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): August 12, 2020
Commission File Number 0-17071
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (IRS Employer Identification No.) | ||||
(Address of principal executive offices, including zip code)
(765 ) 747-1500
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12 (b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 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.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits.
Exhibit 99.1 First Merchants Corporation Investor Presentation
Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
First Merchants Corporation
(Registrant)
By: /s/ Mark K. Hardwick
Mark K. Hardwick
Executive Vice President,
Chief Financial Officer and Chief Operating Officer
Dated: August 12, 2020
2Q Highlights | 2020
Forward Looking Statement This presentation contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These forward- looking statements include, but are not limited to, statements relating to First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: possible changes in economic and business conditions; the existence or exacerbation of general geopolitical instability and uncertainty; the effects of a pandemic or other unforeseeable event; the ability of First Merchants to integrate recent acquisitions and attract new customers; possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity, credit and interest rate risks associated with the First Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First Merchants undertakes no obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this presentation or press release. In addition, the company’s past results of operations do not necessarily indicate its anticipated future results. NON-GAAP FINANCIAL MEASURES These slides contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of the registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of Regulation G, First Merchants Corporation has provided reconciliations within the slides, as necessary, of the non-GAAP financial measure to the most directly comparable GAAP financial measure.
Company Profile (as of June 30, 2020) (in Thousands) First Merchants Market Information Common Shares Outstanding 53,795,500 First Merchants Bank formed in 1893, celebrating its Market Cap $1,483,142 127th anniversary Dividend Yield 3.77% First Merchants Corporation, organized in 1982, is Price/Tangible Book Value 1.20x the largest financial services holding company Price/LTM EPS 9.8x headquartered in Central Indiana Price/2020 Est. EPS 12.3x Financial Highlights($ in Thousands) Assets $13,819,378 Leadership Team (Name, title, age) Loans, Net $9,178,323 Michael C. Rechin, President & CEO 62 Deposits $10,965,988 Mark K. Hardwick, EVP, COO & CFO 49 Tangible Common Equity $1,233,115 Michael J. Stewart, EVP & Chief Banking Officer 54 TCE/TA 9.31% John J. Martin, EVP & Chief Credit Officer 54 2020 Net Income – YTD $67,255 Michele M. Kawiecki, SVP, Director of Finance 48 2020 ROAA – YTD 1.03% 2020 ROATCE - YTD 11.28% Michael B. Joyce, SVP, President PWA 45 NPAs/Loans + OREO 0.63% Carrie A. Valek, SVP, Director Consumer Banking 43 3
Why Invest in First Merchants? 4
Our Franchise Key Market Profiles Loans Deposits $1,357M Columbus, Ohio $ 788M 928M Fort Wayne 1,191M 3,089M Indianapolis 2,213M 784M Lafayette 1,318M 1,095M Lakeshore 1,468M 766M Michigan 1,249M 1,280M Muncie 2,739M $9,299M Total $10,966M (as of June 30, 2020) Mission Statement To be the most responsive, knowledgeable and high-performing bank for our clients, teammates and shareholders. 5
Key FMC Market Share Data County Region/Type Market Position Market % $ Deposits Delaware County, IN Muncie (Established) 1 55.53% $ 1,522,233 Monroe, MI Michigan (Established) 1 48.66% 1,005,960 Madison County, IN Indianapolis (Growth) 1 26.62% 398,825 Jasper County, IN Lafayette (Established) 1 34.43% 226,725 White County, IN Lafayette (Established) 1 36.99% 173,930 Jay County, IN Muncie (Established) 1 50.15% 126,051 Wells County, IN Fort Wayne (Growth) 1 21.79% 105,940 Union County, IN Muncie (Established) 1 41.35% 47,507 Tippecanoe County, IN Lafayette (Established) 2 20.83% 580,077 Henry County, IN Muncie (Established) 2 36.92% 237,709 Shelby County, IN Indianapolis (Growth) 2 16.20% 101,212 Wabash County, IN Muncie (Established) 2 15.09% 65,689 Clinton County, IN Lafayette (Established) 2 12.36% 56,763 Hendricks County, IN Indianapolis (Growth) 3 11.68% 320,734 Adams County, IN Muncie (Established) 3 15.48% 106,177 Huntington County, IN Fort Wayne (Growth) 3 15.66% 96,909 Randolph County, IN Muncie (Established) 3 2.99% 76,092 Hamilton County, IN Indianapolis (Growth) 4 7.10% 838,042 Allen County, IN Fort Wayne (Growth) 4 10.18% 635,312 Morgan County, IN Indianapolis (Growth) 4 12.47% 130,183 Hancock County, IN Indianapolis (Growth) 4 10.76% 113,431 Marshall County, IN Fort Wayne (Growth) 4 6.29% 51,819 Carroll County, IN Lafayette (Established) 4 15.31% 46,381 Miami County, IN Muncie 4 8.23% 33,489 Fayette County, IN Muncie 5 9.45% 31,663 Sub Total $7,128,853 First Merchants Total $9,611,598 FDIC Data June 30, 2019 6
