MUNCIE, Ind., July 23, 2020 (GLOBE NEWSWIRE) — First Merchants Corporation (NASDAQ – FRME) has reported second quarter 2020 net income of $33 million compared to $41.1 million during the same period in 2019.  Earnings per share for the period totaled $.62 per share compared to the second quarter of 2019 result of $.83 per share.  Year-to-date net income totaled $67.3 million compared to $79.9 million during the six months ended June 30, 2019.  Year-to-date earnings per share totaled $1.24 compared to $1.61 during the same period in 2019.

Total assets equaled $13.8 billion as of the quarter-ended June 30, 2020 and loans totaled $9.3 billion.  The Corporation’s loan portfolio increased by $1.8 billion, or 23.7 percent, during the past twelve months.  Investments increased $696 million, or 33.3 percent, during the same period and now totals $2.8 billion.  Total deposits equaled $11 billion as of quarter-end and increased by $2.6 billion, or 31.8 percent, from the same period in 2019.  Our acquisition of Monroe Bank & Trust (“MBT”), which closed on September 1, 2019, accounted for $733 million of loan growth and $1.1 billion of deposit growth.  Additionally, Payroll Protection Program (“PPP”) loans accounted for $883 million of the period’s loan growth.  

The loan to deposit ratio now totals 84.8 percent and loan to asset ratio totals 67.3 percent.  As of June 30, 2020, the Corporation’s total risk-based capital ratio equaled 14.2 percent, the common equity tier 1 capital ratio equaled 11.8 percent, and the tangible common equity ratio totaled 9.31 percent.  Excluding PPP loans, our tangible common equity ratio totaled 9.93 percent.

The Corporation’s provision expense totaled $21.9 million and net charge-offs for the quarter totaled just $230,000.  The allowance for loan losses totaled $121.1 million as of June 30, 2020, up from $81.3 million as of June 30, 2019.   The Corporation chose to defer the adoption of the current expected credit loss (“CECL”) model so allowance for loan losses were calculated under the incurred loss method.  Allowance for loan losses is 1.30% of total loans, 1.62% including remaining fair value marks with allowance, and 1.79% excluding PPP loans from total loans. The increased year-to-date provision expense of $41.6 million primarily reflects our view of increased credit risk related to the COVID-19 pandemic. Remaining fair value marks on purchased loans is $29.3 million.

Michael C. Rechin, President and Chief Executive Officer, stated, “Our financial results for the second quarter 2020 combine stressed economic conditions and net interest margin pressure with the opportunity to provide our clients access to the SBA’s Payroll Protection Program.  Our bankers really leaned into the PPP offering on behalf of businesses throughout our markets because it fits our culture and strategy as a largely commercial bank.   Several thousand borrowers looked to the bank to assist their efforts in employee retention in a most challenging time.  In the near-term, the magnitude of our participation grew our balance sheet substantially in loans and deposits.  The funding affords borrowers time to weather the COVID-19 initiated recession.”  Rechin also added, “Despite the reopening of Midwest economies and reducing unemployment, we recorded a $22 million provision reflecting our uncertain economic environment.  With stay at home orders in place through much of the quarter, our technology proved to be a key point of service delivery for our clients.  The results we achieved in pre-tax, pre-provision earnings, capital growth and efficiency remain at top quartile performance levels.”

Net-interest income for the quarter totaled $93 million, down $859,000 from the first quarter of 2020, as linked quarterly net interest margin declined by 27 basis points totaling 3.19 percent.  Yields on earning assets decreased by 66 basis points totaling 3.72 percent and the cost of supporting liabilities decreased by 39 basis points and totaled 53 basis points.  The addition of $883 million of PPP loans negatively impacted margin by 6 basis points, but the major driver was the decline in LIBOR from 99 basis points as of March 31, 2020 to just 16 basis points on June 30, 2020.

Non-interest income totaled $26.5 million for the quarter, a $4.9 million increase over the second quarter of 2019, but a $3.3 million decrease from the first quarter of 2020.  Gains from the sale of mortgage loans remain strong given the rate environment, while service charges on deposit accounts were less than planned due to higher than normal average balances per account.  Non-interest expense totaled $60 million for the quarter compared to $57.6 million in the second quarter of 2019 and $66.2 million in the first quarter of 2020.  The primary drivers of the linked quarterly results were a $2.3 million deferral of salary expense related to PPP loan originations, a $1.1 million reduction in bonus accruals and a $1.6 million decrease in processing fees related to termination of a debit card rewards program.

