MUNCIE, Ind., April 23, 2020 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported first quarter 2020 net income of $34.3 million compared to $38.8 million during the same period in 2019. Earnings per share for the period totaled $.62 per share compared to the first quarter of 2019 result of $.78 per share.
Total assets equaled $12.7 billion as of quarter-end and loans totaled $8.6 billion. The Corporation’s loan portfolio increased by $1.3 billion, or 17.9 percent, during the past twelve months. Total deposits equaled $9.9 billion as of quarter-end and increased by $1.8 billion, or 22.6 percent over the same period in 2019. Of the increases, 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. The resulting loan-to-deposit ratio of 87.2 percent and loan-to-asset ratio of 67.8 percent provides for fortress balance sheet levels of liquidity.
The Corporation’s provision for loan losses totaled $19.8 million and net charge-offs for the quarter totaled just $582,000. The allowance for loan losses totaled $99.5 million as of March 31, 2020, up from $80.9 million as of March 31, 2019. The increase of $18.6 million, or 22.9 percent, primarily reflects our view of increased credit risk related to the COVID-19 pandemic. Non-accrual loans totaled just $15.6 million as of quarter-end and the allowance plus fair value marks on acquired loans totals 1.54 percent of total loans. As of March 31, 2020, the Corporation’s total risk-based capital ratio equaled 13.80 percent, the common equity tier 1 capital ratio equaled 11.58 percent, and the tangible common equity ratio totaled 9.91 percent, providing fortress balance sheet levels of capital.
Michael C. Rechin, President and Chief Executive Officer, stated, “It’s humbling to lead an organization that has such a positive impact on our communities. The resiliency of our employees and our customers is a testament to the strength of the human spirit. The transformation of our business to remote work, drive-up consumer business and serving our customers through the processing of loan modifications and Paycheck Protection Program loans in the thousands is spectacular.” Rechin also added, “Our profitability levels were negatively impacted by margin compression and provision for loan losses; however, the strength of our fee income businesses provided a positive contribution to earnings. We believe our pre-tax, pre-provision earnings remain best-in-class.”
Net-interest income totaled $93.9 million for the quarter, an increase of $9 million, or 10.6 percent compared to the first quarter of 2019. Net-interest margin on a tax equivalent basis, totaling 3.46 percent, declined by 38 basis points compared to the first quarter of 2019. Yields on earning assets declined by 51 basis points and totaled 4.38 percent. The cost of supporting liabilities decreased by 13 basis points and totaled .92 percent. Fair value accretion had a favorable impact on net interest margin of 12 basis points in the first quarter of 2020, compared to 9 basis points in the first quarter of 2019.
Non-interest income totaled $29.8 million for the quarter, an $11.1 million increase from the first quarter of 2019. Gains on the sale of securities increased by $3.5 million as we took advantage of rebalancing opportunities within the investment portfolio. Additionally, gains from the sale of loans increased by $2.1 million driven by lower mortgage loan interest rates. Derivative hedge fees increased by $1.2 million as borrowers chose to lock in long-term interest rates. In addition to the highlighted items above, most line items increased due to the MBT acquisition in September 2019. Non-interest expense totaled $66.2 million in the first quarter of 2020, compared to $56.6 million in the same period of 2019. Of the $9.6 million increase, nearly all can be attributed to the acquisition of MBT in September 2019.
The effective tax rate was 9.2 percent in the first quarter of 2020, compared to 15.2 percent in the first quarter of 2019. $1.2 million of the decline is attributable to the CARES Act providing the opportunity to carryback net operating losses to pre-tax reform income tax rates.
CONFERENCE CALL
First Merchants Corporation will conduct a first quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, April 23, 2020.
To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's first quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until May 23, 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 10139922.
In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme200423.html during the time of the call. A replay of the web cast will be available until April 30, 2021.
Detailed financial results are reported on the attached pages.
