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News Details

Tuesday, October 25, 2022

MUNCIE, Ind., October 25, 2022 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)

Third Quarter 2022 Highlights:

  • Net income available to common stockholders was $63.3 million and diluted earnings per common share totaled $1.08, compared to $52.8 million and $.98 in the third quarter of 2021, and $38.5 million and $.63 in the second quarter of 2022.  
  • Completed system integration for the acquisition of Level One Bancorp, Inc. (“Level One”) during the quarter.
  • Adjusted net income available to common stockholders1 for the third quarter was $65.6 million and adjusted diluted earnings per common share1 totaled $1.12, compared to $46.6 million and $.87 in the third quarter of 2021, and $60.0 million and $1.01 in the second quarter of 2022.
  • Total loans grew $290.6 million, or 10.2% annualized on a linked quarter basis, excluding the forgiveness of $21.7 million in Paycheck Protection Program (“PPP”) loans.
  • Total deposits declined $136.0 million, or 3.7% annualized on a linked quarter basis. 
  • Nonaccrual loans totaled $43.5 million compared to $46.0 million on a linked quarter basis
  • Net interest income totaled $140.3 million, an increase of $11.6 million, or 9.0% on a linked quarter basis
Mark Hardwick, Chief Executive Officer, stated, “Despite high inflation and volatility in both the bond and stock markets, our performance continues to be steady and strong.  Margins are expanding, loan growth continues, and asset quality metrics remain at historical lows.  We believe our balance sheet mix, allowance coverage and capital levels are well positioned for an uncertain economic environment.”

Third Quarter Financial Results

First Merchants Corporation (the “Corporation) has reported third quarter 2022 net income available to common stockholders of $63.3 million compared to $52.8 million during the same period in 2021.  Diluted earnings per common share for the period totaled $1.08 per share compared to the third quarter of 2021 result of $.98 per share. Current quarter results included integration costs from the acquisition of Level One and severance expense totaling $4.0 million.

Total assets equaled $17.7 billion as of quarter-end and loans totaled $11.7 billion.  Total loans increased $2.6 billion during the past twelve months.  The acquisition of Level One contributed $1.6 billion of loans.  Excluding acquired loans, the Corporation experienced organic loan growth of $1.2 billion, or 13.8 percent, during the past twelve months. This was offset by the forgiveness of PPP loans of $230.3 million.  PPP loans accounted for $11.2 million of the period end loan portfolio balance. Investments decreased $150.7 million, or 3.4 percent, during the last twelve months and now total $4.3 billion.  

Total deposits equaled $14.4 billion as of quarter-end and increased by $2.1 billion over the past twelve months. The acquisition of Level One contributed $1.9 billion in deposits resulting in $155.3 million or 1.3% in organic deposit growth.  The balance sheet growth mix resulted in an increase in the loan to deposit ratio of 7.6% over the past twelve months with the current quarter ratio ending at 80.9 percent.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $226.7 million as of quarter-end, or 1.94 percent of total loans, an increase of $26.7 million over prior year due to the acquisition of Level One.  Net loan recoveries for the quarter totaled $0.4 million.  No provision expense was recorded during the quarter or during the last twelve months other than CECL Day 1 expense of $16.8 million due to the acquisition of Level One. Non-performing assets to total assets were 0.28% for the third quarter of 2022, a decrease of seven basis points compared to 0.35% in the third quarter of 2021.

Net-interest income totaling $140.3 million for the quarter, continued to grow with an increase of $11.6 million, or 9 percent, over prior quarter, and an increase of $35.6 million, or 34 percent compared to the third quarter of 2021.  Stated net-interest margin on a tax equivalent basis, totaling 3.55 percent, increased by 27 basis points compared to the second quarter of 2022 and 35 basis points compared to the third quarter of 2021.  Net-interest margin excluding the impact of fair value accretion and PPP loans totaled 3.47%, an increase of 28 basis points compared to 3.19% for the second quarter of 2022 and an increase of 48 basis points from the third quarter of 2021.  During the quarter, the yield on earning assets expanded 53 basis points from higher loan and investment portfolio yields as well as organic loan growth, offset by a 26 basis point increase in funding costs.

Non-interest income, totaling $29.6 million for the quarter, increased $1.3 million or 4.7% compared to the second quarter of 2022. The increase was driven by higher earnings on cash surrender value of life insurance offset by lower customer related fees and other income. Non-interest income increased $1.1 million from the third quarter of 2021 also due to higher earnings on cash surrender value of life insurance offset by lower gains on the sale of securities and other income.  The decline in other income was due to a write-down of an equity investment of $1.9 million.

