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 26, 2022
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | |||||
| (Commission File Number) | (IRS Employer Identification No.) | ||||
(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)
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
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:
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 ☐
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. ☐
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On Tuesday July 26, 2022, First Merchants Corporation will conduct a second quarter 2022 earnings conference call and web cast at 10:30 a.m. (ET). A copy of the slide presentation utilized on the conference call is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits.
| Exhibit 99.1 | |||||
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
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/ Michele M. Kawiecki Michele M. Kawiecki Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) | |||||||||||
Dated: July 26, 2022 | |||||||||||
EXHIBIT INDEX
| Exhibit | Description | ||||
| Exhibit 99.1 | |||||
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
INVESTOR UPDATE Second Quarter 2022
Forward Looking Statement 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 effects of a pandemic or other unforeseeable event; 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.
Executive Management Team 3 Mark Hardwick Chief Executive Officer Mark K. Hardwick currently serves as the Chief Executive Officer of First Merchants Corporation and First Merchants Bank. Mark joined First Merchants in November of 1997 as Corporate Controller and was promoted to Chief Financial Officer in April of 2002. In 2016, Mark’s title expanded to include Chief Operating Officer, overseeing the leadership responsibilities for finance, operations, technology, risk, legal, and facilities for the corporation. Prior to joining First Merchants Corporation, Mark served as a senior accountant with BKD, LLP in Indianapolis. Mark is a graduate of Ball State University with a Master of Business Administration and Bachelor’s degree in Accounting. He is also a certified public accountant and a graduate of the Stonier School of Banking. FMB: 24 Yrs Banking: 24 Yrs FMB: 7 Yrs Banking: 19 Yrs Michele Kawiecki Chief Financial Officer Michele Kawiecki currently serves as Executive Vice President and Chief Financial Officer for First Merchants Corporation and First Merchants Bank. Michele joined First Merchants in 2015 as Director of Finance. Prior to joining First Merchants, Michele spent 12 years with UMB Financial Corporation in Kansas City, Missouri having served as Senior Vice President of Capital Management and Assistant Treasurer; Director of Corporate Development and the Enterprise Project Management Office; and Chief Risk Officer. Prior to UMB, she worked for PriceWaterhouseCoopers LLP as an Audit Manager. Michele earned both a Master of Science in Accounting and an Executive Master of Business Administration from the University of Missouri-Kansas City and a Bachelor’s degree in Accounting from Dakota Wesleyan University. FMB: 14 Yrs Banking: 34 Yrs Mike Stewart President Mike Stewart currently serves as President for First Merchants Corporation and First Merchants Bank overseeing the Commercial, Private Wealth, and Consumer Lines of Business for the Bank. Mike joined the bank in 2008 as Chief Banking Officer. Prior to joining First Merchants, Mike spent 18 years with National City Bank in various commercial sales and credit roles. Mike has a Master of Business Administration from Butler University and a Bachelor’s degree in Finance from Millikin University. FMB: 14 Yrs Banking: 32 Yrs John Martin Chief Credit Officer John Martin currently serves as Executive Vice President and Chief Credit Officer of First Merchants Corporation overseeing the Commercial, Small Business and Consumer Credit functions, as well as the Mortgage Line of Business. Prior to joining First Merchants, John spent 18 years with National City Bank in various sales and senior credit roles. John is a graduate of Indiana University where he earned a Bachelor of Arts in Economics. He also holds a Master of Business Administration in Finance from Case Western Reserve University.
First Merchants Corporation (NASDAQ: FRME) Financial Highlights as of 6/30/2022 $17.8 Billion $11.4 Billion $14.6 Billion $6.6 Billion Assets Under Advisement* Total Assets Total Loans Total Deposits TCE/TA: YTD Return on TCE YTD ROAA: Dividend Yield: Price / Tangible Book: Price / LTM EPS: 1.05% 7.04% 13.98% 3.34% 1.74x 10.4x Moody’s a3 Baseline Credit Assessment1 Market Cap $2.1B Largest financial services holding company headquartered in Central Indiana 124 Banking Centers 4 *Assets Under Management - $3.1 Billion 1Moody’s Credit Opinion – First Merchants Corporation, September 24, 2021, baseline Credit Assessment (BCA) reflects a bank’s standalone credit strength
