First Merchants Corporation Announces 2019 Results

MUNCIE, Ind., Jan. 30, 2020 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported fourth quarter 2019 net income of $47.8 million compared to $41.7 million during the same period in 2018.  Earnings per share for the period totaled $.87 per share compared to fourth quarter 2018 result of $.85 per share.  Included in the fourth quarter results are $1.9 million, or $.03 per share, of one-time charges related to the closing of our acquisition with Monroe Bank & Trust on September 1, 2019.  Net income for the year ended December 31, 2019 totaled $164.5 million, compared to $159.1 million during the same period in 2018.  Year-to-date earnings per share totaled $3.19 compared to $3.22 in 2018.  Included in the year-to-date results are $13.7 million, or $.21 per share, of one-time charges related to the acquisition of Monroe Bank & Trust.

Total assets equaled $12.5 billion as of year-end and loans totaled $8.5 billion.  The Corporation’s loan portfolio increased by $1.2 billion, or 17.1 percent, during 2019.  Investments increased $963 million, or 59 percent, during the year and now total $2.6 billion.  Total deposits equaled $9.8 billion as of year-end and increased by $2.1 billion, or 26.9 percent, during 2019.  Of the 2019 increases, Monroe Bank & Trust accounted for $733 million of loan growth and $1.1 billion of deposit growth.

The Corporation’s loan-to-deposit ratio now totals 86 percent and loan-to-asset ratio totals 68 percent.  Additionally, the Corporation’s total risk-based capital ratio equaled 14.29 percent, common equity tier 1 capital ratio equaled 12.13 percent, and the tangible common equity ratio totaled 10.16 percent.

Michael C. Rechin, President and Chief Executive Officer, stated, “Our team completed 2019 producing strong financial results that reflect aggressive market coverage as well as entry into the state of Michigan through the acquisition and integration of Monroe Bank & Trust.  Our balance sheet grew organically by 7 percent in loans and 12.6 percent in deposits.  Our loan portfolio continues to exhibit stellar credit quality which improved throughout the year.  Despite net-interest margin pressure during the year, the balance sheet growth fueled record net-interest income and earnings.  We are eager to accelerate into 2020 with a high-performing team that’s motivated to serve our marketplace with skilled advisory and growth solutions.”

Net-interest income totaled $356.7 million for the year, an increase of $17.8 million, or 5.3 percent, in the face of a net-interest margin decline of 31 basis points to 3.69 percent.  Yield on earning assets declined by 1 basis point totaling 4.78 percent and the cost of supporting liabilities increased by 30 basis points and totaled 1.09 percent.  The impact of fair value accretion on margin declined from 16 basis points in 2018 to 12 basis points in 2019.

Non-interest income totaled $86.7 million for the year, a $10.2 million, or 13.4 percent, increase from 2018.  Customer specific line items accounted for $10.4 million of increase in total non-interest income.  Customer specific line items driving the improved revenue included growth in derivative hedge fees of $2.9 million, fiduciary and wealth management fees of $2.7 million, card payment fees of $2.2 million and service charges of $2 million.  Non-interest expense totaled $246.8 million for the year ended 2019, a $26.8 million increase from 2018.  Of the increase, merger-related expenses totaled $13.7 million.

The Corporation’s provision expense totaled $2.8 million for 2019 as net charge-offs were $3.1 million.  The allowance for loan losses totaled $80.3 million as of December 31, 2019, declining slightly from 2018 as delinquent, impaired, and non-accrual loans declined during 2019.

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, January 30, 2020.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's fourth quarter earnings release. International callers please call +1 412-317-1073.  A replay of the call will be available until February 29, 2020. 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 10137476.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme200130.html during the time of the call.  A replay of the web cast will be available until January 30, 2021.

