MUNCIE, Ind., Oct. 24, 2019 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported third quarter 2019 net income of $36.8 million compared to $41.1 million during the same period in 2018. Earnings per share for the period totaled $.71 per share compared to third quarter 2018 results of $.83 per share. Included in the third quarter results are $11.2 million, or $.17 per share, of one-time charges related to the closing of our acquisition of Monroe Bank & Trust on September 1, 2019.
Total assets equaled $12.3 billion as of quarter-end and loans totaled $8.3 billion. The Corporation’s loan portfolio increased by $1.2 billion, or 17.1 percent, during the past twelve months. Investments increased $864 million, or 53.2 percent, during the same period and now total $2.5 billion. The acquisition of Monroe Bank & Trust accounted for $731 million of the increase in loans. Total deposits equaled $9.8 billion as of quarter-end and increased by $2.1 billion, or 27.9 percent, since September 30, 2018. Of the increase, Monroe Bank & Trust accounted for $1.1 billion.
The Corporation’s loan to deposit ratio now totals 85.1 percent and loan to asset ratio totals 67.4 percent. Additionally, the Corporation’s total risk-based capital ratio equaled 14.37 percent, common equity tier 1 capital ratio equaled 12.14 percent, and the tangible common equity ratio totaled 9.95 percent.
Michael C. Rechin, President and Chief Executive Officer, stated, “First Merchants posted strong financial results as our local economies continue to flourish and our clients look to our bank for growth solutions. The signature event for the quarter was the legal closing of the Monroe Bank & Trust transaction. The merger extends our franchise with a community bank that enjoys a dominant market share position. Our plan to operationally integrate Monroe Bank & Trust into First Merchants next month will accelerate our marketplace momentum into 2020 to include a reduction in our overall funding costs.”
Net-interest income for the quarter totaled $88.9 million, an increase of $2.4 million from third quarter 2018, even as net-interest margin declined by 43 basis points totaling 3.62 percent. Yields on earning assets totaled 4.77 percent, a decline of 11 basis points of which nearly half was due to lower fair value accretion. The cost of supporting liabilities increased by 32 basis points and totaled 1.15 percent.
Non-interest income totaled $22.1 million for the quarter, a $2.6 million, or 13.3 percent increase from the third quarter of 2018. Customer specific line items accounted for $3.1 million of the increase, with derivative hedge income accounting for $909,000 of the growth. Non-interest expense totaled $67.4 million up from the 2018 total of $55 million. Of the $12.4 million increase from the third quarter of 2018, merger related expenses accounted for $11.2 million.
The Corporation’s provision expense for the quarter totaled $600,000 and net charge-offs were $1.3 million. The allowance for loan losses reached $80.6 million as of September 30, 2019, up from $78.4 million as of September 30, 2018. Non-accrual loans declined to $22.7 million as of quarter-end and the allowance is .97 percent of total loans and 1.16 percent of non-purchased loans.
CONFERENCE CALL
First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, October 24, 2019.
To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's third quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until November 24, 2019. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529, Canada participants should dial 855-669-9658, or for International participants, dial +1 412-317-0088. The replay access code is 10134821.
In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme191024.html during the time of the call. A replay of the web cast will be available until October 24, 2020.
Detailed financial results are reported on the attached pages.
About First Merchants Corporation
First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank. The Bank also operates as First Merchants Private Wealth Advisors (as a division of First Merchants Bank).
First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company’s Internet web page (http://www.firstmerchants.com).
FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.
Forward-Looking Statements
This release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These statements include statements of First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity, credit and interest rate risks associated with the First Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, First Merchants’ past results of operations do not necessarily indicate its anticipated future results.
| | | | |
| CONSOLIDATED BALANCE SHEETS | | | |
| (Dollars In Thousands) | September 30, |
| | 2019 | | 2018 |
| ASSETS | | | |
| Cash and cash equivalents | $ | 202,383 | | | $ | 142,501 | |
| Interest-bearing time deposits | 230,101 | | | 66,763 | |
| Investment securities | 2,489,420 | | | 1,625,251 | |
| Loans held for sale | 7,910 | | | 3,022 | |
| Loans | 8,299,260 | | | 7,088,071 | |
| Less: Allowance for loan losses | (80,571 | ) | | (78,406 | ) |
| Net loans | 8,218,689 | | | 7,009,665 | |
| Premises and equipment | 113,446 | | | 93,728 | |
| Federal Home Loan Bank stock | 28,736 | | | 24,588 | |
| Interest receivable | 45,923 | | | 38,531 | |
| Goodwill and other intangibles | 579,751 | | | 471,409 | |
| Cash surrender value of life insurance | 286,747 | | | 223,865 | |
| Other real estate owned | 7,156 | | | 8,859 | |
| Tax asset, deferred and receivable | 15,187 | | | 25,933 | |
| Other assets | 99,612 | | | 53,167 | |
| TOTAL ASSETS | $ | 12,325,061 | | | $ | 9,787,282 | |
| LIABILITIES | | | |
| Deposits: | | | |
| Noninterest-bearing | $ | 1,777,365 | | | $ | 1,464,190 | |
| Interest-bearing | 7,988,086 | | | 6,168,962 | |
| Total Deposits | 9,765,451 | | | 7,633,152 | |
| Borrowings: | | | |
| Federal funds purchased | — | | | 90,000 | |
| Securities sold under repurchase agreements | 191,603 | | | 118,824 | |
| Federal Home Loan Bank advances | 354,609 | | | 385,458 | |
| Subordinated debentures and term loans | 138,630 | | | 138,408 | |
| Total Borrowings | 684,842 | | | 732,690 | |
| Interest payable | 7,855 | | | 5,920 | |
| Other liabilities | 117,901 | | | 54,094 | |
| Total Liabilities | 10,576,049 | | | 8,425,856 | |
| 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 - 55,345,672 and 49,304,542 shares | 6,918 | | | 6,163 | |
| Additional paid-in capital | 1,053,148 | | | 837,996 | |
| Retained earnings | 663,173 | | | 552,551 | |
| Accumulated other comprehensive income (loss) | 25,648 | | | (35,409 | ) |
| Total Stockholders' Equity | 1,749,012 | | | 1,361,426 | |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 12,325,061 | | | $ | 9,787,282 | |
| | | | |
| CONSOLIDATED STATEMENTS OF INCOME | Three Months Ended | | Nine Months Ended |
| (Dollars In Thousands, Except Per Share Amounts) | September 30, | | September 30, |
| | 2019 | | 2018 | | 2019 | | 2018 |
| INTEREST INCOME | | | | | | | |
| Loans receivable: | | | | | | | |
| Taxable | $ | 96,850 | | | $ | 88,479 | | | $ | 280,155 | | | $ | 251,409 | |
| Tax-exempt | 4,500 | | | 3,761 | | | 12,897 | | | 10,989 | |
| Investment securities: | | | | | | | |
| Taxable | 6,729 | | | 5,514 | | | 19,822 | | | 16,044 | |
| Tax-exempt | 8,335 | | | 6,493 | | | 22,660 | | | 18,865 | |
| Deposits with financial institutions | 1,363 | | | 270 | | | 3,022 | | | 1,034 | |
| Federal Home Loan Bank stock | 355 | | | 283 | | | 1,028 | | | 950 | |
| Total Interest Income | 118,132 | | | 104,800 | | | 339,584 | | | 299,291 | |
| INTEREST EXPENSE | | | | | | | |
| Deposits | 24,830 | | | 13,685 | | | 67,511 | | | 34,852 | |
| Federal funds purchased | 15 | | | 229 | | | 225 | | | 670 | |
| Securities sold under repurchase agreements | 385 | | | 174 | | | 1,057 | | | 519 | |
| Federal Home Loan Bank advances | 1,894 | | | 2,137 | | | 5,400 | | | 6,141 | |
| Subordinated debentures and term loans | 2,076 | | | 2,089 | | | 6,315 | | | 6,136 | |
| Total Interest Expense | 29,200 | | | 18,314 | | | 80,508 | | | 48,318 | |
| NET INTEREST INCOME | 88,932 | | | 86,486 | | | 259,076 | | | 250,973 | |
| Provision for loan losses | 600 | | | 1,400 | | | 2,300 | | | 5,563 | |
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 88,332 | | | 85,086 | | | 256,776 | | | 245,410 | |
| OTHER INCOME | | | | | | | |
| Service charges on deposit accounts | 6,107 | | | 5,619 | | | 16,639 | | | 15,434 | |