Non-interest expense totaled $96.4 million for the quarter, a decrease of $0.9 million from the second quarter of 2022, and an increase of $25.0 million over the third quarter of 2021.   Integration costs and severance expense totaling $4.0 million were incurred during the quarter.

The Corporation’s total risk-based capital ratio equaled 12.84 percent, common equity tier 1 capital ratio equaled 10.40 percent, and the tangible common equity ratio totaled 6.66 percent.  These ratios continue to reflect the Corporation’s strong capital position.

1 See “Non-GAAP Financial Information” for reconciliation

CONFERENCE CALL
First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 10:30 a.m. (ET) on Tuesday, October 25, 2022. 

To access via phone,  participants will need to register using the following link where they will be provided a phone number and access code: (https://register.vevent.com/register/BI33d38f63624949c49527aaa096d2e146)

In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/988gy9uu) during the time of the call. A replay of the webcast will be available until October 25, 2023.  

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) September 30,
 2022  2021
ASSETS    
Cash and due from banks $                  119,532  $                  169,261
Interest-bearing deposits                     179,593                      369,447
Investment securities, net of allowance for credit losses of $245,000 and $245,000                  4,294,768                   4,445,516
Loans held for sale                      25,394                         5,990
Loans                11,650,002                   9,041,576
Less: Allowance for credit losses - loans                   (226,702)                    (199,972)
Net loans                11,423,300                   8,841,604
Premises and equipment                     116,306                      104,814
Federal Home Loan Bank stock                      38,056                       28,736
Interest receivable                      71,605                       53,079
Goodwill and other intangibles                     750,713                      572,323
Cash surrender value of life insurance                     306,932                      291,825
Other real estate owned                        6,454                            698
Tax asset, deferred and receivable                     142,110                       39,504
Other assets                     244,222                      137,928
TOTAL ASSETS $              17,718,985  $              15,060,725
LIABILITIES    
Deposits:    
Noninterest-bearing $               3,356,651  $               2,554,323
Interest-bearing                11,078,174                   9,794,366
Total Deposits                14,434,825                 12,348,689
Borrowings:    
Federal funds purchased                     185,000                              —
Securities sold under repurchase agreements                     194,482                      183,589
Federal Home Loan Bank advances                     643,769                      334,149
Subordinated debentures and other borrowings                     151,301                      118,558
Total Borrowings                  1,174,552                      636,296
Interest payable                        4,971                         3,736
Other liabilities                     197,971                      203,914
Total Liabilities                15,812,319                 13,192,635
STOCKHOLDERS' EQUITY    
Preferred Stock, $1,000 par value, $1,000 liquidation value:    
Authorized -- 600 cumulative shares    
Issued and outstanding - 125 cumulative shares                           125                            125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:    
Authorized -- 10,000 non-cumulative perpetual shares    
Issued and outstanding - 10,000 non-cumulative perpetual shares                      25,000                              —
Common Stock, $.125 stated value:    
Authorized -- 100,000,000 shares    
Issued and outstanding - 59,145,414 and 53,510,745 shares                        7,393                         6,689
Additional paid-in capital                  1,226,695                      988,659
Retained earnings                     961,542                      832,728
Accumulated other comprehensive income (loss)                   (314,089)                       39,889
Total Stockholders' Equity                  1,906,666                   1,868,090
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $              17,718,985  $              15,060,725


