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): May 3, 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 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: May 3, 2018
FIRST MERCHANTS CORPORATION
By: /s/ Mark K. Hardwick
Mark K. Hardwick
Executive Vice President,
Chief Financial Officer and Chief Operating Officer
1
First Quarter 2018 Highlights
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.
Forward-Looking Statements
2
Why Invest in First Merchants?
3
Financial Highlights
Assets $9,472,796
Loans, Net $6,825,276
Deposits $7,327,635
Tangible Common Equity $838,171
TCE/TA 9.32%
2017 Net Income – YTD $36,679
2017 ROAA – YTD 1.57%
2017 ROATCE - YTD 18.13%
NPAs/Loans + OREO 0.55%
Company Profile (as of 3/31/2018)
Market Information
Common Shares Outstanding 49,243,096
Market Cap $2,053,437
Dividend Yield 1.73%
Price/Tangible Book Value 2.43x
Price/LTM EPS 18.1x
Price/2018 Est. EPS 13.9x
Leadership Team – First Merchants
Name/Title
Michael C. Rechin, President & CEO
Mark K. Hardwick, EVP, Chief Operating Officer &
Chief Financial Officer
Michael J. Stewart, EVP & Chief Banking Officer
John J. Martin, EVP & Chief Credit Officer
First Merchants
First Merchants Bank, formed in 1893, celebrating its
125th anniversary.
First Merchants Corporation, organized in 1982, is the
largest financial services holding company
headquartered in Central Indiana
($ in Thousands)
4
Key Market Profiles
Loans Deposits
$1,162M Columbus $590M
781M Fort Wayne 969M
2,493M Indianapolis 1,562M
624M Lafayette 1,027M
1,059M Muncie 2,102M
783M Northwest 1,078M
$6,902M Total $7,328M
(as of March 31, 2018)
Mission Statement
To be the most responsive, knowledgeable and
high-performing bank for our clients,
teammates and shareholders.
Our Franchise
5
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
First Merchants “Whole Bank” Strategy
Commercial Banking
Consumer Banking
Private Wealth Advisors
Growth Strategy
• Organic
• Merger/Acquisition
7
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
8
First Merchants Strategy
Consumer Retail Bank
• Diverse Locations 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
9
First Merchants Strategy
“We specialize in our communities”
“Service-driven alternative to super-regional bank competitors.
Deliver superior service with presence close to the customer for . . . ”
Retail Banking
Mortgage Banking
Commercial Banking
• Business Banking
• Commercial & Industrial
• Agriculture
• Sponsor Finance
• Public Finance
• Healthcare Services
• Investment Real Estate
• Treasury Management and Merchant Processing Services
Private Wealth Advisory (private banking, investment management, personal trust,
brokerage, and retirement)
10
WEALTH
ADVISORY
MORTGAGECOMMERCIAL
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
Northwest
Higher Growth
Lake & Porter, IN
Cook & DuPage, IL
How We Deliver
Fort Wayne
Higher Growth
Adams, Allen,
Huntington, Marshall,
Miami, Wells
Counties
11
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
FOUNDING 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%
12
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
13
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.
14
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
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 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
15
7.27%
8.00%
3.77%3.77%
2.11%
5.19%
U.S. Indiana Tippecanoe Co.
HHI Pop.
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, MSN Money, Fastest Growing Cities in the State of Indiana
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 #30, 24/7 Wall St., American City Adding the Most Jobs
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
16
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
17
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
18
Second-most populous county in Ohio
Within 600 miles of 60% of All U.S. and Canadian Population
Ranked 2nd in CNBC’s 2010 study of state transportation systems for
its infrastructure, vitality, quality roads, and ability to cost-effectively
ship goods by land, air, and water**
Home to Ohio State University
7.27%
8.07% 7.59%
3.77%
0.89%
5.04%
U.S. Ohio Franklin County
HHI Pop.