| Fiduciary and wealth management fees | 4,429 | | | 3,673 | | | 12,178 | | | 11,064 | |
| Card payment fees | 5,158 | | | 4,586 | | | 14,813 | | | 13,642 | |
| Net gains and fees on sales of loans | 2,227 | | | 1,841 | | | 5,258 | | | 5,262 | |
| Derivative hedge fees | 1,684 | | | 775 | | | 3,952 | | | 1,848 | |
| Other customer fees | 450 | | | 452 | | | 1,230 | | | 1,349 | |
| Earnings on cash surrender value of life insurance | 1,144 | | | 961 | | | 3,079 | | | 3,144 | |
| Net realized gains on sales of available for sale securities | 393 | | | 1,285 | | | 3,376 | | | 4,016 | |
| Other income | 524 | | | 335 | | | 1,918 | | | 1,520 | |
| Total Other Income | 22,116 | | | 19,527 | | | 62,443 | | | 57,279 | |
| OTHER EXPENSES | | | | | | | |
| Salaries and employee benefits | 38,942 | | | 32,936 | | | 104,679 | | | 97,354 | |
| Net occupancy | 4,777 | | | 4,586 | | | 14,273 | | | 13,604 | |
| Equipment | 4,030 | | | 3,483 | | | 11,789 | | | 10,707 | |
| Marketing | 1,332 | | | 1,216 | | | 5,158 | | | 3,574 | |
| Outside data processing fees | 4,435 | | | 3,422 | | | 12,048 | | | 9,848 | |
| Printing and office supplies | 312 | | | 334 | | | 961 | | | 992 | |
| Intangible asset amortization | 1,356 | | | 1,650 | | | 4,404 | | | 5,094 | |
| FDIC assessments | (668 | ) | | 856 | | | 717 | | | 2,286 | |
| Other real estate owned and foreclosure expenses | 294 | | | 455 | | | 2,362 | | | 1,219 | |
| Professional and other outside services | 8,251 | | | 1,844 | | | 12,511 | | | 5,174 | |
| Other expenses | 4,293 | | | 4,240 | | | 12,660 | | | 12,361 | |
| Total Other Expenses | 67,354 | | | 55,022 | | | 181,562 | | | 162,213 | |
| INCOME BEFORE INCOME TAX | 43,094 | | | 49,591 | | | 137,657 | | | 140,476 | |
| Income tax expense | 6,337 | | | 8,478 | | | 21,027 | | | 23,050 | |
| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 36,757 | | | $ | 41,113 | | | $ | 116,630 | | | $ | 117,426 | |
| Per Share Data: | | | | | | | |
| Basic Net Income Available to Common Stockholders | $ | 0.71 | | | $ | 0.83 | | | $ | 2.33 | | | $ | 2.38 | |
| Diluted Net Income Available to Common Stockholders | $ | 0.71 | | | $ | 0.83 | | | $ | 2.32 | | | $ | 2.37 | |
| Cash Dividends Paid | $ | 0.26 | | | $ | 0.22 | | | $ | 0.74 | | | $ | 0.62 | |
| Average Diluted Shares Outstanding (in thousands) | 51,570 | | | 49,492 | | | 50,227 | | | 49,458 | |
| | | | | | | | |
| FINANCIAL HIGHLIGHTS | | | | | | | |
| (Dollars in thousands) | Three Months Ended | | Nine Months Ended |
| | September 30, | | September 30, |
| | 2019 | | 2018 | | 2019 | | 2018 |
| NET CHARGE-OFFS | $ | 1,303 | | | $ | 537 | | | $ | 2,281 | | | $ | 2,189 | |
| | | | | | | | |
| AVERAGE BALANCES: | | | | | | | |
| Total Assets | $ | 11,277,742 | | | $ | 9,756,680 | | | $ | 10,623,664 | | | $ | 9,610,219 | |
| Total Loans | 7,773,328 | | | 7,099,694 | | | 7,464,910 | | | 6,962,460 | |
| Total Earning Assets | 10,192,183 | | | 8,810,758 | | | 9,618,285 | | | 8,657,152 | |
| Total Deposits | 8,922,222 | | | 7,603,625 | | | 8,397,056 | | | 7,466,187 | |
| Total Stockholders' Equity | 1,596,595 | | | 1,358,904 | | | 1,502,474 | | | 1,331,867 | |
| | | | | | | | |
| FINANCIAL RATIOS: | | | | | | | |
| Return on Average Assets | 1.30 | % | | 1.69 | % | | 1.46 | % | | 1.63 | % |
| Return on Average Stockholders' Equity | 9.21 | | | 12.10 | | | 10.35 | | | 11.76 | |
| Return on Average Common Stockholders' Equity | 9.21 | | | 12.10 | | | 10.35 | | | 11.76 | |
| Average Earning Assets to Average Assets | 90.37 | | | 90.30 | | | 90.54 | | | 90.08 | |
| Allowance for Loan Losses as % of Total Loans | 0.97 | | | 1.11 | | | 0.97 | | | 1.11 | |
| Net Charge-offs as % of Average Loans (Annualized) | 0.07 | | | 0.03 | | | 0.04 | | | 0.04 | |
| Average Stockholders' Equity to Average Assets | 14.16 | | | 13.93 | | | 14.14 | | | 13.86 | |
| Tax Equivalent Yield on Average Earning Assets | 4.77 | | | 4.88 | | | 4.84 | | | 4.73 | |
| Interest Expense/Average Earning Assets | 1.15 | | | 0.83 | | | 1.12 | | | 0.74 | |
| Net Interest Margin (FTE) on Average Earning Assets | 3.62 | | | 4.05 | | | 3.72 | | | 3.99 | |
| Efficiency Ratio | 57.60 | | | 49.25 | | | 53.36 | | | 49.94 | |
| Tangible Common Book Value Per Share | $ | 21.26 | | | $ | 18.16 | | | $ | 21.26 | | | $ | 18.16 | |