Highlights 5 ▪ Reported EPS of $0.63 compared to $1.03 in Q2 2021 and $0.91 in Q1 2022. Excluding Paycheck Protection Program (“PPP”) income and expenses related to the Level One acquisition, current quarter EPS was $1.01 compared to Q2 2021 of $0.89 and Q1 2022 of $0.881,2 ▪ 20.1% annualized organic loan growth on a linked quarter basis, excluding PPP loans ▪ Legal close of the acquisition of Level One Bancorp in Farmington Hills, Michigan on April 1, 2022 ▪ System Integration of Level One Bank planned for third quarter of 2022 ▪ Completed 3 branch consolidations with 2 additional planned for Q3 7.62% ROE 12.91% ROTCE ROE & ROTCE (Annualized) $38.5 Million $0.63 Per Share Net Income & EPS1 0.88% ROA 1.62% PTPP ROA ROA (Annualized) 1Net Income and EPS reported on a diluted basis and for common stockholders 2See “Non-GAAP Financial Information” for reconciliation Year to Date 8.90% ROE 13.98% ROTCE ROE & ROTCE (Annualized) $87.1 Million $1.54 Per Share Net Income & EPS1 1.05% ROA 1.54% PTPP ROA ROA (Annualized) Second Quarter ▪ Reported EPS of $1.54 compared to $1.94 in 2021. Excluding PPP income and expenses related to the Level One acquisition, current YTD EPS was $1.89 compared to $1.67 in 20211,2
Business Strategy 6 Full Spectrum of Debt Capital and Treasury Service Offerings Located in Prime Growth Markets Small Business & SBA Middle Market C&I Investment Real Estate Public Finance Sponsor Finance Full Spectrum of Consumer Deposit and Lending Offerings Supported by: Talented Customer Service Oriented Banking Center and Call Center Professionals Competitive Digital Solutions ▪ Deposit and CRM ▪ Online Banking ▪ Mobile Banking Diverse Locations in Stable Rural and Growth Metro Markets Comprehensive and coordinated approach to personal wealth management Expertise in: Investment Management Private Banking Fiduciary Estate Financial Planning Strengthen commercial relationships with personal services for executives/owners and retirement plan services for companies Partner with consumer to offer personal investment advice through First Merchants Investment Services Offering a full suite of mortgage solutions to assist with purchasing, constructing, renovating, or refinancing a home. Strengthen existing Commercial, Consumer and Private Wealth relationships Create new household relationships Support underserved borrowers and neighborhoods Deliver solutions through a personalized, efficient, and scalable model Commercial Banking Private Wealth Advisors Consumer Banking Mortgage Banking Asset Based Lending Syndications Treasury Management Services Merchant Processing Services
▪ C&I growth continues to be the driver of strong Commercial growth in the current quarter and year to date. IRE grew balances in the current quarter yet still down on a year-to-date basis ▪ Consumer loan growth increases showed strength in the current quarter with HELOC and Small Business as the key drivers ▪ Mortgage balance growth is attributed to construction loans and increasing customer preference for variable rate loan products ▪ Across the bank, loan pipeline remains stable 2Q22 2022 YTD Commercial (1.3)% (5.5)% Consumer (14.0)% (3.7)% Total Deposits (8.2)% (1.5)% ▪ Commercial balances declined due to customer working capital deployment, capital investments and stimulus proceeds slowing for municipal and public entities ▪ Consumer decline in legacy FMB follows seasonal pattern, 2% decline ▪ Post close of Level One, decline in deposit balances were due to strategic depository pricing changes in both the commercial and consumer categories Deposit Growth Annualized1 Business Highlights 7 Indianapolis Indianapolis MSA Rank: 9 Deposits: $2.8B Loans: $3.4B Columbus Columbus MSA Rank: 10 Deposits: $0.7B Loans: $1.4B Northwest Indiana Lake County Rank: 4 Lafayette MSA Rank: 2 Deposits: $3.3B Loans: $2.2B Northeast Indiana Muncie MSA Rank: 1 Ft Wayne MSA Rank: 3 Deposits: $4.5B Loans: $2.0B Michigan Monroe MSA Rank: 1 Detroit MSA Rank: 9 Deposits: $3.3B Loans: $2.4B MSA ranking data per S&P Global and is pro forma for pending transactions Loan Growth Annualized1 2Q22 2022 YTD Commercial2 13.7% 9.9% Consumer 6.9% 2.8% Private Wealth 30.4% 35.2% Mortgage 80.7% 51.9% Total Loans – Adjusted2 20.1% 13.8% 1Excluding $1.6 billion of loans and $1.9 billion of deposits acquired from Level One 2Excluding Change in PPP Loans
