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): April 25, 2019

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 April 25, 2019, First Merchants Corporation issued a press release to report its financial results for the first quarter ended March 31, 2019. 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 April 25, 2019, 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: April 25, 2019

EXHIBIT INDEX


Exhibit No.	Description

99.1 Press Release, dated April 25, 2019, issued by First Merchants Corporation

Exhibit

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

April 25, 2019

FOR IMMEDIATE RELEASE

For more information, contact:

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

765-521-7619

http://www.firstmerchants.com

SOURCE: First Merchants Corporation, Muncie, Indiana

FIRST MERCHANTS CORPORATION ANNOUNCES 5.4 PERCENT INCREASE IN FIRST QUARTER 2019 EARNINGS PER SHARE

First Merchants Corporation (NASDAQ - FRME) has reported first quarter 2019 net income of $38.8 million, an increase of 5.8 percent, compared to $36.7 million during the same period in 2018. Earnings per share for the period totaled $.78 per share, an increase of 5.4 percent, compared to the first quarter of 2018 result of $.74 per share.

Total assets equaled $10.2 billion as of quarter-end and loans totaled $7.3 billion. The Corporation’s loan portfolio increased by $397 million, or 5.7 percent, during the past twelve months. Investments increased $319 million, or 20.7 percent, during the same period and now total $1.9 billion. Total deposits equaled $8.0 billion as of quarter-end and increased by $720 million, or 9.8 percent, while borrowings, totaling $615 million, declined during the period by $161 million, or 20.8 percent. As a result, the loan-to-deposit ratio now totals 90.7 percent and loan-to-asset ratio totals 71.5 percent. Additionally, the Corporation’s total risk-based capital ratio equaled 14.71 percent, common equity tier 1 capital ratio equaled 12.12 percent, and the tangible common equity ratio totaled 10.14 percent.

Michael C. Rechin, President and Chief Executive Officer, stated, “We are excited to begin 2019 with a solid quarter of operating results. Our focus on the marketplace produced strong deposit growth and liquidity for our balance sheet. The loan pipeline continues to reflect an expanding Midwest economy with healthy asset quality throughout the portfolio. Our primary financial ratios and related key performance indicators continue to reflect the results of a high performing company.”

Rechin continued, “We now have shareholder, Indiana Department of Financial Institutions and the Federal Deposit Insurance Corporation approvals in hand regarding our merger with Monroe Bank & Trust. We continue to anticipate our holding company’s approval from the Federal Reserve Bank and a legal closing in the current quarter. Our integration activities and re-branding efforts are planned for the third quarter.”

Net-interest income totaled $84.9 million for the quarter, an increase of $5 million, or 6.3 percent, over the same period in 2018. Net-interest margin, totaling 3.84 percent, declined by 8 basis points. Yields on earning assets increased by 32 basis points and totaled 4.89 percent, while the cost of supporting liabilities increased by 40 basis points and totaled 1.05 percent. Fair value accretion negatively impacted yields as it declined from 15 basis points in first quarter of 2018 to 9 basis points in 2019.

Non-interest income totaled $18.7 million for the quarter, an $848,000 decrease from the first quarter of 2018. Gains from the sale of loans accounted for $526,000 of the decline, as approximately one-half of the quarter’s production was added to the balance sheet versus being sold into the secondary market. Non-interest expense totaled $56.6 million, up from the 2018 total of $53.7 million. Of the $2.9 million increase, salary and benefits accounted for $802,000, other real estate and foreclosure expense accounted for $763,000 and outside data processing accounted for $720,000.

The Corporation’s provision expense totaled $1.2 million due to loan growth, while net charge offs totaled $850,000. The allowance for loan losses totaled $80.9 million as of March 31, 2019, up from $76.4 million as of March 31, 2018. Non-accrual loans totaled $27.9 million as of quarter-end and the allowance is 1.11 percent of total loans and 1.24 percent of non-purchased loans.