| | | | | | | | | | |
| NON-PERFORMING ASSETS | | | | | | | | | |
| (Dollars In Thousands) | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | 2019 | | 2019 | | 2019 | | 2018 | | 2018 |
| Non-Accrual Loans | $ | 22,728 | | | $ | 25,635 | | | $ | 27,949 | | | $ | 26,148 | | | $ | 20,421 | |
| Renegotiated Loans | 576 | | | 640 | | | 709 | | | 1,103 | | | 968 | |
| Non-Performing Loans (NPL) | 23,304 | | | 26,275 | | | 28,658 | | | 27,251 | | | 21,389 | |
| Other Real Estate Owned | 7,156 | | | 1,131 | | | 1,877 | | | 2,179 | | | 8,859 | |
| Non-Performing Assets (NPA) | 30,460 | | | 27,406 | | | 30,535 | | | 29,430 | | | 30,248 | |
| 90+ Days Delinquent | 82 | | | 209 | | | 134 | | | 1,855 | | | 50 | |
| NPAs & 90 Day Delinquent | $ | 30,542 | | | $ | 27,615 | | | $ | 30,669 | | | $ | 31,285 | | | $ | 30,298 | |
| | | | | | | | | | |
| Allowance for Loan Losses | $ | 80,571 | | | $ | 81,274 | | | $ | 80,902 | | | $ | 80,552 | | | $ | 78,406 | |
| Quarterly Net Charge-offs | 1,303 | | | 128 | | | 850 | | | (482 | ) | | 537 | |
| NPAs / Actual Assets % | 0.25 | % | | 0.26 | % | | 0.30 | % | | 0.30 | % | | 0.31 | % |
| NPAs & 90 Day / Actual Assets % | 0.25 | % | | 0.26 | % | | 0.30 | % | | 0.32 | % | | 0.31 | % |
| NPAs / Actual Loans and OREO % | 0.37 | % | | 0.36 | % | | 0.42 | % | | 0.41 | % | | 0.43 | % |
| Allowance for Loan Losses / Actual Loans (%) | 0.97 | % | | 1.08 | % | | 1.11 | % | | 1.11 | % | | 1.11 | % |
| Net Charge-offs as % of Average Loans (Annualized) | 0.07 | % | | 0.01 | % | | 0.05 | % | | (0.03 | )% | | 0.03 | % |
| | | | | | | | | | |
| CONSOLIDATED BALANCE SHEETS | | | | | | | | | |
| (Dollars In Thousands) | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | 2019 | | 2019 | | 2019 | | 2018 | | 2018 |
| ASSETS | | | | | | | | | |
| Cash and cash equivalents | $ | 202,383 | | | $ | 128,185 | | | $ | 115,878 | | | $ | 139,247 | | | $ | 142,501 | |
| Interest-bearing time deposits | 230,101 | | | 129,614 | | | 70,672 | | | 36,963 | | | 66,763 | |
| Investment securities | 2,489,420 | | | 2,092,924 | | | 1,862,659 | | | 1,632,582 | | | 1,625,251 | |
| Loans held for sale | 7,910 | | | 5,854 | | | 3,330 | | | 4,778 | | | 3,022 | |
| Loans | 8,299,260 | | | 7,511,370 | | | 7,299,320 | | | 7,224,467 | | | 7,088,071 | |
| Less: Allowance for loan losses | (80,571 | ) | | (81,274 | ) | | (80,902 | ) | | (80,552 | ) | | (78,406 | ) |
| Net loans | 8,218,689 | | | 7,430,096 | | | 7,218,418 | | | 7,143,915 | | | 7,009,665 | |
| Premises and equipment | 113,446 | | | 91,767 | | | 91,863 | | | 93,420 | | | 93,728 | |
| Federal Home Loan Bank stock | 28,736 | | | 24,588 | | | 24,588 | | | 24,588 | | | 24,588 | |
| Interest receivable | 45,923 | | | 45,150 | | | 40,931 | | | 40,881 | | | 38,531 | |
| Goodwill and other intangibles | 579,751 | | | 466,736 | | | 468,256 | | | 469,784 | | | 471,409 | |
| Cash surrender value of life insurance | 286,747 | | | 226,241 | | | 225,928 | | | 224,939 | | | 223,865 | |
| Other real estate owned | 7,156 | | | 1,131 | | | 1,877 | | | 2,179 | | | 8,859 | |
| Tax asset, deferred and receivable | 15,187 | | | 12,340 | | | 16,094 | | | 23,668 | | | 25,933 | |
| Other assets | 99,612 | | | 83,231 | | | 70,431 | | | 47,772 | | | 53,167 | |
| TOTAL ASSETS | $ | 12,325,061 | | | $ | 10,737,857 | | | $ | 10,210,925 | | | $ | 9,884,716 | | | $ | 9,787,282 | |
| LIABILITIES | | | | | | | | | |
| Deposits: | | | | | | | | | |
| Noninterest-bearing | $ | 1,777,365 | | | $ | 1,353,165 | | | $ | 1,381,183 | | | $ | 1,447,907 | | | $ | 1,464,190 | |
| Interest-bearing | 7,988,086 | | | 6,966,163 | | | 6,666,615 | | | 6,306,686 | | | 6,168,962 | |
| Total Deposits | 9,765,451 | | | 8,319,328 | | | 8,047,798 | | | 7,754,593 | | | 7,633,152 | |
| Borrowings: | | | | | | | | | |
| Federal funds purchased | — | | | 75,000 | | | 20,000 | | | 104,000 | | | 90,000 | |
| Securities sold under repurchase agreements | 191,603 | | | 119,674 | | | 111,783 | | | 113,512 | | | 118,824 | |
| Federal Home Loan Bank advances | 354,609 | | | 460,042 | | | 345,013 | | | 314,986 | | | 385,458 | |
| Subordinated debentures and term loans | 138,630 | | | 138,574 | | | 138,519 | | | 138,463 | | | 138,408 | |
