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): January 25, 2018

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 January 25, 2018, First Merchants Corporation issued a press release to report its financial results for the fourth quarter ended December 31, 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 January 25, 2018, 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: January 25, 2018

EXHIBIT INDEX


Exhibit No.	Description

99.1 Press Release, dated January 25, 2018, issued by First Merchants Corporation

Exhibit

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

January 25, 2018

FOR IMMEDIATE RELEASE

For more information, contact:

Nicole M. Weaver, Director of Corporate Administration and Vice President

765-521-7619

http://www.firstmerchants.com

SOURCE: First Merchants Corporation, Muncie, Indiana

FIRST MERCHANTS CORPORATION ANNOUNCES RECORD 2017 RESULTS

First Merchants Corporation (NASDAQ - FRME) reported record fourth quarter 2017 net income of $24.4 million, compared to $22.3 million during the fourth quarter of 2016. Earnings per share for the period totaled $.49 per share compared to $.55 during the same period in 2016. Our fourth quarter results included the impact of the recently enacted Tax Cuts and Jobs Act (the “TCJA”). Specifically, our federal income tax expense was elevated by $5.1 million, or $.10 per share due to deferred tax asset write-downs. Acquisition expenses related to the completion of our Independent Alliance Banks acquisition totaled $1.4 million, or $.02 per share, for the quarter.

Year-to-date net income totaled a record $96.1 million, compared to $81.1 million during the same period in 2016. Earnings per share for the year ended December 31, 2017 totaled $2.12 per share, an increase of $.14 per share, or 7.1 percent, over 2016. The enactment of the TCJA resulted in a reduction of annual profits by $5.1 million, or $.11 per share. Acquisition expenses related to The Arlington Bank and Independent Alliance Banks totaled $12.2 million, or $.18 per share. Our 2017 franchise expansion impacts balance sheet, income, expense and share growth throughout the financial statements.

Michael C. Rechin, President and Chief Executive Officer, stated, “2017 was a record setting year for First Merchants. Our results were fueled by the growth of our clients and the skill and commitment of our teammates. Annual organic loan growth of 12.8 percent, when combined with the acquisitions of Independent Alliance Banks in the Fort Wayne market and The Arlington Bank in the Columbus, Ohio MSA, allowed our total assets to increase by 30 percent for the year.” Rechin also added, “Profitability enhancements in 2017 are further accelerated by significant tax savings in 2018. These improvements in our core business allowed First Merchants to achieve a record share price in 2017 and our business begins 2018 with optimism.”

Total assets reached a record $9.4 billion as of year-end and loans totaled a record $6.8 billion, compared to $7.2 billion and $5.1 billion, as of December 31, 2016. Organic loan growth totaled an annualized rate of 16.7 percent for the fourth quarter and 12.8 percent for the year. Organic deposits grew at an annualized rate of 15.1 percent in the fourth quarter and 9 percent during the year. Inclusive of acquisition growth, total deposits reached $7.2 billion as of December 31, 2017, representing a 29.1 percent increase. Tangible common equity also increased to record levels for the year totaling $834 million, or $16.96 per share, compared to $649 million, or $15.85 per share, as of December 31, 2016.

Net-interest income totaled $78.8 million for the quarter and net-interest margin increased by 20 basis points over the fourth quarter of 2016, totaling 4.10 percent. Yields on earning assets totaled 4.67 percent and the cost of supporting liabilities totaled .57 percent. Fair value accretion added 20 basis points to net-interest margin this quarter compared to 18 basis points in the fourth quarter of 2016.

Non-interest income totaled $19.1 million for the quarter, up $3.0 million from the fourth quarter of 2016 total of $16.1 million. Non-interest expense totaled $56.4 million for the quarter, an increase from $41.9 million during the fourth quarter of 2016, reflecting the inclusion of $1.4 million of merger related expenses.

Tax expense for the quarter totaled $15.2 million, or 38.4 percent of income before income taxes, compared to $7.9 million, or 26.0 percent in the fourth quarter of 2016. The impact of the deferred tax asset write-downs in 2017 will be more than offset by the savings from the reduced tax rate to be realized in 2018.