CONFERENCE CALL

First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, July 23, 2020.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation’s second quarter earnings release. International callers please call +1 412-317-1073.  A replay of the call will be available until August 21, 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 10144066.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme200723.html during the time of the call.  A replay of the web cast will be available until July 23, 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) June 30,
  2020   2019
ASSETS      
Cash and cash equivalents $ 229,759       $ 128,185  
Interest-bearing time deposits 380,021       129,614  
Investment securities 2,789,379       2,092,924  
Loans held for sale 901       5,854  
Loans 9,298,541       7,511,370  
Less: Allowance for loan losses (121,119 )     (81,274 )
Net loans 9,177,422       7,430,096  
Premises and equipment 112,548       91,767  
Federal Home Loan Bank stock 28,736       24,588  
Interest receivable 57,063       45,150  
Goodwill and other intangibles 575,855       466,736  
Cash surrender value of life insurance 290,715       226,241  
Other real estate owned 7,367       1,131  
Tax asset, deferred and receivable 13,126       12,340  
Other assets 156,486       83,231  
TOTAL ASSETS $ 13,819,378       $ 10,737,857  
LIABILITIES      
Deposits:      
Noninterest-bearing $ 2,260,351       $ 1,353,165  
Interest-bearing 8,705,637       6,966,163  
Total Deposits 10,965,988       8,319,328  
Borrowings:      
Federal funds purchased       75,000  
Securities sold under repurchase agreements 181,150       119,674  
Federal Home Loan Bank advances 400,817       460,042  
Subordinated debentures and other borrowings 285,197       138,574  
Total Borrowings 867,164       793,290  
Interest payable 5,587       6,740  
Other liabilities 171,544       116,863  
Total Liabilities 12,010,283       9,236,221  
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 – 53,795,500 and 49,456,594 shares 6,724       6,182  
Additional paid-in capital 1,002,962       841,365  
Retained earnings 735,439       639,362  
Accumulated other comprehensive income (loss) 63,845       14,602  
Total Stockholders’ Equity 1,809,095       1,501,636  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 13,819,378       $ 10,737,857  
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended   Six Months Ended
(Dollars In Thousands, Except Per Share Amounts) June 30,   June 30,
  2020   2019   2020   2019
INTEREST INCOME              
Loans receivable:              
Taxable $ 87,312     $ 92,824     $ 183,964     $ 183,305  
Tax-exempt 5,359     4,244     10,674     8,397  
Investment securities:              
Taxable 6,147     6,998     13,778     13,093  
Tax-exempt 10,019     7,454     19,354     14,325  
Deposits with financial institutions 134     784     709     1,659  
Federal Home Loan Bank stock 281     335     580     673  
Total Interest Income 109,252     112,639     229,059     221,452  
INTEREST EXPENSE              
Deposits 12,707     23,087     34,455     42,681  
Federal funds purchased 2     117     113     210  
Securities sold under repurchase agreements 92     342     444     672  
Federal Home Loan Bank advances 1,794     1,692     3,568     3,506  
Subordinated debentures and other borrowings 1,639     2,123     3,584     4,239  
Total Interest Expense 16,234     27,361     42,164     51,308  
NET INTEREST INCOME 93,018     85,278     186,895     170,144  
Provision for loan losses 21,895     500     41,647     1,700  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 71,123     84,778     145,248     168,444  
OTHER INCOME              
Service charges on deposit accounts 4,312     5,437     10,282     10,532  
Fiduciary and wealth management fees 5,601     3,931     11,586     7,749  
Card payment fees 6,097     4,829     12,004     9,655  
Net gains and fees on sales of loans 3,674     1,736     7,037     3,031  
Derivative hedge fees 1,042     1,487     2,981     2,268  
Other customer fees 333     341     731     780  
Earnings on cash surrender value of life insurance 1,326     946     2,686     1,935  
Net realized gains on sales of available for sale securities 3,068     1,843     7,680     2,983  
Other income 1,028     1,064     1,293     1,394  
Total Other Income 26,481     21,614     56,280     40,327  
OTHER EXPENSES              
Salaries and employee benefits 35,698     32,709     74,941     65,737  
Net occupancy 5,447     4,469     11,248     9,496  
Equipment 4,489     4,117     8,833     7,759  
Marketing 2,092     2,752     3,535     3,826  
Outside data processing fees 2,618     3,929     6,817     7,613  
Printing and office supplies 279     334     666     649  
Intangible asset amortization 1,511     1,520     3,025     3,048  
FDIC assessments 1,472     678     2,995     1,385  
Other real estate owned and foreclosure expenses 684     903     1,189     2,068  
Professional and other outside services 1,553     2,376     3,811     4,260  
Other expenses 4,146     3,800     9,100     8,367  
Total Other Expenses 59,989     57,587     126,160     114,208  
INCOME BEFORE INCOME TAX 37,615     48,805     75,368     94,563  
Income tax expense 4,623     7,749     8,113     14,690  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 32,992     $ 41,056     $ 67,255     $ 79,873  
               
