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 14, 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 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.
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 14, 2017
FIRST MERCHANTS CORPORATION
By: /s/ Mark K. Hardwick
Mark K. Hardwick
Executive Vice President,
Chief Financial Officer and Chief Operating Officer
Sandler O’Neill + Partners, L.P.
2017 East Coast Financial
Services Conference
November 15-17, 2017
Michael C. Rechin
President
Chief Executive Officer
Mark K. Hardwick
Executive Vice President
Chief Operating Officer
Chief Financial Officer
John J. Martin
Executive Vice President
Chief Credit Officer
Michael J. Stewart
Executive Vice President
Chief Banking Officer
This presentation 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 forward-looking statements include, but are not limited to, statements relating to
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 economic and business
conditions; the existence or exacerbation of general geopolitical instability and uncertainty; the ability of First Merchants to integrate recent
acquisitions and attract new customers; 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 undertakes no obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this
presentation or press release. In addition, the company’s past results of operations do not necessarily indicate its anticipated future results.
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.
2
Forward-Looking Statements
3
Why Invest in First Merchants?
4
Financial Highlights
Assets $9,049,403
Loans, Net $6,410,094
Deposits $6,911,019
Tangible Common Equity $ 804,436
TCE/TA 9.39%
2017 Net Income – YTD $ 71,687
2017 ROAA – YTD 1.22%
2017 ROATCE - YTD 13.64%
NPAs/Loans + OREO 0.69%
Company Profile (as of 9/30/2017)
Market Information
Common Shares Outstanding 49,140,594
Market Cap $2,109,606
Dividend Yield 1.54%
Price/Tangible Book Value 2.58x
Price/LTM EPS 19.7x
Price/2017 Est. EPS 18.5x
Leadership Team – First Merchants
Name/Title
Michael C. Rechin, President & CEO
Mark K. Hardwick, EVP, Chief Operating Officer &
Chief Financial Officer
Michael J. Stewart, EVP & Chief Banking Officer
John J. Martin, EVP & Chief Credit Officer
First Merchants
First Merchants Bank, formed in 1893, celebrating its
124th anniversary.
First Merchants Corporation, organized in 1982, is the
largest financial services holding company
headquartered in Central Indiana
($ in Thousands)
5
Key Market Profiles
Loans Deposits
$1,036M Columbus $ 601M
742M Fort Wayne 844M
2,444M Indianapolis 1,699M
583M Lafayette 1,012M
919M Muncie 1,704M
759M Munster 1,051M
$6,483M Total $6,911M
(as of September 30, 2017)
Mission Statement
To be the most responsive, knowledgeable and
high-performing bank for our clients,
teammates and shareholders.
Our Franchise
County Region/Type Market Position Market % $ Deposits
Delaware County, IN Muncie (Established) 1 48.98% $ 1,068,364
Jasper County, IN Lafayette (Established) 1 31.54% 205,997
White County, IN Lafayette (Established) 1 33.69% 158,748
Wells County, IN Fort Wayne (Growth) 1 26.35% 119,473
Jay County, IN Muncie (Established) 1 43.22% 90,907
Union County, IN Muncie (Established) 1 40.54% 43,439
Tippecanoe County, IN Lafayette (Established) 2 19.47% 504,153
Henry County, IN Muncie (Established) 2 37.32% 227,295
Clinton County, IN Lafayette (Established) 2 14.11% 59,950
Wabash County, IN Muncie (Established) 2 14.07% 57,158
Madison County, IN Indianapolis (Growth) 3 23.21% 314,515
Adams County, IN Muncie (Established) 3 16.19% 109,619
Shelby County, IN Indianapolis (Growth) 3 16.62% 91,243
Randolph County, IN Muncie (Established) 3 5.88% 72,162
Hendricks County, IN Indianapolis (Growth) 4 9.88% 234,216
Morgan County, IN Indianapolis (Growth) 4 10.69% 97,943
Huntington County, IN Fort Wayne (Growth) 4 16.55% 95,330
Hancock County, IN Indianapolis (Growth) 4 8.66% 87,632
Marshall County, IN Fort Wayne (Growth) 4 8.74% 65,252
Carroll County, IN Lafayette (Established) 4 11.30% 33,052
Brown County, IN Indianapolis (Growth) 4 18.32% 19,620
Hamilton County, IN Indianapolis (Growth) 5 6.51% 594,976
Allen County, IN Fort Wayne (Growth) 5 8.68% 585,513
Johnson County, IN Indianapolis (Growth) 5 7.88% 169,017
Fayette County, IN Muncie (Established) 5 8.25% 27,006
Miami County, IN Muncie (Established) 5 7.97% 31,250
Sub Total $5,163,830
First Merchants Total $6,913,176
Key FMC Deposit Market Share – FDIC Data June 30, 2017 (includes June 30, 2017, balances of iAB Financial Bank)
6
7
First Merchants “Whole Bank” Strategy
Commercial Banking
Consumer Banking
Private Wealth Advisors
Growth Strategy
• Organic
• Merger/Acquisition
8
First Merchants Strategy
Commercial Bank
• Located in Prime Growth Commercial Banking Markets
• Indianapolis, Indiana
• Columbus, Ohio
• Fort Wayne, Indiana
• Lafayette, Indiana
• Northwest Indiana
• Hire the Best Talent Supported with the Finest:
• Sales Management Process
• Lending and Cash Management Services
• Revenue-Based Incentive System
9
First Merchants Strategy
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