| Total Borrowings | 684,842 | | | 793,290 | | | 615,315 | | | 670,961 | | | 732,690 | |
| Interest payable | 7,855 | | | 6,740 | | | 7,313 | | | 5,607 | | | 5,920 | |
| Other liabilities | 117,901 | | | 116,863 | | | 84,651 | | | 45,295 | | | 54,094 | |
| Total Liabilities | 10,576,049 | | | 9,236,221 | | | 8,755,077 | | | 8,476,456 | | | 8,425,856 | |
| 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 | 6,918 | | | 6,182 | | | 6,179 | | | 6,169 | | | 6,163 | |
| Additional paid-in capital | 1,053,148 | | | 841,365 | | | 839,919 | | | 840,052 | | | 837,996 | |
| Retained earnings | 663,173 | | | 639,362 | | | 611,220 | | | 583,336 | | | 552,551 | |
| Accumulated other comprehensive income (loss) | 25,648 | | | 14,602 | | | (1,595 | ) | | (21,422 | ) | | (35,409 | ) |
| Total Stockholders' Equity | 1,749,012 | | | 1,501,636 | | | 1,455,848 | | | 1,408,260 | | | 1,361,426 | |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 12,325,061 | | | $ | 10,737,857 | | | $ | 10,210,925 | | | $ | 9,884,716 | | | $ | 9,787,282 | |
| | | | | | | | | | |
| CONSOLIDATED STATEMENTS OF INCOME | | | | | | | | | |
| (Dollars In Thousands, Except Per Share Amounts) | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | 2019 | | 2019 | | 2019 | | 2018 | | 2018 |
| INTEREST INCOME | | | | | | | | | |
| Loans receivable: | | | | | | | | | |
| Taxable | $ | 96,850 | | | $ | 92,824 | | | $ | 90,481 | | | $ | 91,092 | | | $ | 88,479 | |
| Tax-exempt | 4,500 | | | 4,244 | | | 4,153 | | | 3,873 | | | 3,761 | |
| Investment securities: | | | | | | | | | |
| Taxable | 6,729 | | | 6,998 | | | 6,095 | | | 5,553 | | | 5,514 | |
| Tax-exempt | 8,335 | | | 7,454 | | | 6,871 | | | 6,644 | | | 6,493 | |
| Deposits with financial institutions | 1,363 | | | 784 | | | 875 | | | 1,207 | | | 270 | |
| Federal Home Loan Bank stock | 355 | | | 335 | | | 338 | | | 284 | | | 283 | |
| Total Interest Income | 118,132 | | | 112,639 | | | 108,813 | | | 108,653 | | | 104,800 | |
| INTEREST EXPENSE | | | | | | | | | |
| Deposits | 24,830 | | | 23,087 | | | 19,594 | | | 16,690 | | | 13,685 | |
| Federal funds purchased | 15 | | | 117 | | | 93 | | | 48 | | | 229 | |
| Securities sold under repurchase agreements | 385 | | | 342 | | | 330 | | | 243 | | | 174 | |
| Federal Home Loan Bank advances | 1,894 | | | 1,692 | | | 1,814 | | | 1,691 | | | 2,137 | |
| Subordinated debentures and term loans | 2,076 | | | 2,123 | | | 2,116 | | | 2,097 | | | 2,089 | |
| Total Interest Expense | 29,200 | | | 27,361 | | | 23,947 | | | 20,769 | | | 18,314 | |
| NET INTEREST INCOME | 88,932 | | | 85,278 | | | 84,866 | | | 87,884 | | | 86,486 | |
| Provision for loan losses | 600 | | | 500 | | | 1,200 | | | 1,664 | | | 1,400 | |
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 88,332 | | | 84,778 | | | 83,666 | | | 86,220 | | | 85,086 | |
| OTHER INCOME | | | | | | | | | |
| Service charges on deposit accounts | 6,107 | | | 5,437 | | | 5,095 | | | 5,516 | | | 5,619 | |
| Fiduciary and wealth management fees | 4,429 | | | 3,931 | | | 3,818 | | | 3,842 | | | 3,673 | |
| Card payment fees | 5,158 | | | 4,829 | | | 4,826 | | | 4,393 | | | 4,586 | |
| Net gains and fees on sales of loans | 2,227 | | | 1,736 | | | 1,295 | | | 1,767 | | | 1,841 | |
| Derivative hedge fees | 1,684 | | | 1,487 | | | 781 | | | 645 | | | 775 | |
| Other customer fees | 450 | | | 341 | | | 439 | | | 511 | | | 452 | |
| Earnings on cash surrender value of life insurance | 1,144 | | | 946 | | | 989 | | | 1,074 | | | 961 | |
| Net realized gains on sales of available for sale securities | 393 | | | 1,843 | | | 1,140 | | | 253 | | | 1,285 | |
| Other income | 524 | | | 1,064 | | | 330 | | | 1,179 | | | 335 | |
| Total Other Income | 22,116 | | | 21,614 | | | 18,713 | | | 19,180 | | | 19,527 | |
| OTHER EXPENSES | | | | | | | | | |
| Salaries and employee benefits | 38,942 | | | 32,709 | | | 33,028 | | | 34,350 | | | 32,936 | |
| Net occupancy | 4,777 | | | 4,469 | | | 5,027 | | | 4,737 | | | 4,586 | |
| Equipment | 4,030 | | | 4,117 | | | 3,642 | | | 3,627 | | | 3,483 | |
| Marketing | 1,332 | | | 2,752 | | | 1,074 | | | 1,107 | | | 1,216 | |
| Outside data processing fees | 4,435 | | | 3,929 | | | 3,684 | | | 3,367 | | | 3,422 | |
| Printing and office supplies | 312 | | | 334 | | | 315 | | | 433 | | | 334 | |