Second Quarter Financial Results 8 ▪ 58.45% Efficiency Ratio, 50.75% excluding acquisition costs1 ▪ Net interest income, excluding the impact of PPP loan income and fair value accretion, increased $25.1 million over prior quarter and $32.5 million over 2Q 2021 ▪ Pre-Tax, Pre-Provision (PTPP) Earnings totaled $72.2 million excluding acquisition costs, PTPP ROA was 1.62% and PTPP ROE was 14.28%1 ▪ Declines in TCE Ratio of 1.27% and Tangible Book Value per share of 12% reflect the impact of AOCI changes in equity due to market volatility and the acquisition of Level One 2Q22 Highlights ($M except per share data) 6/30/21 9/30/21 12/31/21 3/31/22 6/30/22 Variance Linked Quarter % Variance Linked QTR- Annualized Balance Sheet & Asset Quality 1. Total Assets $14,923.1 $15,060.7 $15,453.1 $15,465.3 $17,780.5 $2,315.2 59.9% 2. Total Loans 9,139.8 9,047.6 9,253.0 9,360.2 11,406.5 2,046.3 87.4% 3. Investments 4,148.3 4,445.5 4,524.4 4,489.3 4,630.0 140.8 12.5% 4. Deposits 12,203.4 12,348.7 12,732.6 12,906.0 14,570.9 1,664.9 51.6% 5. Common Equity 1,871.8 1,868.1 1,912.6 1,807.6 1,977.6 170.0 37.6% 6. TCE Ratio 9.04% 8.94% 9.01% 8.31% 7.04% -1.27% 7. Total RBC Ratio 14.23 14.02 13.92 13.85 12.73% -1.12 8. ACL / Loans 2.19 2.21 2.11 2.09 1.98 -0.11 9. NCOs / Avg Loans 0.06 -0.01 0.20 -0.03 0.01 0.04 10. NPAs + 90PD / Assets 0.40 0.35 0.29 0.33 0.30 -0.03 Summary Income Statement 11. Net Interest Income $104.3 $104.7 $101.3 $102.3 $128.7 $26.4 103.2% 12. Provision for Loan Losses 0.0 0.0 0.0 0.0 16.8 16.8 13. Non-interest Income 30.9 28.5 25.8 25.9 28.3 2.4 36.8% 14. Non-interest Expense 69.3 71.4 72.4 72.3 97.3 25.0 138.4% 15. Pre-tax Income 65.9 61.8 54.7 55.9 42.9 (13.0) -93.1% 16. Provision for Taxes 10.3 9.1 7.0 7.3 3.9 (3.4) -187.5% 17. Net Income 55.6 52.8 47.7 48.6 39.0 (9.6) -78.9% 18. Preferred Stock Dividends 0.0 0.0 0.0 0.0 0.5 0.5 19. Net Income Available to Common Stockholders 55.6 52.8 47.7 48.6 38.5 (10.1) -82.8% 20. ROAA 1.51% 1.41% 1.25% 1.26% 0.88% -0.38% 21. ROAE 12.04 11.17 10.10 10.28 7.62 -2.66 22. ROTCE 17.77 16.33 14.78 14.99 12.91 -2.08 23. Net Interest Margin 3.22 3.20 3.04 3.03 3.28 0.25 24. Efficiency Ratio 48.91 51.18 53.49 52.79 58.45 5.66 Per Share 25. Earnings per Diluted Share $1.03 $0.98 $0.89 $0.91 $0.63 ($0.28) 26. Tangible Book Value per Share 24.15 24.31 25.21 23.26 20.45 (2.81) 27. Dividend per Share 0.29 0.29 0.29 0.29 0.32 0.03 28. Dividend Payout Ratio 28.2% 29.6% 32.6% 31.9% 50.8% 18.9% For the Three Months Ended, 1See “Non-GAAP Financial Information” for reconciliation
Year to Date Financial Results 9 ▪ 55.90% Efficiency Ratio, 51.62% excluding acquisition costs1 ▪ Net interest income, excluding the impact of PPP loan income and fair value accretion, increased $42.6 million or 23.5% over prior year ▪ Pre-Tax, Pre-Provision (PTPP) Earnings totaled $128.2, an increase of $3.9 million over prior year1 ▪ Declines in TCE Ratio of 2% and Tangible Book Value per share of 15% reflect the impact of AOCI changes in equity due to market volatility and the acquisition of Level One ▪ PPP fee income totaled $2.8 million, a decrease of $16.2 million from prior year. Remaining unearned fees total $0.4 million Year to Date Highlights ($M except per share data) 2020 2021 2022 Variance YOY % Variance YOY Balance Sheet & Asset Quality 1. Total Assets $13,819.4 $14,923.1 $17,780.5 $2,857.4 19.1% 2. Total Loans 9,299.4 9,139.8 11,406.5 2,266.6 24.8% 3. Investments 2,789.4 4,148.3 4,630.0 481.7 11.6% 4. Deposits 10,966.0 12,203.4 14,570.9 2,367.5 19.4% 5. Common Equity 1,809.1 1,871.8 1,977.6 105.8 5.7% 6. TCE Ratio 9.31% 9.04% 7.04% -2.00% 7. Total RBC Ratio 14.18 14.23 12.73% -1.50 8. ALLL / Loans 1.30 2.19 1.98 -0.21 9. NCOs / Avg Loans 0.02 0.11 -0.01 -0.12 10. NPAs + 90PD / Assets 0.46 0.40 0.30 -0.10 Summary Income Statement 11. Net Interest Income $186.9 $204.7 $230.9 $26.2 12.8% 12. Provision for Loan Losses 41.6 0.0 16.8 16.8 13. Non-interest Income 56.3 55.0 54.2 (0.8) -1.5% 14. Non-interest Expense 126.2 135.4 169.6 34.2 25.3% 15. Pre-tax Income 75.4 124.3 98.7 (25.6) -20.6% 16. Provision for Taxes 8.1 19.3 11.1 (8.2) -42.3% 17. Net Income 67.3 105.0 87.6 (17.4) -16.6% 18. Preferred Stock Dividends 0.0 0.0 0.5 0.5 19. Net Income Available to Common Stockholders 67.3 105.0 87.1 (17.9) -17.1% 20. ROAA 1.03% 1.45% 1.05% -0.40% 21. ROAE 7.45 11.40 8.90 -2.50 22. ROTCE 11.28 16.82 13.98 -2.84 23. Net Interest Margin 3.32 3.23 3.16 -0.07 24. Efficiency Ratio 50.09 49.54 55.90 6.36 Per Share 25. Earnings per Diluted Share $1.24 $1.94 $1.54 ($0.40) 26. Tangible Book Value per Share 23.04 24.15 20.45 (3.70) 27. Dividend per Share 0.52 0.55 0.61 0.06 28. Dividend Payout Ratio 41.9% 28.4% 39.6% 11.3% For the Six Months Ended June 30, 1See “Non-GAAP Financial Information” for reconciliation
▪ Net unrealized AFS Loss of $246.1 million Investment Portfolio Highlights 10 2Q22 Investment Portfolio Composition Yield on Investments (%) / Total Investments ($B) $4.6B Total Investment Portfolio Gains / LossesHighlights Realized Gains ▪ 2Q 2021 $1.8 million ▪ 3Q 2021 $1.7 million ▪ 4Q 2021 $0.4 million ▪ 1Q 2022 $0.6 million ▪ 2Q 2022 $0.1 million Unrealized AFS Loss▪ Effective duration of 6.4 years ▪ 2022 roll off cash flow $113 million / ~2.17% yield ▪ AA rated municipal bond portfolio ▪ Allowance for Credit Losses for Investments of $245,000 ▪ 48% of portfolio classified as Held-to-Maturity $4.1 $4.4 $4.5 $4.5 $4.6 2.59% 2.56% 2.51% 2.55% 2.63% 2Q21 3Q21 4Q21 1Q22 2Q22 Investments ($B) Yield on Investments (%) Municipal Bonds 56% Mortgage- Backed Securities 26% Collateralized Mortgage Obligations 6% U.S. Agencies 11% Corporate Obligations 1%