First Merchants Strategy “Service-driven alternative to super-regional bank competitors. Deliver superior service with presence close to the customer for . . . ” Commercial Banking Consumer Banking Business Banking Mortgage Banking Commercial & Industrial Agriculture Private Wealth Advisory Sponsor Finance Private Banking Public Finance Investment Management Healthcare Services Personal Trust Investment Real Estate Brokerage Treasury Management Retirement Merchant Processing Services Asset-Based Lending “We specialize in our communities” 7
First Merchants Strategy Commercial Bank Located in Prime Growth Commercial Banking Markets Indianapolis, Indiana Monroe, Michigan Columbus, Ohio Fort Wayne, Indiana Lafayette, Indiana Lakeshore - Northwest Indiana Hire the Best Talent Supported with the Finest Sales Management Process Credit and Treasury 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 Systems Deposit and CRM Systems Online Banking System Mobile Banking System Customer Service and Relationship Growth-Oriented Incentive System 9
First Merchants Strategy Private Wealth Advisors Comprehensive and coordinated approach to personal wealth management Expertise in Investment Management, Private Banking, Fiduciary, Estate and Financial Planning Strengthen commercial relationships with personal services for executives/owners and retirement plan services for companies Partner with consumer bank to offer personal investment advice through First Merchants Investment Services 10
Organic Growth Opportunities Exists in All Directions Lakeshore - NW Indiana MSA* Fort Wayne MSA Entered: 2013 Entered: 2017 Total Population: 686,417 Total Population: 413,458 Deposit Market Share: 15.33% Deposit Market Share: 10.16% FOUNDING MARKET Lafayette MSA Muncie MSA Columbus, Ohio MSA Entered: 2002 Established: 1893 Entered: 2003 Total Population: 233,128 Total Population: Total Population: 2,144,928 Deposit Market Share: 20.83% 114,108 Deposit Market Share: 1.22% Current Market Share: 55.53% Indianapolis MSA Monroe, Michigan MSA Entered: 1998 Entered: 2019 Total Population: 2,078,605 Total Population: 150,699 Deposit Market Share: 4.04% Deposit Market Share: 48.66% *Includes Jasper, Lake, and Porter counties 11
Ranked Best in the Midwest for Business AAA Credit Rating since 20081 Leading the Nation in Manufacturing Job Growth 1st in Midwest and 5th Nationally for Best State for Doing Business2 1st Metro Area for Strong Job Opportunities with Affordable Housing 1st Nationally for Highway Accessibility 1st in the Midwest/8th Nationally for Low Taxes 1st for Quality of Government and Government Administration3 1st for Best Business Regulatory Climate4 Top 5 Nationally for Cost of Doing Business 2nd in the Nation for Small Business Growth 2nd Nationally for Availability of Skilled Labor 2nd Best City in the Nation for Recent Graduates (Indianapolis) 2nd Nationally for Top States for Business - Infrastructure 2nd Largest Global Fed Ex Air Hub 4th Nationally for Women in Tech and 10th in Overall Tech Job Growth 1S&P, Moody’s & Fitch 2Chief Executive Magazine 2017 3US News & World Reports 2017 4Forbes 2017 Unless otherwise noted, source IEDC 12
Muncie Market ₎ Located 58 miles northeast of Indianapolis in the east central portion of the Notable Major Employers 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 Delaware County, IN* Mkt. Rank Branches Deposits Share 1 First Merchants Corporation 9 $1,522,233 55.53% Projected HHI & Pop. Change 2020-2025 2 Mutual First Financial 7 653,442 23.84% 3 J.P. Morgan Chase 3 240,499 8.77% 14.34% 10.94% 4 Old National Bancorp 4 175,585 6.41% 9.87% 5 Star Financial Group 3 148,707 5.42% 3.27% 6 Woodforest Financial Group 1 833 0.03% 2.02% Market Total 27 $ 2,741,299 -0.51% U.S. Indiana Delaware Co. *SNL Financial FDIC Summary of Deposits as of June 30, 2019 HHI Pop. 13