| Intangible asset amortization | 1,356 | | | 1,520 | | | 1,528 | | | 1,625 | | | 1,650 | |
| FDIC assessments | (668 | ) | | 678 | | | 707 | | | 634 | | | 856 | |
| Other real estate owned and foreclosure expenses | 294 | | | 903 | | | 1,165 | | | 251 | | | 455 | |
| Professional and other outside services | 8,251 | | | 2,376 | | | 1,884 | | | 3,002 | | | 1,844 | |
| Other expenses | 4,293 | | | 3,800 | | | 4,567 | | | 4,605 | | | 4,240 | |
| Total Other Expenses | 67,354 | | | 57,587 | | | 56,621 | | | 57,738 | | | 55,022 | |
| INCOME BEFORE INCOME TAX | 43,094 | | | 48,805 | | | 45,758 | | | 47,662 | | | 49,591 | |
| Income tax expense | 6,337 | | | 7,749 | | | 6,941 | | | 5,949 | | | 8,478 | |
| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 36,757 | | | $ | 41,056 | | | $ | 38,817 | | | $ | 41,713 | | | $ | 41,113 | |
| | | | | | | | | | |
| Per Share Data: | | | | | | | | | |
| Basic Net Income Available to Common Stockholders | $ | 0.71 | | | $ | 0.83 | | | $ | 0.79 | | | $ | 0.85 | | | $ | 0.83 | |
| Diluted Net Income Available to Common Stockholders | $ | 0.71 | | | $ | 0.83 | | | $ | 0.78 | | | $ | 0.85 | | | $ | 0.83 | |
| Cash Dividends Paid | $ | 0.26 | | | $ | 0.26 | | | $ | 0.22 | | | $ | 0.22 | | | $ | 0.22 | |
| Average Diluted Shares Outstanding (in thousands) | 51,570 | | | 49,550 | | | 49,541 | | | 49,511 | | | 49,492 | |
| FINANCIAL RATIOS: | | | | | | | | | |
| Return on Average Assets | 1.30 | % | | 1.56 | % | | 1.54 | % | | 1.68 | % | | 1.69 | % |
| Return on Average Stockholders' Equity | 9.21 | | | 11.10 | | | 10.86 | | | 12.10 | | | 12.10 | |
| Return on Average Common Stockholders' Equity | 9.21 | | | 11.10 | | | 10.86 | | | 12.10 | | | 12.10 | |
| Average Earning Assets to Average Assets | 90.37 | | | 90.66 | | | 90.60 | | | 90.41 | | | 90.30 | |
| Allowance for Loan Losses as % of Total Loans | 0.97 | | | 1.08 | | | 1.11 | | | 1.11 | | | 1.11 | |
| Net Charge-offs as % of Average Loans (Annualized) | 0.07 | | | 0.01 | | | 0.05 | | | (0.03 | ) | | 0.03 | |
| Average Stockholders' Equity to Average Assets | 14.16 | | | 14.09 | | | 14.18 | | | 13.90 | | | 13.93 | |
| Tax Equivalent Yield on Average Earning Assets | 4.77 | | | 4.86 | | | 4.89 | | | 4.97 | | | 4.88 | |
| Interest Expense/Average Earning Assets | 1.15 | | | 1.15 | | | 1.05 | | | 0.93 | | | 0.83 | |
| Net Interest Margin (FTE) on Average Earning Assets | 3.62 | | | 3.71 | | | 3.84 | | | 4.04 | | | 4.05 | |
| Efficiency Ratio | 57.60 | | | 51.00 | | | 51.18 | | | 50.97 | | | 49.25 | |
| Tangible Common Book Value Per Share | $ | 21.26 | | | $ | 21.01 | | | $ | 20.07 | | | $ | 19.12 | | | $ | 18.16 | |
| | | | | | | | | | |
| LOANS | | | | | | | | | |
| (Dollars In Thousands) | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | 2019 | | 2019 | | 2019 | | 2018 | | 2018 |
| Commercial and industrial loans | $ | 2,034,311 | | | $ | 1,877,042 | | | $ | 1,788,628 | | | $ | 1,726,664 | | | $ | 1,655,569 | |
| Agricultural production financing and other loans to farmers | 90,462 | | | 83,452 | | | 80,357 | | | 92,404 | | | 88,504 | |
| Real estate loans: | | | | | | | | | |
| Construction | 670,138 | | | 624,548 | | | 542,501 | | | 545,729 | | | 668,608 | |
| Commercial and farmland | 3,144,649 | | | 2,821,689 | | | 2,838,798 | | | 2,832,102 | | | 2,699,629 | |
| Residential | 1,155,403 | | | 993,802 | | | 976,668 | | | 966,421 | | | 965,893 | |
| Home equity | 601,335 | | | 548,006 | | | 536,208 | | | 528,157 | | | 517,303 | |
| Individuals' loans for household and other personal expenditures | 131,246 | | | 98,384 | | | 108,216 | | | 99,788 | | | 98,709 | |
| Public finance and other commercial loans | 471,716 | | | 464,447 | | | 427,944 | | | 433,202 | | | 393,856 | |
| Loans | 8,299,260 | | | 7,511,370 | | | 7,299,320 | | | 7,224,467 | | | 7,088,071 | |
| Allowance for loan losses | (80,571 | ) | | (81,274 | ) | | (80,902 | ) | | (80,552 | ) | | (78,406 | ) |
| NET LOANS | $ | 8,218,689 | | | $ | 7,430,096 | | | $ | 7,218,418 | | | $ | 7,143,915 | | | $ | 7,009,665 | |
| DEPOSITS | | | | | | | | | |
| (Dollars In Thousands) | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | 2019 | | 2019 | | 2019 | | 2018 | | 2018 |