10
First Merchants Strategy
“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
• Treasury Management Services
Private Wealth Advisory (private banking, investment management, personal trust,
brokerage, and retirement)
11
WEALTH
ADVISORY
MORTGAGE COMMERCIAL
BANKING
RETAIL
BANKING
Supported by LOB Strategies
Indianapolis
Higher Growth
Brown, Hamilton,
Hancock, Hendricks,
Johnson, Marion,
Morgan, Shelby
Counties
Columbus, OH
Higher Growth
Franklin County, OH
Lafayette
Established
Carroll, Clinton,
Jasper, Montgomery,
Tippecanoe, White
Counties
Muncie
Established
Delaware, Fayette,
Henry, Jay,
Madison, Randolph,
Union, Wabash,
Wayne Counties, IN
Butler, County, OH
Munster
Higher Growth
Lake & Porter, IN
Cook & DuPage, IL
How We Deliver
Fort Wayne
Higher Growth
Adams, Allen,
Huntington, Marshall,
Miami, Wells
Counties
12
Lafayette MSA
Entered: 2002
Total Population: 220,164
Deposit Market Share: 17.18%
Indianapolis MSA
Entered: 1998
Total Population: 2,031,027
Deposit Market Share: 3.41%
Columbus, Ohio MSA
Entered: 2003
Total Population: 2,075,642
Deposit Market Share: 1.00%
Northwest Indiana MSA*
Entered: 2013
Total Population: 684,795
Deposit Market Share: 13.91%
*Includes Jasper, Lake, and Porter counties
LEGACY MARKET
Muncie MSA
Established: 1893
Total Population:
114,969
Current Market
Share: 48.98%
Organic Growth
Opportunities Exists in All
Directions
Fort Wayne MSA
Entered: 2017
Total Population: 435,505
Deposit Market Share: 9.19%
13
Ranked Best in the Midwest
for Business*
AAA Credit Rating**
1st in Midwest and 5th Nationally for Best State for Doing
Business***
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
1st in Government****
Leading the Nation in Manufacturing Job Growth
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
Indiana’s 3 Maritime Ports Rank 6th in Waterborne Shipping
Indiana
*IEDC
**S&P, Moody’s & Fitch
***Chief Executive Magazine
****US News & World Reports
14
Delaware County, IN*
Rank
Branches
Deposits
Mkt.
Share
1 First Merchants Corporation 11 $ 1,068,364 48.98%
2 Mutual First Financial 7 537,800 24.66%
3 J.P. Morgan Chase 4 238,666 10.94%
4 Old National Bancorp 4 199,567 9.15%
5 Star Financial Group 3 135,667 6.22%
6 Woodforest Financial Group 1 957 0.04%
Market Total 30 $ 2,181,021
Projected HHI & Pop. Change 2017-2022
*SNL Financial FDIC Summary of Deposits as of June 30, 2017
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 $ 1,746,030 19.11%
2 JPMorgan Chase & Co. 15 1,558,738 17.06%
3 Merchants Bancorp 2 1,254,403 13.73%
4 PNC Financial Services Group 12 614,405 6.72%
5 First Merchants Corporation 11 594,976 6.51%
6 Lakeland Financial Corp 3 518,183 5.67%
7 Fifth Third Bancorp 6 492,718 5.39%
8 Huntington Bancshares 11 432,562 4.73%
9 Bank of Montreal 9 373,205 4.08%
10 KeyCorp 7 273,681 3.00%
Market Total 117 $ 9,136,439
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, 2017
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 $ 824,748 31.85%
2 First Merchants Corporation 9 504,153 19.47%
3 Regions Financial Corp 6 311,047 12.01%
4 Old National Bancorp 5 259,975 10.04%
5 Horizon Bancorp 4 147,379 5.69%
6 Huntington Bancshares, Inc. 4 129,307 4.99%
7 First Bancshares, Inc. 6 119,618 4.62%
8 Fifth Third Bancorp 3 90,997 3.51%
9 1st Source Corp 3 70,529 2.72%
10 Salin Bancshares 3 52,512 2.03%
Market Total 58 $ 2,589,317
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, 2017
**Indianapolis Business Journal
Lafayette Market
17
Lake County, IN*
Rank
Branches
Deposits
Mkt.
Share
1 JPMorgan Chase & Co. 23 $ 1,947,270 21.89%
2 First Bancshares, Inc. 29 1,853,302 20.83%
3 First Midwest Bancorp 17 1,011,308 11.37%
4 First Financial Bancorp 9 776,948 8.76%
5 Northwest Indiana Bancorp 15 762,955 8.58%
6 First Merchants Corporation 10 703,991 7.91%
7 Fifth Third Bancorp 13 477,393 5.37%
8 BMO Financial Corp 15 476,600 5.36%
9 AMB Financial Corp 5 178,837 2.01%
10 PNC Financial Services Group 4 171,860 1.93%
Market Total 158 $ 8,895,310
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, 2017
**www.nwiforum.org/nwi-becoming-an-economic powerhouse
Northwest Indiana Market
Projected HHI & Pop. Change 2017-2022
18
Allen County, IN*
Rank
Branches
Deposits
Mkt.
Share
1 Wells Fargo 13 $ 1,860,166 27.59%
2 JP Morgan Chase & Co. 12 1,144,376 16.97%
3 Lakeland Financial Corp. 5 707,704 10.50%
4 PNC Financial Services Group 11 654,070 9.70%
5 First Merchants Corporation 8 585,513 8.68%
6 Old National Bancorp 5 489,317 7.26%
7 STAR Financial Group, Inc. 9 357,447 5.30%
8 1st Source Corp. 8 294,082 4.36%
9 Fifth Third Bancorp 8 236,108 3.50%
10 G.S.B. Financial Corp. 1 69,199 1.03%
Market Total 102 $ 6,741,959
2nd Largest MSA in the State of Indiana
Diversified economy (manufacturing, health care, retail trade, food
services)
Attractive location for businesses to locate and expand – located between
the Chicago, Detroit, Dayton, Toledo and Indianapolis metro areas
Fort Wayne-Allen County economic engine of the Northeast Indiana
region
#1 place to raise a family (2017, SmartAsset.com)
7.27%
8.00% 7.86%
3.77%
2.11%
4.78%
U.S. Indiana Allen County
HHI Pop.