Indianapolis Market ₎ Indianapolis metropolitan area includes four of the five fastest-growing counties in Indiana and 10 of the 11 fastest-growing cities and towns with Notable Major Employers populations of at least 5,000* ₎ The population data released by the U.S. Census Bureau show suburban Hamilton County’s population grew 20.2% since 2010 ₎ Indiana’s population growth outpaced those of neighboring states Illinois, Kentucky, Michigan and Ohio* ₎ With 867,125 residents, Indianapolis was the nation’s 17th largest city* Indianapolis-Carmel-Anderson, IN MSA** Mkt. Rank Branches Deposits Share 1 JP Morgan Chase 66 $10,832,171 19.98% 2 PNC Financial Services Group 61 7,585,010 13.99% 3 Fifth Third Bancorp 42 4,610,022 8.50% 4 Huntington Bancshares 40 3,579,245 6.60% 5 Bank of Montreal 36 3,446,760 6.36% 6 First Internet Bancorp 1 3,055,633 5.64% Projected HHI & Pop. Change 2020-2025 7 KeyCorp 19 3,007,934 5.55% 15.03% 8 Bank of America 3 2,528,339 4.66% 9.87% 10.94% 9 Merchants Bancorp 3 2,333,994 4.31% 10 First Merchants Corporation 33 2,192,200 4.04% 3.27% 2.90% 2.02% Market Total 526 $54,224,982 U.S. Indiana Marion Co. *IN.gov **SNL Financial FDIC Summary of Deposits as of June 30, 2019 HHI Pop. ***Marion County, IN 14
Lafayette Market ₎ Ranked #1, MSN Money, Fastest Growing Cities in the State of Indiana Notable Major Employers ₎ 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 among 24/7 Wall St., American City Adding the Most Jobs ₎ Home to Purdue University Tippecanoe County, IN** Mkt. Rank Branches Deposits Share 1 JPMorgan Chase & Co. 5 $ 873,326 31.35% 2 First Merchants Corporation 8 580,077 20.83% 3 Regions Financial Corp 6 309,630 11.12% 4 Old National Bancorp 4 242,592 8.71% 5 Horizon Bancorp 5 210,728 7.57% 6 Huntington Bancshares, Inc. 3 161,359 5.79% Projected HHI & Pop. Change 2020-2025 7 First Bancshares 5 122,206 4.39% 12.98% 8 Fifth Third Bancorp 2 104,968 3.77% 9.87% 10.94% 9 1st Source Corp 3 94,444 3.39% 4.46% 10 Piper Holdings 3 25,631 .92% 3.27% 2.02% Market Total 51 $ 2,785,456 U.S. Indiana Tippecanoe Co. *Indianapolis Business Journal **SNL Financial FDIC Summary of Deposits as of June 30, 2019 HHI Pop. 15
Lakeshore Market Indiana’s second-most populous market ₎ Notable Major Employers ₎ 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** Lake County, IN* Mkt. Rank Branches Deposits Share 1 First Bancshares, Inc. 28 $ 2,559,201 24.94% 2 JPMorgan Chase & Co. 19 2,055,209 20.03% 3 First Midwest Bancorp 14 1,103,746 10.76% 4 First Merchants Corporation 10 913,715 8.90% 5 Northwest Indiana Bancorp 15 823,788 8.03% Projected HHI & Pop. Change 2020-2025 6 First Financial Bancorp 8 759,383 7.40% 10.94% 7 Bank of Montreal 14 574,425 5.60% 9.87% 10.20% 8 Fifth Third Bancorp 11 499,095 4.86% 9 AMB Financial Corp 5 190,578 1.86% 3.27% 10 PNC Financial Services Group 4 187,715 1.83% 2.02% Market Total 145 $10,262,262 -0.24% U.S. Indiana Lake County *SNL Financial FDIC Summary of Deposits as of June 30, 2019 **www.nwiforum.org/nwi-becoming-an-economic powerhouse HHI Pop. 16
Fort Wayne Market ₎ 2nd Largest MSA in the State of Indiana ₎ Diversified economy (manufacturing, health care, retail trade, food Notable Major Employers 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) Allen County, IN* Mkt. Rank Branches Deposits Share 1 JP Morgan Chase & Co. 12 1,276,476 20.42% 2 Lakeland Financial Corp. 5 894,320 14.31% 3 PNC Financial Services Group 11 719,618 11.51% 4 First Merchants Corporation 8 635,312 10.16% Projected HHI & Pop. Change 2020-2025 5 Flagstar Bancorp 13 527,350 8.44% 6 Old National Bancorp 5 514,046 8.22% 10.94% 10.70% 7 STAR Financial Group, Inc. 9 465,735 7.45% 9.87% 8 1st Source Corp. 8 393,564 6.30% 9 Fifth Third Bancorp 7 279,488 4.47% 3.27% 3.11% 10 First Defiance Financial 3 99,128 1.59% 2.02% Market Total 97 $ 6,250,828 U.S. Indiana Allen County *SNL Financial FDIC Summary of Deposits as of June 30, 2019 HHI Pop. 17
Columbus, Ohio Market ₎ Second-most populous county in Ohio Notable Major Employers ₎ 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 Franklin County, OH* Mkt. Rank Branches Deposits Share 1 Huntington Bancshares 57 $ 21,259,940 42.58% 2 JP Morgan Chares & Co 51 11,806,056 23.65% 3 PNC Financial Services Group 40 4,801,164 9.62% 4 Fifth Third Bancorp 38 4,692,684 9.40% 5 Key Corp 21 1,357,761 2.72% 6 U.S. Bancorp 33 1,224,166 2.45% Projected HHI & Pop. Change 2020-2025 7 Heartland Bancorp 15 769,022 1.54% 8 First Merchants Corporation 9 607,718 1.22% 9.87% 10.18% 9 Wells Fargo & Co 1 579,729 1.16% 8.72% 10 First Financial Bancorp 5 512,166 1.03% 4.66% 3.27% Market Total 319 $ 49,928,406 0.96% *SNL Financial FDIC Summary of Deposits as of June 30, 2019 U.S. Ohio Franklin County **http://jobs-ohio.com/manufacturing/ HHI Pop. 18