Per Share Data:              
Basic Net Income Available to Common Stockholders $ 0.62     $ 0.83     $ 1.24     $ 1.62  
Diluted Net Income Available to Common Stockholders $ 0.62     $ 0.83     $ 1.24     $ 1.61  
Cash Dividends Paid $ 0.26     $ 0.26     $ 0.52     $ 0.48  
Average Diluted Shares Outstanding (in thousands) 53,943     49,550     54,430     49,545  
FINANCIAL HIGHLIGHTS              
(Dollars in thousands) Three Months Ended   Six Months Ended
  June 30,   June 30,
  2020   2019   2020   2019
NET CHARGE-OFFS $ 230     $ 128     $ 812     $ 978  
               
AVERAGE BALANCES:              
Total Assets $ 13,655,322     $ 10,499,948     $ 13,114,280     $ 10,291,205  
Total Loans 9,180,610     7,385,315     8,853,591     7,308,146  
Total Earning Assets 12,187,442     9,518,892     11,739,936     9,326,579  
Total Deposits 10,789,909     8,321,459     10,338,091     8,130,120  
Total Stockholders’ Equity 1,795,509     1,479,254     1,805,963     1,454,633  
               
FINANCIAL RATIOS:              
Return on Average Assets 0.97 %   1.56 %   1.03 %   1.55 %
Return on Average Stockholders’ Equity 7.35     11.10     7.45     10.98  
Return on Average Common Stockholders’ Equity 7.35     11.10     7.45     10.98  
Average Earning Assets to Average Assets 89.25     90.66     89.52     90.63  
Allowance for Loan Losses as % of Total Loans 1.30     1.08     1.30     1.08  
Net Charge-offs as % of Average Loans (Annualized) 0.01     0.01     0.02     0.03  
Average Stockholders’ Equity to Average Assets 13.15     14.09     13.77     14.13  
Tax Equivalent Yield on Average Earning Assets 3.72     4.86     4.04     4.88  
Interest Expense/Average Earning Assets 0.53     1.15     0.72     1.10  
Net Interest Margin (FTE) on Average Earning Assets 3.19     3.71     3.32     3.78  
Efficiency Ratio 47.95     51.00     50.09     51.09  
Tangible Common Book Value Per Share $ 23.04     $ 21.01     $ 23.04     $ 21.01  
NON-PERFORMING ASSETS                  
(Dollars In Thousands) June 30,   March 31,   December 31,   September 30,   June 30,
  2020   2020   2019   2019   2019
Non-Accrual Loans $ 50,102     $ 15,649     $ 15,949     $ 22,728     $ 25,635  
Renegotiated Loans 1,086     665     841     576     640  
Non-Performing Loans (NPL) 51,188     16,314     16,790     23,304     26,275  
Other Real Estate Owned and Repossessions 7,409     8,017     7,527     7,156     1,131  
Non-Performing Assets (NPA) 58,597     24,331     24,317     30,460     27,406  
90+ Days Delinquent 4,981     312     69     82     209  
NPAs & 90 Day Delinquent $ 63,578     $ 24,643     $ 24,386     $ 30,542     $ 27,615  
                   