Loan Portfolio Highlights 11 2Q22 Loan Composition Yield on Loans (%) / Total Loans ($B) $11.4B Total 2Q22 Portfolio by Yield Type Highlights Total loan rate mix as of 2Q22 • $7.4 billion variable rate • $4.0 billion fixed rate ▪ Portfolio composition remains ~80% Commercial oriented • Composition mostly unchanged from prior quarter ▪ Loan yields remained strong at 4.09%, 3.96% excluding PPP loans and fair value accretion ▪ New/renewed loan yields averaged 3.87% for the quarter compared to 3.22% in 1Q22 ▪ Acquired Level One loans totaled $1.6 billion $0.9 $0.7 $0.7$0.4$0.7$0.7 Commercial & Industrial 28.9% Commercial Real Estate Owner-Occupied 11.1% Commercial Real Estate Non-Owner Occupied 21.3% Construction Land & Land Development 6.5% Agricultural Land & Production 1.9% Public Finance/Other Commercial 7.8% Residential Mortgage 16.0% Home Equity 5.1% Other Consumer 1.4% Non-PPP Fixed Rate 35% LIBOR-Based 27% Prime-Based 15% Other Variable Rates 12% SOFR-Based 11% $9.1 $9.0 $9.3 $9.4 $11.4 4.05% 4.07% 3.87% 3.73% 4.09% 2Q21 3Q21 4Q21 1Q22 2Q22 Total Loans ($B) Yield on Loans (%)
Allowance for Credit Losses - Loans 12 2Q22 Allowance for Credit Losses - Loans Change in ACL – Loans Highlights ▪ Q2 provision expense of $16.8 million reflects: • $14 million for CECL Day 1 non-PCD loans • $2.8 million for Level One’s unfunded commitments ▪ The reserve for unfunded commitments now totals $23.3 million and is recorded in Other Liabilities ▪ The remaining fair value accretion on acquired loans is $37.3 million, an increase of $27.3 million due to the acquisition $199.8 $200.0 $195.4 $196.0 $226.3 2.19% 2.21% 2.11% 2.09% 1.98% 2Q21 3Q21 4Q21 1Q22 2Q22 Allowance Allowance to Loans $195,397 $226,275 $16,599 $324 $13,955 $50,000 $100,000 $150,000 $200,000 $250,000 ACL - Loans 12/31/2021 CECL Day 1 PCD ACL Net Recoveries 6/30/2022 CECL Day 1 non- PCD Provision Exp. ACL-Loans 6/30/2022 Increase Decrease
Deposit Portfolio Highlights 13 2Q22 Deposit Composition Highlights $14.6B Total 1Defined as total deposits less time deposits > $100k Cost of Total Deposits (%) / Total Deposits ($B) ▪ Strong core deposit base • 97% core deposits1 • 24% non-interest bearing • ~54% yield 5 bps or less ▪ Acquired Level One deposits totaled $1.9 billion ▪ Consumer DDA average balance per account declined slightly but is still 33% higher than pre-pandemic levels ▪ Total deposit costs increased to 0.23% • Up 10 bps from 1Q22 Demand Deposits 61% Savings Deposits 33% Certificates & Time Deposits > $100k 3% Certificates & Time Deposits < $100k 3% $12.2 $12.3 $12.7 $12.9 $14.6 0.19% 0.18% 0.18% 0.13% 0.23% 2Q21 3Q21 4Q21 1Q22 2Q22 Total Deposits ($B) Cost of Total Deposits (%)
Net Interest Margin 14 $105.1$97.1 $97.3 $105.1 $107.0$97.8 $107.0 $97.3 $105.1 $110.0$109.2 $107.0 $105.1 $109.2 $110.0 $106.9 1Adjusted for Fair Value Accretion and PPP Loan Income 2Q21 3Q21 4Q21 1Q22 2Q22 1. Net Interest Income - FTE ($millions) 109.2$ 110.0$ 106.9$ 108.0$ 134.8$ 2. Fair Value Accretion 2.5$ 1.5$ 1.5$ 1.0$ 3.2$ 3. PPP Loan Income 9.7$ 8.2$ 3.7$ 1.9$ 0.9$ 4. Adjusted Net Interest Income - FTE1 97.0$ 100.3$ 101.7$ 105.1$ 130.7$ 5. Tax Equivalent Yield on Earning Assets 3.49% 3.46% 3.29% 3.23% 3.58% 6. Interest Expense/Average Earning Assets 0.27% 0.26% 0.25% 0.20% 0.30% 7. Net Interest Margin 3.22% 3.20% 3.04% 3.03% 3.28% 8. Fair Value Accretion Effect 0.07% 0.04% 0.04% 0.03% 0.08% 9. Impact of PPP Loans 0.15% 0.17% 0.08% 0.03% 0.01% 10. Adjusted Net Interest Margin1 3.00% 2.99% 2.92% 2.97% 3.19% $109.2 $110.0 $106.9 $108.0 $134.8 3.22% 3.20% 3.04% 3.03% 3.28% 2Q21 3Q21 4Q21 1Q22 2Q22 Net Interest Income - FTE ($millions) Net Interest Margin
Non-Interest Income Highlights 15 2Q22 Non-Interest Income Detail ($M) $28.3M Total Non-Interest Income Trends ($M) Fee Income / Revenue Highlights ▪ 91% in Customer-related fees totaling $25.8 million for 2Q22, an increase of $2.8 million over 1Q22 driven by higher service charges on deposits, gains on mortgage loan sales, and derivative hedge fees Wealth Management $7.6 27% Gain on Sale of Loans $3.2 11% Service Charges $7.7 27% Card Payment Fees $5.2 18% Gain on Sale of Securities $0.1 0% Derivative Hedge Fees $1.5 5% BOLI $1.3 5% Other Customer Fees $0.7 3% Other $1.0 4% 22.1% 20.6% 19.4% 19.3% 17.3% $7.5 $7.4 $7.1 $7.3 $7.6 $8.3 $4.0 $3.4 $2.2 $3.2 $5.6 $6.2 $6.5 $6.4 $7.7 $4.2 $4.2 $3.9 $5.7 $5.2 $5.3 $6.7 $4.9 $4.3 $4.6 $30.9M $28.5M $25.8M $25.9M $28.3M 2Q21 3Q21 4Q21 1Q22 2Q22 Wealth Management Gain on Sale of Loans Service Charges Card Payment Fees Other
Non-Interest Expense Highlights 16 2Q22 Non-Interest Expense Detail $97.3M Total Non-Interest Expense Trends ($M) Efficiency Ratio Highlights ▪ 2Q22 included acquisition costs of $12.5 million of which $10 million were one-time charges ▪ Core expense increase of $1.5 million in salaries and incentives Salary & Benefits $56.0 58% Premises & Equipment $13.4 14% Outside Data Processing $4.9 5% Professional & Other Outside Services $10.3 11% Intangible Asset Amortization $2.3 2%Marketing $1.4 1% FDIC Expense $2.9 3% Other $6.1 6% 48.91% 51.18% 53.49% 52.79% 58.45% $42.4 $43.3 $42.4 $42.5 $56.0 $10.5 $10.1 $10.6 $11.3 $13.4 $4.7 $4.8 $4.6 $4.4 $4.9 $11.7 $13.2 $14.8 $14.1 $23.0 $69.3M $71.4M $72.4M $72.3M $97.3M 2Q21 3Q21 4Q21 1Q22 2Q22 Salary & Benefits Premises & Equipment Outside Data Processing Other 50.75%1 12Q22 Efficiency Ratio excluding acquisition costs, see “Non-GAAP Financial Information” for reconciliation
