days Delinquent	634			123			112			1,625			362
NPAs & 90 Day Delinquent	$	40,258		$	37,212		$	43,823		$	49,912		$	51,445

Allowance for Loan Losses	$	70,471		$	68,225		$	66,037		$	63,456		$	62,186
Quarterly Net Charge-offs	629			197			(164		)	630			690
NPAs / Actual Assets %	0.51		%	0.51		%	0.61		%	0.69		%	0.74		%
NPAs & 90 Day / Actual Assets %	0.52		%	0.51		%	0.61		%	0.71		%	0.74		%
NPAs / Actual Loans and OREO %	0.70		%	0.70		%	0.85		%	0.97		%	1.06		%
Allowance for Loan Losses / Actual Loans (%)	1.25		%	1.29		%	1.28		%	1.28		%	1.29		%
Net Charge-offs as % of Average Loans (Annualized)	0.05		%	0.02		%	(0.01		)%	0.05		%	0.06		%



CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	June 30,			March 31,			December 31,			September 30,			June 30,
	2017			2017			2016			2016			2016
ASSETS
Cash and cash equivalents	$	142,650		$	104,247		$	127,927		$	99,602		$	120,471
Interest-bearing time deposits	48,305			20,439			24,459			33,803			62,533
Investment securities	1,343,323			1,327,217			1,304,505			1,300,428			1,297,801
Loans held for sale	4,036			1,262			2,929			1,482			18,854
Loans	5,613,144			5,274,909			5,139,645			4,973,844			4,791,429
Less: Allowance for loan losses	(70,471		)	(68,225		)	(66,037		)	(63,456		)	(62,186		)
Net loans	5,542,673			5,206,684			5,073,608			4,910,388			4,729,243
Premises and equipment	92,637			91,311			94,432			95,540			95,170
Federal Home Loan Bank stock	19,015			17,964			17,964			18,044			18,096
Interest receivable	27,597			25,174			26,194			23,652			23,351
Core deposit intangibles and goodwill	309,686			257,963			258,866			259,844			260,821
Cash surrender value of life insurance	200,125			202,574			201,671			201,856			201,417
Other real estate owned	11,893			8,293			8,966			10,242			13,219
Tax asset, deferred and receivable	27,331			32,074			39,384			31,779			32,547
Other assets	35,758			30,991			30,706			35,692			32,895
TOTAL ASSETS	$	7,805,029		$	7,326,193		$	7,211,611		$	7,022,352		$	6,906,418
LIABILITIES
Deposits:
Noninterest-bearing	$	1,398,237		$	1,373,778		$	1,348,267		$	1,307,886		$	1,253,747
Interest-bearing	4,618,867			4,261,531			4,208,231			4,136,354			4,153,807
Total Deposits	6,017,104			5,635,309			5,556,498			5,444,240			5,407,554
Borrowings:
Federal funds purchased	134,608			102,000			120,349			58,358			20,000
Securities sold under repurchase agreements	127,884			139,007			146,480			138,671			140,777
Federal Home Loan Bank advances	312,715			338,919			298,923			297,022			268,579
Subordinated debentures and term loans	128,742			128,862			128,445			128,288			127,678
Total Borrowings	703,949			708,788			694,197			622,339			557,034
Interest payable	3,477			3,875			3,110			3,733			3,051
Other liabilities	45,383			48,751			56,149			51,175			51,229
Total Liabilities	6,769,913			6,396,723			6,309,954			6,121,487			6,018,868
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding	125			125			125			125			125
Common Stock, $.125 stated value:
Authorized -- 100,000,000 and 50,000,000 shares ⁽¹⁾
Issued and outstanding	5,394			5,131			5,114			5,100			5,097
Additional paid-in capital	593,904			509,953			509,018			506,848			505,725
Retained earnings	434,309			417,983			400,981			384,868			369,568
Accumulated other comprehensive income (loss)	1,384			(3,722		)	(13,581		)	3,924			7,035
Total Stockholders' Equity	1,035,116			929,470			901,657			900,865			887,550
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,805,029		$	7,326,193		$	7,211,611		$	7,022,352		$	6,906,418



CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	June 30,			March 31,			December 31,			September 30,			June 30,
	2017			2017			2016			2016			2016
INTEREST INCOME
Loans receivable:
Taxable	$	59,386		$	56,357		$	53,895		$	53,819		$	52,099
Tax-exempt	2,492			2,333			2,096			1,649			1,465
Investment securities:
Taxable	4,180			4,308			3,893			3,992			4,202
Tax-exempt	5,091			5,003			4,862			4,668			4,583
Deposits with financial institutions	114			44			67			55			122
Federal Reserve and Federal Home Loan Bank stock	204			189			192			193			233
Total Interest Income	71,467			68,234			65,005			64,376			62,704
INTEREST EXPENSE
Deposits	5,137			4,124			3,886			3,926			4,039
Federal funds purchased	103			228			40			27			7
Securities sold under repurchase agreements	110			88			91			91			92
Federal Home Loan Bank advances	1,177			978			797			853			818
Subordinated debentures and term loans	1,840			1,817			1,817			1,797			1,786
Total Interest Expense	8,367			7,235			6,631			6,694			6,742
NET INTEREST INCOME	63,100			60,999			58,374			57,682			55,962
Provision for loan losses	2,875			2,385			2,417			1,900			790
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	60,225			58,614			55,957			55,782			55,172
OTHER INCOME
Service charges on deposit accounts	4,438			4,174			4,534			4,667			4,416
Fiduciary activities	2,609			2,640			2,500			2,448			2,376
Other customer fees	5,406			4,863			4,784			4,777			4,695
Earnings on cash surrender value of life insurance	2,971			898			886			614			1,297
Net gains and fees on sales of loans	1,617			1,275			1,886			1,989			1,717
Net realized gains on sales of available for sale securities	567			598			847			839			706
Other income	826			398			683			1,527			1,178
Total Other Income	18,434			14,846			16,120			16,861			16,385
OTHER EXPENSES
Salaries and employee benefits	27,076			25,732			22,994			26,651			25,570
Net occupancy	3,965			4,216			4,568			4,348			4,059
Equipment	2,907			2,807			3,069			2,947			3,243
Marketing	792			565			790			630			851
Outside data processing fees	3,086			2,616			2,672			2,382			2,025
Printing and office supplies	275			264			301			314			369
Core deposit amortization	991			903			977			978			977
FDIC assessments	579			570			550			534			1,002
Other real estate owned and foreclosure expenses	731			531			574			637			915
Professional and other outside services	3,266			1,734			1,634			1,242			1,478
Other expenses	3,648			3,161			3,805			3,452			4,346
Total Other Expenses	47,316			43,099			41,934			44,115			44,835
INCOME BEFORE INCOME TAX	31,343			30,361			30,143			28,528			26,722
Income tax expense	7,207			7,168			7,850			7,469			6,716
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	24,136		$	23,193		$	22,293		$	21,059		$	20,006

Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.57		$	0.57		$	0.55		$	0.51		$	0.50
Diluted Net Income Available to Common Stockholders	$	0.57		$	0.56		$	0.55		$	0.51		$	0.49
Cash Dividends Paid	$	0.18		$	0.15		$	0.15		$	0.14		$	0.14
Average Diluted Shares Outstanding (in thousands)	42,244			41,221			41,124			41,026			40,969
FINANCIAL RATIOS:
Return on Average Assets	1.28		%	1.29		%	1.26		%	1.22		%	1.17		%
Return on Average Stockholders' Equity	9.82			10.15			9.87			9.39			9.13
Return on Average Common Stockholders' Equity	9.82			10.15			9.87			9.39			9.14
Average Earning Assets to Average Assets	89.97			90.43			89.86			89.73			89.41
Allowance for Loan Losses as % of Total Loans	1.25			1.29			1.28			1.28			1.29
Net Charge-offs as % of Average Loans (Annualized)	0.05			0.02			(0.01		)	0.05			0.06
Average Stockholders' Equity to Average Assets	12.98			12.67			12.75			12.99			12.78
Tax Equivalent Yield on Earning Assets	4.44			4.42			4.32			4.37			4.30
Cost of Supporting Liabilities	0.49			0.44			0.42			0.43			0.44
Net Interest Margin (FTE) on Earning Assets	3.95			3.98			3.90			3.94			3.86
Efficiency Ratio	53.61			52.61			52.18			55.12			57.33
Tangible Common Book Value Per Share	$	16.97		$	16.49		$	15.85		$	15.86		$	15.53