Allowance for Loan Losses $ 121,119     $ 99,454     $ 80,284     $ 80,571     $ 81,274  
Quarterly Net Charge-offs 230     582     787     1,303     128  
NPAs / Actual Assets % 0.42 %   0.19 %   0.20 %   0.25 %   0.26 %
NPAs & 90 Day / Actual Assets % 0.46 %   0.19 %   0.20 %   0.25 %   0.26 %
NPAs / Actual Loans and OREO % 0.63 %   0.28 %   0.29 %   0.37 %   0.36 %
Allowance for Loan Losses / Actual Loans (%) 1.30 %   1.15 %   0.95 %   0.97 %   1.08 %
Net Charge-offs as % of Average Loans (Annualized) 0.01 %   0.03 %   0.04 %   0.07 %   0.01 %
CONSOLIDATED BALANCE SHEETS                  
(Dollars In Thousands) June 30,   March 31,   December 31,   September 30,   June 30,
  2020   2020   2019   2019   2019
ASSETS                  
Cash and cash equivalents $ 229,759       $ 127,731       $ 177,201       $ 202,383       $ 128,185  
Interest-bearing time deposits 380,021       132,944       118,263       230,101       129,614  
Investment securities 2,789,379       2,697,954       2,596,063       2,489,420       2,092,924  
Loans held for sale 901       5,039       9,037       7,910       5,854  
Loans 9,298,541       8,606,849       8,459,310       8,299,260       7,511,370  
Less: Allowance for loan losses (121,119 )     (99,454 )     (80,284 )     (80,571 )     (81,274 )
Net loans 9,177,422       8,507,395       8,379,026       8,218,689       7,430,096  
Premises and equipment 112,548       114,045       113,055       113,446       91,767  
Federal Home Loan Bank stock 28,736       28,736       28,736       28,736       24,588  
Interest receivable 57,063       47,489       48,901       45,923       45,150  
Goodwill and other intangibles 575,855       577,366       578,880       579,751       466,736  
Cash surrender value of life insurance 290,715       289,574       288,206       286,747       226,241  
Other real estate owned 7,367       7,972       7,527       7,156       1,131  
Tax asset, deferred and receivable 13,126       9,497       12,165       15,187       12,340  
Other assets 156,486       147,776       100,194       99,612       83,231  
TOTAL ASSETS $ 13,819,378       $ 12,693,518       $ 12,457,254       $ 12,325,061       $ 10,737,857  
LIABILITIES                  
Deposits:                  
Noninterest-bearing $ 2,260,351       $ 1,688,205       $ 1,736,396       $ 1,777,365       $ 1,353,165  
Interest-bearing 8,705,637       8,182,279       8,103,560       7,988,086       6,966,163  
Total Deposits 10,965,988       9,870,484       9,839,956       9,765,451       8,319,328  
Borrowings:                  
Federal funds purchased       47,000       55,000             75,000  
Securities sold under repurchase agreements 181,150       183,317       187,946       191,603       119,674  
Federal Home Loan Bank advances 400,817       480,995       351,072       354,609       460,042  
Subordinated debentures and other borrowings 285,197       128,741       138,685       138,630       138,574  
Total Borrowings 867,164       840,053       732,703       684,842       793,290  
Interest payable 5,587       7,746       6,754       7,855       6,740  
Other liabilities 171,544       197,275       91,404       117,901       116,863  
Total Liabilities 12,010,283       10,915,558       10,670,817       10,576,049       9,236,221  
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 6,724       6,719       6,921       6,918       6,182  
Additional paid-in capital 1,002,962       1,000,942       1,054,997       1,053,148       841,365  
Retained earnings 735,439       716,518       696,520       663,173       639,362  
Accumulated other comprehensive income (loss) 63,845       53,656       27,874       25,648       14,602  
Total Stockholders’ Equity 1,809,095       1,777,960       1,786,437       1,749,012       1,501,636  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 13,819,378       $ 12,693,518       $ 12,457,254       $ 12,325,061       $ 10,737,857  
                   