Notable Major Employers
*SNL Financial FDIC Summary of Deposits as of June 30, 2017
Fort Wayne Market
Projected HHI & Pop. Change 2017-2022
19
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, 2017
**http://jobs-ohio.com/manufacturing/
Franklin County, OH*
Rank
Branches
Deposits
Mkt.
Share
1 Huntington Bancshares 63 $ 21,024,114 41.96%
2 JP Morgan Chares & Co 48 12,503,686 24.95%
3 PNC Financial Services Group 42 5,001,589 9.98%
4 Fifth Third Bancorp 41 4,365,885 8.71%
5 Key Corp 21 1,411,859 2.82%
6 U.S. Bancorp 33 1,149,694 2.29%
7 Wells Fargo & Co 1 796,395 1.59%
8 First Merchants Corporation 10 609,366 1.22%
9 Heartland Bancorp 12 570,458 1.14%
10 First Financial Bancorp 6 527,051 1.05%
Market Total 321 $ 50,106,324
Columbus, Ohio Market
20
Growth Through Acquisition
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.
21
21
22
Continuous Relationship Building
Complete and Thorough Due Diligence Process
Demonstrated Pricing Discipline
Detailed Project Management
Integration Process
Single Charter Operating Environment
Scalable Technology and Operations Center
First Merchants Acquisition Process
Operational Delivery Highlights
23
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: 175K
Online Banking/Digital Channel
• Consumer: 66K Users
• 970K logins monthly
• 12K bill pay users
• 80K payments monthly
Cash Management Annual Volume
• Automated Clearing House (ACH)
• # Originated: 2M Items ($7B)
• # Received: 13M Items ($20B)
• Mobile: 30K Users
• 23 average logins per month
• 8K mobile deposits per month
• Domestic Wires
• # Originated: 37K Items ($11.2B)
• # Received: 37K Items ($18.2B)
• Business: 9.9K Users
• 13% use ACH/Wire/Positive Pay
• International Wires
• # Originated: 1K Items ($43.67M)
• # Received: 243 Items ($4.4M)
• Total ATMS: 124 + 25,000 MoneyPass ATMs
Total Debit Cards
• 146K active cards
• 2.5M monthly card swipes
• $100M in monthly volume
Commercial Remote Deposit Capture
• 498 businesses using solution
• 135K deposits annually
• 1.6M items deposited annually
• $3.1B in total deposits
24
Operational Delivery Highlights
Customer, Digital Channel & Transaction Activity
25
3rd Quarter 2017 Financial Highlights
Earnings Per Share of $.50
$24.4 Million of Net Income, a 15.7% Increase over 3Q2016
Includes $7.9 Million in Acquisition Expenses, or $.11 Per Share
Total Assets of $9.0 Billion, Grew by 28.9% over 3Q2016
$16.62 Tangible Book Value Per Share, a 6.5% Annualized Increase
from December 31, 2016
26
3rd Quarter 2017 Performance Highlights
Winning Market Strategy Delivering Consistent Organic Growth:
Organic Loan Growth of $145 Million, a 9.2% Annualized Growth Rate
Organic Non-Brokered Deposit Growth of $75 Million, a 4.6%
Annualized Growth Rate
Grew Net-Interest Income to $74.4 Million, a 29% Increase over 3Q2016
Completed Acquisition of Independent Alliance Banks, Inc. on July 14, 2017
Completed Integration of The Arlington Bank on August 18, 2017
Total Assets
2015 2016 Q1-’17 Q2-’17 Q3-’17
1. Investments $1,277 $1,305 $1,327 $1,343 $1,469
2. Loans Held for Sale 10 3 1 4 5
3. Loans 4,694 5,140 5,275 5,613 6,483
4. Allowance (62) (66) (68) (70) (73)
5. Goodwill & Intangibles 260 259 258 310 479
6. BOLI 201 202 203 200 222
7. Other 381 369 330 405 464
8. Total Assets $6,761 $7,212 $7,326 $7,805 $9,049
Annualized Asset Growth 6.7% 34.0%*
*Annualized from 12.31.2016
27
Commercial &
Industrial
22.1%
Commercial
Real Estate Owner-
Occupied
10.4%
Commercial
Real Estate
Non-Owner
Occupied
25.4%
Construction Land
& Land
Development
7.7%
Agricultural
Land
3.8%
Agricultural
Production
1.8%
Public
Finance/Other
Commercial
5.1%
Residential
Mortgage
14.5%
Home
Equity
7.8%
Other
Consumer
1.4%
QTD Yield = 4.81%
YTD Yield = 4.70%
Total Loans = $6.5 Billion
Loan and Yield Detail
(as of 9/30/2017)
28
CRE Loan Concentration
First Merchants Results in Relation to FDIC Guidelines
0.0% 20.0% 40.0% 60.0% 80.0% 100.0%
4Q2015
1Q2016
2Q2016
3Q2016
4Q2016
1Q017
2Q2017
3Q2017
Quar
te
r-
En
d
GUIDELINE #1
0.0% 100.0% 200.0% 300.0%
4Q2015
1Q2016
2Q2016
3Q2016
4Q2016
1Q2017
2Q2017
3Q2017
Quar
te
r-
En
d
GUIDELINE #2
FDIC GUIDELINES TO IDENTIFY INSTITUTIONS POTENTIALLY EXPOSED TO CRE RISK:
Guideline 1: Total loans for construction, land development, and other land representing 100% or
more of total capital
Guideline 2: Total CRE loans representing 300% or more of total capital AND a CRE portfolio that has
increased 50% or more during the prior 36 months
29
Mortgage-Backed
Securities
29%
Collateralized
Mortgage
Obligations
22%
U. S. Agencies
1%
Corporate
Obligations
2%
Tax-Exempt
Municipals
46%
Investment Portfolio
(as of 9/30/2017)
$1.5 Billion Portfolio
Modified duration of 4.9 years
Tax equivalent yield of 3.88%
Net unrealized gain of $23.4 Million
30
2015 2016 Q1-’17 Q2-’17 Q3-’17
1. Customer Non-Maturity Deposits $4,096 $4,428 $4,426 $4,724 $5,448
2. Customer Time Deposits 880 747 789 875 1,088
3. Brokered Deposits 314 381 420 418 375
4. Borrowings 446 572 587 581 656
5. Other Liabilities 51 60 53 49 66
6. Hybrid Capital 123 122 122 123 133
7. Common Equity 851 902 929 1,035 1,283
8. Total Liabilities and Capital $6,761 $7,212 $7,326 $7,805 $9,049
31
Total Liabilities and Capital
($ in Millions)
Deposit Detail
(as of 9/30/2017) QTD Cost = .52%
YTD Cost = .46%
Total = $6.9 Billion
32
Demand Deposits
52%
Savings Deposits
27%
Certificates &
Time Deposits of
>$100,000
7%
Certificates &
Time Deposits of
<$100,000
9%
Brokered
Deposits
5%
11.31%
11.49% 11.42% 11.39%
11.05% 11.10% 11.16% 11.11% 11.03%
9.17% 9.08% 9.26%
9.43% 9.48% 9.24%
9.50%
9.68%
9.39%
14.85%
14.94%
14.79% 14.67%
14.18% 14.21% 14.24%
14.01%
13.76%
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%
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
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%)
33
Capital Ratios
(Target)
(Target)
(Target)
3.85%
3.75%
3.83%
3.86%
3.94% 3.90%
3.98% 3.95%
4.03%
2.80%
3.00%
3.20%
3.40%
3.60%
3.80%
4.00%
4.20%
$44
$48
$52
$56
$60
$64
$68
$72
$76
$80
Q3 - '15 Q4 - '15 Q1 - '16 Q2 - '16 Q3 - '16 Q4 - '16 Q1 - '17 Q2 - '17 Q3 - '17
Net Interest Income - FTE ($millions) Net Interest Margin
34
Net Interest Margin
` NET INTEREST MARGIN
Q3 - '15 Q4 - '15 Q1 - '16 Q2 - '16 Q3 - '16 Q4 - '16 Q1 - '17 Q2 - '17 Q3 - '17
Net Interest Income - FTE
($millions) $ 53.3 $ 53.2 $ 57.6 $ 59.2 $ 61.1 $ 62.1 $ 64.9 $ 67.2 $ 78.9
Fair Value Accretion $ 2.0 $ 1.9 $ 2.5 $ 3.2 $ 3.8 $ 2.9 $ 4.3 $ 2.3 $ 3.2
Tax Equivalent Yield on Earning
Assets 4.30% 4.20% 4.28% 4.30% 4.37% 4.32% 4.42% 4.44% 4.56%
Cost of Supporting Liabilities 0.45% 0.45% 0.45% 0.44% 0.43% 0.42% 0.44% 0.49% 0.53%
Net Interest Margin 3.85% 3.75% 3.83% 3.86% 3.94% 3.90% 3.98% 3.95% 4.03%
Fair Value Accretion Effect 0.14% 0.13% 0.17% 0.21% 0.24% 0.18% 0.26% 0.14% 0.17%
35
Non-Interest Income
–
–
–
–
–
–
–
–
($ in Millions) 2015 2016 Q1-’17 Q2-’17 Q3-’17
1. Service Charges on Deposit Accounts $16.2 $17.8 $ 4.2 $ 4.4 $ 5.0
2. Wealth Management Fees 11.3 12.6 3.4 3.4 3.8
3. Insurance Commission Income 4.1
4. Card Payment Fees 13.4 15.0 3.7 4.2 4.1
5. Cash Surrender Value of Life Ins 2.9 4.3 0.9 3.0 1.6
6. Gains on Sales Mortgage Loans 6.5 7.1 1.3 1.6 2.3
7. Securities Gains/Losses 2.7 3.4 0.6 0.6 0.3
8. Gain on Sale of Insurance Subsidiary 8.3
9. Gain on Cancellation of Trust Preferred Debt 1.3
10. Other 3.1 5.0 0.8 1.2 1.6
11. Total $69.8 $65.2 $14.9 $18.4 $18.7
– – –
– – –
– – –
-I t r st In
–
–
–
35
26.2%
20.4%
23.1%
10.6%
10.0%
2.8% 6.9%
Service Charges on Deposit Accounts - $13.6 Wealth Management Fees - $10.6
Card Payment Fees - $12.0 Cash Surrender Value of Life Ins - $5.5
Gains on Sales Mortage Loans - $5.2 Securities Gains/Losses - $1.5
Other - $3.6 Total - $52.0
36
Non-Interest Income YTD 9/30/2017
($ in Millions)
37
Private Wealth Advisors
Delivers broad advisory capabilities and expertise through
local, engaged and empowered leaders
Business lines include:
Investment Management – Personal and Institutional
Retirement Plan Services
Trust Administration
Private Banking
Retail Brokerage (not reflected below)
Record quarterly revenue and assets under management
Key contributor to pre-tax income
Double-digit growth in Investment Management/Agency
and IRAs in 2017
Average Individual/Family relationship over $1.3mm
Average Retirement Plan over $2.4mm
Personal Trust/Fiduciary represents over 36% of total
assets under management
2014 2015 2016 2017
(Projected)