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)	December 31,
	2019				2018
ASSETS
Cash and cash equivalents	$	177,201			$	139,247
Interest-bearing time deposits	118,263				36,963
Investment securities	2,596,063				1,632,582
Loans held for sale	9,037				4,778
Loans	8,459,310				7,224,467
Less: Allowance for loan losses	(80,284		)		(80,552		)
Net loans	8,379,026				7,143,915
Premises and equipment	113,055				93,420
Federal Home Loan Bank stock	28,736				24,588
Interest receivable	48,901				40,881
Goodwill and other intangibles	578,880				469,784
Cash surrender value of life insurance	288,206				224,939
Other real estate owned	7,527				2,179
Tax asset, deferred and receivable	12,165				23,668
Other assets	100,194				47,772
TOTAL ASSETS	$	12,457,254			$	9,884,716
LIABILITIES
Deposits:
Noninterest-bearing	$	1,736,396			$	1,447,907
Interest-bearing	8,103,560				6,306,686
Total Deposits	9,839,956				7,754,593
Borrowings:
Federal funds purchased	55,000				104,000
Securities sold under repurchase agreements	187,946				113,512
Federal Home Loan Bank advances	351,072				314,986
Subordinated debentures and term loans	138,685				138,463
Total Borrowings	732,703				670,961
Interest payable	6,754				5,607
Other liabilities	91,404				45,295
Total Liabilities	10,670,817				8,476,456
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 - 55,368,482 and 49,349,800 shares	6,921				6,169
Additional paid-in capital	1,054,997				840,052
Retained earnings	696,520				583,336
Accumulated other comprehensive income (loss)	27,874				(21,422		)
Total Stockholders' Equity	1,786,437				1,408,260
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	12,457,254			$	9,884,716

 

CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended								Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts)	December 31,								December 31,
	2019				2018				2019				2018
INTEREST INCOME
Loans receivable:
Taxable	$	102,617			$	91,092			$	382,772			$	342,501
Tax-exempt	4,671				3,873				17,568				14,862
Investment securities:
Taxable	7,993				5,553				27,815				21,597
Tax-exempt	8,995				6,644				31,655				25,509
Deposits with financial institutions	1,203				1,207				4,225				2,241
Federal Home Loan Bank stock	342				284				1,370				1,234
Total Interest Income	125,821				108,653				465,405				407,944
INTEREST EXPENSE
Deposits	24,074				16,690				91,585				51,542
Federal funds purchased	26				48				251				718
Securities sold under repurchase agreements	367				243				1,424				762
Federal Home Loan Bank advances	1,776				1,691				7,176				7,832
Subordinated debentures and term loans	1,994				2,097				8,309				8,233
Total Interest Expense	28,237				20,769				108,745				69,087
NET INTEREST INCOME	97,584				87,884				356,660				338,857
Provision for loan losses	500				1,664				2,800				7,227
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	97,084				86,220				353,860				331,630
OTHER INCOME
Service charges on deposit accounts	6,312				5,516				22,951				20,950
Fiduciary and wealth management fees	5,384				3,842				17,562				14,906
Card payment fees	5,430				4,393				20,243				18,035
Net gains and fees on sales of loans	2,633				1,767				7,891				7,029
Derivative hedge fees	1,405				645				5,357				2,493
Other customer fees	434				511				1,664				1,860
Earnings on cash surrender value of life insurance	1,458				1,074				4,537				4,218
Net realized gains on sales of available for sale securities	1,039				253				4,415				4,269
Other income	150				1,179				2,068				2,699
Total Other Income	24,245				19,180				86,688				76,459
OTHER EXPENSES
Salaries and employee benefits	39,358				34,350				144,037				131,704
Net occupancy	5,311				4,737				19,584				18,341
Equipment	4,429				3,627				16,218				14,334
Marketing	1,492				1,107				6,650				4,681
Outside data processing fees	4,428				3,367				16,476				13,215
Printing and office supplies	484				433				1,445				1,425
Intangible asset amortization	1,590				1,625				5,994				6,719
FDIC assessments	—				634				717				2,920
Other real estate owned and foreclosure expenses	66				251				2,428				1,470
Professional and other outside services	2,899				3,002				15,410				8,176
Other expenses	5,144				4,605				17,804				16,966
Total Other Expenses	65,201				57,738				246,763				219,951
INCOME BEFORE INCOME TAX	56,128				47,662				193,785				188,138
Income tax expense	8,298				5,949				29,325				28,999
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	47,830			$	41,713			$	164,460			$	159,139
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.87			$	0.85			$	3.20			$	3.23
Diluted Net Income Available to Common Stockholders	$	0.87			$	0.85			$	3.19			$	3.22
Cash Dividends Paid	$	0.26			$	0.22			$	1.00			$	0.84
Average Diluted Shares Outstanding (in thousands)	55,520				49,511				51,561				49,471