CONSOLIDATED STATEMENTS OF INCOME Three Months Ended  Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts) September 30,  September 30,
 2022  2021  2022  2021
INTEREST INCOME        
Loans receivable:        
Taxable $              128,504  $               85,319  $              314,366  $              257,426
Tax-exempt                    6,500                     5,591                   18,194                   16,475
Investment securities:        
Taxable                  10,055                     7,788                   28,937                   21,923
Tax-exempt                  17,261                   14,464                   50,348                   39,920
Deposits with financial institutions                      704                       218                     1,544                       461
Federal Home Loan Bank stock                      314                       168                       635                       434
Total Interest Income                163,338                 113,548                 414,024                 336,639
INTEREST EXPENSE        
Deposits                  16,644                     5,707                   29,423                   17,730
Federal funds purchased                      418                         —                       494                           4
Securities sold under repurchase agreements                      372                         77                       595                       239
Federal Home Loan Bank advances                    3,493                     1,389                     6,485                     4,283
Subordinated debentures and other borrowings                    2,105                     1,660                     5,780                     4,976
Total Interest Expense                  23,032                     8,833                   42,777                   27,232
NET INTEREST INCOME                140,306                 104,715                 371,247                 309,407
Provision for credit losses - loans                        —                         —                   16,755                         —
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES                140,306                 104,715                 354,492                 309,407
NON-INTEREST INCOME        
Service charges on deposit accounts                    7,165                     6,249                   21,274                   17,109
Fiduciary and wealth management fees                    7,221                     7,352                   22,187                   21,284
Card payment fees                    4,776                     4,156                   15,674                   12,682
Net gains and fees on sales of loans                    2,543                     3,955                     7,968                   16,266
Derivative hedge fees                      700                     1,028                     3,062                     2,288
Other customer fees                      501                       393                     1,573                     1,129
Earnings on cash surrender value of life insurance                    6,655                     2,468                     9,659                     5,009
Net realized gains on sales of available for sale securities                      481                     1,756                     1,137                     5,316
Other income (loss)                     (425)                     1,144                     1,257                     2,393
Total Non-Interest Income                  29,617                   28,501                   83,791                   83,476
NON-INTEREST EXPENSES        
Salaries and employee benefits                  56,002                   43,314                 154,562                 124,563
Net occupancy                    6,738                     5,576                   19,573                   17,682
Equipment                    5,997                     4,529                   17,797                   14,407
Marketing                    2,401                     1,676                     4,551                     3,922
Outside data processing fees                    6,827                     4,794                   16,071                   13,736
Printing and office supplies                      472                       265                     1,198                       861
Intangible asset amortization                    2,303                     1,463                     5,972                     4,284
FDIC assessments                    2,824                     1,552                     7,940                     4,381
Other real estate owned and foreclosure expenses                      328                        (91)                       626                       821
Professional and other outside services                    4,461                    2,767                   17,681                     8,286
Other expenses                    8,025                     5,539                   20,045                   13,834
Total Non-Interest Expenses                  96,378                   71,384                 266,016                 206,777
INCOME BEFORE INCOME TAX                  73,545                   61,832                 172,267                 186,106
Income tax expense                    9,793                     9,062                   20,938                   28,308
NET INCOME                  63,752                   52,770                 151,329                 157,798
Preferred stock dividends                      469                         —                       938                         —
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $               63,283  $               52,770  $              150,391  $              157,798
Per Share Data:        
Basic Net Income Available to Common Stockholders $                   1.08  $                   0.98  $                   2.63  $                   2.93
Diluted Net Income Available to Common Stockholders $                   1.08  $                   0.98  $                   2.62  $                   2.92
Cash Dividends Paid to Common Stockholders $                   0.32  $                   0.29  $                   0.93  $                   0.84
Average Diluted Common Shares Outstanding (in thousands)                  59,339                   53,960                   57,468                   54,093

 

FINANCIAL HIGHLIGHTS        
(Dollars in thousands) Three Months Ended  Nine  Months Ended
 September 30,  September 30,
 2022  2021  2022  2021
NET CHARGE-OFFS (RECOVERIES) $               (427)    $               (197)    $               (751)    $              4,731   
        
AVERAGE BALANCES:        
Total Assets $       17,770,623     $       15,006,087     $       17,012,930     $       14,672,596   
Total Loans         11,488,203               9,089,648             10,647,950               9,202,327   
Total Earning Assets         16,508,914             13,741,196             15,744,040             13,419,310   
Total Deposits         14,577,532             12,350,336             14,074,696             12,017,335   
Total Stockholders' Equity           2,018,156               1,889,037               1,977,299               1,858,680   
        