Projected HHI & Pop. Change 2017-2022
Notable Major Employers
*SNL Financial FDIC Summary of Deposits as of June 30, 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
19
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
20
THE STRENGTH OF BIG. THE SERVICE OF SMALL.
21
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
22
Operational Delivery Highlights
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 on the interstate less than one hour north of Indianapolis, IN
76,500+ square feet of flexible space Strategic Vendor Partners
23
Retail Households: 185K
Online Banking/Digital Channel
• Consumer: 83K Users
• 1.3M logins monthly
• 14K bill pay users
• 90K bill payment transactions monthly ($30M)
Cash Management Annual Volume
• Automated Clearing House (ACH)
• # Originated: 2.5M Items ($8B)
• # Received: 14M Items ($23B)
• Mobile: 48K Users
• 24.5 average logins per user, per month
• 14K mobile deposits per month
• Domestic Wires
• # Originated: 42K Items ($21B)
• # Received: 43K Items ($27B)
• Business: 9.9K Users
• 13% use ACH/Wire/Positive Pay
• International Wires
• # Originated: 1K Items ($35M)
• # Received: 159 Items ($2.6M)
• Total ATMS: 140 + 25,000 MoneyPass ATMs
Total Debit Cards
• 157K active cards
• 3.2M monthly card swipes
• $127M in monthly volume
Commercial Remote Deposit Capture
• 591 businesses using solution
• 143K deposits annually
• 1.7M items deposited annually
• $3.7B in total deposits
Operational Delivery Highlights
Customer, Digital Channel & Transaction Activity
24
1st Quarter 2018 Highlights
Earnings Per Share of $ .74, a 32.1% Increase over 1Q2017
$36.7 Million of Net Income, a 58.1% Increase over 1Q2017
Total Assets of $9.5 Billion Grew by 29.3% over 1Q2017
Annualized Organic Loan & Deposit Growth of Nearly 9%
1.57% Return on Average Assets, 11.21% Return on Average Equity
51.33% Efficiency Ratio
25
Total Assets
($ in Millions)
1 2017 Loans include acquired loans of $225 from The Arlington Bank and $725 from Independent Alliance Banks
2 Annualized from 12.31.2017
Annualized Asset Growth 29.9% 4.5%
1
2
26
2016 2017 Q1-’17 Q1-’18
1. Investments $1,305 $1,561 $1,327 $1,544
2. Loans 5,143 6,758 5,276 6,906
3. Allowance (66) (75) (68) (76)
4. Goodwill & Intangibles 259 477 258 475
5. BOLI 202 224 203 222
6. Other 369 422 330 402
7. Total Assets $7,212 $9,367 $7,326 $9,473
Loan and Yield Detail
(as of 3/31/2018)
Commercial &
Industrial
22.5%
Commercial
Real Estate
Owner-Occupied
10.3%
Commercial
Real Estate
Non-Owner
Occupied
25.5%
Construction Land
& Land
Development
8.5%
Agricultural
Land
3.5%
Agricultural
Production
1.4%
Public
Finance/Other
Commercial
5.8%
Residential
Mortgage
13.8%