About First Merchants Corporation
First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank. The Bank also operates as First Merchants Private Wealth Advisors (as a division of First Merchants Bank).
First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company’s Internet web page (http://www.firstmerchants.com).
FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.
Forward-Looking Statements
This release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These statements include statements of First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity, credit and interest rate risks associated with the First Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, First Merchants’ past results of operations do not necessarily indicate its anticipated future results.
| CONSOLIDATED BALANCE SHEETS |
|
|
|
| (Dollars In Thousands) |
March 31, |
|
2020 |
|
2019 |
| ASSETS |
|
|
|
| Cash and cash equivalents |
$ |
127,731 |
|
|
$ |
115,878 |
|
| Interest-bearing time deposits |
132,944 |
|
|
70,672 |
|
| Investment securities |
2,697,954 |
|
|
1,862,659 |
|
| Loans held for sale |
5,039 |
|
|
3,330 |
|
| Loans |
8,606,849 |
|
|
7,299,320 |
|
| Less: Allowance for loan losses |
(99,454 |
) |
|
(80,902 |
) |
| Net loans |
8,507,395 |
|
|
7,218,418 |
|
| Premises and equipment |
114,045 |
|
|
91,863 |
|
| Federal Home Loan Bank stock |
28,736 |
|
|
24,588 |
|
| Interest receivable |
47,489 |
|
|
40,931 |
|
| Goodwill and other intangibles |
577,366 |
|
|
468,256 |
|
| Cash surrender value of life insurance |
289,574 |
|
|
225,928 |
|
| Other real estate owned |
7,972 |
|
|
1,877 |
|
| Tax asset, deferred and receivable |
9,497 |
|
|
16,094 |
|
| Other assets |
147,776 |
|
|
70,431 |
|
| TOTAL ASSETS |
$ |
12,693,518 |
|
|
$ |
10,210,925 |
|
| LIABILITIES |
|
|
|
| Deposits: |
|
|
|
| Noninterest-bearing |
$ |
1,688,205 |
|
|
$ |
1,381,183 |
|
| Interest-bearing |
8,182,279 |
|
|
6,666,615 |
|
| Total Deposits |
9,870,484 |
|
|
8,047,798 |
|
| Borrowings: |
|
|
|
| Federal funds purchased |
47,000 |
|
|
20,000 |
|
| Securities sold under repurchase agreements |
183,317 |
|
|
111,783 |
|
| Federal Home Loan Bank advances |
480,995 |
|
|
345,013 |
|
| Subordinated debentures and term loans |
128,741 |
|
|
138,519 |
|
| Total Borrowings |
840,053 |
|
|
615,315 |
|
| Interest payable |
7,746 |
|
|
7,313 |
|
| Other liabilities |
197,275 |
|
|
84,651 |
|
| Total Liabilities |
10,915,558 |
|
|
8,755,077 |
|
| 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 - 53,754,137 and 49,428,468 shares |
6,719 |
|
|
6,179 |
|
| Additional paid-in capital |
1,000,942 |
|
|
839,919 |
|
| Retained earnings |
716,518 |
|
|
611,220 |
|