Total Revenue
(excludes brokerage revenue)
Total Revenue
$1.68B $1.72B
$1.94B
$2.83B
$8.65M
$9.23M
$9.79M
$11M
2012 2013 2014 2015 2016 2017
Total Assets under Management
Total Assets
$1.44B $1.57B
$3.0B
$2.5B
$2.0B
$1.5B
$1.0B
$0.5B
0
$12M
$10M
$ 8M
$ 6M
$ 4M
$ 2M
0
Key component of Fee
Income
0
1
2
3
4
5
6
7
8
9
2014 2015 2016 9 mos Annualized
Mortgage Banking Revenue
Servicing fees Gain on Sale
$4.9M
Mortgage Production for sale and
portfolio via commissioned and
salaried loan originators
Strong loan origination teams in
high-growth areas of Indianapolis
and Columbus, OH
Centralized underwriting and
processing
Strong connectivity with retail
branches
Majority of the pipeline is driven
by purchase business
9/30/2017 YTD 1,555 mortgages
for $278M in volume
$6.5M $7.0M $7.2M
$640 $620 $760 $780
Mortgage Banking
$5.54M
$7.12M
$7.76M $7.98M
38
39
Non-Interest Expense
2015 2016 Q1-’17 Q2-’17 Q3-’17
1. Salary & Benefits $101.9 $102.6 $ 25.7 $ 27.1 $ 33.2
2. Premises & Equipment 25.5 29.5 7.0 6.9 7.9
3. Intangible Asset Amortization 2.8 3.9 0.9 1.0 1.7
4. Professional & Other Outside Services 9.9 6.5 1.7 3.3 5.8
5. OREO/Credit-Related Expense 3.9 2.9 0.5 0.7 0.3
6. FDIC Expense 3.7 3.0 0.6 0.6 0.7
7. Outside Data Processing 7.1 9.2 2.6 3.1 3.2
8. Marketing 3.5 3.0 0.6 0.8 1.0
9. Other 16.5 16.7 3.5 3.8 4.9
10. Non-Interest Expense $174.8 $177.3 $43.1 $47.3 $58.7
($ in Millions)
* * *
*Includes acquisition-related expenses of $0.4 in Q1-’17; $2.5 in Q2-’17; and $7.9 in Q3-’17
40
2015 2016 Q1-’17 Q2-’17 Q3-’17
1. Net Interest Income $196.4 $226.5 $ 61.0 $ 63.1 $ 74.4
2. Provision for Loan Losses (0.4) (5.7) (2.4) (2.9) (2.1)
3. Net Interest Income after Provision 196.0 220.8 58.6 60.2 72.3
4. Non-Interest Income 69.8 65.2 14.9 18.4 18.7
5. Non-Interest Expense (174.8) (177.3) (43.1) (47.3) (58.7)
6. Income before Income Taxes 91.0 108.7 30.4 31.3 32.3
7. Income Tax Expense (25.6) (27.6) (7.2) (7.2) (7.9)
8. Net Income Avail. for Distribution $ 65.4 $ 81.1 $ 23.2 $ 24.1 $ 24.4
9. EPS $ 1.72 $ 1.98 $ 0.56 $ 0.57 $ 0.50
10. Efficiency Ratio 61.19% 56.51% 52.61% 53.61% 58.30%
Earnings
($ in Millions)
2016 Q1 Q2 Q3 Q4 Total
1. Earnings Per Share $ .43 $ .49 $ .51 $ .55 $ 1.98
2. Dividends $ .11 $ .14 $ .14 $ .15 $ .54
3. Tangible Book Value $15.02 $15.53 $15.86 $15.85
2017 Q1 Q2 Q3 Q4 Total
1. Earnings Per Share $ .56 $ .57 $ .50 – $ 1.63
2. Dividends $ .15 .18 .18 – $ .51
3. Tangible Book Value $16.49 $16.97 $16.62 –
41
Per Share Results
$9.21 $9.64
$10.95
$12.17
$13.65
$14.68
$15.85
$16.62
Dividends and Tangible Book Value
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
.11
.01
.03
.05
.14
.15 1.68%
Forward
Dividend
Yield
31.3%
YTD Dividend
Payout Ratio
=
Quarterly Dividends Tangible Book Value
.08
42
.18
43
Asset Quality Summary
($ in Millions) FMB
2015 2016 Q1-'17 Q2-'17 Q3-'17
1
iAB Q3-'17 $
1
$ % 186.1
1. Non-Accrual Loans 31.4$ 30.0$ 27.9$ 27.4$ 26.8$ 5.5$ 32.3$ (0.6)$ 4.9$ 17.9%
2. Other Real Estate 17.3 9.0 8.3 11.9 11.9 - 11.9 - - 0.0%
3. Renegotiated Loans 1.9 4.7 0.9 0.4 0.6 - 0.6 0.2 0.2 50.0%
4. 90+ Days Delinquent Loans 0.9 0.1 0.1 0.6 0.3 0.1 0.4 (0.3) (0.2) (33.3%)
5. Total NPAs & 90+ Days Delinquent 51.5$ 43.8$ 37.2$ 40.3$ 39.6$ 5.6$ 45.2$ (0.7)$ 4.9$ 12.2%
6. Total NPAs & 90+ Days/Loans & ORE 1.1% 0.9% 0.7% 0.7% 0.7% 0.8% 0.7%
7. Classified Assets 171.8$ 174.1$ 173.9$ 148.8$ 127.2$ 42.4$ 169.6$ (21.6)$ 20.8$ 14.0%
8. Specific Reserves 1.8$ 0.9$ 1.2$ 1.2$ 1.8$ 1.8$ 0.6$ 0.6$ 50.0%
1 Excludes acquired iAB loans
Change
Linked Quarter
44
ALLL and Fair Value Summary
($ in Millions) Q4-'16 Q1-'17 Q2-'17 Q3-'17
1. Beginning Allowance for Loan Losses (ALLL) 63.5$ 66.0$ 68.2$ 70.5$
2. Net Charge-offs (Recoveries) (0.1) 0.2 0.6 (0.8)
3. Provision Expense 2.4 2.4 2.9 2.1
4. Ending Allowance for Loan Losses (ALLL) 66.0 68.2 70.5 73.4
5. ALLL/Non-Accrual Loans 220.1% 244.4% 257.7% 227.4%
6. ALLL/Non-Purchased Loans 1.47% 1.46% 1.45% 1.44%
7. ALLL/Loans 1.28% 1.29% 1.25% 1.13%
8. Fair Value Adjustment (FVA) 34.9$ 30.6$ 29.7$ 50.4$
9. Total ALLL plus FVA 100.9 98.8 100.2 123.8
10. Purchased Loans plus FVA 700.4 639.3 792.6 1,445.8
11. FVA/Purchased Loans plus FVA 4.99% 4.79% 3.74% 3.49%
45
46
Looking Forward . . .