Home
Equity
7.4%
Other
Consumer
1.3%
YTD Yield = 4.86%
Total Loans = $6.9 Billion
27
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
1Q2017
2Q2017
3Q2017
4Q2017
1Q2018
Quar
te
r-
En
d
GUIDELINE #1
0.0% 100.0% 200.0% 300.0%
4Q2015
1Q2016
2Q2016
3Q2016
4Q2016
1Q2017
2Q2017
3Q2017
4Q2017
1Q2018
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
28
Investment Portfolio
(as of 3/31/2018)
Mortgage-Backed
Securities
23%
Collateralized
Mortgage
Obligations
26%
U. S. Agencies
2%
Corporate
Obligations
2%
Tax-Exempt
Municipals
47%
$1.5 Billion Portfolio
Modified duration of 5.5 years
Tax equivalent yield of 3.47%
Net unrealized loss of $10.3 Million
29
Total Liabilities and Capital
2016 2017 Q1-’17 Q1-’18
1. Customer Non-Maturity Deposits $4,428 $5,741 $4,426 $5,850
2. Customer Time Deposits 747 1,051 789 1,137
3. Brokered Deposits 381 381 420 341
4. Borrowings 572 701 587 644
5. Other Liabilities 60 57 53 55
6. Hybrid Capital 122 133 122 133
7. Common Equity 902 1,303 929 1,313
8. Total Liabilities and Capital $7,212 $9,367 $7,326 $9,473
($ in Millions)
1 2017 includes acquired Non-Maturity Deposits of $169 from The Arlington Bank and $719 from Independent Alliance Banks
2 2017 includes acquired Time Deposits of $84 from The Arlington Bank and $143 from Independent Alliance Banks
1
2
30
Deposit Detail
(as of 3/31/2018)
YTD Cost = .65%
Total = $7.3 Billion
Demand
Deposits
51%
Savings
Deposits
29%
Certificates &
Time Deposits of
>$100,000
7%
Certificates &
Time Deposits of
<$100,000
8% Brokered
Deposits
5%
31
Capital Ratios
11.42% 11.39%
11.05% 11.10%
11.16%
11.11% 11.03% 11.00% 11.04%
9.26%
9.43% 9.48%
9.24%
9.50% 9.68%
9.39% 9.30% 9.32%
14.79% 14.67%
14.18% 14.21% 14.24%
14.01%
13.76% 13.69% 13.69%
7.00%
8.00%
9.00%
10.00%
11.00%
12.00%
13.00%
14.00%
15.00%
16.00%
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18
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%)
32
Net Interest Margin
3.83%
3.86%
3.94% 3.90%
3.98% 3.95%
4.03%
4.10%
3.92%
2.80%
3.00%
3.20%
3.40%
3.60%
3.80%
4.00%
4.20%
$48
$52
$56
$60
$64
$68
$72
$76
$80
$84
Q1 - '16 Q2 - '16 Q3 - '16 Q4 - '16 Q1 - '17 Q2 - '17 Q3 - '17 Q4 - '17 Q1 - '18
Net Interest Income - FTE ($millions) Net Interest Margin
Q1 - '16 Q2 - '16 Q3 - '16 Q4 - '16 Q1 - '17 Q2 - '17 Q3 - '17 Q4 - '17 Q1 - '18
Net Interest Income - FTE ($millions) $ 57.6 $ 59.2 $ 61.1 $ 62.1 $ 64.9 $ 67.2 $ 78.9 $ 83.5 $ 82.5
Fair Value Accretion $ 2.5 $ 3.2 $ 3.8 $ 2.9 $ 4.3 $ 2.3 $ 3.2 $ 4.1 $ 3.2
Tax Equivalent Yield on Earning Assets 4.28% 4.30% 4.37% 4.32% 4.42% 4.44% 4.56% 4.67% 4.57%
Cost of Supporting Liabilities 0.45% 0.44% 0.43% 0.42% 0.44% 0.49% 0.53% 0.57% 0.65%