| Accumulated other comprehensive income (loss) |
53,656 |
|
|
(1,595 |
) |
| Total Stockholders' Equity |
1,777,960 |
|
|
1,455,848 |
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
12,693,518 |
|
|
$ |
10,210,925 |
|
| CONSOLIDATED STATEMENTS OF INCOME |
Three Months Ended |
| (Dollars In Thousands, Except Per Share Amounts) |
March 31, |
|
2020 |
|
2019 |
| INTEREST INCOME |
|
|
|
| Loans receivable: |
|
|
|
| Taxable |
$ |
96,652 |
|
|
$ |
90,481 |
|
| Tax-exempt |
5,315 |
|
|
4,153 |
|
| Investment securities: |
|
|
|
| Taxable |
7,631 |
|
|
6,095 |
|
| Tax-exempt |
9,335 |
|
|
6,871 |
|
| Deposits with financial institutions |
575 |
|
|
875 |
|
| Federal Home Loan Bank stock |
299 |
|
|
338 |
|
| Total Interest Income |
119,807 |
|
|
108,813 |
|
| INTEREST EXPENSE |
|
|
|
| Deposits |
21,748 |
|
|
19,594 |
|
| Federal funds purchased |
111 |
|
|
93 |
|
| Securities sold under repurchase agreements |
352 |
|
|
330 |
|
| Federal Home Loan Bank advances |
1,774 |
|
|
1,814 |
|
| Subordinated debentures and term loans |
1,945 |
|
|
2,116 |
|
| Total Interest Expense |
25,930 |
|
|
23,947 |
|
| NET INTEREST INCOME |
93,877 |
|
|
84,866 |
|
| Provision for loan losses |
19,752 |
|
|
1,200 |
|
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
74,125 |
|
|
83,666 |
|
| OTHER INCOME |
|
|
|
| Service charges on deposit accounts |
5,970 |
|
|
5,095 |
|
| Fiduciary and wealth management fees |
5,985 |
|
|
3,818 |
|
| Card payment fees |
5,907 |
|
|
4,826 |
|
| Net gains and fees on sales of loans |
3,363 |
|
|
1,295 |
|
| Derivative hedge fees |
1,939 |
|
|
781 |
|
| Other customer fees |
398 |
|
|
439 |
|
| Earnings on cash surrender value of life insurance |
1,360 |
|
|
989 |
|
| Net realized gains on sales of available for sale securities |
4,612 |
|
|
1,140 |
|
| Other income |
265 |
|
|
330 |
|
| Total Other Income |
29,799 |
|
|
18,713 |
|
| OTHER EXPENSES |
|
|
|
| Salaries and employee benefits |
39,243 |
|
|
33,028 |
|
| Net occupancy |
5,801 |
|
|
5,027 |
|
| Equipment |
4,344 |
|
|
3,642 |
|
| Marketing |
1,443 |
|
|
1,074 |
|
| Outside data processing fees |
4,199 |
|
|
3,684 |
|
| Printing and office supplies |
387 |
|
|
315 |
|
| Intangible asset amortization |
1,514 |
|
|
1,528 |
|
| FDIC assessments |
1,523 |
|
|
707 |
|
| Other real estate owned and foreclosure expenses |
505 |
|
|
1,165 |
|
| Professional and other outside services |
2,258 |
|
|
1,884 |
|
| Other expenses |
4,954 |
|
|
4,567 |
|
| Total Other Expenses |
66,171 |
|
|
56,621 |
|
| INCOME BEFORE INCOME TAX |
37,753 |
|
|
45,758 |
|
| Income tax expense |
3,490 |
|
|
6,941 |
|
| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS |
$ |
34,263 |
|
|
$ |