FINANCIAL RATIOS:        
Return on Average Assets 1.43 %  1.41 %  1.19 %  1.43 %
Return on Average Stockholders' Equity                 12.54                     11.17                     10.14                     11.32   
Return on Average Common Stockholders' Equity                 12.70                     11.17                     10.23                     11.32   
Average Earning Assets to Average Assets                 92.90                     91.57                     92.54                     91.46   
Allowance for Credit Losses - Loans as % of Total Loans                   1.94                       2.21                       1.94                       2.21   
Net Charge-offs as % of Average Loans (Annualized)                 (0.01)                    (0.01)                    (0.01)                      0.07   
Average Stockholders' Equity to Average Assets                 11.36                     12.59                     11.62                     12.67   
Tax Equivalent Yield on Average Earning Assets                   4.11                       3.46                       3.66                       3.49   
Interest Expense/Average Earning Assets                   0.56                       0.26                       0.36                       0.27   
Net Interest Margin (FTE) on Average Earning Assets                   3.55                       3.20                       3.30                       3.22   
Efficiency Ratio                 53.34                     51.18                     54.95                     50.10   
Tangible Common Book Value Per Share $              19.26     $              24.31     $              19.26     $              24.31   

 

NON-PERFORMING ASSETS          
(Dollars In Thousands) September 30,  June 30,  March 31,  December 31,  September 30,
 2022  2022  2022  2021  2021
Non-Accrual Loans $        43,508     $        45,970     $        42,698     $        43,062     $        51,502   
Renegotiated Loans               195                   233                   141                   329                   439   
Non-Performing Loans (NPL)           43,703               46,203               42,839               43,391               51,941   
Other Real Estate Owned and Repossessions            6,454                6,521                6,271                   558                   698   
Non-Performing Assets (NPA)           50,157               52,724               49,110               43,949               52,639   
90+ Days Delinquent               764                   592                2,085                   963                   157   
NPAs & 90 Day Delinquent $        50,921     $        53,316     $        51,195     $        44,912     $        52,796   
          
Allowance for Credit Losses - Loans $      226,702     $      226,275     $      195,984     $      195,397     $      199,972   
Quarterly Net Charge-offs (Recoveries)             (427)                  263                 (587)               4,575                 (197)  
NPAs / Actual Assets % 0.28 %  0.30 %  0.32 %  0.28 %  0.35 %
NPAs & 90 Day / Actual Assets % 0.29 %  0.30 %  0.33 %  0.29 %  0.35 %
NPAs / Actual Loans and OREO % 0.43 %  0.46 %  0.52 %  0.47 %  0.58 %
Allowance for Credit Losses - Loans / Actual Loans (%) 1.94 %  1.98 %  2.09 %  2.11 %  2.21 %
Net Charge-offs as % of Average Loans (Annualized) (0.01)        %  0.01 %  (0.03)        %  0.20 %  (0.01)        %

 

CONSOLIDATED BALANCE SHEETS          
(Dollars In Thousands) September 30,  June 30,  March 31,  December 31,  September 30,
 2022  2022  2022  2021  2021
ASSETS          
Cash and due from banks $         119,532  $         212,559  $         148,277  $         167,146  $         169,261
Interest-bearing deposits            179,593             136,702             395,262             474,154             369,447
Investment securities, net of allowance for credit losses         4,294,768          4,630,030          4,489,263          4,524,353          4,445,516
Loans held for sale             25,394                9,060                3,938              11,187                5,990
Loans       11,650,002        11,397,417          9,356,241          9,241,861          9,041,576
Less: Allowance for credit losses - loans          (226,702)           (226,275)           (195,984)           (195,397)           (199,972)
Net loans       11,423,300        11,171,142          9,160,257          9,046,464          8,841,604
Premises and equipment            116,306             117,757             105,883             105,655             104,814
Federal Home Loan Bank stock             38,056              38,111              26,422              28,736              28,736
Interest receivable             71,605              68,728              56,081              57,187              53,079
Goodwill and other intangibles            750,713             753,649             569,494             570,860             572,323
Cash surrender value of life insurance            306,932             323,013             291,881             291,041             291,825
Other real estate owned               6,454                6,521                6,271                   558                   698
Tax asset, deferred and receivable            142,110             114,965              73,422              35,641              39,504
Other assets            244,222             198,255             138,807             140,167             137,928
TOTAL ASSETS $     17,718,985  $     17,780,492  $     15,465,258  $     15,453,149  $     15,060,725
LIABILITIES          
Deposits:          
Noninterest-bearing $      3,356,651  $      3,435,331  $      2,745,235  $      2,709,646  $      2,554,323
Interest-bearing       11,078,174        11,135,538        10,160,718        10,022,931          9,794,366
Total Deposits       14,434,825        14,570,869        12,905,953        12,732,577        12,348,689
Borrowings:          
Federal funds purchased            185,000             100,000                     —                     —                     —
Securities sold under repurchase agreements            194,482             186,468             169,697             181,577             183,589
Federal Home Loan Bank advances            643,769             598,865             308,960             334,055             334,149
Subordinated debentures and other borrowings            151,301             151,299             118,677             118,618             118,558
Total Borrowings         1,174,552          1,036,632             597,334             634,250             636,296
Interest payable               4,971                2,978                3,589                2,762                3,736
Other liabilities            197,971             192,372             150,749             170,989             203,914
Total Liabilities       15,812,319        15,802,851        13,657,625        13,540,578        13,192,635
STOCKHOLDERS' EQUITY          
Preferred Stock, $1,000 par value, $1,000 liquidation value:          
Authorized -- 600 cumulative shares          
Issued and outstanding - 125 cumulative shares                  125                   125                   125                   125                   125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:          
Authorized -- 10,000 non-cumulative perpetual shares          
Issued and outstanding - 10,000 non-cumulative perpetual shares             25,000              25,000                     —                     —                     —
Common Stock, $.125 stated value:          
Authorized -- 100,000,000 shares          
Issued and outstanding               7,393                7,383                6,678                6,676                6,689
Additional paid-in capital         1,226,695          1,226,378             987,404             985,818             988,659
Retained earnings            961,542             917,311             897,818             864,839             832,728
Accumulated other comprehensive income (loss)          (314,089)           (198,556)             (84,392)              55,113              39,889
Total Stockholders' Equity         1,906,666          1,977,641          1,807,633          1,912,571          1,868,090
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $     17,718,985  $     17,780,492  $     15,465,258  $     15,453,149  $     15,060,725
          