CONFERENCE CALL

First Merchants Corporation will conduct a first quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, April 25, 2019.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's first quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until May 25, 2019. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529, Canada participants should dial 855-669-9658, or for International participants, dial +1 412-317-0088. The replay access code is 10127190.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme190425.html during the time of the call. A replay of the web cast will be available until April 25, 2020.

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 First Merchants Private Wealth Advisors (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)	March 31,
	2019			2018
ASSETS
Cash and cash equivalents	$	115,878		$	128,828
Interest-bearing time deposits	70,672			24,233
Investment securities	1,862,659			1,543,820
Loans held for sale	3,330			4,469
Loans	7,299,320			6,901,696
Less: Allowance for loan losses	(80,902		)	(76,420		)
Net loans	7,218,418			6,825,276
Premises and equipment	91,863			94,741
Federal Home Loan Bank stock	24,588			24,588
Interest receivable	40,931			35,223
Goodwill and other intangibles	468,256			474,777
Cash surrender value of life insurance	225,928			221,949
Other real estate owned	1,877			9,698
Tax asset, deferred and receivable	16,094			24,177
Other assets	70,431			61,017
TOTAL ASSETS	$	10,210,925		$	9,472,796
LIABILITIES
Deposits:
Noninterest-bearing	$	1,381,183		$	1,698,958
Interest-bearing	6,666,615			5,628,677
Total Deposits	8,047,798			7,327,635
Borrowings:
Federal funds purchased	20,000			50,000
Securities sold under repurchase agreements	111,783			138,910
Federal Home Loan Bank advances	345,013			449,419
Subordinated debentures and term loans	138,519			138,297
Total Borrowings	615,315			776,626
Interest payable	7,313			5,376
Other liabilities	84,651			50,086
Total Liabilities	8,755,077			8,159,723
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 shares
Issued and outstanding - 49,428,468 and 49,243,096 shares	6,179			6,155
Additional paid-in capital	839,919			834,894
Retained earnings	611,220			493,624
Accumulated other comprehensive loss	(1,595		)	(21,725		)
Total Stockholders' Equity	1,455,848			1,313,073
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	10,210,925		$	9,472,796



CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended
(Dollars In Thousands, Except Per Share Amounts)	March 31,
	2019		2018
INTEREST INCOME
Loans receivable:
Taxable	$	90,481	$	78,267
Tax-exempt	4,153		3,596
Investment securities:
Taxable	6,095		5,096
Tax-exempt	6,871		6,126
Deposits with financial institutions	875		131
Federal Home Loan Bank stock	338		404
Total Interest Income	108,813		93,620
INTEREST EXPENSE
Deposits	19,594		9,002
Federal funds purchased	93		380
Securities sold under repurchase agreements	330		173
Federal Home Loan Bank advances	1,814		2,159
Subordinated debentures and term loans	2,116		1,990
Total Interest Expense	23,947		13,704
NET INTEREST INCOME	84,866		79,916
Provision for loan losses	1,200		2,500
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	83,666		77,416
OTHER INCOME
Service charges on deposit accounts	5,095		4,777
Fiduciary and wealth management fees	3,818		3,796
Card payment fees	4,826		4,594
Net gains and fees on sales of loans	1,295		1,821
Derivative hedge fees	781		842
Other customer fees	439		442
Earnings on cash surrender value of life insurance	989		1,176
Net realized gains on sales of available for sale securities	1,140		1,609
Other income	330		504
Total Other Income	18,713		19,561
OTHER EXPENSES
Salaries and employee benefits	33,028		32,226
Net occupancy	5,027		4,670
Equipment	3,642		3,668
Marketing	1,074		884
Outside data processing fees	3,684		2,964
Printing and office supplies	315		334
Intangible asset amortization	1,528		1,726
FDIC assessments	707		719
Other real estate owned and foreclosure expenses	1,165		402
Professional and other outside services	1,884		1,541
Other expenses	4,567		4,553
Total Other Expenses	56,621		53,687
INCOME BEFORE INCOME TAX	45,758		43,290
Income tax expense	6,941		6,611
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	38,817	$	36,679
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.79	$	0.75
Diluted Net Income Available to Common Stockholders	$	0.78	$	0.74
Cash Dividends Paid	$	0.22	$	0.18
Average Diluted Shares Outstanding (in thousands)	49,541		49,428



FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended
	March 31,
	2019			2018
NET CHARGE-OFFS	$	850		$	1,112

AVERAGE BALANCES:
Total Assets	$	10,080,142		$	9,372,736
Total Loans	7,230,119			6,811,087
Total Earning Assets	9,132,129			8,415,177
Total Deposits	7,936,656			7,153,164
Total Stockholders' Equity	1,429,739			1,308,804

FINANCIAL RATIOS:
Return on Average Assets	1.54		%	1.57		%
Return on Average Stockholders' Equity	10.86			11.21
Return on Average Common Stockholders' Equity	10.86			11.21
Average Earning Assets to Average Assets	90.60			89.78
Allowance for Loan Losses as % of Total Loans	1.11			1.11
Net Charge-offs as % of Average Loans (Annualized)	0.05			0.07
Average Stockholders' Equity to Average Assets	14.18			13.96
Tax Equivalent Yield on Average Earning Assets	4.89			4.57
Interest Expense/Average Earning Assets	1.05			0.65
Net Interest Margin (FTE) on Average Earning Assets	3.84			3.92
Efficiency Ratio	51.18			51.33
Tangible Common Book Value Per Share	$	20.07		$	17.14



NON-PERFORMING ASSETS
(Dollars In Thousands)	March 31,			December 31,			September 30,			June 30,			March 31,
	2019			2018			2018			2018			2018
Non-Accrual Loans	$	27,949		$	26,148		$	20,421		$	20,143		$	27,497
Renegotiated Loans	709			1,103			968			544			579
Non-Performing Loans (NPL)	28,658			27,251			21,389			20,687			28,076
Other Real Estate Owned	1,877			2,179			8,859			9,071			9,698
Non-Performing Assets (NPA)	30,535			29,430			30,248			29,758			37,774
90+ Days Delinquent	134			1,855			50			184			738
NPAs & 90 Day Delinquent	$	30,669		$	31,285		$	30,298		$	29,942		$	38,512

Allowance for Loan Losses	$	80,902		$	80,552		$	78,406		$	77,543		$	76,420
Quarterly Net Charge-offs	850			(482		)	537			540			1,112
NPAs / Actual Assets %	0.30		%	0.30		%	0.31		%	0.31		%	0.40		%
NPAs & 90 Day / Actual Assets %	0.30		%	0.32		%	0.31		%	0.31		%	0.41		%
NPAs / Actual Loans and OREO %	0.42		%	0.41		%	0.43		%	0.42		%	0.55		%
Allowance for Loan Losses / Actual Loans (%)	1.11		%	1.11		%	1.11		%	1.09		%	1.11		%
Net Charge-offs as % of Average Loans (Annualized)	0.05		%	(0.03		)%	0.03		%	0.03		%	0.07		%



CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	March 31,			December 31,			September 30,			June 30,			March 31,
	2019			2018			2018			2018			2018
ASSETS
Cash and cash equivalents	$	115,878		$	139,247		$	142,501		$	133,893		$	128,828
Interest-bearing time deposits	70,672			36,963			66,763			36,599			24,233
Investment securities	1,862,659			1,632,582			1,625,251			1,619,683			1,543,820
Loans held for sale	3,330			4,778			3,022			2,046			4,469
Loans	7,299,320			7,224,467			7,088,071			7,081,059			6,901,696
Less: Allowance for loan losses	(80,902		)	(80,552		)	(78,406		)	(77,543		)	(76,420		)
Net loans	7,218,418			7,143,915			7,009,665			7,003,516			6,825,276
Premises and equipment	91,863			93,420			93,728			94,397			94,741
Federal Home Loan Bank stock	24,588			24,588			24,588			24,588			24,588
Interest receivable	40,931			40,881			38,531			38,530			35,223
Goodwill and other intangibles	468,256			469,784			471,409			473,059			474,777
Cash surrender value of life insurance	225,928			224,939			223,865			222,905			221,949
Other real estate owned	1,877			2,179			8,859			9,071			9,698
Tax asset, deferred and receivable	16,094			23,668			25,933			24,619			24,177
Other assets	70,431			47,772			53,167			51,809			61,017
TOTAL ASSETS	$	10,210,925		$	9,884,716		$	9,787,282		$	9,734,715		$	9,472,796
LIABILITIES
Deposits:
Noninterest-bearing	$	1,381,183		$	1,447,907		$	1,464,190		$	1,571,194		$	1,698,958
Interest-bearing	6,666,615			6,306,686			6,168,962			5,932,621			5,628,677
Total Deposits	8,047,798			7,754,593			7,633,152			7,503,815			7,327,635
Borrowings:
Federal funds purchased	20,000			104,000			90,000			109,000			50,000
Securities sold under repurchase agreements	111,783			113,512			118,824			122,513			138,910
Federal Home Loan Bank advances	345,013			314,986			385,458			469,261			449,419
Subordinated debentures and term loans	138,519			138,463			138,408			138,352			138,297
Total Borrowings	615,315			670,961			732,690			839,126			776,626
Interest payable	7,313			5,607			5,920			4,807			5,376
Other liabilities	84,651			45,295			54,094			46,639			50,086
Total Liabilities	8,755,077			8,476,456			8,425,856			8,394,387			8,159,723
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 shares
Issued and outstanding	6,179			6,169			6,163			6,160			6,155
Additional paid-in capital	839,919			840,052			837,996			836,549			834,894
Retained earnings	611,220			583,336			552,551			522,362			493,624
Accumulated other comprehensive loss	(1,595		)	(21,422		)	(35,409		)	(24,868		)	(21,725		)
Total Stockholders' Equity	1,455,848			1,408,260			1,361,426			1,340,328			1,313,073
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	10,210,925		$	9,884,716		$	9,787,282		$	9,734,715		$	9,472,796



CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	March 31,			December 31,			September 30,			June 30,			March 31,
	2019			2018			2018			2018			2018
INTEREST INCOME
Loans receivable:
Taxable	$	90,481		$	91,092		$	88,479		$	84,663		$	78,267
Tax-exempt	4,153			3,873			3,761			3,632			3,596
Investment securities:
Taxable	6,095			5,553			5,514			5,434			5,096
Tax-exempt	6,871			6,644			6,493			6,246			6,126
Deposits with financial institutions	875			1,207			270			633			131
Federal Home Loan Bank stock	338			284			283			263			404
Total Interest Income	108,813			108,653			104,800			100,871			93,620
INTEREST EXPENSE
Deposits	19,594			16,690			13,685			12,165			9,002
Federal funds purchased	93			48			229			61			380
Securities sold under repurchase agreements	330			243			174			172			173
Federal Home Loan Bank advances	1,814			1,691			2,137			1,845			2,159
Subordinated debentures and term loans	2,116			2,097			2,089			2,057			1,990
Total Interest Expense	23,947			20,769			18,314			16,300			13,704
NET INTEREST INCOME	84,866			87,884			86,486			84,571			79,916
Provision for loan losses	1,200			1,664			1,400			1,663			2,500
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	83,666			86,220			85,086			82,908			77,416
OTHER INCOME
Service charges on deposit accounts	5,095			5,516			5,619			5,038			4,777
Fiduciary and wealth management fees	3,818			3,842			3,673			3,595			3,796
Card payment fees	4,826			4,393			4,586			4,462			4,594
Net gains and fees on sales of loans	1,295			1,767			1,841			1,600			1,821
Derivative hedge fees	781			645			775			231			842
Other customer fees	439			511			452			455			442
Earnings on cash surrender value of life insurance	989			1,074			961			1,007			1,176
Net realized gains on sales of available for sale securities	1,140			253			1,285			1,122			1,609
Other income	330			1,179			335			681			504
Total Other Income	18,713			19,180			19,527			18,191			19,561
OTHER EXPENSES
Salaries and employee benefits	33,028			34,350			32,936			32,192			32,226
Net occupancy	5,027			4,737			4,586			4,348			4,670
Equipment	3,642			3,627			3,483			3,556			3,668
Marketing	1,074			1,107			1,216			1,474			884
Outside data processing fees	3,684			3,367			3,422			3,462			2,964
Printing and office supplies	315			433			334			324			334
Intangible asset amortization	1,528			1,625			1,650			1,718			1,726
FDIC assessments	707			634			856			711			719
Other real estate owned and foreclosure expenses	1,165			251			455			362			402
Professional and other outside services	1,884			3,002			1,844			1,789			1,541
Other expenses	4,567			4,605			4,240			3,568			4,553
Total Other Expenses	56,621			57,738			55,022			53,504			53,687
INCOME BEFORE INCOME TAX	45,758			47,662			49,591			47,595			43,290
Income tax expense	6,941			5,949			8,478			7,961			6,611
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	38,817		$	41,713		$	41,113		$	39,634		$	36,679

Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.79		$	0.85		$	0.83		$	0.80		$	0.75
Diluted Net Income Available to Common Stockholders	$	0.78		$	0.85		$	0.83		$	0.80		$	0.74
Cash Dividends Paid	$	0.22		$	0.22		$	0.22		$	0.22		$	0.18
Average Diluted Shares Outstanding (in thousands)	49,541			49,511			49,492			49,451			49,428
FINANCIAL RATIOS:
Return on Average Assets	1.54		%	1.68		%	1.69		%	1.63		%	1.57		%
Return on Average Stockholders' Equity	10.86			12.10			12.10			11.94			11.21
Return on Average Common Stockholders' Equity	10.86			12.10			12.10			11.95			11.21
Average Earning Assets to Average Assets	90.60			90.41			90.30			90.14			89.78
Allowance for Loan Losses as % of Total Loans	1.11			1.11			1.11			1.09			1.11
Net Charge-offs as % of Average Loans (Annualized)	0.05			(0.03		)	0.03			0.03			0.07
Average Stockholders' Equity to Average Assets	14.18			13.90			13.93			13.69			13.96
Tax Equivalent Yield on Average Earning Assets	4.89			4.97			4.88			4.74			4.57
Interest Expense/Average Earning Assets	1.05			0.93			0.83			0.75			0.65
Net Interest Margin (FTE) on Average Earning Assets	3.84			4.04			4.05			3.99			3.92
Efficiency Ratio	51.18			50.97			49.25			49.32			51.33
Tangible Common Book Value Per Share	$	20.07		$	19.12		$	18.16		$	17.71		$	17.14



LOANS
(Dollars In Thousands)	March 31,			December 31,			September 30,			June 30,			March 31,
	2019			2018			2018			2018			2018
Commercial and industrial loans	$	1,788,628		$	1,726,664		$	1,655,569		$	1,657,591		$	1,554,169
Agricultural production financing and other loans to farmers	80,357			92,404			88,504			89,093			98,315
Real estate loans:
Construction	542,501			545,729			668,608			714,866			590,093
Commercial and farmland	2,838,798			2,832,102			2,699,629			2,652,782			2,713,994
Residential	976,668			966,421			965,893			965,720			948,644
Home equity	536,208			528,157			517,303			518,699			510,545
Individuals' loans for household and other personal expenditures	108,216			99,788			98,709			92,809			88,235
Public finance and other commercial loans	427,944			433,202			393,856			389,499			397,701
Loans	7,299,320			7,224,467			7,088,071			7,081,059			6,901,696
Allowance for loan losses	(80,902		)	(80,552		)	(78,406		)	(77,543		)	(76,420		)
NET LOANS	$	7,218,418		$	7,143,915		$	7,009,665		$	7,003,516		$	6,825,276