 

FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2019				2018				2019				2018
NET CHARGE-OFFS	$	787			$	(482	)		$	3,068			$	1,707
AVERAGE BALANCES:
Total Assets	$	12,479,039			$	9,923,001			$	11,091,320			$	9,689,057
Total Loans	8,358,683				7,102,552				7,690,190				6,997,771
Total Earning Assets	11,194,954				8,971,432				10,015,771				8,736,367
Total Deposits	9,926,794				7,875,998				8,782,634				7,569,482
Total Stockholders' Equity	1,768,848				1,379,453				1,569,615				1,343,861
FINANCIAL RATIOS:
Return on Average Assets	1.53		%		1.68		%		1.48		%		1.64		%
Return on Average Stockholders' Equity	10.82				12.10				10.48				11.84
Return on Average Common Stockholders' Equity	10.82				12.10				10.48				11.84
Average Earning Assets to Average Assets	89.71				90.41				90.30				90.17
Allowance for Loan Losses as % of Total Loans	0.95				1.11				0.95				1.11
Net Charge-offs as % of Average Loans (Annualized)	0.04				(0.03		)		0.04				0.02
Average Stockholders' Equity to Average Assets	14.17				13.90				14.15				13.87
Tax Equivalent Yield on Average Earning Assets	4.63				4.97				4.78				4.79
Interest Expense/Average Earning Assets	1.01				0.93				1.09				0.79
Net Interest Margin (FTE) on Average Earning Assets	3.62				4.04				3.69				4.00
Efficiency Ratio	51.07				50.97				52.73				50.21
Tangible Common Book Value Per Share	$	21.94			$	19.12			$	21.94			$	19.12

 

NON-PERFORMING ASSETS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
	2019				2019				2019				2019				2018
Non-Accrual Loans	$	15,949			$	22,728			$	25,635			$	27,949			$	26,148
Renegotiated Loans	841				576				640				709				1,103
Non-Performing Loans (NPL)	16,790				23,304				26,275				28,658				27,251
Other Real Estate Owned	7,527				7,156				1,131				1,877				2,179
Non-Performing Assets (NPA)	24,317				30,460				27,406				30,535				29,430
90+ Days Delinquent	69				82				209				134				1,855
NPAs & 90 Day Delinquent	$	24,386			$	30,542			$	27,615			$	30,669			$	31,285
Allowance for Loan Losses	$	80,284			$	80,571			$	81,274			$	80,902			$	80,552
Quarterly Net Charge-offs	787				1,303				128				850				(482		)
NPAs / Actual Assets %	0.20		%		0.25		%		0.26		%		0.30		%		0.30		%
NPAs & 90 Day / Actual Assets %	0.20		%		0.25		%		0.26		%		0.30		%		0.32		%
NPAs / Actual Loans and OREO %	0.29		%		0.37		%		0.36		%		0.42		%		0.41		%
Allowance for Loan Losses / Actual Loans (%)	0.95		%		0.97		%		1.08		%		1.11		%		1.11		%
Net Charge-offs as % of Average Loans (Annualized)	0.04		%		0.07		%		0.01		%		0.05		%		(0.03		)%