Capital Ratios 17 Tangible Common Equity Ratio Common Equity Tier 1 Ratio Total Risk-Based Capital Ratio 9.31% 9.31% 9.57% 9.31% 9.65%9.57%9.31% 9.57% 9.65% 9.04%8.78% 9.04% 8.94% 9.01% 8.31% 7.04% 2Q21 3Q21 4Q21 1Q22 2Q22 TCE Ratio Target TCE (9.00%) 11.94% 11.75% 11.68% 11.63% 10.27% 2Q21 3Q21 4Q21 1Q22 2Q22 CET 1 Ratio Target CET1 Ratio (10.00%) 14.23% 14.02% 13.92% 13.85% 12.73% 2Q21 3Q21 4Q21 1Q22 2Q22 TRBC Ratio Target TRBC Ratio (12.50%) ▪ Reduction in TCE due to AOCI changes in equity due to market volatility and cash consideration used in acquisition of Level One vs. Prior Quarter
18.6% 9.7% 9.4% 9.5% 7.6% 6.6% 6.3% 4.9% 4.1% 3.9% Manufacturing Wholesale Trade Investment CRE Admin Services Retail Trade Finance/Insur. Prof. Services Construction Specialty Trade Transp./Warehouse Loan Portfolio 18 Highlights Geography / C&I Top Industries Loan Portfolio Trends ($M) Top Industries % of C&I loans vs. Prior Quarter ▪ Robust quarterly organic loan growth up $468 million / 20.1% annualized ex PPP ↑ $169 million Residential Mortgage ↑ $152 million C&I (lines 1 & 2)1 ↑ $105 million Construction ▪ Consistent organic loan growth. YOY increase of $1.1 billion / 12.1% ex PPP ▪ Commercially focused and comparably concentrated portfolio • $1.6 billion commercially oriented loan portfolio with residential mortgage concentration • Michigan loan portfolio increases to 20.4% from 7.1% of loans Acquired Level One Portfolio 2Q21 3Q21 4Q21 1Q22 2Q22 Level One2 2Q22 Organic Growth 1. Commercial & Industrial 2,214$ 2,125$ 2,213$ 2,283$ 2,681$ 378$ 20$ 2. Sponsor Finance 460 448 504 546 619 0 73 3. CRE Owner Occupied 950 953 984 972 1,262 274 16 4. Construction/Land/Land Dev. 491 522 523 553 746 88 105 5. CRE Non-Owner Occupied 2,264 2,150 2,136 2,073 2,423 424 (74) 6. Agricultural 235 241 246 209 215 0 6 7. Public Finance/Other Commercial 759 782 807 833 894 4 57 8. Total Commercial Loans 7,373 7,221 7,413 7,469 8,840 1,168 203 9. Residential Mortgage 1,146 1,159 1,168 1,230 1,823 424 169 10. Home Equity 490 531 524 513 586 44 29 11. Other Consumer 131 137 148 148 157 1 8 12. Total Resid. Mortgage & Consumer 1,767 1,827 1,840 1,891 2,566 469 206 13. Total Loans 9,140$ 9,048$ 9,253$ 9,360$ 11,406$ 1,637$ 409$ 14. PPP Loans1 416$ 198$ 107$ 49$ 33$ 43$ (59)$ 15. Total Loans net of PPP 8,724$ 8,850$ 9,146$ 9,311$ 11,373$ 1,594$ 468$ 1Included in C&I above 2Acquired Level One loans 1excluding $59 million PPP quarterly paydown 2excluding $426 million PPP annual paydown vs. Prior Year ↑ $674 million C&I (lines 1 & 2)2 ↑ $253 million Residential Mortgage ↑ $ 167 million Construction
Asset Quality 19 Asset Quality Trends ($M) Highlights Acquired Level One Portfolio ▪ Favorable Asset Quality Position • NPA +90PD at 0.61% of loans vs. Prior Quarter vs. Prior Year ▪ Strong Asset Quality • Continued reduction in non-accrual loans on the legacy portfolio • NPAs +90PD of .47% of loans and ORE • Classified loans of 1.68% after inclusion of $73.5 million Level One loans Top Industries - manufacturing, senior living, agriculture and CRE ▪ Favorable Asset Quality Trends on Legacy portfolio • Non-accrual loans down $21.0 million (37%) • NPAs +90PD decreased $15.7 million (27%) • Classified loans down $65.1 million (35%) 2Q21 3Q21 4Q21 1Q22 2Q22 Level One1 Excluding Level One 1. Non-Accrual Loans 57.6$ 51.5$ 43.1$ 42.7$ 46.0$ 9.4$ 36.6$ 2. Other Real Estate 0.6 0.7 0.5 6.3 6.5 - 6.5 3. 90PD Loans 0.2 0.2 1.0 2.1 0.6 0.6 - 4. Renegotiated Loans 0.6 0.4 0.3 0.1 0.2 0.2 5. NPAs + 90PD 59.0$ 52.8$ 44.9$ 51.2$ 53.3$ 10.0$ 43.3$ 6. NPAs + 90PD/Loans and ORE 0.65% 0.58% 0.49% 0.55% 0.47% 7. Classified Loans 183.7$ 144.6$ 122.7$ 102.3$ 192.1$ 73.5$ 118.6$ 8. Classified Loans/Loans 2.01% 1.60% 1.33% 1.09% 1.68% 9. Net Charge-offs (QTD) 1.3$ (0.2)$ 4.6$ (0.6)$ 0.3$ -$ 0.3$ 10. QTD NCO/Avg. Loans (Annualized) 0.06% -0.01% 0.20% -0.03% 0.01% 1 Acquired Level One loans
Non-Performing Assets 20 Non-Performing Assets Roll Forward ($M) Highlights ▪ Stable Asset Quality • Reduction of $7.9 million in NPAs +90PD offset by the addition of $10 million in new Level One NPAs +90PD Non-accrual loans declined $6.1 million with $8.9 million resolved on line 3 • Top three non-accrual relationships total $20.1 million Senior Living, Grain Marketing, Medical Office • Recoveries of $1.1 million offset by gross charge-offs of $1.4 million 2nd Quarter NPA Roll Forward 2Q21 3Q21 4Q21 1Q22 2Q22 Level One1 Excluding Level One 1. Beginning Balance NPAs + 90PD 60.3$ 59.0$ 52.8$ 44.9$ 51.2$ 51.2$ Non-Accrual 2. Add: New Non-Accruals 5.4 22.6 6.4 4.4 13.1 9.4 3.7 3. Less: To Accrual/ (4.0) (27.9) (9.5) (4.3) (8.9) - (8.9) Payoff/Renegotiated 4. Less: To ORE - (0.2) - - 0.5 - 0.5 5. Less: Charge-offs (1.7) (0.6) (5.3) (0.5) (1.4) - (1.4) 6. Non-Accrual Loans Change (0.3) (6.1) (8.4) (0.4) 3.3 9.4 (6.1) Other Real Estate Owned (ORE) 7. Add: New ORE Properties - 0.2 - 5.8 0.5 - 0.5 8. Less: ORE Sold - (0.1) - - (0.2) - (0.2) 9. Less: ORE Losses (write-downs) - - (0.2) - (0.1) - (0.1) 10. ORE Change - 0.1 (0.2) 5.8 0.2 - 0.2 11. 90PD Change (0.9) - 0.8 1.1 (1.5) 0.6 (2.1) 12. Renegotiated Loans Change (0.1) (0.2) (0.1) (0.2) 0.1 - 0.1 13. NPAs + 90PD Change (1.3) (6.2) (7.9) 6.3 2.1 10.0 (7.9) 14. Ending Balance NPAs + 90PD 59.0$ 52.8$ 44.9$ 51.2$ 53.3$ 10.0$ 43.3$ 1 Acquired Level One loans