The Corporation’s provision expense totaled $1.8 million compared to $2.4 million during the same period in 2016. The provision expense in the quarter provided allowance coverage for the organic loan growth. The allowance for loan losses now totals $75.0 million as of December 31, 2017, an increase from $66.0 million as of December 31, 2016. Non-accrual loans totaled $28.7 million as of year-end and the allowance is 1.11 percent of total loans and 1.36 percent of non-purchased loans.

As of December 31, 2017, the Corporation’s total risk-based capital ratio equaled 13.69 percent, common equity tier 1 capital ratio equaled 11.00 percent, and the tangible common equity ratio totaled 9.30 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, January 25, 2018.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's fourth quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until February 25, 2018. 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 10114961.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme180125.html during the time of the call. A replay of the web cast will be available until January 25, 2019.

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank. The Bank also operates as Lafayette Bank & Trust and First Merchants Private Wealth Advisors (each 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)	December 31
	2017			2016
ASSETS
Cash and cash equivalents	$	154,905		$	127,927
Interest-bearing time deposits	35,027			24,459
Investment securities	1,560,602			1,304,505
Loans held for sale	7,216			2,929
Loans	6,751,199			5,139,645
Less: Allowance for loan losses	(75,032		)	(66,037		)
Net loans	6,676,167			5,073,608
Premises and equipment	95,852			94,432
Federal Home Loan Bank stock	23,825			17,964
Interest receivable	37,130			26,194
Goodwill and other intangibles	476,503			258,866
Cash surrender value of life insurance	223,557			201,671
Other real estate owned	10,373			8,966
Tax asset, deferred and receivable	23,983			39,384
Other assets	42,338			30,706
TOTAL ASSETS	$	9,367,478		$	7,211,611
LIABILITIES
Deposits:
Noninterest-bearing	$	1,761,553		$	1,348,267
Interest-bearing	5,410,977			4,208,231
Total Deposits	7,172,530			5,556,498
Borrowings:
Federal funds purchased	144,038			120,349
Securities sold under repurchase agreements	136,623			146,480
Federal Home Loan Bank advances	414,377			298,923
Subordinated debentures and term loans	139,349			128,445
Total Borrowings	834,387			694,197
Interest payable	4,390			3,110
Other liabilities	52,708			56,149
Total Liabilities	8,064,015			6,309,954
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 - 49,158,238 and 40,912,697 shares	6,145			5,114
Additional paid-in capital	834,870			509,018
Retained earnings	465,231			400,981
Accumulated other comprehensive income (loss)	(2,908		)	(13,581		)
Total Stockholders' Equity	1,303,463			901,657
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,367,478		$	7,211,611