 

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
	2019				2019				2019				2019				2018
ASSETS
Cash and cash equivalents	$	177,201			$	202,383			$	128,185			$	115,878			$	139,247
Interest-bearing time deposits	118,263				230,101				129,614				70,672				36,963
Investment securities	2,596,063				2,489,420				2,092,924				1,862,659				1,632,582
Loans held for sale	9,037				7,910				5,854				3,330				4,778
Loans	8,459,310				8,299,260				7,511,370				7,299,320				7,224,467
Less: Allowance for loan losses	(80,284		)		(80,571		)		(81,274		)		(80,902		)		(80,552		)
Net loans	8,379,026				8,218,689				7,430,096				7,218,418				7,143,915
Premises and equipment	113,055				113,446				91,767				91,863				93,420
Federal Home Loan Bank stock	28,736				28,736				24,588				24,588				24,588
Interest receivable	48,901				45,923				45,150				40,931				40,881
Goodwill and other intangibles	578,880				579,751				466,736				468,256				469,784
Cash surrender value of life insurance	288,206				286,747				226,241				225,928				224,939
Other real estate owned	7,527				7,156				1,131				1,877				2,179
Tax asset, deferred and receivable	12,165				15,187				12,340				16,094				23,668
Other assets	100,194				99,612				83,231				70,431				47,772
TOTAL ASSETS	$	12,457,254			$	12,325,061			$	10,737,857			$	10,210,925			$	9,884,716
LIABILITIES
Deposits:
Noninterest-bearing	$	1,736,396			$	1,777,365			$	1,353,165			$	1,381,183			$	1,447,907
Interest-bearing	8,103,560				7,988,086				6,966,163				6,666,615				6,306,686
Total Deposits	9,839,956				9,765,451				8,319,328				8,047,798				7,754,593
Borrowings:
Federal funds purchased	55,000				—				75,000				20,000				104,000
Securities sold under repurchase agreements	187,946				191,603				119,674				111,783				113,512
Federal Home Loan Bank advances	351,072				354,609				460,042				345,013				314,986
Subordinated debentures and term loans	138,685				138,630				138,574				138,519				138,463
Total Borrowings	732,703				684,842				793,290				615,315				670,961
Interest payable	6,754				7,855				6,740				7,313				5,607
Other liabilities	91,404				117,901				116,863				84,651				45,295
Total Liabilities	10,670,817				10,576,049				9,236,221				8,755,077				8,476,456
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	6,921				6,918				6,182				6,179				6,169
Additional paid-in capital	1,054,997				1,053,148				841,365				839,919				840,052
Retained earnings	696,520				663,173				639,362				611,220				583,336
Accumulated other comprehensive income (loss)	27,874				25,648				14,602				(1,595		)		(21,422		)
Total Stockholders' Equity	1,786,437				1,749,012				1,501,636				1,455,848				1,408,260
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	12,457,254			$	12,325,061			$	10,737,857			$	10,210,925			$	9,884,716

 

CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	December 31,				September 30,				June 30,				March 31,				December 31,
	2019				2019				2019				2019				2018
INTEREST INCOME
Loans receivable:
Taxable	$	102,617			$	96,850			$	92,824			$	90,481			$	91,092
Tax-exempt	4,671				4,500				4,244				4,153				3,873
Investment securities:
Taxable	7,993				6,729				6,998				6,095				5,553
Tax-exempt	8,995				8,335				7,454				6,871				6,644
Deposits with financial institutions	1,203				1,363				784				875				1,207
Federal Home Loan Bank stock	342				355				335				338				284
Total Interest Income	125,821				118,132				112,639				108,813				108,653
INTEREST EXPENSE
Deposits	24,074				24,830				23,087				19,594				16,690
Federal funds purchased	26				15				117				93				48
Securities sold under repurchase agreements	367				385				342				330				243
Federal Home Loan Bank advances	1,776				1,894				1,692				1,814				1,691
Subordinated debentures and term loans	1,994				2,076				2,123				2,116				2,097
Total Interest Expense	28,237				29,200				27,361				23,947				20,769
NET INTEREST INCOME	97,584				88,932				85,278				84,866				87,884
Provision for loan losses	500				600				500				1,200				1,664
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	97,084				88,332				84,778				83,666				86,220
OTHER INCOME
Service charges on deposit accounts	6,312				6,107				5,437				5,095				5,516
Fiduciary and wealth management fees	5,384				4,429				3,931				3,818				3,842
Card payment fees	5,430				5,158				4,829				4,826				4,393
Net gains and fees on sales of loans	2,633				2,227				1,736				1,295				1,767
Derivative hedge fees	1,405				1,684				1,487				781				645
Other customer fees	434				450				341				439				511
Earnings on cash surrender value of life insurance	1,458				1,144				946				989				1,074
Net realized gains on sales of available for sale securities	1,039				393				1,843				1,140				253
Other income	150				524				1,064				330				1,179
Total Other Income	24,245				22,116				21,614				18,713				19,180
OTHER EXPENSES
Salaries and employee benefits	39,358				38,942				32,709				33,028				34,350
Net occupancy	5,311				4,777				4,469				5,027				4,737
Equipment	4,429				4,030				4,117				3,642				3,627
Marketing	1,492				1,332				2,752				1,074				1,107
Outside data processing fees	4,428				4,435				3,929				3,684				3,367
Printing and office supplies	484				312				334				315				433
Intangible asset amortization	1,590				1,356				1,520				1,528				1,625
FDIC assessments	—				(668		)		678				707				634
Other real estate owned and foreclosure expenses	66				294				903				1,165				251
Professional and other outside services	2,899				8,251				2,376				1,884				3,002
Other expenses	5,144				4,293				3,800				4,567				4,605
Total Other Expenses	65,201				67,354				57,587				56,621				57,738
INCOME BEFORE INCOME TAX	56,128				43,094				48,805				45,758				47,662
Income tax expense	8,298				6,337				7,749				6,941				5,949
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	47,830			$	36,757			$	41,056			$	38,817			$	41,713
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.87			$	0.71			$	0.83			$	0.79			$	0.85
Diluted Net Income Available to Common Stockholders	$	0.87			$	0.71			$	0.83			$	0.78			$	0.85
Cash Dividends Paid	$	0.26			$	0.26			$	0.26			$	0.22			$	0.22
Average Diluted Shares Outstanding (in thousands)	55,520				51,570				49,550				49,541				49,511
FINANCIAL RATIOS:
Return on Average Assets	1.53		%		1.30		%		1.56		%		1.54		%		1.68		%
Return on Average Stockholders' Equity	10.82				9.21				11.10				10.86				12.10
Return on Average Common Stockholders' Equity	10.82				9.21				11.10				10.86				12.10
Average Earning Assets to Average Assets	89.71				90.37				90.66				90.60				90.41
Allowance for Loan Losses as % of Total Loans	0.95				0.97				1.08				1.11				1.11
Net Charge-offs as % of Average Loans (Annualized)	0.04				0.07				0.01				0.05				(0.03		)
Average Stockholders' Equity to Average Assets	14.17				14.16				14.09				14.18				13.90
Tax Equivalent Yield on Average Earning Assets	4.63				4.77				4.86				4.89				4.97
Interest Expense/Average Earning Assets	1.01				1.15				1.15				1.05				0.93
Net Interest Margin (FTE) on Average Earning Assets	3.62				3.62				3.71				3.84				4.04
Efficiency Ratio	51.07				57.60				51.00				51.18				50.97
Tangible Common Book Value Per Share	$	21.94			$	21.26			$	21.01			$	20.07			$	19.12