| Demand deposits | $ | 5,183,971 | | | $ | 4,309,473 | | | $ | 4,101,156 | | | $ | 3,985,178 | | | $ | 3,870,816 | |
| Savings deposits | 2,808,745 | | | 2,358,720 | | | 2,338,266 | | | 2,282,701 | | | 2,212,675 | |
| Certificates and other time deposits of $100,000 or more | 731,693 | | | 720,536 | | | 670,199 | | | 593,592 | | | 602,002 | |
| Other certificates and time deposits | 811,780 | | | 729,392 | | | 704,527 | | | 646,682 | | | 625,341 | |
| Brokered deposits | 229,262 | | | 201,207 | | | 233,650 | | | 246,440 | | | 322,318 | |
| TOTAL DEPOSITS | $ | 9,765,451 | | | $ | 8,319,328 | | | $ | 8,047,798 | | | $ | 7,754,593 | | | $ | 7,633,152 | |
| | | | | | | | |
| CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS | | | | | | | |
| (Dollars in Thousands) | | | | | | | | | | | |
| | For the Three Months Ended |
| | September 30, 2019 | | September 30, 2018 |
| | Average Balance | | Interest
Income /
Expense | | Average
Rate | | Average Balance | | Interest
Income /
Expense | | Average
Rate |
| Assets: | | | | | | | | | | | |
| Interest-bearing time deposits | $ | 262,082 | | | $ | 1,363 | | | 2.06 | % | | $ | 52,027 | | | $ | 270 | | | 2.08 | % |
| Federal Home Loan Bank stock | 24,633 | | | 355 | | | 5.76 | | | 24,588 | | | 283 | | | 4.60 | |
| Investment Securities: (1) | | | | | | | | | | | |
| Taxable | 1,104,612 | | | 6,729 | | | 2.44 | | | 857,507 | | | 5,514 | | | 2.57 | |
| Tax-Exempt (2) | 1,027,528 | | | 10,551 | | | 4.11 | | | 776,942 | | | 8,219 | | | 4.23 | |
| Total Investment Securities | 2,132,140 | | | 17,280 | | | 3.24 | | | 1,634,449 | | | 13,733 | | | 3.36 | |
| Loans held for sale | 21,913 | | | 274 | | | 5.00 | | | 11,038 | | | 142 | | | 5.15 | |
| Loans: (3) | | | | | | | | | | | |
| Commercial | 5,674,956 | | | 77,370 | | | 5.45 | | | 5,226,284 | | | 71,223 | | | 5.45 | |
| Real Estate Mortgage | 822,874 | | | 9,518 | | | 4.63 | | | 739,356 | | | 8,383 | | | 4.54 | |
| Installment | 715,428 | | | 9,688 | | | 5.42 | | | 655,738 | | | 8,731 | | | 5.33 | |
| Tax-Exempt (2) | 538,157 | | | 5,696 | | | 4.23 | | | 467,278 | | | 4,761 | | | 4.08 | |
| Total Loans | 7,773,328 | | | 102,546 | | | 5.28 | | | 7,099,694 | | | 93,240 | | | 5.25 | |
| Total Earning Assets | 10,192,183 | | | 121,544 | | | 4.77 | % | | 8,810,758 | | | 107,526 | | | 4.88 | % |
| Net unrealized gain (loss) on securities available for sale | 30,353 | | | | | | | (15,245 | ) | | | | |
| Allowance for loan losses | (80,918 | ) | | | | | | (77,763 | ) | | | | |
| Cash and cash equivalents | 143,266 | | | | | | | 128,557 | | | | | |
| Premises and equipment | 99,021 | | | | | | | 94,422 | | | | | |
| Other assets | 893,837 | | | | | | | 815,951 | | | | | |
| Total Assets | $ | 11,277,742 | | | | | | | $ | 9,756,680 | | | | | |
| Liabilities: | | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | |
| Interest-bearing deposits | $ | 3,134,675 | | | $ | 9,285 | | | 1.18 | % | | $ | 2,399,477 | | | $ | 4,909 | | | 0.82 | % |
| Money market deposits | 1,307,647 | | | 3,766 | | | 1.14 | | | 1,062,154 | | | 1,551 | | | 0.58 | |
| Savings deposits | 1,244,859 | | | 2,523 | | | 0.80 | | | 1,081,369 | | | 1,500 | | | 0.55 | |
| Certificates and other time deposits | 1,736,759 | | | 9,256 | | | 2.11 | | | 1,536,697 | | | 5,725 | | | 1.49 | |
| Total Interest-bearing Deposits | 7,423,940 | | | 24,830 | | | 1.33 | | | 6,079,697 | | | 13,685 | | | 0.90 | |
| Borrowings | 660,107 | | | 4,370 | | | 2.59 | | | 741,092 | | | 4,629 | | | 2.50 | |
| Total Interest-bearing Liabilities | 8,084,047 | | | 29,200 | | | 1.43 | | | 6,820,789 | | | 18,314 | | | 1.07 | |
| Noninterest-bearing deposits | 1,498,282 | | | | | | | 1,523,928 | | | | | |
| Other liabilities | 98,818 | | | | | | | 53,059 | | | | | |
| Total Liabilities | 9,681,147 | | | | | | | 8,397,776 | | | | | |
| Stockholders' Equity | 1,596,595 | | | | | | | 1,358,904 | | | | | |
| Total Liabilities and Stockholders' Equity | $ | 11,277,742 | | | 29,200 | | | | | $ | 9,756,680 | | | 18,314 | | | |
| Net Interest Income (FTE) | | | $ | 92,344 | | | | | | | $ | 89,212 | | | |
| Net Interest Spread (FTE) (4) | | | | | 3.34 | % | | | | | | 3.81 | % |
| | | | | | | | | | | | |
| Net Interest Margin (FTE): | | | | | | | | | | | |
| Interest Income (FTE) / Average Earning Assets | | | | | 4.77 | % | | | | | | 4.88 | % |