CONSOLIDATED STATEMENTS OF INCOME          
(Dollars In Thousands, Except Per Share Amounts) September 30,  June 30,  March 31,  December 31,  September 30,
 2022  2022  2022  2021  2021
INTEREST INCOME          
Loans receivable:          
Taxable $      128,504     $      106,787     $        79,075     $        80,583     $        85,319   
Tax-exempt            6,500                5,990                5,704                5,635                5,591   
Investment securities:          
Taxable           10,055               10,372                8,510                8,028                7,788   
Tax-exempt           17,261               17,212               15,875               15,411               14,464   
Deposits with financial institutions               704                   610                   230                   173                   218   
Federal Home Loan Bank stock               314                   175                   146                   163                   168   
Total Interest Income         163,338             141,146             109,540             109,993             113,548   
INTEREST EXPENSE          
Deposits           16,644                8,485                4,294                5,589                5,707   
Federal funds purchased               418                     76                     —                      1                     —   
Securities sold under repurchase agreements               372                   134                     89                     75                     77   
Federal Home Loan Bank advances            3,493                1,774                1,218                1,389                1,389   
Subordinated debentures and other borrowings            2,105                2,016                1,659                1,666                1,660   
Total Interest Expense           23,032               12,485                7,260                8,720                8,833   
NET INTEREST INCOME         140,306             128,661             102,280             101,273             104,715   
Provision for credit losses - loans                 —               16,755                     —                     —                     —   
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES         140,306             111,906             102,280             101,273             104,715   
NON-INTEREST INCOME          
Service charges on deposit accounts            7,165                7,690                6,419                6,462                6,249   
Fiduciary and wealth management fees            7,221                7,634                7,332                7,078                7,352   
Card payment fees            4,776                5,175                5,723                3,937                4,156   
Net gains and fees on sales of loans            2,543                3,226                2,199                3,423                3,955   
Derivative hedge fees               700                1,444                   918                1,562                1,028   
Other customer fees               501                   662                   410                   361                   393   
Earnings on cash surrender value of life insurance            6,655                1,308                1,696                2,051                2,468   
Net realized gains on sales of available for sale securities               481                     90                   566                   358                1,756   
Other income (loss)              (425)               1,048                   634                   615                1,144   
Total Non-Interest Income          29,617               28,277               25,897               25,847               28,501   
NON-INTEREST EXPENSES          
Salaries and employee benefits           56,002               56,041               42,519               42,432               43,314   
Net occupancy            6,738                6,648                6,187                5,644                5,576   
Equipment            5,997                6,720                5,080                4,994                4,529   
Marketing            2,401                1,414                   736                1,840                1,676   
Outside data processing fees            6,827                4,881                4,363                4,581                4,794   
Printing and office supplies               472                   381                   345                   356                   265   
Intangible asset amortization            2,303                2,303                1,366                1,463                1,463   
FDIC assessments            2,824                2,924                2,192                1,862                1,552   
Other real estate owned and foreclosure expenses               328                  (266)                  564                   171                    (91)  
Professional and other outside services            4,461              10,267                2,953                3,627                2,767   
Other expenses            8,025                6,000                6,020                5,466                5,539   
Total Non-Interest Expenses           96,378               97,313               72,325               72,436               71,384   
INCOME BEFORE INCOME TAX           73,545               42,870               55,852               54,684               61,832   
Income tax expense            9,793                3,879                7,266                6,951                9,062   
NET INCOME           63,752               38,991               48,586               47,733               52,770   
Preferred stock dividends               469                   469                     —                     —                     —   
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $        63,283     $        38,522     $        48,586     $        47,733     $        52,770   
Per Share Data:          
Basic Net Income Available to Common Stockholders $           1.08     $           0.64     $           0.91     $           0.89     $           0.98   
Diluted Net Income Available to Common Stockholders $           1.08     $           0.63     $           0.91     $           0.89     $           0.98   
Cash Dividends Paid to Common Stockholders $           0.32     $           0.32     $           0.29     $           0.29     $           0.29   
Average Diluted Common Shares Outstanding (in thousands)           59,339               59,308               53,616               53,660               53,960   
FINANCIAL RATIOS:          
Return on Average Assets 1.43 %  0.88 %  1.26 %  1.25 %  1.41 %
Return on Average Stockholders' Equity            12.54                  7.62                10.28                10.10                11.17   
Return on Average Common Stockholders' Equity            12.70                  7.72                10.28                10.10                11.17   
Average Earning Assets to Average Assets            92.90                92.45                92.23                91.86                91.57   
Allowance for Credit Losses - Loans as % of Total Loans              1.94                  1.98                  2.09                  2.11                  2.21   
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)             (0.01)                 0.01                 (0.03)                 0.20                 (0.01)  
Average Stockholders' Equity to Average Assets            11.36                11.37                12.23                12.36                12.59   
Tax Equivalent Yield on Average Earning Assets              4.11                  3.58                  3.23                  3.29                  3.46   
Interest Expense/Average Earning Assets              0.56                  0.30                  0.20                  0.25                  0.26   
Net Interest Margin (FTE) on Average Earning Assets              3.55                  3.28                  3.03                  3.04                  3.20   
Efficiency Ratio            53.34                58.45                52.79                53.49                51.18   
Tangible Common Book Value Per Share $          19.26     $          20.45     $          23.26     $          25.21     $          24.31   