 

LOANS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
	2019				2019				2019				2019				2018
Commercial and industrial loans	$	2,109,879			$	2,034,311			$	1,877,042			$	1,788,628			$	1,726,664
Agricultural production financing and other loans to farmers	93,861				90,462				83,452				80,357				92,404
Real estate loans:
Construction	787,568				670,138				624,548				542,501				545,729
Commercial and farmland	3,052,698				3,144,649				2,821,689				2,838,798				2,832,102
Residential	1,143,217				1,155,403				993,802				976,668				966,421
Home equity	588,984				601,335				548,006				536,208				528,157
Individuals' loans for household and other personal expenditures	135,989				131,246				98,384				108,216				99,788
Public finance and other commercial loans	547,114				471,716				464,447				427,944				433,202
Loans	8,459,310				8,299,260				7,511,370				7,299,320				7,224,467
Allowance for loan losses	(80,284		)		(80,571		)		(81,274		)		(80,902		)		(80,552		)
NET LOANS	$	8,379,026			$	8,218,689			$	7,430,096			$	7,218,418			$	7,143,915

 

DEPOSITS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
	2019				2019				2019				2019				2018
Demand deposits	$	5,250,568			$	5,183,971			$	4,309,473			$	4,101,156			$	3,985,178
Savings deposits	2,896,177				2,808,745				2,358,720				2,338,266				2,282,701
Certificates and other time deposits of $100,000 or more	736,843				731,693				720,536				670,199				593,592
Other certificates and time deposits	741,759				811,780				729,392				704,527				646,682
Brokered deposits	214,609				229,262				201,207				233,650				246,440
TOTAL DEPOSITS	$	9,839,956			$	9,765,451			$	8,319,328			$	8,047,798			$	7,754,593

 

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	December 31, 2019											December 31, 2018
	Average Balance				Interest  Income / Expense				Average Rate			Average Balance				Interest  Income / Expense				Average Rate
Assets:
Interest-bearing time deposits	$	291,616			$	1,203			1.65	%		$	210,121			$	1,207			2.30	%
Federal Home Loan Bank stock	28,736				342				4.76			24,588				284				4.62
Investment Securities: (1)
Taxable	1,339,068				7,993				2.39			843,514				5,553				2.63
Tax-Exempt (2)	1,176,851				11,386				3.87			790,657				8,410				4.25
Total Investment Securities	2,515,919				19,379				3.08			1,634,171				13,963				3.42
Loans held for sale	23,712				267				4.50			15,142				177				4.68
Loans: (3)
Commercial	6,111,179				81,374				5.33			5,224,202				73,416				5.62
Real Estate Mortgage	916,247				11,256				4.91			739,325				8,375				4.53
Installment	747,166				9,720				5.20			649,717				9,124				5.62
Tax-Exempt (2)	560,379				5,913				4.22			474,166				4,903				4.14
Total Loans	8,358,683				108,530				5.19			7,102,552				95,995				5.41
Total Earning Assets	11,194,954				129,454				4.63	%		8,971,432				111,449				4.97	%
Net unrealized gain (loss) on securities available for sale	31,979											(24,206		)
Allowance for loan losses	(80,491		)									(78,926		)
Cash and cash equivalents	179,582											140,065
Premises and equipment	113,333											93,589
Other assets	1,039,682											821,047
Total Assets	$	12,479,039										$	9,923,001
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	3,513,297			$	9,077			1.03	%		$	2,563,703			$	5,565			0.87	%
Money market deposits	1,529,156				4,054				1.06			1,157,022				2,450				0.85
Savings deposits	1,406,548				2,149				0.61			1,134,559				2,016				0.71
Certificates and other time deposits	1,736,058				8,794				2.03			1,542,222				6,659				1.73
Total Interest-bearing Deposits	8,185,059				24,074				1.18			6,397,506				16,690				1.04
Borrowings	669,756				4,163				2.49			611,255				4,079				2.67
Total Interest-bearing Liabilities	8,854,815				28,237				1.28			7,008,761				20,769				1.19
Noninterest-bearing deposits	1,741,735											1,478,492
Other liabilities	113,641											56,295
Total Liabilities	10,710,191											8,543,548
Stockholders' Equity	1,768,848											1,379,453
Total Liabilities and Stockholders' Equity	$	12,479,039			28,237							$	9,923,001			20,769
Net Interest Income (FTE)					$	101,217										$	90,680
Net Interest Spread (FTE) (4)									3.35	%										3.78	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets									4.63	%										4.97	%
Interest Expense / Average Earning Assets									1.01	%										0.93	%
Net Interest Margin (FTE) (5)									3.62	%										4.04	%
(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 $3,633 and $2,796 for the three months ended December 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.