⁽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				Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts)	December 31,				December 31,
	2017		2016		2017		2016
INTEREST INCOME
Loans receivable:
Taxable	$	76,470	$	53,895	$	263,704	$	210,302
Tax-exempt	3,018		2,096		10,694		6,525
Investment securities:
Taxable	4,477		3,893		17,489		16,415
Tax-exempt	5,830		4,862		21,379		18,622
Deposits with financial institutions	294		67		736		350
Federal Reserve and Federal Home Loan Bank stock	259		192		894		1,098
Total Interest Income	90,348		65,005		314,896		253,312
INTEREST EXPENSE
Deposits	7,835		3,886		23,806		15,914
Federal funds purchased	55		40		561		102
Securities sold under repurchase agreements	146		91		477		374
Federal Home Loan Bank advances	1,577		797		5,196		3,264
Subordinated debentures and term loans	1,970		1,817		7,572		7,185
Total Interest Expense	11,583		6,631		37,612		26,839
NET INTEREST INCOME	78,765		58,374		277,284		226,473
Provision for loan losses	1,800		2,417		9,143		5,657
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	76,965		55,957		268,141		220,816
OTHER INCOME
Service charges on deposit accounts	5,066		4,534		18,722		17,762
Fiduciary activities	3,345		2,500		11,589		9,818
Other customer fees	5,346		4,784		20,956		19,315
Earnings on cash surrender value of life insurance	1,133		886		6,577		4,273
Net gains and fees on sales of loans	2,355		1,886		7,564		7,052
Net realized gains on sales of available for sale securities	1,134		847		2,631		3,389
Other income	682		683		2,970		3,594
Total Other Income	19,061		16,120		71,009		65,203
OTHER EXPENSES
Salaries and employee benefits	33,760		22,994		119,812		102,552
Net occupancy	4,424		4,568		16,976		16,997
Equipment	3,898		3,069		13,090		12,497
Marketing	1,361		790		3,739		3,008
Outside data processing fees	3,378		2,672		12,242		9,148
Printing and office supplies	378		301		1,283		1,348
Intangible asset amortization	2,055		977		5,647		3,910
FDIC assessments	711		550		2,564		3,036
Other real estate owned and foreclosure expenses	311		574		1,903		2,877
Professional and other outside services	1,914		1,634		12,757		6,516
Other expenses	4,243		3,805		15,543		15,470
Total Other Expenses	56,433		41,934		205,556		177,359
INCOME BEFORE INCOME TAX	39,593		30,143		133,594		108,660
Income tax expense	15,210		7,850		37,524		27,609
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	24,383	$	22,293	$	96,070	$	81,051
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.49	$	0.55	$	2.13	$	1.99
Diluted Net Income Available to Common Stockholders	$	0.49	$	0.55	$	2.12	$	1.98
Cash Dividends Paid	$	0.18	$	0.15	$	0.69	$	0.54
Average Diluted Shares Outstanding (in thousands)	49,379		41,124		45,403		41,013



FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2017			2016			2017			2016
NET CHARGE-OFFS	$	122		$	(164	)	$	148		$	2,073

AVERAGE BALANCES:
Total Assets	$	9,174,237		$	7,086,456		$	8,196,229		$	6,899,265
Total Loans	6,575,055			5,008,066			5,881,284			4,814,005
Total Earning Assets	8,139,993			6,367,973			7,335,702			6,180,050
Total Deposits	7,142,375			5,585,468			6,368,751			5,438,217
Total Stockholders' Equity	1,294,810			903,610			1,110,524			884,664

FINANCIAL RATIOS:
Return on Average Assets	1.06		%	1.26		%	1.17		%	1.17		%
Return on Average Stockholders' Equity	7.53			9.87			8.65			9.16
Return on Average Common Stockholders' Equity	7.53			9.87			8.65			9.16
Average Earning Assets to Average Assets	88.73			89.86			89.50			89.58
Allowance for Loan Losses as % of Total Loans	1.11			1.28			1.11			1.28
Net Charge-offs as % of Average Loans (Annualized)	0.01			(0.01		)	—			0.04
Average Stockholders' Equity to Average Assets	14.11			12.75			13.55			12.82
Tax Equivalent Yield on Earning Assets	4.67			4.32			4.53			4.32
Cost of Supporting Liabilities	0.57			0.42			0.51			0.43
Net Interest Margin (FTE) on Earning Assets	4.10			3.90			4.02			3.89
Efficiency Ratio	53.29			52.18			54.56			56.51
Tangible Common Book Value Per Share	$	16.96		$	15.85		$	16.96		$	15.85



NON-PERFORMING ASSETS
(Dollars In Thousands)	December 31,			September 30,			June 30,			March 31,			December 31,
	2017			2017			2017			2017			2016
Non-Accrual Loans	$	28,724		$	32,253		$	27,347		$	27,920		$	29,998
Renegotiated Loans	1,013			626			384			876			4,747
Non-Performing Loans (NPL)	29,737			32,879			27,731			28,796			34,745
Other Real Estate Owned	10,373			11,912			11,893			8,293			8,966
Non-Performing Assets (NPA)	40,110			44,791			39,624			37,089			43,711
90+ Days Delinquent	924			425			634			123			112
NPAs & 90 Day Delinquent	$	41,034		$	45,216		$	40,258		$	37,212		$	43,823