LOANS
(Dollars In Thousands)	June 30,			March 31,			December 31,			September 30,			June 30,
	2017			2017			2016			2016			2016
Commercial and industrial loans	$	1,289,884		$	1,258,840		$	1,194,646		$	1,146,538		$	1,084,890
Agricultural production financing and other loans to farmers	75,746			77,021			79,689			93,169			95,131
Real estate loans:
Construction	442,389			336,931			418,703			368,241			352,980
Commercial and farmland	2,167,729			2,118,431			1,953,062			1,941,739			1,869,703
Residential	847,580			737,918			739,169			739,855			758,870
Home equity	436,038			423,708			418,525			398,837			374,159
Individuals' loans for household and other personal expenditures	79,887			77,590			77,479			76,497			75,205
Lease financing receivables, net of unearned income	232			261			311			380			388
Other commercial loans	273,659			244,209			258,061			208,588			180,103
Loans	5,613,144			5,274,909			5,139,645			4,973,844			4,791,429
Allowance for loan losses	(70,471		)	(68,225		)	(66,037		)	(63,456		)	(62,186		)
NET LOANS	$	5,542,673		$	5,206,684		$	5,073,608		$	4,910,388		$	4,729,243



DEPOSITS
(Dollars In Thousands)	June 30,		March 31,		December 31,		September 30,		June 30,
	2017		2017		2016		2016		2016
Demand deposits	$	3,015,846	$	2,861,384	$	2,866,853	$	2,745,028	$	2,717,500
Savings deposits	1,708,478		1,565,174		1,560,752		1,545,372		1,551,210
Certificates and other time deposits of $100,000 or more	362,589		312,327		276,274		296,838		301,695
Other certificates and time deposits	511,935		476,741		471,247		498,203		517,720
Brokered deposits	418,256		419,683		381,372		358,799		319,429
TOTAL DEPOSITS	$	6,017,104	$	5,635,309	$	5,556,498	$	5,444,240	$	5,407,554



NET INTEREST INCOME
(Dollars in Thousands)	For the Three Months Ended
	June 30, 2017							June 30, 2016
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	42,794		$	114	1.07	%	$	99,734		$	122	0.49	%
Federal Reserve and Federal Home Loan Bank stock	18,655			204		4.37		23,442			233		3.98
Investment Securities: ⁽¹⁾
Taxable	717,818			4,180		2.33		730,179			4,202		2.30
Tax-Exempt ⁽²⁾	596,223			7,832		5.25		539,004			7,050		5.23
Total Investment Securities	1,314,041			12,012		3.66		1,269,183			11,252		3.55
Loans held for sale	3,791			65		6.86		3,664			96		10.48
Loans: ⁽³⁾
Commercial	3,911,477			45,400		4.64		3,501,919			40,501		4.63
Real Estate Mortgage	647,032			7,229		4.47		568,746			6,116		4.30
Installment	546,339			6,692		4.90		470,254			5,386		4.58
Tax-Exempt ⁽²⁾	328,322			3,834		4.67		194,496			2,254		4.64
Total Loans	5,436,961			63,220		4.65		4,739,079			54,353		4.59
Total Earning Assets	6,812,451			75,550		4.44		6,131,438			65,960		4.30
Net unrealized gain on securities available for sale	4,908							10,924
Allowance for loan losses	(69,068		)					(62,235		)
Cash and cash equivalents	153,247							104,372
Premises and equipment	92,026							96,620
Other assets	578,225							576,720
Total Assets	$	7,571,789						$	6,857,839
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	1,596,182		$	1,089	0.27	%	$	1,429,191		$	637	0.18	%
Money market deposits	901,077			600		0.27		849,270			502		0.24
Savings deposits	791,464			161		0.08		717,044			149		0.08
Certificates and other time deposits	1,281,132			3,287		1.03		1,159,247			2,751		0.95
Total Interest-bearing Deposits	4,569,855			5,137		0.45		4,154,752			4,039		0.39
Borrowings	618,335			3,230		2.09		476,852			2,703		2.27
Total Interest-bearing Liabilities	5,188,190			8,367		0.65		4,631,604			6,742		0.58
Noninterest-bearing deposits	1,360,677							1,285,396
Other liabilities	39,826							64,723
Total Liabilities	6,588,693							5,981,723
Stockholders' Equity	983,096							876,116
Total Liabilities and Stockholders' Equity	$	7,571,789		8,367		0.49		$	6,857,839		6,742		0.44
Net Interest Income				$	67,183						$	59,218
Net Interest Margin						3.95	%						3.86	%