38,817 |
|
| Per Share Data: |
|
|
|
| Basic Net Income Available to Common Stockholders |
$ |
0.63 |
|
|
$ |
0.79 |
|
| Diluted Net Income Available to Common Stockholders |
$ |
0.62 |
|
|
$ |
0.78 |
|
| Cash Dividends Paid |
$ |
0.26 |
|
|
$ |
0.22 |
|
| Average Diluted Shares Outstanding (in thousands) |
54,918 |
|
|
49,541 |
|
| FINANCIAL HIGHLIGHTS |
|
|
|
| (Dollars in thousands) |
Three Months Ended |
|
March 31, |
|
2020 |
|
2019 |
| NET CHARGE-OFFS |
$ |
582 |
|
|
$ |
850 |
|
|
|
|
|
| AVERAGE BALANCES: |
|
|
|
| Total Assets |
$ |
12,573,238 |
|
|
$ |
10,080,142 |
|
| Total Loans |
8,526,571 |
|
|
7,230,119 |
|
| Total Earning Assets |
11,292,430 |
|
|
9,132,129 |
|
| Total Deposits |
9,886,273 |
|
|
7,936,656 |
|
| Total Stockholders' Equity |
1,816,418 |
|
|
1,429,739 |
|
|
|
|
|
| FINANCIAL RATIOS: |
|
|
|
| Return on Average Assets |
1.09 |
% |
|
1.54 |
% |
| Return on Average Stockholders' Equity |
7.55 |
|
|
10.86 |
|
| Return on Average Common Stockholders' Equity |
7.55 |
|
|
10.86 |
|
| Average Earning Assets to Average Assets |
89.81 |
|
|
90.60 |
|
| Allowance for Loan Losses as % of Total Loans |
1.15 |
|
|
1.11 |
|
| Net Charge-offs as % of Average Loans (Annualized) |
0.03 |
|
|
0.05 |
|
| Average Stockholders' Equity to Average Assets |
14.45 |
|
|
14.18 |
|
| Tax Equivalent Yield on Average Earning Assets |
4.38 |
|
|
4.89 |
|
| Interest Expense/Average Earning Assets |
0.92 |
|
|
1.05 |
|
| Net Interest Margin (FTE) on Average Earning Assets |
3.46 |
|
|
3.84 |
|
| Efficiency Ratio |
52.17 |
|
|
51.18 |
|
| Tangible Common Book Value Per Share |
$ |
22.46 |
|
|
$ |
20.07 |
|
| NON-PERFORMING ASSETS |
|
|
|
|
|
|
|
|
|
| (Dollars In Thousands) |
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
| Non-Accrual Loans |
$ |
15,649 |
|
|
$ |
15,949 |
|
|
$ |
22,728 |
|
|
$ |
25,635 |
|
|
$ |
27,949 |
|
| Renegotiated Loans |
665 |
|
|
841 |
|
|
576 |
|
|
640 |
|
|
709 |
|
| Non-Performing Loans (NPL) |
16,314 |
|
|
16,790 |
|
|
23,304 |
|
|
26,275 |
|
|
28,658 |
|
| Other Real Estate Owned and Repossessions |
8,017 |
|
|
7,527 |
|
|
7,156 |
|
|
1,131 |
|
|
1,877 |
|
| Non-Performing Assets (NPA) |
24,331 |
|
|
24,317 |
|
|
30,460 |
|
|
27,406 |
|
|
30,535 |
|
| 90+ Days Delinquent |
312 |
|
|
69 |
|
|
82 |
|
|
209 |
|
|
134 |
|
| NPAs & 90 Day Delinquent |
$ |
24,643 |
|
|
$ |
24,386 |
|
|
$ |
30,542 |
|
|
$ |
27,615 |
|
|
$ |
30,669 |
|
|
|
|
|
|
|
|
|
|
|
| Allowance for Loan Losses |
$ |
99,454 |
|
|
$ |
80,284 |
|
|
$ |
80,571 |
|
|
$ |
81,274 |
|
|
$ |
80,902 |
|
| Quarterly Net Charge-offs |
582 |
|
|
787 |
|
|
1,303 |
|
|
128 |
|
|
850 |
|
| NPAs / Actual Assets % |
0.19 |
% |
|
0.20 |
% |
|
0.25 |
% |
|