Monroe, Michigan Market ₎ Monroe is located on the western shore of Lake Erie, approximately 14 miles Notable Major Employers north of Toledo, Ohio and 25 miles south of Detroit ₎ Michigan is within 500 miles of nearly half the U.S. and Canadian population and commerce centers providing unparalleled access to market ₎ $500 Million in trade crosses between Michigan and Canada daily via the Ambassador Bridge, the busiest border crossing in North America ₎ Michigan’s cost of living is 10% below the national average and ranks as the fourth most affordable state in the country Monroe County, MI* Mkt. Rank Branches Deposits Share 1 First Merchants Corporation 14 $ 1,005,960 48.66% 2 Huntington Bancshares 4 366,202 17.71 3 Fifth Third Bancorp 3 243,611 11.78% 4 KeyCorp 3 164,865 7.97% Projected HHI & Pop. Change 2020-2025 5 PNC Financial Services Group 2 163,628 7.91% 6 Old National Bancorp 1 64,881 3.14% 7 Flagstar Bancorp 1 38,283 1.85% 11.63% 8 Citizens Financial Group 1 19,936 .96% 9.87% 8.19% Market Total 29 $ 2,067,366 3.27% 0.86% 0.41% *SNL Financial FDIC Summary of Deposits as of June 30, 2019 U.S. Michigan Monroe County HHI Pop. 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
Acquisition Experience 21
Acquisition Process Continuous Relationship Building Complete and Thorough Due Diligence Process Demonstrated Pricing Discipline Detailed Project Management Integration Process Scalable Technology and Operations Center Achieve Announced Financial Return Targets 22
Operational Delivery Highlights Strategic differentiator in support of growth and scalability Operational services execution “hub” focusing on value creation Functional focus: Operations Project Management Technology Risk Management Vendor Management Credit Administration Located on the interstate less than 30 minutes north of Indianapolis + 130,000 square feet of flexible space Strategic Vendor Partners 23
Operational Delivery Highlights Customer, Digital Channel & Transaction Activity Total Households: 208,032 Online Banking/Digital Channel Treasury Management Annual Volume • Consumer: 93K Users • Automated Clearing House (ACH) • 1.2M logins monthly • # Originated: 3.4M Items ($13.9B) • 16K bill pay users • # Received: 21.5M Items ($40.2B) • 94K bill payment transactions monthly ($33M) • Mobile: 70K Users • Domestic Wires • 22.4 average logins per user, per month • # Originated: 61K Items ($21.3B) • 23K mobile deposits per month • # Received: 65K Items ($29.9B) • Business: 18K Users • International Wires • 184K logins monthly • # Originated: 1K Items ($14.7M) • 9.52% use ACH/Wire/Positive Pay • # Received: 77 Items ($5.3M) • Total ATMS: 164 + 25,000 MoneyPass ATMs Total Debit Cards Commercial Remote Deposit Capture • 200K active cards • 850 businesses using solution • 4.2M monthly card swipes • 210K deposits annually • $174M in monthly volume • 2.3M items deposited annually • $5.8B in total deposits 24
2nd Quarter 2020 Highlights . Earnings Per Share of $.62; Net Income of $33.0 Million; ROA 0.97% Earnings . Pre-Tax Pre-Provision Income of $59.1 Million . PTPP ROA 1.73%; PTPP ROE 13.18% . Total Assets of $13.8 Billion; Grew by 28.7% over 2Q 2019 Assets . Total Loans Grew approximately $900 Million from PPP Volume . Allowance & Fair Value Marks totaling 1.62% of Loans Asset Quality . $21.9 Million Provision; Allowance increased by 49.0% over 2Q 2019 . Deposit Costs Declined by 50 bps from 4Q 2019 to 47 bps Deposits . Anticipate Additional Interest Rate and Expense Reductions Linked to CD Volume and Maturities . Tangible Common Equity to Assets of 9.31% Capital . $23.04 TBV Per Share, 9.7% Increase over 2Q 2019 25
Response to COVID-19 . SBA Paycheck Protection Program institution with more than 5,000 applications and greater than $900 Million funded to businesses (FMB is, and has been, a preferred SBA Lender) CARES Act . Prepared for forgiveness phase with internal and external resources . Main Street Approved Lender . Less than $1.25 Billion in Commercial Loan modifications or ~12% of the portfolio COVID-19 Loan . Robust process for 2nd request modifications Modifications . No 2nd request modifications at the end of the quarter with limited interest thus far . Ample liquidity with Loan to Deposit Ratio of 84.8% Liquidity . Deposit Growth of $1.1 Billion or 11% over 1Q 2020 . Cash and Investment Securities total $3.4 Billion; increasing 15% over 1Q 2020 26
Response to Our Stakeholders . Protection of Clients and Employees is our priority . All Banking Center lobbies are open and serving clients Client & . Modifications and protective barriers in place to protect Employees and Clients Employee . “Safe” environment includes masked employees with appointments encouraged Support . Enhanced mobile and online services, such as increased mobile deposit limits, to allow more transactions to be completed outside the branch . Leveraged digital banking, call center and banking centers to provide uninterrupted customer service . “Return to Office” framework flexes to our environment . $1 Million in donations distributed to non profits within our communities aiding COVID-19 relief efforts Community . $1.4 Billion pledged within the Community Benefits Agreement to provide multi-year Support support through credit, philanthropy and banking center access . Director of Corporate Social Responsibility named to combine and expand efforts throughout market 27