Net Interest Margin 3.83% 3.86% 3.94% 3.90% 3.98% 3.95% 4.03% 4.10% 3.92%
Fair Value Accretion Effect 0.17% 0.21% 0.24% 0.18% 0.26% 0.14% 0.17% 0.20% 0.15%
Reflects 13 bps impact of Tax Cuts and Jobs Act
33
Non-Interest Income
2016 2017 Q1-’17 Q1-’18
1. Service Charges on Deposit Accounts $17.8 $ 18.7 $ 4.2 $ 4.8
2. Wealth Management Fees 12.6 14.7 3.4 3.8
3. Card Payment Fees 15.0 16.1 3.7 4.6
4. Cash Surrender Value of Life Ins 4.3 6.6 0.9 1.2
5. Gains on Sales of Mortgage Loans 7.1 7.6 1.3 1.8
6. Gains on Sales of Securities 3.4 2.6 0.6 1.6
7. Other 5.0 4.7 0.8 1.8
8. Total Non-Interest Income $65.2 $71.0 $14.9 $19.6
($ in Millions)
34
24.5%
19.4%
23.5%
6.1%
9.2%
8.2%
9.2%
Service Charges on Deposit Accounts - $4.8 Wealth Management Fees - $3.8
Card Payment Fees - $4.6 Cash Surrender Value of Life Ins - $1.2
Gains on Sales Mortage Loans - $1.8 Gains on Sales of Securities - $1.6
Other - $1.8 Total - $19.6
Non-Interest Income YTD
3/31/2018
($ in Millions)
35
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
Total Revenue
(excludes brokerage revenue)
Total Revenue
$8.65M
$9.23M
$9.79M
$11.5M
2014 2015 2016 2017
Total Assets under Management
Total Assets
$3.0B
$2.5B
$2.0B
$1.5B
$1.0B
$0.5B
0
$12M
$10M
$ 8M
$ 6M
$ 4M
$ 2M
0
$2.83B
$1.68B
$1.94B
$1.72B
36
Key component of Fee
Income
0
1
2
3
4
5
6
7
8
2014 2015 2016 2017
Mortgage Banking Revenue
Servicing fees Gain on Sale
$4.26M $5.88M $6.24M $6.46M
$640 $620 $760 $1.1M
Mortgage Banking
$4.9M
$6.5M
$7.0M
$7.56M
37
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
12/31/2017 YTD 2,146 mortgages
for $391M in volume
Non-Interest Expense
($ in Millions)
2016 2017 Q1-’17 Q1-’18
1. Salary & Benefits $102.6 $119.8 $ 25.7 $ 32.2
2. Premises & Equipment 29.5 30.1 7.0 8.4
3. Intangible Asset Amortization 3.9 5.6 0.9 1.7
4. Professional & Other Outside Services 6.5 12.8 1.7 1.5
5. OREO/Credit-Related Expense 2.9 1.9 0.5 0.4
6. FDIC Expense 3.0 2.6 0.6 0.7
7. Outside Data Processing 9.2 12.2 2.6 3.0
8. Marketing 3.0 3.7 0.6 0.9
9. Other 16.7 16.9 3.5 4.9
10. Total Non-Interest Expense $177.3 $ 205.6 $ 43.1 $ 53.7
1
1 2017 includes acquisition-related expenses of $12.2 million, reflected in ($ in Millions): $3.9 Salaries & Benefits, $0.6 Premises &
Equipment, $6.3 Professional & Other Outside Services, $0.5 Outside Data Processing, $0.3 Marketing and $0.6 Other
38
Earnings
2016 2017 Q1-’17 Q1-’18
1. Net Interest Income $226.5 $ 277.3 $ 61.0 $ 79.9
2. Provision for Loan Losses (5.7) (9.1) (2.4) (2.5)
3. Net Interest Income after Provision 220.8 268.2 58.6 77.4
4. Non-Interest Income 65.2 71.0 14.9 19.6
5. Non-Interest Expense (177.3) (205.6) (43.1) (53.7)
6. Income before Income Taxes 108.7 133.6 30.4 43.3