398.9% 192.2% FRME SNL U.S. Bank Track Record of Shareholder Value 21 10-Year Total Return (2011-2021) Earnings per Share Tangible Book Value per Share Dividends per Share CAGR 2011-2021: 27.3% CAGR 2011-2021: 10.1% CAGR 2011-2021: 39.7% Return on Tangible Common Equity $0.34 $1.41 $1.41 $1.65 $1.72 $1.98 $2.12 $3.22 $3.19 $2.74 $3.81 $1.54 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD'22 $9.64 $10.95 $12.17 $13.65 $14.68 $15.85 $16.96 $19.12 $21.94 $24.27 $25.21 $20.45 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD'22 4.37% 14.04% 12.69% 12.94%12.47% 13.26%13.29% 18.77% 15.81% 12.21% 16.17% 13.98% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD'22 $0.04 $0.10 $0.18 $0.29 $0.41 $0.54 $0.69 $0.84 $1.00 $1.04 $1.13 $0.61 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD'22
$1.6 $1.8 $2.7 $3.1 $3.2 $3.2 $3.6 $3.8 $4.8 $4.5 $4.2 $4.2 $4.3 $5.4 $5.8 $6.8 $7.2 $9.4 $9.9 $12.5 $14.1 $15.5 $17.8 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2Q22 History of Organic and Whole Bank Acquisition Growth 22 Total Assets ($B) Growth Through Acquisition ✓ Experienced Acquirer ✓ Expanded in Current High-Growth Markets ✓ Extended into Additional High-Growth Markets ✓ Added to Franchise with Stable Deposit Gathering Markets 2000 Decatur Bank & Trust 2001 Frances Slocum Bank & Trust 2002 Lafayette Bank & Trust 2003 Commerce National Bank 2008 Lincoln Bank 2012 Shelby County Bank 2013 Citizens Financial Bank 2014 Community Bank 2015 Cooper State Bank Ameriana Bank 2017 Arlington Bank iAB Financial Bank 2019 Monroe Bank & Trust 2022 (Closed April 1, 2022)
Vision for the Future 23 Our Vision: To enhance the financial wellness of the diverse communities we serve. To be the most responsive, knowledgeable, and high-performing bank for our clients, teammates, and shareholders. We are a collection of dynamic colleagues with diverse experiences and perspectives who share a passion for positively impacting lives. We are genuinely committed to attracting and engaging teammates of diverse backgrounds. We believe in the power of inclusion and belonging. ▪ Lead a brand-focused cultural transformation through inclusivity, teamwork, performance management, career development, rewards and work-life balance ▪ Produce organic growth across all lines of business and markets through focused, data-driven industry leading client acquisition, expansion and retention activities ▪ Invest in the digital transformation of our delivery channels to simplify the client experience ▪ Maintain top-quartile financial results supported by industry-leading governance, risk and compliance practices to ensure long-term sustainability ▪ Continue to leverage our core competency in acquisitions to enhance growth, efficiency and high performance ▪ Cultivate a high-quality shareholder base that values environmental, social and governance initiatives inspired by our stakeholder-centric business model Strategic Imperatives: Our Mission: Our Team:
24 APPENDIX
Non-GAAP 25 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. CAPITAL RATIOS (dollars in thousands): 2Q20 2Q21 3Q21 4Q21 1Q22 2Q22 Total Risk-Based Capital Ratio (dollars in thousands) Total Stockholders' Equity (GAAP) 1,809,095 1,871,800 1,868,090 1,912,571 1,807,633 1,977,641 Adjust for Accumulated Other Comprehensive (Income) Loss 1 (63,845) (60,080) (39,889) (55,113) 84,392 198,556 Less: Preferred Stock (125) (125) (125) (125) (125) (25,125) Add: Qualifying Capital Securities 46,248 46,487 46,546 46,606 46,665 25,000 Less: Tier 1 Capital Deductions - - - - - - Less: Disallowed Goodwill and Intangible Assets (567,246) (566,412) (565,221) (564,002) (562,887) (743,285) Less: Disallowed Deferred Tax Assets - (1,152) (1,005) (239) (374) (1,554) Add: Modified CECL Transition Amount - 40,314 34,542 34,542 23,028 23,028 Total Tier 1 Capital (Regulatory) 1,224,127$ 1,330,832$ 1,342,938$ 1,374,240$ 1,398,332$ 1,454,261$ Qualifying Subordinated Debentures 65,000 65,000 65,000 65,000 65,000 143,074 Allowance for Loan Losses includible in Tier 2 Capital 121,119 135,690 139,200 143,241 146,247 175,059 Total Risk-Based Capital (Regulatory) 1,410,246$ 1,531,522$ 1,547,138$ 1,582,481$ 1,609,579$ 1,772,394$ Net Risk-Weighted Assets (Regulatory) 9,946,087$ 10,759,672$ 11,037,663$ 11,369,907$ 11,618,250$ 13,918,947$ Total Risk-Based Capital Ratio (Regulatory) 14.18% 14.23% 14.02% 13.92% 13.85% 12.73% Common Equity Tier 1 Capital Ratio Total Tier 1 Capital (Regulatory) 1,224,127$ 1,330,832$ 1,342,938$ 1,374,240$ 1,398,332$ 1,454,261$ Less: Qualified Capital Securities (46,248) (46,487) (46,546) (46,606) (46,665) (25,000) Add: Additional Tier 1 Capital Deductions - - - - - - Common Equity Tier 1 Capital (Regulatory) 1,177,879$ 1,284,345$ 1,296,392$ 1,327,634$ 1,351,667$ 1,429,261$ Net Risk-Weighted Assets (Regulatory) 9,946,087$ 10,759,672$ 11,037,663$ 11,369,907$ 11,618,250$ 13,918,947$ Common Equity Tier 1 Capital Ratio (Regulatory) 11.84% 11.94% 11.75% 11.68% 11.63% 10.27%