 

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Twelve Months Ended
	December 31, 2019											December 31, 2018
	Average Balance				Interest  Income / Expense				Average Rate			Average Balance				Interest  Income / Expense				Average Rate
Assets:
Interest-bearing time deposits	$	211,683			$	4,225			2.00	%		$	110,232			$	2,241			2.03	%
Federal Home Loan Bank stock	25,645				1,370				5.34			24,538				1,234				5.03
Investment Securities: (1)
Taxable	1,101,247				27,815				2.53			841,203				21,597				2.57
Tax-Exempt (2)	987,006				40,070				4.06			762,623				32,290				4.23
Total Investment Securities	2,088,253				67,885				3.25			1,603,826				53,887				3.36
Loans held for sale	18,402				780				4.24			11,425				540				4.73
Loans: (3)
Commercial	5,631,146				306,139				5.44			5,143,576				274,302				5.33
Real Estate Mortgage	811,188				37,782				4.66			733,709				33,549				4.57
Installment	701,459				38,071				5.43			640,310				34,110				5.33
Tax-Exempt (2)	527,995				22,238				4.21			468,751				18,813				4.01
Total Loans	7,690,190				405,010				5.27			6,997,771				361,314				5.16
Total Earning Assets	10,015,771				478,490				4.78	%		8,736,367				418,676				4.79	%
Net unrealized gain on securities available for sale	17,676											(14,790		)
Allowance for loan losses	(81,000		)									(77,444		)
Cash and cash equivalents	142,857											131,925
Premises and equipment	99,343											94,567
Other assets	896,673											818,432
Total Assets	$	11,091,320										$	9,689,057
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	3,070,861			$	33,921			1.10	%		$	2,319,081			$	17,577			0.76	%
Money market deposits	1,300,064				14,111				1.09			1,097,762				6,721				0.61
Savings deposits	1,242,468				9,464				0.76			1,065,031				5,230				0.49
Certificates and other time deposits	1,673,292				34,089				2.04			1,514,271				22,014				1.45
Total Interest-bearing Deposits	7,286,685				91,585				1.26			5,996,145				51,542				0.86
Borrowings	644,729				17,160				2.66			718,061				17,545				2.44
Total Interest-bearing Liabilities	7,931,414				108,745				1.37			6,714,206				69,087				1.03
Noninterest-bearing deposits	1,495,949											1,573,337
Other liabilities	94,342											57,653
Total Liabilities	9,521,705											8,345,196
Stockholders' Equity	1,569,615											1,343,861
Total Liabilities and Stockholders' Equity	$	11,091,320			108,745							$	9,689,057			69,087
Net Interest Income (FTE)					$	369,745										$	349,589
Net Interest Spread (FTE) (4)									3.41	%										3.76	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets									4.78	%										4.79	%
Interest Expense / Average Earning Assets									1.09	%										0.79	%
Net Interest Margin (FTE) (5)									3.69	%										4.00	%
(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 $13,085 and $10,732 for the twelve months ended December 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.

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