CONSOLIDATED STATEMENTS OF INCOME                  
(Dollars In Thousands, Except Per Share Amounts) June 30,   March 31,   December 31,   September 30,   June 30,
  2020   2020   2019   2019   2019
INTEREST INCOME                  
Loans receivable:                  
Taxable $ 87,312     $ 96,652     $ 102,617     $ 96,850       $ 92,824  
Tax-exempt 5,359     5,315     4,671     4,500       4,244  
Investment securities:                  
Taxable 6,147     7,631     7,993     6,729       6,998  
Tax-exempt 10,019     9,335     8,995     8,335       7,454  
Deposits with financial institutions 134     575     1,203     1,363       784  
Federal Home Loan Bank stock 281     299     342     355       335  
Total Interest Income 109,252     119,807     125,821     118,132       112,639  
INTEREST EXPENSE                  
Deposits 12,707     21,748     24,074     24,830       23,087  
Federal funds purchased 2     111     26     15       117  
Securities sold under repurchase agreements 92     352     367     385       342  
Federal Home Loan Bank advances 1,794     1,774     1,776     1,894       1,692  
Subordinated debentures and other borrowings 1,639     1,945     1,994     2,076       2,123  
Total Interest Expense 16,234     25,930     28,237     29,200       27,361  
NET INTEREST INCOME 93,018     93,877     97,584     88,932       85,278  
Provision for loan losses 21,895     19,752     500     600       500  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 71,123     74,125     97,084     88,332       84,778  
OTHER INCOME                  
Service charges on deposit accounts 4,312     5,970     6,312     6,107       5,437  
Fiduciary and wealth management fees 5,601     5,985     5,384     4,429       3,931  
Card payment fees 6,097     5,907     5,430     5,158       4,829  
Net gains and fees on sales of loans 3,674     3,363     2,633     2,227       1,736  
Derivative hedge fees 1,042     1,939     1,405     1,684       1,487  
Other customer fees 333     398     434     450       341  
Earnings on cash surrender value of life insurance 1,326     1,360     1,458     1,144       946  
Net realized gains on sales of available for sale securities 3,068     4,612     1,039     393       1,843  
Other income 1,028     265     150     524       1,064  
Total Other Income 26,481     29,799     24,245     22,116       21,614  
OTHER EXPENSES                  
Salaries and employee benefits 35,698     39,243     39,358     38,942       32,709  
Net occupancy 5,447     5,801     5,311     4,777       4,469  
Equipment 4,489     4,344     4,429     4,030       4,117  
Marketing 2,092     1,443     1,492     1,332       2,752  
Outside data processing fees 2,618     4,199     4,428     4,435       3,929  
Printing and office supplies 279     387     484     312       334  
Intangible asset amortization 1,511     1,514     1,590     1,356       1,520  
FDIC assessments 1,472     1,523         (668 )     678  
Other real estate owned and foreclosure expenses 684     505     66     294       903  
Professional and other outside services 1,553     2,258     2,899     8,251       2,376  
Other expenses 4,146     4,954     5,144     4,293       3,800  
Total Other Expenses 59,989     66,171     65,201     67,354       57,587  
INCOME BEFORE INCOME TAX 37,615     37,753     56,128     43,094       48,805  
Income tax expense 4,623     3,490     8,298     6,337       7,749  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 32,992     $ 34,263     $ 47,830     $ 36,757       $ 41,056  
                   