Allowance for Loan Losses	$	75,032		$	73,354		$	70,471		$	68,225		$	66,037
Quarterly Net Charge-offs	122			(800		)	629			197			(164		)
NPAs / Actual Assets %	0.43		%	0.49		%	0.51		%	0.51		%	0.61		%
NPAs & 90 Day / Actual Assets %	0.44		%	0.50		%	0.52		%	0.51		%	0.61		%
NPAs / Actual Loans and OREO %	0.59		%	0.69		%	0.70		%	0.70		%	0.85		%
Allowance for Loan Losses / Actual Loans (%)	1.11		%	1.13		%	1.25		%	1.29		%	1.28		%
Net Charge-offs as % of Average Loans (Annualized)	0.01		%	(0.05		)%	0.05		%	0.02		%	(0.01		)%



CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	December 31,			September 30,			June 30,			March 31,			December 31,
	2017			2017			2017			2017			2016
ASSETS
Cash and cash equivalents	$	154,905		$	146,607		$	142,650		$	104,247		$	127,927
Interest-bearing time deposits	35,027			72,950			48,305			20,439			24,459
Investment securities	1,560,602			1,468,887			1,343,323			1,327,217			1,304,505
Loans held for sale	7,216			4,514			4,036			1,262			2,929
Loans	6,751,199			6,483,448			5,613,144			5,274,909			5,139,645
Less: Allowance for loan losses	(75,032		)	(73,354		)	(70,471		)	(68,225		)	(66,037		)
Net loans	6,676,167			6,410,094			5,542,673			5,206,684			5,073,608
Premises and equipment	95,852			102,485			92,637			91,311			94,432
Federal Home Loan Bank stock	23,825			23,825			19,015			17,964			17,964
Interest receivable	37,130			32,366			27,597			25,174			26,194
Goodwill and other intangibles	476,503			478,558			309,686			257,963			258,866
Cash surrender value of life insurance	223,557			222,437			200,125			202,574			201,671
Other real estate owned	10,373			11,912			11,893			8,293			8,966
Tax asset, deferred and receivable	23,983			36,024			27,331			32,074			39,384
Other assets	42,338			38,744			35,758			30,991			30,706
TOTAL ASSETS	$	9,367,478		$	9,049,403		$	7,805,029		$	7,326,193		$	7,211,611
LIABILITIES
Deposits:
Noninterest-bearing	$	1,761,553		$	1,662,814		$	1,398,237		$	1,373,778		$	1,348,267
Interest-bearing	5,410,977			5,248,205			4,618,867			4,261,531			4,208,231
Total Deposits	7,172,530			6,911,019			6,017,104			5,635,309			5,556,498
Borrowings:
Federal funds purchased	144,038			100,000			134,608			102,000			120,349
Securities sold under repurchase agreements	136,623			142,107			127,884			139,007			146,480
Federal Home Loan Bank advances	414,377			406,820			312,715			338,919			298,923
Subordinated debentures and term loans	139,349			139,686			128,742			128,862			128,445
Total Borrowings	834,387			788,613			703,949			708,788			694,197
Interest payable	4,390			4,956			3,477			3,875			3,110
Other liabilities	52,708			61,695			45,383			48,751			56,149
Total Liabilities	8,064,015			7,766,283			6,769,913			6,396,723			6,309,954
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	6,145			6,143			5,394			5,131			5,114
Additional paid-in capital	834,870			833,451			593,904			509,953			509,018
Retained earnings	465,231			449,759			434,309			417,983			400,981
Accumulated other comprehensive income (loss)	(2,908		)	(6,358		)	1,384			(3,722		)	(13,581		)
Total Stockholders' Equity	1,303,463			1,283,120			1,035,116			929,470			901,657
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,367,478		$	9,049,403		$	7,805,029		$	7,326,193		$	7,211,611



CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	December 31,			September 30,			June 30,			March 31,			December 31,
	2017			2017			2017			2017			2016
INTEREST INCOME
Loans receivable:
Taxable	$	76,470		$	71,491		$	59,386		$	56,357		$	53,895
Tax-exempt	3,018			2,851			2,492			2,333			2,096
Investment securities:
Taxable	4,477			4,524			4,180			4,308			3,893
Tax-exempt	5,830			5,455			5,091			5,003			4,862
Deposits with financial institutions	294			284			114			44			67
Federal Reserve and Federal Home Loan Bank stock	259			242			204			189			192
Total Interest Income	90,348			84,847			71,467			68,234			65,005
INTEREST EXPENSE
Deposits	7,835			6,710			5,137			4,124			3,886
Federal funds purchased	55			175			103			228			40
Securities sold under repurchase agreements	146			133			110			88			91
Federal Home Loan Bank advances	1,577			1,464			1,177			978			797
Subordinated debentures and term loans	1,970			1,945			1,840			1,817			1,817
Total Interest Expense	11,583			10,427			8,367			7,235			6,631
NET INTEREST INCOME	78,765			74,420			63,100			60,999			58,374
Provision for loan losses	1,800			2,083			2,875			2,385			2,417
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	76,965			72,337			60,225			58,614			55,957
OTHER INCOME
Service charges on deposit accounts	5,066			5,044			4,438			4,174			4,534
Fiduciary activities	3,345			2,995			2,609			2,640			2,500
Other customer fees	5,346			5,341			5,406			4,863			4,784
Earnings on cash surrender value of life insurance	1,133			1,575			2,971			898			886
Net gains and fees on sales of loans	2,355			2,317			1,617			1,275			1,886
Net realized gains on sales of available for sale securities	1,134			332			567			598			847
Other income	682			1,064			826			398			683
Total Other Income	19,061			18,668			18,434			14,846			16,120
OTHER EXPENSES
Salaries and employee benefits	33,760			33,244			27,076			25,732			22,994
Net occupancy	4,424			4,371			3,965			4,216			4,568
Equipment	3,898			3,478			2,907			2,807			3,069
Marketing	1,361			1,021			792			565			790
Outside data processing fees	3,378			3,162			3,086			2,616			2,672
Printing and office supplies	378			366			275			264			301
Intangible asset amortization	2,055			1,698			991			903			977
FDIC assessments	711			704			579			570			550
Other real estate owned and foreclosure expenses	311			330			731			531			574
Professional and other outside services	1,914			5,843			3,266			1,734			1,634
Other expenses	4,243			4,491			3,648			3,161			3,805
Total Other Expenses	56,433			58,708			47,316			43,099			41,934
INCOME BEFORE INCOME TAX	39,593			32,297			31,343			30,361			30,143
Income tax expense	15,210			7,939			7,207			7,168			7,850
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	24,383		$	24,358		$	24,136		$	23,193		$	22,293

Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.49		$	0.50		$	0.57		$	0.57		$	0.55
Diluted Net Income Available to Common Stockholders	$	0.49		$	0.50		$	0.57		$	0.56		$	0.55
Cash Dividends Paid	$	0.18		$	0.18		$	0.18		$	0.15		$	0.15
Average Diluted Shares Outstanding (in thousands)	49,379			48,644			42,244			41,221			41,124
FINANCIAL RATIOS:
Return on Average Assets	1.06		%	1.11		%	1.28		%	1.29		%	1.26		%
Return on Average Stockholders' Equity	7.53			7.83			9.82			10.15			9.87
Return on Average Common Stockholders' Equity	7.53			7.83			9.82			10.15			9.87
Average Earning Assets to Average Assets	88.73			89.16			89.97			90.43			89.86
Allowance for Loan Losses as % of Total Loans	1.11			1.13			1.25			1.29			1.28
Net Charge-offs as % of Average Loans (Annualized)	0.01			(0.05		)	0.05			0.02			(0.01		)
Average Stockholders' Equity to Average Assets	14.11			14.15			12.98			12.67			12.75
Tax Equivalent Yield on Earning Assets	4.67			4.56			4.44			4.42			4.32
Cost of Supporting Liabilities	0.57			0.53			0.49			0.44			0.42
Net Interest Margin (FTE) on Earning Assets	4.10			4.03			3.95			3.98			3.90
Efficiency Ratio	53.29			58.30			53.61			52.61			52.18
Tangible Common Book Value Per Share	$	16.96		$	16.62		$	16.97		$	16.49		$	15.85