Complete Independent Alliance Bank integration and gain synergies and market expansion opportunities
that Arlington Bank and Independent Alliance Bank acquisitions offer; continue to evaluate M&A
opportunities for strategic fit
Win in all our markets, in all lines of business; Commercial and Consumer Lending, Deposit Gathering,
Payments, Mortgage, and Private Wealth Management; be the service-driven alternative to super-
regional bank competitors
Expand specialty finance businesses in asset-based lending, sponsor finance, and public finance
Leverage asset-sensitive balance sheet as interest rates rise
Complete checking account migration to new product set and streamline front and back-office processes;
continue implementation of workflow technologies and automation agents for back-office efficiency and
operating leverage
Persistently focus on banking center optimization in alignment with digital channels migration
Prepare to successfully cross $10 Billion asset level
“Responsive, Knowledgeable, High-Performing”
47
Recent Acquisition Announcements
48
The Arlington Bank Summary
Acquisition Completed on May 19, 2017
Headquartered in Columbus, Ohio
Founded in 1998
As of Sept. 30, 2017,
• $229 Million in Loans
• $249 Million in Deposits
3rd Quarter 2017 Integration
49
The Arlington Bank Transaction Rationale
Columbus Ohio Market Expansion
• Adds Three, Full-Service Banking Centers to our Seven; Creating a Columbus
Banking Presence with Nearly $1 Billion in Loans
• Banking Centers Average More than $80 Million in Deposits Per Location of
which 92% are Core
• Improves First Merchants’ Deposit Market Position from #12 to #8
• Columbus is One of the Fastest Growing Cities in the Midwest
• Arlington Bank is the 9th Largest Originator of Residential Mortgages in the
Columbus, Ohio Area
Strategic
Opportunity
Financially
Attractive
Accretive to EPS During 2017
Tangible Book Value Earn-Back in Three Years
Significant Operating Efficiencies – Approximately 35% in Cost Savings
Attractive
Risk Profile
Cultural Fit, Retention of Key Management Members
Due Diligence Process Completed
Experienced Acquirer, Core Competency in Integration Processes
50
Acquisition Completed on July 14, 2017
Headquartered in Fort Wayne, Indiana
Founded in 2005 in a combination of two
70-year old companies; Grabill Bank and
MarkleBank
As of Sept. 30, 2017,
• $719 Million in Loans
• $844 Million in Deposits
4th Quarter 2017 Integration
Independent Alliance Banks, Inc. Summary
*as of February 16, 2017
51
Contiguous Market Expansion
• Significant Entry into Fort Wayne MSA, Indiana’s 2nd Largest MSA,
with $646 Million in Deposits and #5 Market Share Position
• #1 Market Share in Wells County with Two County Seat Locations
Strong and Growing Core Earnings, Acquisition Accretive to EPS by 2% in
2017 and 5% annually thereafter
Tangible Book Value Earn Back of 3.75 Years
Significant and Stable Core Deposits, 91% of Deposits
Maintains a Healthy Capital Position
Comprehensive Due Diligence Process Completed
Cultural Fit and Retention of Key Management Members including Mike
Marhenke and Will Thatcher in Leadership Roles
Experienced Acquirer, Core Competency in Integration Processes
Market Opportunity
• Leverage Successful First Merchants Model into Northeast Indiana Markets
• Diverse Loan Portfolio with Significant Opportunities to Expand
• Bridge to Significant Markets in North Western Ohio and Southern Michigan
Strategic
Opportunity
Financially
Attractive
Attractive
Risk Profile
Independent Alliance Banks, Inc. Transaction Rationale
52
Why Invest in First Merchants?