Per Share Data:                  
Basic Net Income Available to Common Stockholders $ 0.62     $ 0.63     $ 0.87     $ 0.71       $ 0.83  
Diluted Net Income Available to Common Stockholders $ 0.62     $ 0.62     $ 0.87     $ 0.71       $ 0.83  
Cash Dividends Paid $ 0.26     $ 0.26     $ 0.26     $ 0.26       $ 0.26  
Average Diluted Shares Outstanding (in thousands) 53,943     54,918     55,520     51,570       49,550  
FINANCIAL RATIOS:                  
Return on Average Assets 0.97 %   1.09 %   1.53 %   1.30   %   1.56 %
Return on Average Stockholders’ Equity 7.35     7.55     10.82     9.21       11.10  
Return on Average Common Stockholders’ Equity 7.35     7.55     10.82     9.21       11.10  
Average Earning Assets to Average Assets 89.25     89.81     89.71     90.37       90.66  
Allowance for Loan Losses as % of Total Loans 1.30     1.15     0.95     0.97       1.08  
Net Charge-offs as % of Average Loans (Annualized) 0.01     0.03     0.04     0.07       0.01  
Average Stockholders’ Equity to Average Assets 13.15     14.45     14.17     14.16       14.09  
Tax Equivalent Yield on Average Earning Assets 3.72     4.38     4.63     4.77       4.86  
Interest Expense/Average Earning Assets 0.53     0.92     1.01     1.15       1.15  
Net Interest Margin (FTE) on Average Earning Assets 3.19     3.46     3.62     3.62       3.71  
Efficiency Ratio 47.95     52.17     51.07     57.60       51.00  
Tangible Common Book Value Per Share $ 23.04     $ 22.46     $ 21.94     $ 21.26       $ 21.01  
LOANS                  
(Dollars In Thousands) June 30,   March 31,   December 31,   September 30,   June 30,
  2020   2020   2019   2019   2019
Commercial and industrial loans $ 2,898,329     $ 2,199,226     $ 2,109,879     $ 2,034,311     $ 1,877,042  
Agricultural production financing and other loans to farmers 93,838     87,421     93,861     90,462     83,452  
Real estate loans:                  
Construction 640,560     643,674     787,568     670,138     624,548  
Commercial and farmland 3,239,998     3,268,168     3,052,698     3,144,649     2,821,689  
Residential 1,145,187     1,121,556     1,143,217     1,155,403     993,802  
Home equity 532,314     570,398     588,984     601,335     548,006  
Individuals’ loans for household and other personal expenditures 123,611     129,765     135,989     131,246     98,384  
Public finance and other commercial loans 624,704     586,641     547,114     471,716     464,447  
Loans 9,298,541     8,606,849     8,459,310     8,299,260     7,511,370  
Allowance for loan losses (121,119 )   (99,454 )   (80,284 )   (80,571 )   (81,274 )
NET LOANS $ 9,177,422     $ 8,507,395     $ 8,379,026     $ 8,218,689     $ 7,430,096  
DEPOSITS                  
(Dollars In Thousands) June 30,   March 31,   December 31,   September 30,   June 30,
  2020   2020   2019   2019   2019
Demand deposits $ 6,288,360     $ 5,293,200     $ 5,250,568     $ 5,183,971     $ 4,309,473  
Savings deposits 3,278,156     2,962,821     2,896,177     2,808,745     2,358,720  
Certificates and other time deposits of $100,000 or more 607,474     694,062     736,843     731,693     720,536  
Other certificates and time deposits 669,119     717,723     741,759     811,780     729,392  
Brokered deposits 122,879     202,678     214,609     229,262     201,207  
TOTAL DEPOSITS $ 10,965,988     $ 9,870,484     $ 9,839,956     $ 9,765,451     $ 8,319,328  
CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS            
(Dollars in Thousands)                      
  For the Three Months Ended
  June 30, 2020   June 30, 2019
  Average Balance   Interest
 Income /
Expense
  Average
Rate
  Average Balance   Interest
 Income /
Expense
  Average
Rate
Assets:                      
Interest-bearing time deposits $ 378,489     $ 134     0.14 %   $ 144,626     $ 784     2.17 %
Federal Home Loan Bank stock 28,736     281     3.91     24,588     335     5.45  
Investment Securities: (1)                      
Taxable 1,282,080     6,147     1.92     1,054,068     6,998     2.66  
Tax-Exempt (2) 1,317,527     12,682     3.85     910,295     9,435     4.15  
Total Investment Securities 2,599,607     18,829     2.90     1,964,363     16,433     3.35  
Loans held for sale 12,630     131     4.15     11,430     127     4.44  
Loans: (3)                      
Commercial 6,890,010     69,463     4.03     5,419,169     74,638     5.51  
Real Estate Mortgage 887,257     10,122     4.56     766,528     8,686     4.53  
Installment 724,165     7,596     4.20     677,133     9,373     5.54  
Tax-Exempt (2) 666,548     6,784     4.07     511,055     5,372     4.20  
Total Loans 9,180,610     94,096     4.10     7,385,315     98,196     5.32  
Total Earning Assets 12,187,442     113,340     3.72 %   9,518,892     115,748     4.86 %
Net unrealized gain (loss) on securities available for sale 56,807             12,841          
Allowance for loan losses (106,858 )           (81,691 )        
Cash and cash equivalents 303,491             130,987          
Premises and equipment 113,528             91,563          
Other assets 1,100,912             827,356          
Total Assets $ 13,655,322             $ 10,499,948          
Liabilities:                      
Interest-bearing deposits:                      
Interest-bearing deposits $ 3,951,819     $ 4,186     0.42 %   $ 2,935,925     $ 8,541     1.16 %
Money market deposits 1,673,104     1,696     0.41     1,220,020     3,509     1.15  
Savings deposits 1,521,312     596     0.16     1,164,901     2,525     0.87  
Certificates and other time deposits 1,498,002     6,229     1.66     1,652,203     8,512     2.06  
Total Interest-bearing Deposits 8,644,237     12,707     0.59     6,973,049     23,087     1.32  
Borrowings 909,258     3,527     1.55     613,446     4,274     2.79  
Total Interest-bearing Liabilities 9,553,495     16,234     0.68     7,586,495     27,361     1.44  
Noninterest-bearing deposits 2,145,672             1,348,410          
Other liabilities 160,646             85,789          
Total Liabilities 11,859,813             9,020,694          
Stockholders’ Equity 1,795,509             1,479,254          
Total Liabilities and Stockholders’ Equity $ 13,655,322     16,234         $ 10,499,948     27,361      
Net Interest Income (FTE)     $ 97,106             $ 88,387      
Net Interest Spread (FTE) (4)         3.04 %           3.42 %
                       