7. Income Tax Expense (27.6) (37.5) (7.2) (6.6)
8. Net Income Avail. for Distribution $ 81.1 $ 96.1 $ 23.2 $ 36.7
9. EPS $ 1.98 $ 2.12 $ 0.56 $ 0.74
10. Efficiency Ratio 56.51% 54.56% 52.61% 51.33%
($ in Millions)
1
2
3
1 2017 includes $5.1 million of additional tax expense due to revaluing deferred taxes as a result of the Tax Cuts and Jobs Act
2 Acquisition-related expenses, the impact of tax reform, and pension settlement accounting reduced EPS by $0.30 for 2017
3 Acquisition-related expenses and pension settlement accounting added 3.57% to the Efficiency Ratio
4 Impact of Tax Cuts and Jobs Act was 1.32 bps in Q1-’18
4
39
Per Share Results
2017 Q1 Q2 Q3 Q4 Total
1. Earnings Per Share $ .56 $ .57 $ .50 $ .49 $ 2.12
2. Dividends $ .15 $ .18 $ .18 $ .18 $ .69
3. Tangible Book Value $16.49 $16.97 $16.62 $16.96
2018 Q1 Q2 Q3 Q4 Total
1. Earnings Per Share $ .74 – – – $ .74
2. Dividends $ .18 – – – $ .18
3. Tangible Book Value $17.14 – – –
40
Dividends and Tangible Book Value
$9.21 $9.64
$10.95
$12.17
$13.65
$14.68
$15.85
$16.96 $17.14
.01
.03
.05
.08
.11
.14
.15
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
1.73%
Forward
Dividend
Yield
=
24.3%
Dividend
Payout Ratio
Quarterly Dividends Tangible Book Value
.18
41
Asset Quality Summary
($ in Millions)
2016 2017 Q1-'17 Q1-'18 $ % $ % 186.1
1. Non-Accrual Loans 30.0$ 28.7$ 27.9$ 27.5$ (1.2)$ (4.2%) (0.4)$ (1.4%)
2. Other Real Estate 9.0 10.4 8.3 9.7 (0.7) (6.7%) 1.4 16.9%
3. Renegotiated Loans 4.7 1.0 0.9 0.6 (0.4) (40.0%) (0.3) (33.3%)
4. 90+ Days Delinquent Loans 0.1 0.9 0.1 0.7 (0.2) (22.2%) 0.6 600.0%
5. Total NPAs & 90+ Days Delinquent 43.8$ 41.0$ 37.2$ 38.5$ (2.5)$ (6.1%) 1.3$ 3.5%
6. Total NPAs & 90+ Days/Loans & ORE 0.9% 0.6% 0.7% 0.6%
7. Classified Assets 174.1$ 153.1$ 173.9$ 178.4$ 25.3$ 16.5% 4.5$ 2.6%
8. Specific Reserves 0.9$ 1.6$ 1.2$ 1.3$ (0.3)$ (18.8%) 0.1$ 8.3%
Change Change Q1
Linked Quarter 2018 Over 2017
42
ALL and Fair Value Summary
43
($ in Millions) Q2-'17 Q3-'17 Q4-'17 Q1-'18
1. Beginning Allowance for Loan Losses (ALLL) 68.2$ 70.5$ 73.4$ 75.0$
2. Net Charge-offs (Recoveries) 0.6 (0.8) 0.2 1.1
3. Provision Expense 2.9 2.1 1.8 2.5
4. Ending Allowance for Loan Losses (ALLL) 70.5$ 73.4$ 75.0$ 76.4$
5. ALLL/Non-Accrual Loans 257.7% 227.4% 261.2% 277.9%
6. ALLL/Non-Purchased Loans 1.45% 1.44% 1.36% 1.32%
7. ALLL/Loans 1.25% 1.13% 1.11% 1.11%
8. Fair Value Adjustment (FVA) 29.7$ 50.4$ 46.3$ 43.1$
9. Total ALLL plus FVA 100.2 123.8 121.3 119.5
10. Purchased Loans plus FVA 792.6 1,445.8 1,304.7 1,179.8
11. FVA/Purchased Loans plus FVA 3.74% 3.49% 3.55% 3.65%
Total Return Performance
44
FMC Strategy and Tactics Overview
45
Looking Forward . . .