0.26 |
% |
|
0.30 |
% |
| NPAs & 90 Day / Actual Assets % |
0.19 |
% |
|
0.20 |
% |
|
0.25 |
% |
|
0.26 |
% |
|
0.30 |
% |
| NPAs / Actual Loans and OREO % |
0.28 |
% |
|
0.29 |
% |
|
0.37 |
% |
|
0.36 |
% |
|
0.42 |
% |
| Allowance for Loan Losses / Actual Loans (%) |
1.15 |
% |
|
0.95 |
% |
|
0.97 |
% |
|
1.08 |
% |
|
1.11 |
% |
| Net Charge-offs as % of Average Loans (Annualized) |
0.03 |
% |
|
0.04 |
% |
|
0.07 |
% |
|
0.01 |
% |
|
0.05 |
% |
| CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
|
|
|
|
| (Dollars In Thousands) |
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
| ASSETS |
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
$ |
127,731 |
|
|
$ |
177,201 |
|
|
$ |
202,383 |
|
|
$ |
128,185 |
|
|
$ |
115,878 |
|
| Interest-bearing time deposits |
132,944 |
|
|
118,263 |
|
|
230,101 |
|
|
129,614 |
|
|
70,672 |
|
| Investment securities |
2,697,954 |
|
|
2,596,063 |
|
|
2,489,420 |
|
|
2,092,924 |
|
|
1,862,659 |
|
| Loans held for sale |
5,039 |
|
|
9,037 |
|
|
7,910 |
|
|
5,854 |
|
|
3,330 |
|
| Loans |
8,606,849 |
|
|
8,459,310 |
|
|
8,299,260 |
|
|
7,511,370 |
|
|
7,299,320 |
|
| Less: Allowance for loan losses |
(99,454 |
) |
|
(80,284 |
) |
|
(80,571 |
) |
|
(81,274 |
) |
|
(80,902 |
) |
| Net loans |
8,507,395 |
|
|
8,379,026 |
|
|
8,218,689 |
|
|
7,430,096 |
|
|
7,218,418 |
|
| Premises and equipment |
114,045 |
|
|
113,055 |
|
|
113,446 |
|
|
91,767 |
|
|
91,863 |
|
| Federal Home Loan Bank stock |
28,736 |
|
|
28,736 |
|
|
28,736 |
|
|
24,588 |
|
|
24,588 |
|
| Interest receivable |
47,489 |
|
|
48,901 |
|
|
45,923 |
|
|
45,150 |
|
|
40,931 |
|
| Goodwill and other intangibles |
577,366 |
|
|
578,880 |
|
|
579,751 |
|
|
466,736 |
|
|
468,256 |
|
| Cash surrender value of life insurance |
289,574 |
|
|
288,206 |
|
|
286,747 |
|
|
226,241 |
|
|
225,928 |
|
| Other real estate owned |
7,972 |
|
|
7,527 |
|
|
7,156 |
|
|
1,131 |
|
|
1,877 |
|
| Tax asset, deferred and receivable |
9,497 |
|
|
12,165 |
|
|
15,187 |
|
|
12,340 |
|
|
16,094 |
|
| Other assets |
147,776 |
|
|
100,194 |
|
|
99,612 |
|
|
83,231 |
|
|
70,431 |
|
| TOTAL ASSETS |
$ |
12,693,518 |
|
|
$ |
12,457,254 |
|
|
$ |
12,325,061 |
|
|
$ |
10,737,857 |
|
|
$ |
10,210,925 |
|
| LIABILITIES |
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
| Noninterest-bearing |
$ |
1,688,205 |
|
|
$ |
1,736,396 |
|
|
$ |
1,777,365 |
|
|
$ |
1,353,165 |
|
|
$ |
1,381,183 |
|
| Interest-bearing |
8,182,279 |
|
|
8,103,560 |
|
|
7,988,086 |
|
|
6,966,163 |
|
|
6,666,615 |
|
| Total Deposits |
9,870,484 |
|
|
9,839,956 |
|
|
9,765,451 |
|
|
8,319,328 |
|
|
8,047,798 |
|
| Borrowings: |
|
|
|
|
|
|
|
|
|
| Federal funds purchased |
47,000 |
|
|
55,000 |