Net Interest Margin (FTE):                      
Interest Income (FTE) / Average Earning Assets         3.72 %           4.86 %
Interest Expense / Average Earning Assets         0.53 %           1.15 %
Net Interest Margin (FTE) (5)         3.19 %           3.71 %
                       
(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 2020 and 2019.  These totals equal $4,088 and $3,109 for the three months ended June 30, 2020 and 2019, 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 Six Months Ended
  June 30, 2020   June 30, 2019
  Average Balance   Interest
 Income /
Expense
  Average
Rate
  Average Balance   Interest
 Income /
Expense
  Average
Rate
Assets:                      
Federal Funds Sold                      
Interest-bearing time deposits $ 269,174     $ 709     0.53 %   $ 145,277     $ 1,659     2.28 %
Federal Home Loan Bank stock 28,736     580     4.04     24,588     673     5.47  
Investment Securities: (1)                      
Taxable 1,325,313     13,778     2.08     978,654     13,093     2.68  
Tax-Exempt (2) 1,263,122     24,499     3.88     869,914     18,133     4.17  
Total Investment Securities 2,588,435     38,277     2.96     1,848,568     31,226     3.38  
Loans held for sale 14,924     324     4.34     10,697     239     4.47  
Loans: (3)                      
Commercial 6,562,673     146,415     4.46     5,364,884     147,394     5.49  
Real Estate Mortgage 878,956     20,524     4.67     755,070     17,008     4.51  
Installment 741,889     16,701     4.50     671,125     18,664     5.56  
Tax-Exempt (2) 655,149     13,511     4.12     506,370     10,629     4.20  
Total Loans 8,853,591     197,475     4.46     7,308,146     193,934     5.31  
Total Earning Assets 11,739,936     237,041     4.04 %   9,326,579     227,492     4.88 %
Net unrealized gain on securities available for sale 52,732             3,963          
Allowance for loan losses (94,009 )           (81,301 )        
Cash and cash equivalents 231,624             124,143          
Premises and equipment 113,670             92,395          
Other assets 1,070,327             825,426          
Total Assets $ 13,114,280             $ 10,291,205          
Liabilities:                      
Interest-bearing deposits:                      
Interest-bearing deposits $ 3,770,530     $ 12,461     0.66 %   $ 2,813,541     $ 15,560     1.11 %
Money market deposits 1,604,474     5,479     0.68     1,179,765     6,291     1.07  
Savings deposits 1,473,183     2,424     0.33     1,157,852     4,792     0.83  
Certificates and other time deposits 1,582,322     14,091     1.78     1,609,130     16,038     1.99  
Total Interest-bearing Deposits 8,430,509     34,455     0.82     6,760,288     42,681     1.26  
Borrowings 828,721     7,709     1.86     624,192     8,627     2.76  
Total Interest-bearing Liabilities 9,259,230     42,164     0.91     7,384,480     51,308     1.39  
Noninterest-bearing deposits 1,907,582             1,369,832          
Other liabilities 141,505             82,260          
Total Liabilities 11,308,317             8,836,572          
Stockholders’ Equity 1,805,963             1,454,633          
Total Liabilities and Stockholders’ Equity $ 13,114,280     42,164         $ 10,291,205     51,308      
Net Interest Income (FTE)     $ 194,877             $ 176,184      
Net Interest Spread (FTE) (4)         3.13 %           3.49 %
                       
Net Interest Margin (FTE):                      
Interest Income (FTE) / Average Earning Assets         4.04 %           4.88 %
Interest Expense / Average Earning Assets         0.72 %           1.10 %
Net Interest Margin (FTE) (5)         3.32 %           3.78 %
                       
(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 2020 and 2019.  These totals equal $7,982 and $6,040 for the six months ended June 30, 2020 and 2019, 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

 



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