Build market presence and cultivate the First Merchants’ Brand in former Arlington Bank and
Independent Alliance Bank communities
Capitalize on talent opportunities from performance and preferred employer recognitions
Build out of specialty finance businesses in sponsor finance, public finance, asset-based lending,
and loan syndications
Complete checking account migration to new product set and streamline front and back-office
processes; continue implementation of workflow technologies for operating leverage
Manage net-interest margin upside with next interest rate moves
Assess M&A opportunities for strategic fit as we prepare to cross the $10 Billion asset level
“Responsive, Knowledgeable, High-Performing”
Why Invest in First Merchants?
Forbes Magazine recognition as a Top 5
Ranking in “America’s Best Banks”
Performance Ranked Best among Indiana
Banks by Bank Director Magazine
Attractive and Growing Earnings Stream
2nd Largest Indiana Bank with an Energized
and Experienced Management Team
Attractive Long-Term Deposit Market Shares
Commercial Presence that Creates a Client
Preference
State-of-the-Art Technology and Operations
Center
Successful Acquisition and Integration Track
Record
Focused on Providing Sustainable
Shareholder Value
46
Research Coverage
47
Contact Information
First Merchants Corporation common stock is
traded on the NASDAQ Global Select Market
under the symbol FRME.
Additional information can be found at
www.FIRSTMERCHANTS.COM
Investor inquiries:
Nicole M. Weaver
Investor Relations
Telephone: 765.521.7619
nweaver@firstmerchants.com
48
Appendix
49
Appendix – Non-GAAP Reconciliation
50
CAPITAL RATIOS (dollars in thousands):
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18
Total Risk-Based Capital Ratio
Total Stockholders' Equity (GAAP) 867,263 887,550 900,865 901,657 929,470 1,035,116 1,283,120 1,303,463 1,313,073
Adjust for Accumulated Other Comprehensive (Income) Loss 1 (2,066) (7,035) (3,924) 13,581 3,722 (1,384) 6,358 3,534 21,725
Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125)
Add: Qualifying Capital Securities 55,236 55,296 55,355 55,415 55,474 55,534 65,864 65,919 65,975
Less: Tier 1 Capital Deductions (1,999) (1,828) (1,440) (376) (80) (166) - - -
Less: Disallowed Goodwill and Intangible Assets (250,367) (249,932) (249,541) (249,104) (250,493) (300,307) (462,080) (464,066) (467,518)
Less: Disallowed Servicing Assets
Total Tier 1 Capital (Regulatory) 664,944$ 681,183$ 699,029$ 720,484$ 737,648$ 788,003$ 893,137$ 908,725$ 930,536$
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 62,086 62,186 63,456 66,037 68,225 70,471 73,354 75,032 76,420
Total Risk-Based Capital (Regulatory) 792,030$ 808,369$ 827,485$ 851,521$ 870,873$ 923,474$ 1,031,491$ 1,048,757$ 1,071,956$
Net Risk-Weighted Assets (Regulatory) 5,355,827$ 5,511,557$ 5,836,806$ 5,993,381$ 6,114,112$ 6,592,710$ 7,497,321$ 7,660,604$ 7,831,727$
Total Risk-Based Capital Ratio (Regulatory) 14.79% 14.67% 14.18% 14.21% 14.24% 14.01% 13.76% 13.69% 13.69%
Common Equity Tier 1 Capital Ratio
Total Tier 1 Capital (Regulatory) 664,944$ 681,183$ 699,029$ 720,484$ 737,648$ 788,003$ 893,137$ 908,725$ 930,536$
Less: Qualified Capital Securities (55,236) (55,296) (55,355) (55,415) (55,474) (55,534) (65,864) (65,919) (65,975)
Add: Additional Tier 1 Capital Deductions 1,999 1,828 1,440 376 80 166 - - -
Less: Preferred Stock
Net Risk-Weighted Assets (Regulatory) 5,355,827$ 5,511,557$ 5,836,806$ 5,993,381$ 6,114,112$ 6,592,710$ 7,497,321$ 7,660,604$ 7,831,727$
Common Equity Tier 1 Capital Ratio (Regulatory) 11.42% 11.39% 11.05% 11.10% 11.16% 11.11% 11.03% 11.00% 11.04%
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.