Non-GAAP 26 TANGIBLE COMMON EQUITY RATIO (dollars in thousands): 2Q20 2Q21 3Q21 4Q21 1Q22 2Q22 Tangible Common Equity Ratio (dollars in thousands) Total Stockholders' Equity (GAAP) 1,809,095$ 1,871,800$ 1,868,090$ 1,912,571$ 1,807,633$ 1,977,641$ Less: Preferred Stock (125) (125) (125) (125) (125) (25,125) Less: Intangible Assets (575,855) (573,786) (572,323) (570,860) (569,494) (753,649) Tangible Common Equity (non-GAAP) 1,233,115$ 1,297,889$ 1,295,642$ 1,341,586$ 1,238,014$ 1,198,867$ Total Assets (GAAP) 13,819,378$ 14,923,097$ 15,060,725$ 15,453,149$ 15,465,258$ 17,780,492$ Less: Intangible Assets (575,855) (573,786) (572,323) (570,860) (569,494) (753,649) Tangible Assets (non-GAAP) 13,243,523$ 14,349,311$ 14,488,402$ 14,882,289$ 14,895,764$ 17,026,843$ Tangible Common Equity Ratio (non-GAAP) 9.31% 9.04% 8.94% 9.01% 8.31% 7.04% TANGIBLE COMMON EQUITY PER SHARE (dollars in thousands): 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 Tangible Common Equity Per Share Total Stockholders' Equity (GAAP) 514,467$ 552,236$ 634,923$ 726,827$ 850,509$ 901,657$ 1,303,463$ 1,408,260$ Less: Preferred Stock (90,783) (90,908) (125) (125) (125) (125) (125) (125) Less: Intangible Assets (150,471) (149,529) (202,767) (218,755) (259,764) (258,866) (476,503) (469,784) Tax Benefit 2,224 2,249 4,973 6,085 6,278 5,930 6,788 5,017 Tangible Common Equity, Net of Tax (non-GAAP) 275,437$ 314,048$ 437,004$ 514,032$ 596,898$ 648,596$ 833,623$ 943,368$ Common Shares Outstanding 28,559,707 28,692,616 35,921,761 37,669,948 40,664,258 40,912,697 49,158,238 49,349,800 Tangible Common Equity per Share (non-GAAP) 9.64$ 10.95$ 12.17$ 13.65$ 14.68$ 15.85$ 16.96$ 19.12$ TANGIBLE COMMON EQUITY PER SHARE (dollars in thousands): 4Q19 2Q20 4Q20 2Q21 3Q21 4Q21 1Q22 2Q22 Tangible Common Equity Per Share Total Stockholders' Equity (GAAP) 1,786,437$ 1,809,095$ 1,875,645$ 1,871,800$ 1,868,090$ 1,912,571$ 1,807,633$ 1,977,641$ Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (25,125) Less: Intangible Assets (578,881) (575,855) (572,893) (573,786) (572,323) (570,860) (569,494) (753,649) Tax Benefit 7,257 6,597 5,989 5,432 5,153 4,875 4,615 8,692 Tangible Common Equity, Net of Tax (non-GAAP) 1,214,688$ 1,239,712$ 1,308,616$ 1,303,321$ 1,300,795$ 1,346,461$ 1,242,629$ 1,207,559$ Common Shares Outstanding 55,368,482 53,795,500 53,922,359 53,972,386 53,510,745 53,410,411 53,424,823 59,059,866 Tangible Common Equity per Share (non-GAAP) 21.94$ 23.04$ 24.27$ 24.15$ 24.31$ 25.21$ 23.26$ 20.45$
Non-GAAP 27 ADJUSTED EPS EXCLUDING PAYCHECK PROTECTION PROGRAM ("PPP") AND ACQUISITION-RELATED EXPENSES 2Q21 3Q21 4Q21 1Q22 2Q22 6/30/20 YTD 6/30/21 YTD 6/30/22 YTD (Dollars in Thousands, Except Per Share Amounts) Net Income Available to Common Stockholders - GAAP 55,559$ 52,770$ 47,733$ 48,586$ 38,522$ 67,255$ 105,028$ 87,108$ Adjustments: PPP loan income (9,725) (8,211) (3,721) (1,884) (891) (4,686) (18,968) (2,775) Acquisition-related expenses - - - 152 12,549 - - 12,701 Acquisition-related provision expense - - - - 16,755 - - 16,755 Tax on adjustment 2,385 2,013 912 425 (6,967) 1,149 4,651 (6,542) Adjusted Net Income Available to Common Stockholders - NON-GAAP 48,219$ 46,572$ 44,924$ 47,279$ 59,968$ 63,718$ 90,711$ 107,247$ Average Diluted Common Shares Outstanding 54,184 53,960 53,660 53,616 59,308 54,430 54,159 56,516 Diluted Earnings Per Common Share - GAAP 1.03$ 0.98$ 0.89$ 0.91$ 0.63$ 1.24$ 1.94$ 1.54$ Adjustments: PPP loan income (0.18) (0.15) (0.07) (0.04) (0.01) (0.09) (0.35) (0.05) Acquisition-related expenses - - - - 0.22 - - 0.22 Acquisition-related provision expense - - - - 0.30 - - 0.30 Tax on adjustment 0.04 0.04 0.02 0.01 (0.13) 0.02 0.08 (0.12) Adjusted Diluted Earnings Per Common Share - NON-GAAP 0.89$ 0.87$ 0.84$ 0.88$ 1.01$ 1.17$ 1.67$ 1.89$ PRE-TAX, PRE-PROVISION ("PTPP") EARNINGS EXCLUDING PAYCHECK PROTECTION PROGRAM ("PPP") AND ACQUISITION-RELATED EXPENSES 2Q21 3Q21 4Q21 1Q22 2Q22 6/30/20 YTD 6/30/21 YTD 6/30/22 YTD (Dollars in Thousands, Except Per Share Amounts) Net Interest Income (GAAP) 104,264$ 104,715$ 101,273$ 102,280$ 128,661$ 186,895$ 204,692$ 230,941$ Other Income (GAAP) 30,884 28,501 25,847 25,897 28,277 56,280 54,975 54,174 Total Revenue 135,148 133,216 127,120 128,177 156,938 243,175 259,667 285,115 Less: Other Expenses (GAAP) (69,295) (71,384) (72,436) (72,325) (97,313) (126,160) (135,393) (169,638) Add: Acquisition-Related Expenses (GAAP) - - 528 152 12,549 (111) - 12,701 Pre-Tax, Pre-Provision Earnings (non-GAAP) 65,853$ 61,832$ 55,212$ 56,004$ 72,174$ 116,904$ 124,274$ 128,178$ Average Assets (GAAP) 14,758,597$ 15,006,087$ 15,298,655$ 15,464,605$ 17,778,221$ 13,114,280$ 14,503,087$ 16,627,804$ Average Equity (GAAP) 1,846,037$ 1,889,037$ 1,890,229$ 1,891,223$ 2,021,123$ 1,805,963$ 1,843,250$ 1,956,532$ Average Diluted Common Shares 54,184 53,960 53,660 53,616 59,308 54,430 54,159 56,516 PTPP/Average Assets (PTPP ROA) 1.78% 1.65% 1.44% 1.45% 1.62% 1.78% 1.71% 1.54% PTPP/Average Equity (PTPP ROE) 14.27% 13.09% 11.68% 11.85% 14.28% 12.95% 13.48% 13.10% PTPP/Average Diluted Common Shares 1.22$ 1.15$ 1.03$ 1.04$ 1.22$ 2.15$ 2.29$ 2.27$