 

LOANS          
(Dollars In Thousands) September 30,  June 30,  March 31,  December 31,  September 30,
 2022  2022  2022  2021  2021
Commercial and industrial loans $      3,330,529  $      3,297,477  $      2,826,660  $      2,714,565  $      2,573,615
Agricultural land, production and other loans to farmers            221,954             214,904             209,077             246,442             240,686
Real estate loans:          
Construction            828,923             745,983             552,975             523,066             521,889
Commercial real estate, non-owner occupied         2,299,272          2,423,185          2,073,197          2,135,459          2,150,387
Commercial real estate, owner occupied         1,268,567          1,264,563             974,521             986,720             952,441
Residential         1,990,668          1,813,297          1,226,695          1,159,127          1,154,373
Home equity            621,619             586,108             512,641             523,754             531,307
Individuals' loans for household and other personal expenditures            173,225             157,264             147,593             146,092             135,093
Public finance and other commercial loans            915,245             894,636             832,882             806,636             781,785
Loans       11,650,002        11,397,417          9,356,241          9,241,861          9,041,576
Allowance for credit losses - loans          (226,702)           (226,275)           (195,984)           (195,397)           (199,972)
NET LOANS $     11,423,300  $     11,171,142  $      9,160,257  $      9,046,464  $      8,841,604
DEPOSITS          
(Dollars In Thousands) September 30,  June 30,  March 31,  December 31,  September 30,
 2022  2022  2022  2021  2021
Demand deposits $      8,534,950  $      8,785,889  $      7,806,033  $      7,704,190  $      7,317,399
Savings deposits         5,054,490          4,875,880          4,444,417          4,334,802          4,301,483
Certificates and other time deposits of $100,000 or more            443,588             436,942             252,033             273,379             283,396
Other certificates and time deposits            381,365             446,973             380,293             389,752             404,010
Brokered deposits             20,432              25,185              23,177              30,454              42,401
TOTAL DEPOSITS $     14,434,825  $     14,570,869  $     12,905,953  $     12,732,577  $     12,348,689