Our Franchise ILLINOIS MICHIGAN Restore Illinois Plan Phase 4 of 5 MI Safe Start Plan Phase 2-4 of 6 Unemployment1 April 2020 16.4% Unemployment1 June 2020 14.6% April 2020 22.7% June 2020 14.8% OHIO INDIANA Responsible Restart Ohio Back on Track Indiana Plan Levels 1-3 Phase 4.5 of 5 Unemployment1 1 Unemployment April 2020 16.8% April 2020 16.9% June 2020 10.9% June 2020 11.2% 1US Bureau of Labor Statistics 28
Total Assets ($ in Millions) 2018 2019 Q1-’20 Q2-’20 1. Investments $1,633 $2,596 $2,698 $2,789 2. Loans 7,229 8,468 8,612 9,2991 3. Allowance (81) (80) (99) (121) 4. Goodwill & Intangibles 470 579 577 576 5. BOLI 225 288 290 291 6. Other 409 606 616 985 7. Total Assets $9,885 $12,457 $12,694 $13,819 1 1 Includes $883 million of SBA Paycheck Protection Program loans 29
Loan Yield and Detail (as of June 30, 2020) QTD Yield = 4.10% Commercial YTD Yield = 4.46% Agricultural Real Estate Construction Land & Agricultural Total Loans = $9.3 Billion Land Non-Owner Land Development Production 2.4% Public Occupied 6.9% 1.0% Finance/Other 22.6% Commercial Variable = $5.5 Billion 6.7% Fixed = $3.8 Billion Residential Mortgage 12.3% Home LIBOR- Prime- Equity Based Based 5.7% Other 33% 14% Variable Rates 12% Commercial Real Estate Owner-Occupied Other 9.9% Consumer 1.3% Commercial & PPP Fixed Industrial Rate Non-PPP 31.2% 10% Fixed Rate 31% 30
CRE Loan Concentration First Merchants Results in Relation to FDIC Guidelines 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 GUIDELINE #1 GUIDELINE #2 2Q2020 2Q2020 1Q2020 1Q2020 4Q2019 4Q2019 End End - - 3Q2019 3Q2019 2Q2019 2Q2019 Quarter Quarter 1Q2019 1Q2019 4Q2018 4Q2018 3Q2018 3Q2018 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 0.0% 100.0% 200.0% 300.0% 31
Investment Portfolio (as of June 30, 2020) $2.8 Billion Portfolio Tax-Exempt Mortgage-Backed Modified duration of 4.7 years Municipals Securities Tax equivalent yield of 3.02% 51% 35% Net unrealized gain of $139.1 Million Corporate Obligations U. S. Collateralized 1% Agencies Mortgage 2% Obligations 11% 32
Total Liabilities and Capital ($ in Millions) 2018 2019 Q1-’20 Q2-’20 1. Customer Non-Maturity Deposits $6,268 $8,147 $8,256 $9,567 2. Customer Time Deposits 1,241 1,478 1,411 1,276 3. Brokered Deposits 246 215 203 123 Total Deposits 7,755 9,840 9,870 10,966 4. Borrowings 538 599 716 754 5. Other Liabilities 51 98 206 177 6. Hybrid Capital 133 134 124 113 7. Common Equity 1,408 1,786 1,778 1,809 8. Total Liabilities and Capital $9,885 $12,457 $12,694 $13,819 33
Deposit Detail (as of June 30, 2020) QTD Cost = 0.47% Certificates & Certificates & Time Time Deposits YTD Cost = 0.67% Deposits <$100,000 >$100,000 Total Deposits = $11.0 Billion Savings 6% Brokered 6% Deposits Deposits 30% 1% Demand Deposits 57% 34
Capital Ratios Total Risk-Based Capital Ratio (Target = 12.50%) Common Equity Tier 1 Capital Ratio (Target = 10.00%) Tangible Common Equity Ratio (TCE) (Target = 9.00%) 15.00% 14.71% 14.61% 14.56% 14.25% 14.37% 14.29% 14.18% 14.00% 13.81% 13.80% 13.00% 12.12% 11.98% 12.05% 12.14% 12.13% 11.84% 12.00% 11.64% 11.58% 11.21% 11.00% 10.16% 10.14% 10.07% 9.97% 9.95% 9.91% 9.93% without 10.00% 9.55% PPP Loans 9.36% 9.31% 9.00% 8.00% 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 35
Net Interest Margin Q2 - '18 Q3 - '18 Q4 - '18 Q1 - '19 Q2 - '19 Q3 - '19 Q4 - '19 Q1 - '20 Q2 - '20 Net Interest Income - FTE ($millions) $ 87.2 $ 89.2 $ 90.7 $ 87.8 $ 88.4 $ 92.3 $ 101.2 $ 97.8 $ 97.1 Fair Value Accretion $ 3.8 $ 3.2 $ 3.9 $ 2.3 $ 2.2 $ 2.5 $ 5.0 $ 3.5 $ 3.7 Tax Equivalent Yield on Earning Assets 4.74% 4.88% 4.97% 4.89% 4.86% 4.77% 4.63% 4.38% 3.72% Interest Expense/Average Earning Assets 0.75% 0.83% 0.93% 1.05% 1.15% 1.15% 1.01% 0.92% 0.53% Net Interest Margin 3.99% 4.05% 4.04% 3.84% 3.71% 3.62% 3.62% 3.46% 3.19% Fair Value Accretion Effect 0.18% 0.15% 0.17% 0.09% 0.09% 0.10% 0.18% 0.12% 0.12% $104 4.50% $100 4.00% 4.05% $96 3.99% 4.04% 3.84% 3.71% 3.62% 3.62% 3.50% $92 3.46% 3.00% $88 3.19% 2.50% $84 2.00% $80 $76 1.50% $72 1.00% $68 0.50% $64 0.00% Q2 - '18 Q3 - '18 Q4 - '18 Q1 - '19 Q2 - '19 Q3 - '19 Q4 - '19 Q1 - '20 Q2 - '20 Net Interest Income - FTE ($millions) Net Interest Margin 36
Non-Interest Income ($ in Millions) 2018 2019 Q1-’20 Q2-’20 1. Service Charges on Deposit Accounts $ 21.0 $23.0 $ 6.0 $ 4.3 2. Wealth Management Fees 14.9 17.6 6.0 5.6 3. Card Payment Fees 18.0 20.2 5.9 6.1 4. Gains on Sales of Mortgage Loans 7.0 7.9 3.4 3.7 5. Derivative Hedge Fees 2.5 5.4 1.9 1.1 6. Other Customer Fees 1.9 1.7 0.4 0.3 7. Cash Surrender Value of Life Ins 4.2 4.5 1.4 1.3 8. Gains on Sales of Securities 4.3 4.4 4.6 3.1 9. Other 2.7 2.0 0.2 1.0 10. Total Non-Interest Income $76.5 $86.7 $29.8 $26.5 37