Non-GAAP 28 EFFICIENCY RATIO (dollars in thousands): 2Q21 3Q21 4Q21 1Q22 2Q22 2Q20 YTD 2Q21 YTD 2Q22 YTD EFFICIENCY RATIO (dollars in thousands): Non Interest Expense (GAAP) 69,295$ 71,384$ 72,436$ 72,325$ 97,313$ 126,160$ 135,393$ 169,638$ Less: Intangible Asset Amortization (1,464) (1,463) (1,463) (1,366) (2,303) (3,025) (2,821) (3,669) Less: OREO and Foreclosure Expenses (178) 91 (171) (564) 266 (1,189) (912) (298) Adjusted Non Interest Expense (non-GAAP) 67,653 70,012 70,802 70,395 95,276 121,946 131,660 165,671 Net Interest Income (GAAP) 104,264 104,715 101,273 102,280 128,661 186,895 204,692 230,941 Plus: Fully Taxable Equivalent Adjustment 4,948 5,331 5,594 5,736 6,168 7,982 9,659 11,904 Net Interest Income on a Fully Taxable Equivalent Basis (non-GAAP) 109,212 110,046 106,867 108,016 134,829 194,877 214,351 242,845 Non Interest Income (GAAP) 30,884 28,501 25,847 25,897 28,277 56,280 54,975 54,174 Less: Investment Securities Gains (Losses) (1,761) (1,756) (358) (566) (90) (7,680) (3,560) (656) Adjusted Non Interest Income (non-GAAP) 29,123 26,745 25,489 25,331 28,187 48,600 51,415 53,518 Adjusted Revenue (non-GAAP) 138,335 136,791 132,356 133,347 163,016 243,477 265,766 296,363 Efficiency Ratio (non-GAAP) 48.91% 51.18% 53.49% 52.79% 58.45% 50.09% 49.54% 55.90% EFFICIENCY RATIO EXCLUDING ACQUISITION-RELATED EXPENSES (dollars in thousands): 2Q22 2Q22 YTD EFFICIENCY RATIO (dollars in thousands): Non Interest Expense (GAAP) 97,313$ 169,638$ Less: Intangible Asset Amortization (2,303) (3,669) Less: OREO and Foreclosure Expenses 266 (298) Less: Acquisition-Related Expenses (12,549) (12,701) Adjusted Non Interest Expense (non-GAAP) 82,727 152,970 Net Interest Income (GAAP) 128,661 230,941 Plus: Fully Taxable Equivalent Adjustment 6,168 11,904 Net Interest Income on a Fully Taxable Equivalent Basis (non-GAAP) 134,829 242,845 Non Interest Income (GAAP) 28,277 54,174 Less: Investment Securities Gains (Losses) (90) (656) Adjusted Non Interest Income (non-GAAP) 28,187 53,518 Adjusted Revenue (non-GAAP) 163,016 296,363 Efficiency Ratio Excluding Acquisition-Related Expenses (non-GAAP) 50.75% 51.62%
Non-GAAP 29 RETURN ON TANGIBLE COMMON EQUITY (dollars in thousands): 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD Return on Tangible Common Equity Total Average Stockholders' Equity (GAAP) 478,440$ 535,506$ 540,255$ 675,295$ 753,724$ 884,664$ 1,110,524$ 1,343,861$ 1,569,615$ 1,805,963$ Less: Average Preferred Stock (74,181) (90,908) (47,537) (125) (125) (125) (125) (125) (125) (125) Less: Average Intangible Assets, Net of Tax (149,554) (147,889) (153,519) (199,354) (215,281) (254,332) (360,005) (467,421) (499,622) (570,553) Average Tangible Common Equity, Net of Tax (non-GAAP) 254,705$ 296,709$ 339,199$ 475,816$ 538,318$ 630,207$ 750,394$ 876,315$ 1,069,868$ 1,235,285$ Net Income Available to Common Stockholders (GAAP) 9,013$ 40,583$ 42,150$ 60,162$ 65,384$ 81,051$ 96,070$ 159,139$ 164,460$ 67,255$ Less: Intangible Asset Amortization, Net of Tax 2,112 1,081 892 1,395 1,720 2,542 3,670 5,307 4,736 2,390 Tangible Net Income (non-GAAP) 11,125$ 41,664$ 43,042$ 61,557$ 67,104$ 83,593$ 99,740$ 164,446$ 169,196$ 69,645$ Return on Tangible Common Equity (non-GAAP) 4.37% 14.04% 12.69% 12.94% 12.47% 13.26% 13.29% 18.77% 15.81% 11.28% RETURN ON TANGIBLE COMMON EQUITY (dollars in thousands): 2020 2Q21 2021 YTD 3Q21 4Q21 2021 1Q22 2Q22 2022 YTD Return on Tangible Common Equity Total Average Stockholders' Equity (GAAP) 1,825,135$ 1,846,037$ 1,843,250$ 1,889,037$ 1,890,229$ 1,866,632$ 1,891,223$ 2,021,123$ 1,956,532$ Less: Average Preferred Stock (125) (125) (125) (125) (125) (125) (125) (25,125) (12,625) Less: Average Intangible Assets, Net of Tax (569,377) (569,107) (567,795) (567,852) (566,616) (567,512) (565,476) (745,614) (656,042) Average Tangible Common Equity, Net of Tax (non-GAAP) 1,255,633$ 1,276,805$ 1,275,330$ 1,321,060$ 1,323,488$ 1,298,995$ 1,325,622$ 1,250,384$ 1,287,865$ Net Income Available to Common Stockholders (GAAP) 148,600$ 55,559$ 105,028$ 52,770$ 47,733$ 205,531$ 48,586$ 38,521$ 87,108$ Less: Intangible Asset Amortization, Net of Tax 4,730 1,156 2,228 1,156 1,156 4,540 1,079 1,820 2,898 Tangible Net Income (non-GAAP) 153,330$ 56,715$ 107,256$ 53,926$ 48,889$ 210,071$ 49,665$ 40,341$ 90,006$ Return on Tangible Common Equity (non-GAAP) 12.21% 17.77% 16.82% 16.33% 14.78% 16.17% 14.99% 12.91% 13.98%