LOANS
(Dollars In Thousands)	December 31,			September 30,			June 30,			March 31,			December 31,
	2017			2017			2017			2017			2016
Commercial and industrial loans	$	1,493,493		$	1,436,092		$	1,289,884		$	1,258,840		$	1,194,646
Agricultural production financing and other loans to farmers	121,757			117,751			75,746			77,021			79,689
Real estate loans:
Construction	612,219			498,862			442,389			336,931			418,703
Commercial and farmland	2,562,691			2,571,253			2,167,729			2,118,431			1,953,062
Residential	962,765			938,437			847,580			737,918			739,169
Home equity	514,021			502,240			436,038			423,708			418,525
Individuals' loans for household and other personal expenditures	86,935			86,406			79,887			77,590			77,479
Lease financing receivables, net of unearned income	2,527			3,877			232			261			311
Other commercial loans	394,791			328,530			273,659			244,209			258,061
Loans	6,751,199			6,483,448			5,613,144			5,274,909			5,139,645
Allowance for loan losses	(75,032		)	(73,354		)	(70,471		)	(68,225		)	(66,037		)
NET LOANS	$	6,676,167		$	6,410,094		$	5,542,673		$	5,206,684		$	5,073,608



DEPOSITS
(Dollars In Thousands)	December 31,		September 30,		June 30,		March 31,		December 31,
	2017		2017		2017		2017		2016
Demand deposits	$	3,746,654	$	3,562,718	$	3,015,846	$	2,861,384	$	2,866,853
Savings deposits	1,994,366		1,884,705		1,708,478		1,565,174		1,560,752
Certificates and other time deposits of $100,000 or more	468,895		503,668		362,589		312,327		276,274
Other certificates and time deposits	581,894		585,042		511,935		476,741		471,247
Brokered deposits	380,721		374,886		418,256		419,683		381,372
TOTAL DEPOSITS	$	7,172,530	$	6,911,019	$	6,017,104	$	5,635,309	$	5,556,498



NET INTEREST INCOME
(Dollars in Thousands)	For the Three Months Ended
	December 31, 2017							December 31, 2016
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	87,172		$	294	1.35	%	$	49,835		$	66	0.53	%
Federal Reserve and Federal Home Loan Bank stock	23,825			259		4.35		18,041			193		4.28
Investment Securities: ⁽¹⁾
Taxable	755,341			4,477		2.37		710,902			3,893		2.19
Tax-Exempt ⁽²⁾	698,600			8,969		5.14		581,129			7,480		5.15
Total Investment Securities	1,453,941			13,446		3.70		1,292,031			11,373		3.52
Loans held for sale	13,657			216		6.33		1,611			81		20.11
Loans: ⁽³⁾
Commercial	4,806,978			60,015		4.99		3,655,414			41,830		4.58
Real Estate Mortgage	737,668			8,320		4.51		557,259			6,125		4.40
Installment	617,591			7,919		5.13		519,257			5,859		4.51
Tax-Exempt ⁽²⁾	399,161			4,643		4.65		274,525			3,225		4.70
Total Loans	6,575,055			81,113		4.93		5,008,066			57,120		4.56
Total Earning Assets	8,139,993			95,112		4.67		6,367,973			68,752		4.32
Net unrealized gain on securities available for sale	4,131							7,221
Allowance for loan losses	(73,675		)					(63,999		)
Cash and cash equivalents	182,970							113,414
Premises and equipment	102,605							95,245
Other assets	818,213							566,602
Total Assets	$	9,174,237						$	7,086,456
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	1,970,916		$	2,185	0.44	%	$	1,524,324		$	730	0.19	%
Money market deposits	1,071,037			1,101		0.41		795,045			328		0.17
Savings deposits	922,052			214		0.09		766,232			164		0.09
Certificates and other time deposits	1,458,365			4,335		1.19		1,132,962			2,664		0.94
Total Interest-bearing Deposits	5,422,370			7,835		0.58		4,218,563			3,886		0.37
Borrowings	678,242			3,748		2.21		531,059			2,745		2.07
Total Interest-bearing Liabilities	6,100,612			11,583		0.76		4,749,622			6,631		0.56
Noninterest-bearing deposits	1,720,005							1,366,905
Other liabilities	58,810							66,319
Total Liabilities	7,879,427							6,182,846
Stockholders' Equity	1,294,810							903,610
Total Liabilities and Stockholders' Equity	$	9,174,237		11,583		0.57		$	7,086,456		6,631		0.42
Net Interest Income				$	83,529						$	62,121
Net Interest Margin						4.10	%						3.90	%