Private Wealth Advisors Delivers broad advisory capabilities and expertise through Growth in Total Assets includes expansion of a large local, engaged and empowered leaders custodial relationship AUM levels lower due to market volatility Business lines include: New business development slowed in Q2 due to Investment Management – Personal and Institutional coronavirus but pipelines have built back up to very strong Retirement Plan Services levels – driven by from business owner liquidity events as Fiduciary Administration succession plans are executed Private Banking Strong client asset retention and expansion First Merchants Investment Services (not reflected below) FMIS business moving to stronger recurring revenue model from transactional model ( > 50% ) Total Assets Total Revenue (in Millions $) (excludes First Merchants Investment Services) $25.00 $8.00 $5.00 $7.53 $22.25 $4.25 $1.93 $7.00 $4.66 $4.00 $3.82 $20.00 $17.85 $6.00 $5.09 $2.93 $2.45 $1.05 $14.68 $5.00 $2.72 $15.00 $3.00 $2.68 $2.63 $2.54 $1.78 $1.16 $12.63 $3.10 $15.11 $4.55 $4.00 $2.04 $2.78 $13.13 $0.64 $1.79 $11.59 $12.00 $2.00 $1.70 $10.00 $3.29 $3.80 $3.00 $9.82 $10.20 $1.25 $8.78 $2.71 $2.00 Assets $ (in Billions) (in $ Assets $7.29 $1.00 $5.00 $1.00 $- $- $0.00 12/31/2016 12/31/2017 12/31/2018 12/31/2019 6/30/2020 12/31/2016 12/31/2017 12/31/2018 12/31/2019 2Q19 2Q20 Annual Revenues (LHS) Quarterly Revenues (RHS) Total Assets Total Assets Under Management Total Fee Revenue FMIS Revenue Net Interest Income Core Fee Revenue 38
Mortgage Banking Delivers mortgage lending across our Mortgage Banking Revenue ($ in Millions) markets via commissions and salaried loan originators 30 $22.19 $21.02 30 $19.80 25 $17.52 Strong loan origination teams in 25 $15.77 high-growth areas of Indianapolis 20 and Columbus, OH 20 Centralized underwriting and $14.29 15 $13.52 processing $12.79 15 Strong connectivity with retail $10.52 $9.27 branches 10 10 Majority of the pipeline is driven by purchase business 5 5 12/31/2019 YTD 2489 mortgages $5.88 $6.24 $6.46 $5.62 $6.60 for $501M in volume 0 $0.62 $0.76 $1.04 $1.39 $1.30 0 2015 2016 2017 2018 2019 Servicing fees Gain on Sale Net Interest Income 39
Non-Interest Expense ($ in Millions) 2018 2019 Q1-’20 Q2-’20 1. Salary & Benefits $131.7 $144.0 $39.2 $35.7 2. Premises & Equipment 32.7 35.8 10.2 9.9 3. Intangible Asset Amortization 6.7 6.0 1.5 1.5 4. Professional & Other Outside Services 8.2 15.4 2.3 1.6 5. OREO/Credit-Related Expense 1.5 2.4 0.5 0.7 6. FDIC Expense 2.9 0.7 1.5 1.5 7. Outside Data Processing 13.2 16.5 4.2 2.6 8. Marketing 4.7 6.7 1.4 2.1 9. Other 18.4 19.3 5.3 4.4 10. Total Non-Interest Expense $220.0 $246.8 1 $66.1 $60.0 1Includes acquisition-related expenses of $13.7 million 40
Earnings ($ in Millions) 2018 2019 Q1-’20 Q2-’20 1. Net Interest Income $ 338.8 $356.7 $93.9 $93.0 2. Provision for Loan Losses (7.2) (2.8) (19.8) (21.9) 3. Net Interest Income after Provision 331.6 353.9 74.1 71.1 4. Non-Interest Income 76.5 86.7 29.8 26.5 5. Non-Interest Expense (220.0) (246.8) (66.1) (60.0) 6. Income Before Income Taxes 188.1 193.8 37.8 37.6 7. Income Tax Expense (29.0) (29.3) (3.5) (4.6) 8. Net Income Avail. for Distribution $ 159.1 $164.5 $34.3 $33.0 9. EPS $ 3.22 $ 3.191 $0.62 $0.62 10. Pre-Tax Pre-Provision ROA 2.02% 1.90% 1.84% 1.73% 11. Efficiency Ratio 50.21% 52.73%2 52.17% 47.95% 1Acquisition-related expenses reduced EPS by $0.21 2Acquisition-related expenses increased the Efficiency Ratio by 3.04% 41
Per Share Results 2019 Q1 Q2 Q3 Q4 Total 1. Earnings Per Share $ .78 $ .83 1 $ .711 $ .87 1 $ 3.191 2. Dividend Per Share $ .22 $ .26 $ .26 $ .26 $ 1.00 3. Dividend Payout Ratio 28.2% 31.3% 36.6% 29.9% 31.4% 4. TBV Per Share $20.07 $21.01 $21.26 $21.94 2020 Q1 Q2 Q3 Q4 Total 1. Earnings Per Share $ .62 $ .62 – – $ 1.24 2. Dividend Per Share $ .26 $ .26 – – $ .52 3. Dividend Payout Ratio 41.9% 41.9% – – 41.9% 4. TBV Per Share $22.46 $23.04 – – 1Acquisition-related expenses reduced EPS by $0.01 in Q2; $0.17 in Q3; $0.03 in Q4; and $0.21 for full-year 2019 42
Dividends and Tangible Book Value Quarterly Dividends Tangible Book Value $0.26 $0.26 0.26 $23.04 $21.94 0.24 $0.22 0.22 $19.12 0.20 $0.18 $16.96 0.18 $15.85 $14.68 $0.15 $13.65 0.16 $0.14 0.14 $12.17 $10.95 $0.11 0.12 $9.21 $9.64 0.10 $0.08 0.08 0.06 $0.05 0.04 $0.03 0.02 $0.01 0.00 3.77% Forward Dividend Yield Compound Annual Growth Rate of 10.13% 43
Asset Quality Summary Asset Quality – Q2-’20 Change ($ in Millions) Linked Quarter 2018 2019 Q1-'20 Q2-'20 $ % 1. Non-Accrual Loans $ 26.1 $ 16.0 $ 15.6 $ 50.1 $ 34.5 221.2% 2. Other Real Estate 2.2 7.5 8.0 7.4 (0.6) (7.5%) 3. Renegotiated Loans 1.1 0.8 0.7 1.1 0.4 57.1% 4. 90+ Days Delinquent Loans 1.9 0.1 0.3 5.0 4.7 1,566.7% 5. Total NPAs & 90+ Days Delinquent $ 31.3 $ 24.4 $ 24.6 $ 63.6 $ 39.0 158.5% 6. Total NPAs & 90+ Days/Loans & ORE 0.4% 0.3% 0.3% 0.7% 7. Classified Loans $167.4 $200.1 $ 207.0 $ 239.6 $ 32.6 15.7% 8. Classified Loans/Total Loans 2.3% 2.4% 2.4% 2.6% 44