 

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS       
(Dollars in Thousands)            
 For the Three Months Ended
 September 30, 2022  September 30, 2021
 Average Balance  Interest
 Income /
Expense 		 Average
Rate 		 Average Balance  Interest
 Income /
Expense 		 Average
Rate
Assets:            
Interest-bearing deposits $         190,434  $           704  1.48 %  $         539,377  $           218  0.16 %
Federal Home Loan Bank stock             38,089               314  3.30                 28,736               168  2.34   
Investment Securities: (1)            
Taxable         2,091,608          10,055  1.92             1,843,026            7,788  1.69   
Tax-Exempt (2)         2,700,580          21,849  3.24             2,240,409          18,309  3.27   
Total Investment Securities         4,792,188          31,904  2.66             4,083,435          26,097  2.56   
Loans held for sale             20,039               266  5.74                 17,426               158  3.63   
Loans: (3)            
Commercial         8,177,895         103,227  5.05             6,745,303          70,442  4.18   
Real Estate Mortgage         1,666,173          14,701  3.53                886,469            8,142  3.67   
Installment            813,112          10,310  5.07                690,093            6,576  3.81   
Tax-Exempt (2)            810,984            8,228  4.06                750,357            7,078  3.77   
Total Loans       11,488,203         136,732  4.76             9,089,648          92,396  4.07   
Total Earning Assets       16,508,914         169,654  4.11 %        13,741,196         118,879  3.46 %
Total Non-Earning Assets         1,261,709              1,264,891     
Total Assets $     17,770,623      $     15,006,087     
Liabilities:            
Interest-bearing deposits:            
Interest-bearing deposits $      5,184,087  $        8,723  0.67 %  $      4,799,624  $        3,606  0.30 %
Money market deposits         3,096,423            5,390  0.70             2,459,205               764  0.12   
Savings deposits         1,978,596            1,538  0.31             1,788,281               486  0.11   
Certificates and other time deposits            857,033               993  0.46                758,565               851  0.45   
Total Interest-bearing Deposits       11,116,139          16,644  0.60             9,805,675            5,707  0.23   
Borrowings         1,013,893            6,388  2.52                619,768            3,126  2.02   
Total Interest-bearing Liabilities       12,130,032          23,032  0.76           10,425,443            8,833  0.34   
Noninterest-bearing deposits         3,461,393              2,544,661     
Other liabilities            161,042                 146,946     
Total Liabilities       15,752,467            13,117,050     
Stockholders' Equity         2,018,156              1,889,037     
Total Liabilities and Stockholders' Equity $     17,770,623          23,032    $     15,006,087            8,833   
Net Interest Income (FTE)   $     146,622      $     110,046   
Net Interest Spread (FTE) (4)    3.35 %      3.12 %
            
Net Interest Margin (FTE):            
Interest Income (FTE) / Average Earning Assets     4.11 %      3.46 %
Interest Expense / Average Earning Assets     0.56 %      0.26 %
Net Interest Margin (FTE) (5)    3.55 %      3.20 %
            