| Interest Expense / Average Earning Assets | | | | | 1.15 | % | | | | | | 0.83 | % |
| Net Interest Margin (FTE) (5) | | | | | 3.62 | % | | | | | | 4.05 | % |
| | | | | | | | | | | | |
| (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 $3,412 and $2,726 for the three months ended September 30, 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 Nine Months Ended |
| | September 30, 2019 | | September 30, 2018 |
| | Average Balance | | Interest
Income /
Expense | | Average
Rate | | Average Balance | | Interest
Income /
Expense | | Average
Rate |
| Assets: | | | | | | | | | | | |
| Interest-bearing time deposits | $ | 184,640 | | | $ | 3,022 | | | 2.18 | % | | $ | 76,570 | | | $ | 1,034 | | | 1.80 | % |
| Federal Home Loan Bank stock | 24,603 | | | 1,028 | | | 5.57 | | | 24,521 | | | 950 | | | 5.17 | |
| Investment Securities: (1) | | | | | | | | | | | |
| Taxable | 1,021,102 | | | 19,822 | | | 2.59 | | | 840,425 | | | 16,044 | | | 2.55 | |
| Tax-Exempt (2) | 923,030 | | | 28,684 | | | 4.14 | | | 753,176 | | | 23,880 | | | 4.23 | |
| Total Investment Securities | 1,944,132 | | | 48,506 | | | 3.33 | | | 1,593,601 | | | 39,924 | | | 3.34 | |
| Loans held for sale | 13,618 | | | 512 | | | 5.01 | | | 9,520 | | | 363 | | | 5.08 | |
| Loans: (3) | | | | | | | | | | | |
| Commercial | 5,469,377 | | | 224,766 | | | 5.48 | | | 5,116,405 | | | 200,886 | | | 5.24 | |
| Real Estate Mortgage | 778,778 | | | 26,526 | | | 4.54 | | | 732,469 | | | 25,174 | | | 4.58 | |
| Installment | 686,055 | | | 28,351 | | | 5.51 | | | 637,140 | | | 24,986 | | | 5.23 | |
| Tax-Exempt (2) | 517,082 | | | 16,325 | | | 4.21 | | | 466,926 | | | 13,910 | | | 3.97 | |
| Total Loans | 7,464,910 | | | 296,480 | | | 5.30 | | | 6,962,460 | | | 265,319 | | | 5.08 | |
| Total Earning Assets | 9,618,285 | | | 349,036 | | | 4.84 | % | | 8,657,152 | | | 307,227 | | | 4.73 | % |
| Net unrealized gain on securities available for sale | 12,856 | | | | | | | (11,616 | ) | | | | |
| Allowance for loan losses | (81,172 | ) | | | | | | (76,944 | ) | | | | |
| Cash and cash equivalents | 130,587 | | | | | | | 129,181 | | | | | |
| Premises and equipment | 94,628 | | | | | | | 94,897 | | | | | |
| Other assets | 848,480 | | | | | | | 817,549 | | | | | |
| Total Assets | $ | 10,623,664 | | | | | | | $ | 9,610,219 | | | | | |
| Liabilities: | | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | |
| Interest-bearing deposits | $ | 2,921,762 | | | $ | 24,844 | | | 1.13 | % | | $ | 2,236,644 | | | $ | 12,013 | | | 0.72 | % |
| Money market deposits | 1,222,860 | | | 10,057 | | | 1.10 | | | 1,077,792 | | | 4,270 | | | 0.53 | |
| Savings deposits | 1,187,173 | | | 7,315 | | | 0.82 | | | 1,041,600 | | | 3,214 | | | 0.41 | |
| Certificates and other time deposits | 1,652,141 | | | 25,295 | | | 2.04 | | | 1,504,851 | | | 15,355 | | | 1.36 | |
| Total Interest-bearing Deposits | 6,983,936 | | | 67,511 | | | 1.29 | | | 5,860,887 | | | 34,852 | | | 0.79 | |
| Borrowings | 636,295 | | | 12,997 | | | 2.72 | | | 754,054 | | | 13,466 | | | 2.38 | |
| Total Interest-bearing Liabilities | 7,620,231 | | | 80,508 | | | 1.41 | | | 6,614,941 | | | 48,318 | | | 0.97 | |
| Noninterest-bearing deposits | 1,413,120 | | | | | | | 1,605,300 | | | | | |
| Other liabilities | 87,839 | | | | | | | 58,111 | | | | | |
| Total Liabilities | 9,121,190 | | | | | | | 8,278,352 | | | | | |
| Stockholders' Equity | 1,502,474 | | | | | | | 1,331,867 | | | | | |
| Total Liabilities and Stockholders' Equity | $ | 10,623,664 | | | 80,508 | | | | | $ | 9,610,219 | | | 48,318 | | | |
| Net Interest Income (FTE) | | | $ | 268,528 | | | | | | | $ | 258,909 | | | |
| Net Interest Spread (FTE) (4) | | | | | 3.43 | % | | | | | | 3.76 | % |
| | | | | | | | | | | | |
| Net Interest Margin (FTE): | | | | | | | | | | | |
| Interest Income (FTE) / Average Earning Assets | | | | | 4.84 | % | | | | | | 4.73 | % |
| Interest Expense / Average Earning Assets | | | | | 1.12 | % | | | | | | 0.74 | % |
| Net Interest Margin (FTE) (5) | | | | | 3.72 | % | | | | | | 3.99 | % |
| | | | | | | | | | | | |
| (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 $9,452 and $7,936 for the nine months ended September 30, 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