⁽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 $4,764 and $3,747 for the three months ended December 31, 2017 and 2016, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.



NET INTEREST INCOME
(Dollars in Thousands)	For the Twelve Months Ended
	December 31, 2017							December 31, 2016
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	75,417		$	736	0.98	%	$	69,753		$	350	0.50	%
Federal Reserve and Federal Home Loan Bank stock	20,921			894		4.27		24,268			1,098		4.52
Investment Securities: ⁽¹⁾
Taxable	726,004			17,489		2.41		721,689			16,415		2.27
Tax-Exempt ⁽²⁾	632,076			32,891		5.20		550,335			28,649		5.21
Total Investment Securities	1,358,080			50,380		3.71		1,272,024			45,064		3.54
Loans held for sale	7,707			462		5.99		4,050			372		9.19
Loans: ⁽³⁾
Commercial	4,267,651			204,771		4.80		3,541,098			162,848		4.60
Real Estate Mortgage	679,284			30,267		4.46		566,050			25,156		4.44
Installment	573,100			28,204		4.92		485,111			21,926		4.52
Tax-Exempt ⁽²⁾	353,542			16,452		4.65		217,696			10,039		4.61
Total Loans	5,881,284			280,156		4.76		4,814,005			220,341		4.58
Total Earning Assets	7,335,702			332,166		4.53	%	6,180,050			266,853		4.32	%
Net unrealized gain on securities available for sale	4,360							9,969
Allowance for loan losses	(70,380		)					(62,976		)
Cash and cash equivalents	142,503							105,443
Premises and equipment	97,446							96,023
Other assets	686,598							570,756
Total Assets	$	8,196,229						$	6,899,265
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	1,730,272		$	5,817	0.34	%	$	1,427,535		$	2,579	0.18	%
Money market deposits	938,959			2,788		0.30		825,681			1,705		0.21
Savings deposits	844,825			734		0.09		731,902			618		0.08
Certificates and other time deposits	1,339,866			14,467		1.08		1,151,700			11,012		0.96
Total Interest-bearing Deposits	4,853,922			23,806		0.49		4,136,818			15,914		0.38
Borrowings	664,045			13,806		2.08		512,356			10,925		2.13
Total Interest-bearing Liabilities	5,517,967			37,612		0.68		4,649,174			26,839		0.58
Noninterest-bearing deposits	1,514,829							1,301,399
Other liabilities	52,909							64,028
Total Liabilities	7,085,705							6,014,601
Stockholders' Equity	1,110,524							884,664
Total Liabilities and Stockholders' Equity	$	8,196,229		37,612		0.51		$	6,899,265		26,839		0.43
Net Interest Income				$	294,554						$	240,014
Net Interest Margin						4.02	%						3.89	%


⁽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 $17,270 and $13,541 for the years ended December 31, 2017 and 2016, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.