Performance Ranked Best among Indiana Banks by Bank Director
Magazine
Attractive and Growing Earnings Stream
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
Focused on Providing Sustainable Shareholder Value
53
Research Coverage
54
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
Appendix
56
Appendix – Non-GAAP Reconciliation
CAPITAL RATIOS (dollars in thousands):
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Total Risk-Based Capital Ratio
Total Stockholders' Equity (GAAP) 766,984 850,509 867,263 887,550 900,865 901,657 929,470 1,035,116 1,283,120
Adjust for Accumulated Other Comprehensive (Income) Loss* 3,614 1,362 (2,066) (7,035) (3,924) 13,581 3,722 (1,384) 6,358
Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125)
Add: Qualifying Capital Securities 51,827 55,776 55,236 55,296 55,355 55,415 55,474 55,534 65,864
Less: Tier 1 Capital Deductions (3,418) (2,516) (1,999) (1,828) (1,440) (376) (80) (166) -
Less: Disallowed Goodwill and Intangible Assets (208,749) (247,006) (250,367) (249,932) (249,541) (249,104) (250,493) (300,307) (462,080)
Less: Disallowed Deferred Tax Assets (1,144) (1,677) (2,998) (2,743) (2,161) (564) (320) (665) -
Total Tier 1 Capital (Regulatory) 608,989$ 656,323$ 664,944$ 681,183$ 699,029$ 720,484$ 737,648$ 788,003$ 893,137$
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 62,012 62,453 62,086 62,186 63,456 66,037 68,225 70,471 73,354
Total Risk-Based Capital (Regulatory) 736,001$ 783,776$ 792,030$ 808,369$ 827,485$ 851,521$ 870,873$ 923,474$ 1,031,491$
Net Risk-Weighted Assets (Regulatory) 4,956,737$ 5,247,617$ 5,355,827$ 5,511,557$ 5,836,806$ 5,993,381$ 6,114,112$ 6,592,710$ 7,497,321$
Total Risk-Based Capital Ratio (Regulatory) 14.85% 14.94% 14.79% 14.67% 14.18% 14.21% 14.24% 14.01% 13.76%
Common Equity Tier 1 Capital Ratio
Total Tier 1 Capital (Regulatory) 608,989$ 656,323$ 664,944$ 681,183$ 699,029$ 720,484$ 737,648$ 788,003$ 893,137$
Less: Qualified Capital Securities (51,827) (55,776) (55,236) (55,296) (55,355) (55,415) (55,474) (55,534) (65,864)
Add: Additional Tier 1 Capital Deductions 3,418 2,516 1,999 1,828 1,440 376 80 166 -
Common Equity Tier 1 Capital (Regulatory) 560,580$ 603,063$ 611,707$ 627,715$ 645,114$ 665,445$ 682,254$ 732,635$ 827,273$
Net Risk-Weighted Assets (Regulatory) 4,956,737$ 5,247,617$ 5,355,827$ 5,511,557$ 5,836,806$ 5,993,381$ 6,114,112$ 6,592,710$ 7,497,321$
Common Equity Tier 1 Capital Ratio (Regulatory) 11.31% 11.49% 11.42% 11.39% 11.05% 11.10% 11.16% 11.11% 11.03%
* 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.
57
Appendix – Non-GAAP Reconciliation
TANGIBLE COMMON EQUITY RATIO (dollars in thousands):
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Total Stockholders' Equity (GAAP) 766,984$ 850,509$ 867,263$ 887,550$ 900,865$ 901,657$ 929,470$ 1,035,116$ 1,283,120$
Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125)
Less: Intangible Assets (219,503) (259,764) (261,799) (260,822) (259,844) (258,866) (257,963) (309,686) (478,558)
Tangible Common Equity (non-GAAP) 547,356$ 590,620$ 605,339$ 626,603$ 640,896$ 642,666$ 671,382$ 725,305$ 804,437$
Total Assets (GAAP) 6,189,797$ 6,761,003$ 6,798,539$ 6,906,418$ 7,022,352$ 7,211,611$ 7,326,193$ 7,805,029$ 9,049,403$
Less: Intangible Assets (219,503) (259,764) (261,799) (260,822) (259,844) (258,866) (257,963) (309,686) (478,558)
Tangible Assets (non-GAAP) 5,970,294$ 6,501,239$ 6,536,740$ 6,645,596$ 6,762,508$ 6,952,745$ 7,068,230$ 7,495,343$ 8,570,845$
Tangible Common Equity Ratio (non-GAAP) 9.17% 9.08% 9.26% 9.43% 9.48% 9.24% 9.50% 9.68% 9.39%
ANGIBLE COMMON EQUITY PER SHARE (dollars in thousands):
4Q10 4Q11 4Q12 4Q1 4Q14 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Total Stockholders' Equity (GAAP) 454,408$ 514,467$ 552,236$ 634,923$ 726,827$ 850,509$ 867,263$ 887,550$ 900,865$ 901,657$ 929,470$ 1,035,116$ 1,283,120$
Less: Preferred Stock (67,880) (90,783) (90,908) (125) (125) (125) (125) (125) (125) (125) (125) (125) (125)
Less: Intangible Assets (154,019) (150,471) (149,529) (202,767) (218,755) (259,764) (261,799) (260,822) (259,844) (258,866) (257,963) (309,686) (478,558)
Tax Benefit 2,907 2,224 2,249 4,973 6,085 6,278 6,753 6,453 6,204 5,930 5,659 6,941 12,510
Tangible Common Equity, Net of Tax (non-GAAP) 235,416$ 275,437$ 314,048$ 437,004$ 514,032$ 596,898$ 612,092$ 633,056$ 647,100$ 648,596$ 677,041$ 732,246$ 816,947$
0