Appendix – Non-GAAP Reconciliation
51
TANGIBLE COMMON EQUITY RATIO (dollars in thousands):
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18
Total Stockholders' Equity (GAAP) 867,263$ 887,550$ 900,865$ 901,657$ 929,470$ 1,035,116$ 1,283,120$ 1,303,463$ 1,313,073$
L ss: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125)
Less: Intangible Assets (261,799) (260,822) (259,844) (258,866) (257,963) (309,686) (478,558) (476,503) (474,777)
Tangible Common Equity (non-GAAP) 605,339$ 626,603$ 640,896$ 642,666$ 671,382$ 725,305$ 804,437$ 826,835$ 838,171$
Total Assets (GAAP) 6,798,539$ 6,906,418$ 7,022,352$ 7,211,611$ 7,326,193$ 7,805,029$ 9,049,403$ 9,367,478$ 9,472,796$
Less: Intangible Assets (261,799) (260,822) (259,844) (258,866) (257,963) (309,686) (478,558) (476,503) (474,777)
Tangible Assets (non-GAAP) 6,536,740$ 6,645,596$ 6,762,508$ 6,952,745$ 7,068,230$ 7,495,343$ 8,570,845$ 8,890,975$ 8,998,019$
Tangible Common Equity Ratio (non-GAAP) 9.26% 9.43% 9.48% 9.24% 9.50% 9.68% 9.39% 9.30% 9.32%ANGIBLE COMMON EQUITY PER SHARE (dollars in thousands):
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18
Total Stockholders' Equity (GAAP) 454,408$ 514,467$ 552,236$ 634,923$ 726,827$ 850,509$ 901,657$ 929,470$ 1,035,116$ 1,283,120$ 1,303,463$ 1,313,073$
Less: Preferred Stock (67,880) (90,783) (90,908) (125) (125) (125) (125) (125) (125) (125) (125) (125)
Less: Intangible Assets (154,019) (150,471) (149,529) (202,767) (218,755) (259,764) (258,866) (257,963) (309,686) (478,558) (476,503) (474,777)
Tax Benefit 2,907 2,224 2,249 4,973 6,085 6,278 5,930 5,659 6,941 12,510 6,788 6,043
Tangible Common Equity, Net of Tax (non-GAAP) 235,416$ 275,437$ 314,048$ 437,004$ 514,032$ 596,898$ 648,596$ 677,041$ 732,246$ 816,947$ 833,623$ 844,214$
0
Shares Outstanding 25,574,251 28,559,707 28,692,616 35,921,761 37,669,948 40,664,258 40,912,697 41,047,543 43,153,509 49,140,594 49,158,238 49,243,096
Tangible Common Equity per Share (non-GAAP) 9.21$ 9.64$ 10.95$ 12.17$ 13.65$ 14.68$ 15.85$ 16.49$ 16.97$ 16.62$ 16.96$ 17.14$
Appendix – Non-GAAP Reconciliation
52
EFFICIENCY RATIO (dollars in thousands):
2016 1Q17 2017 1Q18
Non Interest Expense (GAAP) 177,359$ 43,099$ 205,556$ 53,687$
Less: Intangible Asset Amortization (3,910) (903) (5,647) (1,726)
Less: OREO and Foreclosure Expenses (2,877) (531) (1,903) (402)
Adjusted Non Interest Expense (non-GAAP) 170,572 41,665 198,006 51,559
Net Interest Income (GAAP) 226,473 60,999 277,284 79,916
Plus: Fully Taxab e Equivalent Adjustment 13,541 3,950 17,270 2,584
Net Interest Income on a Fully Taxable Equivalent Basis (non-GAAP) 240,014 64,949 294,554 82,500
Non Interest Income (GAAP) 65,203 14,846 71,009 19,561
Less: Investment Securities Gains (Losses) (3,389) (598) (2,631) (1,609)