ALLL and Fair Value Summary ($ in Millions) Q3-'19 Q4-'19 Q1-'20 Q2-'20 1 Beginning Allowance for Loan Losses (ALLL) $ 81.3 $ 80.6 $ 80.3 $ 99.5 2 Less: Net Charge-offs (Recoveries) 1.3 0.8 0.6 0.2 3 Add: Provision Expense 0.6 0.5 19.8 21.9 4 Ending Allowance for Loan Losses (ALLL) $ 80.6 $ 80.3 $ 99.5 $ 121.1 5 Specific Reserves $ 2.3 $ 0.7 $ 0.6 $ 13.0 6 ALLL/Non-Accrual Loans 354.5% 503.4% 635.5% 241.7% 7 ALLL/Non-Purchased Loans 1.16% 1.11% 1.33% 1.46% 8 ALLL/Loans 0.97% 0.95% 1.15% 1.30% 9 Fair Value Adjustment (FVA) $ 41.3 $ 36.6 $ 33.1 $ 29.3 10 Total ALLL plus FVA 121.9 116.9 132.5 150.4 11 Purchased Loans plus FVA 1,410.3 1,271.2 1,155.1 1,039.4 12 FVA/Purchased Loans plus FVA 2.93% 2.88% 2.86% 2.82% 100% 90% 80% 70% 60% 62.1% Cumulative Loan Income 50% 16.1% Cumulative Offset Charge-Offs 40% Remaining Fair Value 21.8% Adjustment 30% 20% 10% 0% 45
Total Return Performance 250 200 150 100 50 Total Return Percentage Return Total 0 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 First Merchants Corporation Russell 2000 SNL Bank >$10B 46
First Merchants… Strong & Stable Looking Forward… Industry leading profitability, Return on Assets, and Efficiency Ratios Pre-Tax Pre-Provision Earnings strength of $59.1 Million TCE of nearly 10% excluding effect of PPP Loans Diversified loan portfolio, long-term consistent asset quality and underwriting Allowance for Loan Losses & Fair Value Marks total approximately 1.62% of loans 85% loan-to-deposit ratio produces excess liquidity Corporate Social Responsibility investment fortifies our communities staying power Accelerate our delivery channel change Well positioned for this challenge . . . and for the future “Compelling value proposition” 47
Why Invest in First Merchants? High Performance Financial Metrics Attractive Long-Term Deposit Market Shares Commercial Presence that Creates a Client Preference Successful Acquisition and Integration Track Record Focused on Providing Sustainable Shareholder Value 48
Research Coverage 49
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 Weaver, Investor Relations 765.521.7619 nweaver@firstmerchants.com 50
Appendix
Appendix – Non-GAAP Reconciliation CAPITAL RATIOS (dollars in thousands): 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Total Risk-Based Capital Ratio Total Stockholders' Equity (GAAP) 1,340,328 1,361,426 1,408,260 1,455,848 1,501,636 1,749,012 1,786,437 1,777,960 1,809,095 Adjust for Accumulated Other Comprehensive (Income) Loss 1 24,868 35,409 21,422 1,595 (14,602) (25,648) (27,874) (53,656) (63,845) Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125) Add: Qualifying Capital Securities 66,030 66,086 66,141 66,197 66,252 66,308 66,363 56,419 46,248 Less: Tier 1 Capital Deductions - - - - - - - - - Less: Disallowed Goodwill and Intangible Assets (466,063) (464,658) (463,525) (462,202) (460,885) (570,098) (569,468) (568,442) (567,246) Less: Disallowed Deferred Tax Assets (2,104) (1,111) - (4,037) (2,587) (3,460) - - - Total Tier 1 Capital (Regulatory) $ 962,934 $ 997,027 $ 1,032,173 $ 1,057,276 $ 1,089,689 $ 1,215,989 $ 1,255,333 $ 1,212,156 $ 1,224,127 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 77,543 78,406 80,552 80,902 81,274 80,571 80,284 99,454 121,119 Total Risk-Based Capital (Regulatory) $ 1,105,477 $ 1,140,433 $ 1,177,725 $ 1,203,178 $ 1,235,963 $ 1,361,560 $ 1,400,617 $ 1,376,610 $ 1,410,246 Net Risk-Weighted Assets (Regulatory) $ 8,002,666 $ 8,001,191 $ 8,060,882 $ 8,176,677 $ 8,491,188 $ 9,474,126 $ 9,799,329 $ 9,978,462 $ 9,946,087 Total Risk-Based Capital Ratio (Regulatory) 13.81% 14.25% 14.61% 14.71% 14.56% 14.37% 14.29% 13.80% 14.18% Common Equity Tier 1 Capital Ratio Total Tier 1 Capital (Regulatory) $ 962,934 $ 997,027 $ 1,032,173 $ 1,057,276 $ 1,089,689 $ 1,215,989 $ 1,255,333 $ 1,212,156 $ 1,224,127 Less: Qualified Capital Securities (66,030) (66,086) (66,141) (66,197) (66,252) (66,308) (66,363) (56,419) (46,248) Add: Additional Tier 1 Capital Deductions - - - - - - - - - Common Equity Tier 1 Capital (Regulatory) $ 896,904 $ 930,941 $ 966,032 $ 991,079 $ 1,023,437 $ 1,149,681 $ 1,188,970 $ 1,155,737 $ 1,177,879 Net Risk-Weighted Assets (Regulatory) $ 8,002,666 $ 8,001,191 $ 8,060,882 $ 8,176,677 $ 8,491,188 $ 9,474,126 $ 9,799,329 $ 9,978,462 $ 9,946,087 Common Equity Tier 1 Capital Ratio (Regulatory) 11.21% 11.64% 11.98% 12.12% 12.05% 12.14% 12.13% 11.58% 11.84% 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. 52