Shares Outstanding 25,574,251 28,559,707 28,692,616 35,921,761 37,669,948 40,664,258 40,749,340 40,772,896 40,799,025 40,912,697 41,047,543 43,153,509 49,140,594
Tangible Common Equity per Share (non-GAAP) 9.21$ 9.64$ 10.95$ 12.17$ 13.65$ 14.68$ 15.02$ 15.53$ 15.86$ 15.85$ 16.49$ 16.97$ 16.62$
58
Appendix – Non-GAAP Reconciliation
FORWARD DIVIDEND YIELD
3Q17
Most recent quarter's dividend per share 0.18$
Most recent quarter's dividend per share - Annualized 0.72$
Stock Price at 9/30/17 42.93$
Forward Dividend Yield 1.68%
DIVIDEND PAYOUT RATIO
2017 YTD
Dividends per share 0.51$
Earnings Per Share 1.63$
Dividend Payout Ratio - YTD 31.3%
EFFICIENCY RATIO (dollars in thousands):
2015 2016 1Q17 2Q17 3Q17
Non Interest Expense (GAAP) 174,806$ 177,359$ 43,099$ 47,316$ 58,708$
Less: Intangible Asset Amortization (2,835) (3,910) (903) (991) (1,698)
Less: OREO and Foreclosure Expenses (3,956) (2,877) (531) (731) (330)
Adjusted Non Interest Expense (non-GAAP) 168,015 170,572 41,665 45,594 56,680
Net Interest Income (GAAP) 196,404 226,473 60,999 63,100 74,420
Plus: Fully Taxable Equivalent Adjustment 10,975 13,541 3,950 4,083 4,472
Net Interest Income on a Fully Taxable Equivalent Basis (non-GAAP) 207,379 240,014 64,949 67,183 78,892
Non Interest Income (GAAP) 69,868 65,203 14,846 18,434 18,668
Less: Investment Securities Gains (Losses) (2,670) (3,389) (598) (567) (332)
Adjusted Non Interest Income (non-GAAP) 67,198 61,814 14,248 17,867 18,336
Adjusted Revenu (non-GA P) 274,577 301,828 79,197 85,050 97,228
Efficiency Ratio (non-GAAP) 61.19% 56.51% 52.61% 53.61% 58.30%
59
Appendix – Non-GAAP Reconciliation
ALLOWANCE AS A PERCENTAGE OF NON-PURCHASED LOANS (dollars in thousands):
4Q16 1Q17 2Q17 3Q17
Loans Held for Sale (GAAP) 2,929$ 1,262$ 4,036$ 4,514$
Loans (GAAP) 5,139,645 5,274,909 5,613,144 6,483,448
Total Loans 5,142,574 5,276,171 5,617,180 6,487,962
Less: Purchased Loans (665,417) (608,724) (762,893) (1,395,368)
Non-Purchased Loans (non-GAAP) 4,477,157$ 4,667,447$ 4,854,287$ 5,092,594$
Allowance for Loan Losses (GAAP) 66,037$ 68,225$ 70,471$ 73,354$
Fair Value Adjustment (FVA) (GAAP) 34,936 30,623 29,664 50,434
Allowance plus FVA (non-GAAP) 100,973$ 98,848$ 100,135$ 123,788$
Purchased Loans 665,417$ 608,724$ 762,893$ 1,395,368$
Fair Value Adjustment (FVA) (GAAP) 34,936 30,623 29,664 50,434
Purchased Loans plus FVA (non-GAAP) 700,353$ 639,347$ 792,557$ 1,445,802$
Allowance as a Percentage of Non-Purchased Loans (non-GAAP) 1.47% 1.46% 1.45% 1.44%
FVA as a Percentage of Purchased Loans plus FVA (non-GAAP) 4.99% 4.79% 3.74% 3.49%
CONSTRUCTION AND INVESTMENT REAL ESTATE CONCENTRATIONS (dollars in
thousands):
4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017
Total Risk-Based Capital (Subsidiary Bank Only)
Total Stockholders' Equity (GAAP) $ 927,774 $ 945,283 $ 967,099 $ 972,182 $ 973,641 $ 993,130 $ 1,099,762 $ 1,384,867
Adjust for Accumulated Other Comprehensive (Income)
Loss 1 (579) (4,566) (9,699) 6,332) 9,701 8,226 3,830 3,170
Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125)
Less: Tier 1 Capital Deductions (1,903) (1,805) (1,427) (889) - - - -
Less: Disallowed Goodwill and Intangible Assets (246,558) (249,919) (249,484) (249,093) (248,656) (250,047) (299,859) (461,632)
Less: Disallowed Deferred Tax Assets (1,269) (2,708) (2,141) (1,334) - - - -
Total Tier 1 Capital (Regulatory) 677,340 686,160 704,223 714,409 734,561 751,184 803,608 926,280
Allowance for Loan Losses includible in Tier 2 Capital 62,453 62,086 62,186 63,456 66,037 68,225 70,471 73,354
Total Risk-Based Capital (Regulatory) $ 739,793 $ 748,246 $ 766,409 $ 777,865 $ 800,598 $ 819,409 $ 874,079 $ 999,634
Construction, Land and Land Development Loans $ 366,704 $ 391,621 $ 352,980 $ 368,241 $ 418,703 $ 336,931 $ 442,389 $ 498,862
Concentration as a % of the Bank's Risk-Based Capital 50% 52% 46% 47% 52% 41% 51% 50%
Construction, Land and Land Development Loans $ 366,704 $ 391,621 $ 352,980 $ 368,241 $ 418,703 $ 336,931 $ 442,389 $ 498,862
Investment Real Estate Loans 1,090,573 1,107,288 1,178,660 1,264,304 1,272,415 1,423,792 1,443,576 1,647,797
Total Construction and Investment RE Loans $ 1,457,277 $ 1,498,909 $ 1,531,640 $ 1,632,545 $ 1,691,118 $ 1,760,723 $ 1,885,965 $ 2,146,659
Concentration as a % of the Bank's Risk-Based Capital 197% 200% 200% 210% 211% 215% 216% 215%
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.