(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.  Annualized amounts are computed using a 30/360 day basis.
(2)  Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2022 and 2021.  These totals equal $6,316 and $5,331 for the three months ended September 30, 2022 and 2021, 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 Nine Months Ended
 September 30, 2022  September 30, 2021
 Average Balance  Interest
 Income /
Expense 		 Average
Rate 		 Average Balance  Interest
 Income /
Expense 		 Average
Rate
Assets:            
Interest-bearing deposits $         333,818  $        1,544  0.62 %  $         509,153  $           461  0.12 %
Federal Home Loan Bank stock             34,742               635  2.44                 28,736               434  2.01   
Investment Securities: (1)            
Taxable         2,079,983          28,937  1.85             1,689,697          21,923  1.73   
Tax-Exempt (2)         2,647,547          63,732  3.21             1,989,397          50,532  3.39   
Total Investment Securities         4,727,530          92,669  2.61             3,679,094          72,455  2.63   
Loans held for sale             19,020               622  4.36                 19,360               551  3.79   
Loans: (3)            
Commercial         7,731,591         253,770  4.38             6,857,968         210,502  4.09   
Real Estate Mortgage         1,350,969          35,199  3.47                924,652          26,917  3.88   
Installment            765,960          24,775  4.31                674,696          19,456  3.84   
Tax-Exempt (2)            780,410          23,030  3.93                725,651          20,854  3.83   
Total Loans       10,647,950         337,396  4.22             9,202,327         278,280  4.03   
Total Earning Assets       15,744,040         432,244  3.66 %        13,419,310         351,630  3.49 %
Total Non-Earning Assets         1,268,890              1,253,286     
Total Assets $     17,012,930      $     14,672,596     
Liabilities:            
Interest-bearing deposits:            
Interest-bearing deposits $      5,195,249  $       15,699  0.40 %  $      4,721,267  $       10,875  0.31 %
Money market deposits         2,880,603            8,392  0.39             2,295,589            2,395  0.14   
Savings deposits         1,937,761            2,895  0.20             1,730,149            1,424  0.11   
Certificates and other time deposits            828,158            2,437  0.39                809,721            3,036  0.50   
Total Interest-bearing Deposits       10,841,771          29,423  0.36             9,556,726          17,730  0.25   
Borrowings            817,894          13,354  2.18                646,326            9,502  1.96   
Total Interest-bearing Liabilities       11,659,665          42,777  0.49           10,203,052          27,232  0.36   
Noninterest-bearing deposits         3,232,925              2,460,609     
Other liabilities            143,041                 150,255     
Total Liabilities       15,035,631            12,813,916     
Stockholders' Equity         1,977,299              1,858,680     
Total Liabilities and Stockholders' Equity $     17,012,930          42,777    $     14,672,596          27,232   
Net Interest Income (FTE)   $     389,467      $     324,398   
Net Interest Spread (FTE) (4)    3.17 %      3.13 %
            
Net Interest Margin (FTE):            
Interest Income (FTE) / Average Earning Assets     3.66 %      3.49 %
Interest Expense / Average Earning Assets     0.36 %      0.27 %
Net Interest Margin (FTE) (5)    3.30 %      3.22 %
            
(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. Annualized amounts are computed using a 30/360 day basis.
(2)  Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2022 and 2021.  These totals equal $18,220 and $14,991 for the nine  months ended September 30, 2022  and 2021, 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.

 


ADJUSTED EPS EXCLUDING PAYCHECK PROTECTION PROGRAM ("PPP") AND ACQUISITION-RELATED EXPENSES - NON-GAAP
(Dollars In Thousands, Except Per Share Amounts) Three Months Ended  Nine Months Ended
 September 30,  June 30,  March 31,  December 31,  September 30,  September 30,  September 30,
 2022  2022  2022  2021  2021  2022  2021
Net Income Available to Common Stockholders - GAAP $         63,283  $        38,522  $        48,586  $         47,733  $         52,770  $        150,391  $        157,798
Adjustments:              
PPP loan income               (323)              (891)            (1,884)             (3,721)             (8,211)             (3,098)            (27,179)
Acquisition-related expenses              3,417           12,549                152                   —                   —             16,118                   —
Acquisition-related provision expense                  —           16,755                  —                   —                   —             16,755                   —
Tax on adjustment               (759)            (6,967)                425                 912               2,013             (7,301)               6,664
Adjusted Net Income Available to Common Stockholders - Non-GAAP $         65,618  $        59,968  $        47,279  $         44,924  $         46,572  $        172,865  $        137,283
              
Average Diluted Common Shares Outstanding (in thousands)            59,339           59,308           53,616             53,660             53,960             57,468             54,093
              
Diluted Earnings Per Common Share - GAAP $             1.08  $           0.63  $           0.91  $            0.89  $             0.98  $             2.62  $             2.92
Adjustments:              
PPP loan income                  —             (0.01)             (0.04)               (0.07)               (0.15)               (0.05)               (0.50)
Acquisition-related expenses 0.05  0.22                  —                   —                   —                0.27                   —
Acquisition-related provision expense                  —               0.30                  —                   —                   —                0.30                   —
Tax on adjustment              (0.01)  -0.13  0.01  0.02  0.04               (0.13)  0.12
Adjusted Diluted Earnings Per Common Share - Non-GAAP $             1.12  $           1.01  $           0.88  $            0.84  $             0.87  $             3.01  $             2.54
              


For more information, contact:
Nicole M. Weaver, Vice President and Director of Corporate Administration
765-521-7619 
http://www.firstmerchants.com

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