Appendix – Non-GAAP Reconciliation TANGIBLE COMMON EQUITY RATIO (dollars in thousands): 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Total Stockholders' Equity (GAAP) $ 1,340,328 $ 1,361,426 $ 1,408,260 $ 1,455,848 $ 1,501,636 $ 1,749,012 $ 1,786,437 $ 1,777,960 $ 1,809,095 Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125) Less: Intangible Assets (473,059) (471,409) (469,784) (468,256) (466,736) (579,751) (578,881) (577,366) (575,855) Tangible Common Equity (non-GAAP) $ 867,144 $ 889,892 $ 938,351 $ 987,467 $ 1,034,775 $ 1,169,136 $ 1,207,431 $ 1,200,469 $ 1,233,115 Total Assets (GAAP) $ 9,734,715 $ 9,787,282 $ 9,884,716 $ 10,210,925 $ 10,737,857 $ 12,325,061 $ 12,457,254 $12,693,518 $ 13,819,378 Less: Intangible Assets (473,059) (471,409) (469,784) (468,256) (466,736) (579,751) (578,881) (577,366) (575,855) Tangible Assets (non-GAAP) $ 9,261,656 $ 9,315,873 $ 9,414,932 $ 9,742,669 $ 10,271,121 $ 11,745,310 $ 11,878,373 $12,116,152 $ 13,243,523 Tangible Common Equity Ratio (non-GAAP) 9.36% 9.55% 9.97% 10.14% 10.07% 9.95% 10.16% 9.91% 9.31% TANGIBLE COMMON EQUITY PER SHARE (dollars in thousands): 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Total Stockholders' Equity (GAAP) $ 454,408 $ 514,467 $ 552,236 $ 634,923 $ 726,827 $ 850,509 $ 901,657 $ 1,303,463 $ 1,408,260 $ 1,455,848 $ 1,501,636 $ 1,749,012 $ 1,786,437 $ 1,777,960 $ 1,809,095 Less: Preferred Stock (67,880) (90,783) (90,908) (125) (125) (125) (125) (125) (125) (125) (125) (125) (125) (125) (125) Less: Intangible Assets (154,019) (150,471) (149,529) (202,767) (218,755) (259,764) (258,866) (476,503) (469,784) (468,256) (466,736) (579,751) (578,881) (577,366) (575,855) Tax Benefit 2,907 2,224 2,249 4,973 6,085 6,278 5,930 6,788 5,017 4,703 4,391 7,627 7,257 6,946 6,597 Tangible Common Equity, Net of Tax (non-GAAP) $ 235,416 $ 275,437 $ 314,048 $ 437,004 $ 514,032 $ 596,898 $ 648,596 $ 833,623 $ 943,368 $ 992,170 $ 1,039,166 $ 1,176,763 $ 1,214,688 $ 1,207,415 $ 1,239,712 0 Shares Outstanding 25,574,251 28,559,707 28,692,616 35,921,761 37,669,948 40,664,258 40,912,697 49,158,238 49,349,800 49,428,468 49,456,594 55,345,672 55,368,482 53,754,137 53,795,500 Tangible Common Equity per Share (non-GAAP) $ 9.21 $ 9.64 $ 10.95 $ 12.17 $ 13.65 $ 14.68 $ 15.85 $ 16.96 $ 19.12 $ 20.07 $ 21.01 $ 21.26 $ 21.94 $ 22.46 $ 23.04 53
Appendix – Non-GAAP Reconciliation EFFICIENCY RATIO (dollars in thousands): 2018 2019 1Q20 2Q20 Non Interest Expense (GAAP) $ 219,951 $ 246,763 $ 66,171 $ 59,989 Less: Intangible Asset Amortization (6,719) (5,994) (1,514) (1,511) Less: OREO and Foreclosure Expenses (1,470) (2,428) (505) (684) Adjusted Non Interest Expense (non-GAAP) 211,762 238,341 64,152 57,794 Net Interest Income (GAAP) 338,857 356,660 93,877 93,018 Plus: Fully Taxable Equivalent Adjustment 10,732 13,085 3,894 4,088 Net Interest Income on a Fully Taxable Equivalent Basis (non-GAAP) 349,589 369,745 97,771 97,106 Non Interest Income (GAAP) 76,459 86,688 29,799 26,481 Less: Investment Securities Gains (Losses) (4,269) (4,415) (4,612) (3,068) Adjusted Non Interest Income (non-GAAP) 72,190 82,273 25,187 23,413 Adjusted Revenue (non-GAAP) 421,779 452,018 122,958 120,519 Efficiency Ratio (non-GAAP) 50.21% 52.73% 52.17% 47.95% FORWARD DIVIDEND YIELD 2Q20 Most recent quarter's dividend per share $ 0.26 Most recent quarter's dividend per share - Annualized $ 1.04 Stock Price at 6/30/20 $ 27.57 Forward Dividend Yield 3.77% 54
Appendix – Non-GAAP Reconciliation CONSTRUCTION AND INVESTMENT REAL ESTATE CONCENTRATIONS (dollars in thousands): 2018 2019 1Q20 2Q20 Total Risk-Based Capital (Subsidiary Bank Only) Total Stockholders' Equity (GAAP) $ 1,456,220 $ 1,787,006 $ 1,850,513 $ 1,882,807 Adjust for Accumulated Other Comprehensive (Income) Loss 1 19,031 (30,495) (56,807) (66,941) Less: Preferred Stock (125) (125) (125) (125) Less: Tier 1 Capital Deductions - - - - Less: Disallowed Goodwill and Intangible Assets (463,076) (569,021) (567,994) (566,799) Less: Disallowed Deferred Tax Assets - - - - Total Tier 1 Capital (Regulatory) 1,012,050 1,187,365 1,225,587 1,248,942 Allowance for Loan Losses includible in Tier 2 Capital 80,552 80,284 99,454 121,119 Total Risk-Based Capital (Regulatory) $ 1,092,602 $ 1,267,649 $ 1,325,041 $ 1,370,061 Construction, Land and Land Development Loans $ 545,729 $ 787,568 $ 643,674 $ 640,560 Concentration as a % of the Bank's Risk-Based Capital 50% 62% 49% 47% Construction, Land and Land Development Loans $ 545,729 $ 787,568 $ 643,674 $ 640,560 Investment Real Estate Loans 1,865,544 1,902,692 2,118,148 2,097,767 Total Construction and Investment RE Loans $ 2,411,273 $ 2,690,260 $ 2,761,822 $ 2,738,327 Concentration as a % of the Bank's Risk-Based Capital 221% 212% 208% 200% 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. 55