DEPOSITS
(Dollars In Thousands)	March 31,		December 31,		September 30,		June 30,		March 31,
	2019		2018		2018		2018		2018
Demand deposits	$	4,101,156	$	3,985,178	$	3,870,816	$	3,933,233	$	3,740,395
Savings deposits	2,338,266		2,282,701		2,212,675		2,099,771		2,109,071
Certificates and other time deposits of $100,000 or more	670,199		593,592		602,002		555,910		552,643
Other certificates and time deposits	704,527		646,682		625,341		602,239		584,377
Brokered deposits	233,650		246,440		322,318		312,662		341,149
TOTAL DEPOSITS	$	8,047,798	$	7,754,593	$	7,633,152	$	7,503,815	$	7,327,635



CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	March 31, 2019							March 31, 2018
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	145,935		$	875	2.40	%	$	32,776		$	131	1.60	%
Federal Home Loan Bank stock	24,588			338		5.50		24,385			404		6.63
Investment Securities: ⁽¹⁾
Taxable	902,402			6,095		2.70		810,385			5,096		2.52
Tax-Exempt ⁽²⁾	829,085			8,697		4.20		736,544			7,754		4.21
Total Investment Securities	1,731,487			14,792		3.42		1,546,929			12,850		3.32
Loans held for sale	9,703			112		4.62		10,636			137		5.15
Loans: ⁽³⁾
Commercial	5,309,998			72,758		5.48		4,980,450			62,154		4.99
Real Estate Mortgage	743,736			8,321		4.48		728,725			7,999		4.39
Installment	665,050			9,290		5.59		623,429			7,977		5.12
Tax-Exempt ⁽²⁾	501,632			5,257		4.19		467,847			4,552		3.89
Total Loans	7,230,119			95,738		5.30		6,811,087			82,819		4.86
Total Earning Assets	9,132,129			111,743		4.89		8,415,177			96,204		4.57
Net unrealized gain (loss) on securities available for sale	(5,015		)					(6,440		)
Allowance for loan losses	(80,907		)					(75,851		)
Cash and cash equivalents	117,224							126,484
Premises and equipment	93,236							95,525
Other assets	823,475							817,841
Total Assets	$	10,080,142						$	9,372,736
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	2,689,797		$	7,019	1.04	%	$	1,980,141		$	2,689	0.54	%
Money market deposits	1,139,062			2,782		0.98		1,089,694			1,275		0.47
Savings deposits	1,150,725			2,267		0.79		945,940			381		0.16
Certificates and other time deposits	1,565,578			7,526		1.92		1,486,093			4,657		1.25
Total Interest-bearing Deposits	6,545,162			19,594		1.20		5,501,868			9,002		0.65
Borrowings	635,058			4,353		2.74		848,208			4,702		2.22
Total Interest-bearing Liabilities	7,180,220			23,947		1.33		6,350,076			13,704		0.86
Noninterest-bearing deposits	1,391,494							1,651,296
Other liabilities	78,689							62,560
Total Liabilities	8,650,403							8,063,932
Stockholders' Equity	1,429,739							1,308,804
Total Liabilities and Stockholders' Equity	$	10,080,142		23,947				$	9,372,736		13,704
Net Interest Income (FTE)				$	87,796						$	82,500
Net Interest Spread (FTE) ⁽⁴⁾						3.56	%						3.71	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets						4.89	%						4.57	%
Interest Expense / Average Earning Assets						1.05	%						0.65	%
Net Interest Margin (FTE) ⁽⁵⁾						3.84	%						3.92	%

⁽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 21 percent for 2019 and 2018. These totals equal $2,930 and $2,584 for the three months ended March 31, 2019 and 2018, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.
⁽⁴⁾ Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
⁽⁵⁾ Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.