⁽¹⁾ Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
⁽²⁾ Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 35 percent for 2017 and 2016. These totals equal $4,083 and $3,256 for the three months ended June 30, 2017 and 2016, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.



NET INTEREST INCOME
(Dollars in Thousands)	For the Six Months Ended
	June 30, 2017							June 30, 2016
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	36,662		$	158	0.86	%	$	87,722		$	228	0.52	%
Federal Reserve and Federal Home Loan Bank stock	18,312			393		4.29		30,537			713		4.67
Investment Securities: ⁽¹⁾
Taxable	714,672			8,488		2.38		723,333			8,530		2.36
Tax-Exempt ⁽²⁾	591,401			15,529		5.25		529,963			13,987		5.28
Total Investment Securities	1,306,073			24,017		3.68		1,253,296			22,517		3.59
Loans held for sale	3,197			109		6.82		4,956			218		8.80
Loans: ⁽³⁾
Commercial	3,846,622			89,494		4.65		3,475,684			79,365		4.57
Real Estate Mortgage	596,990			13,350		4.47		572,006			12,510		4.37
Installment	539,272			12,790		4.74		463,454			10,495		4.53
Tax-Exempt ⁽²⁾	323,230			7,423		4.59		188,223			4,277		4.54
Total Loans	5,309,311			123,166		4.64		4,704,323			106,865		4.54
Total Earning Assets	6,670,358			147,734		4.43	%	6,075,878			130,323		4.29	%
Net unrealized gain on securities available for sale	2,762							10,464
Allowance for loan losses	(68,007		)					(62,724		)
Cash and cash equivalents	128,768							103,143
Premises and equipment	92,519							96,659
Other assets	569,050							577,157
Total Assets	$	7,395,450						$	6,800,577
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	1,554,740		$	1,926	0.25	%	$	1,364,729		$	1,181	0.17	%
Money market deposits	845,536			941		0.22		857,601			993		0.23
Savings deposits	784,033			317		0.08		703,174			284		0.08
Certificates and other time deposits	1,223,426			6,077		0.99		1,172,852			5,644		0.96
Total Interest-bearing Deposits	4,407,735			9,261		0.42		4,098,356			8,102		0.40
Borrowings	641,499			6,341		1.98		498,470			5,412		2.17
Total Interest-bearing Liabilities	5,049,234			15,602		0.62		4,596,826			13,514		0.59
Noninterest-bearing deposits	1,353,649							1,270,363
Other liabilities	43,798							64,504
Total Liabilities	6,446,681							5,931,693
Stockholders' Equity	948,769							868,884
Total Liabilities and Stockholders' Equity	$	7,395,450		15,602		0.47		$	6,800,577		13,514		0.44
Net Interest Income				$	132,132						$	116,809
Net Interest Margin						3.96	%						3.85	%


⁽¹⁾ Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
⁽²⁾ Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 35 percent for 2017 and 2016. These totals equal $8,033 and $6,392 for the six months ended June 30, 2017 and 2016, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.