Adjusted Non Interest Income (non-GAAP) 61,814 14,248 68,378 17,952
Adjusted Revenue (non-GAAP) 301,828 79,197 362,932 100,452
Efficiency Ratio (non-GAAP) 56.51% 52.61% 54.56% 51.33%
FORWARD DIVIDEND YIELD
1Q18
Most rece t quarter's dividend per share 0.18$
Most recent quarter's dividend per share - Annualized 0.72$
Stock Price at 3/31/18 41.70$
Forward Dividend Yield 1.73%
DIVIDEND PAYOUT RATIO
2018
Dividends per share 0.18$
Earnings Per Share 0.74$
Dividend Payout Ratio 24.3%
Appendix – Non-GAAP Reconciliation
53
CONSTRUCTION AND INVESTMENT REAL ESTATE CONCENTRATIONS (dollars in thousands):
2016 1Q17 2017 1Q18
Total Risk-Based Capital (Subsidiary Bank Only)
Total Stockholders' Equity (GAAP) 973,641$ 993,130$ 1,404,303$ 1,414,109$
Adjust for Accumulated Other Comprehensive (Income) Loss 1 9,701 8,226 763 19,231
Less: Preferred Stock (125) (125) (125) (125)
Less: Tier 1 Capital Deductions - - - -
Less: Disallowed Goodwill and Intangible Assets (248,656) (250,047) (463,618) (467,070)
Less: Disallowed Deferred Tax Assets - - - (2,234)
Total Tier 1 Capital (Regulatory) 734,561 751,184 941,323 963,911
Allowance for Loan Losses includible in Tier 2 Capital 66,037 68,225 75,032 76,420
Total Risk-Based Capital (Regulatory) 800,598$ 819,409$ 1,016,355$ 1,040,331$
Construction, Land and Land Development Loans 418,703$ 336,931$ 612,219$ 590,093$
Concentration as a % of the Bank's Risk-Based Capital 52% 41% 60% 57%
Construction, Land and Land Development Loans 418,703$ 336,931$ 612,219$ 590,093$
Investment Real Estate Loans 1,272,415 1,423,792 1,617,943 1,760,226
Total Construction and Investment RE Loans 1,691,118$ 1,760,723$ 2,230,162$ 2,350,319$
Concentration as a % of the Bank's Risk-Based Capital 211% 215% 219% 226%
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.
LLOWANCE AS A PERCENTAGE OF NON-PURCHASED LOANS (dollars in thousands):
2Q17 3Q17 4Q17 1Q18
L ans Held for S le (GAAP) 4,036$ 4,514$ 7,216$ 4,469$
L ans (GAAP) 5,613,144 6,483,448 6,751,199 ,901,696
Total Loans 5,617,180 6,487,962 6,758,415 6,906,165
Less: Purchased Loans (762,893) (1,395,368) (1,258,386) (1,136,711)
Non-Purchased Loans (non-GAAP) 4,854,287$ 5,092,594$ 5,500,029$ 5,769,454$
Allowa ce for Loan Losses (GAAP) 70,471$ 73,354$ 75,032$ 76,420$
Fair Value Adjustment (FVA) (GAAP) 29,664 50,434 46,304 43,121
Allowance plus FVA (non-GAAP) 100,135$ 123,788$ 121,336$ 119,541$
Purchased Loans (GAAP) 762,893$ 1,395,368$ 1,258,386$ 1,136,711$
Fair Value Adjustment (FVA) (GAAP) 29,664 50,434 46,304 43,121
Purchased Loans plus FVA (non-GAAP) 792,557$ 1,445,802$ 1,304,690$ 1,179,832$
Allowance as a Percentage of Non-Purchased Loans (non-GAAP) 1.45% 1.44% 1.36% 1.32%
FVA as a Percentage of Purchased Loans plus FVA (non-GAAP) 3.74% 3.49% 3.55% 3.65%