|
|
— |
|
|
75,000 |
|
|
20,000 |
|
| Securities sold under repurchase agreements |
183,317 |
|
|
187,946 |
|
|
191,603 |
|
|
119,674 |
|
|
111,783 |
|
| Federal Home Loan Bank advances |
480,995 |
|
|
351,072 |
|
|
354,609 |
|
|
460,042 |
|
|
345,013 |
|
| Subordinated debentures and term loans |
128,741 |
|
|
138,685 |
|
|
138,630 |
|
|
138,574 |
|
|
138,519 |
|
| Total Borrowings |
840,053 |
|
|
732,703 |
|
|
684,842 |
|
|
793,290 |
|
|
615,315 |
|
| Interest payable |
7,746 |
|
|
6,754 |
|
|
7,855 |
|
|
6,740 |
|
|
7,313 |
|
| Other liabilities |
197,275 |
|
|
91,404 |
|
|
117,901 |
|
|
116,863 |
|
|
84,651 |
|
| Total Liabilities |
10,915,558 |
|
|
10,670,817 |
|
|
10,576,049 |
|
|
9,236,221 |
|
|
8,755,077 |
|
| 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 |
6,719 |
|
|
6,921 |
|
|
6,918 |
|
|
6,182 |
|
|
6,179 |
|
| Additional paid-in capital |
1,000,942 |
|
|
1,054,997 |
|
|
1,053,148 |
|
|
841,365 |
|
|
839,919 |
|
| Retained earnings |
716,518 |
|
|
696,520 |
|
|
663,173 |
|
|
639,362 |
|
|
611,220 |
|
| Accumulated other comprehensive income (loss) |
53,656 |
|
|
27,874 |
|
|
25,648 |
|
|
14,602 |
|
|
(1,595 |
) |
| Total Stockholders' Equity |
1,777,960 |
|
|
1,786,437 |
|
|
1,749,012 |
|
|
1,501,636 |
|
|
1,455,848 |
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
12,693,518 |
|
|
$ |
12,457,254 |
|
|
$ |
12,325,061 |
|
|
$ |
10,737,857 |
|
|
$ |
10,210,925 |
|
|
|
|
|
|
|
|
|
|
|
| CONSOLIDATED STATEMENTS OF INCOME |
|
|
|
|
|
|
|
|
|
| (Dollars In Thousands, Except Per Share Amounts) |
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
| INTEREST INCOME |
|
|
|
|
|
|
|
|
|
| Loans receivable: |
|
|
|
|
|
|
|
|
|
| Taxable |
$ |
96,652 |
|
|
$ |
102,617 |
|
|
$ |
96,850 |
|
|
$ |
92,824 |
|
|
$ |
90,481 |
|
| Tax-exempt |
5,315 |
|
|
4,671 |
|
|
4,500 |
|
|
4,244 |
|
|
4,153 |
|
| Investment securities: |
|
|
|
|
|
|
|
|
|
| Taxable |
7,631 |
|
|
7,993 |
|
|
6,729 |
|
|
6,998 |
|
|
6,095 |
|
| Tax-exempt |
9,335 |
|
|
8,995 |
|
|
8,335 |
|
|
7,454 |
|
|
6,871 |
|
| Deposits with financial institutions |
575 |
|
|
1,203 |
|
|
1,363 |
|
|
784 |
|
|
875 |
|
| Federal Home Loan Bank stock |
299 |
|
|
342 |
|
|
355 |
|
|
335 |
|
|
338 |
|
| Total Interest Income |
119,807 |
|
|
125,821 |
|
|
118,132 |
|
|
112,639 |
|
|
108,813 |
|
| INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
| Deposits |
21,748 |
|
|
24,074 |
|
|
24,830 |
|
|
23,087 |
|
|
19,594 |
|
| Federal funds purchased |
111 |
|
|
26 |
|
|
15 |
|
|
117 |
|
|
93 |
|
| Securities sold under repurchase agreements |
352 |
|
|
367 |
|
|
385 |
|
|
342 |
|
|
330 |
|
| Federal Home Loan Bank advances |
1,774 |
|
|
1,776 |
|
|
1,894 |
|
|
1,692 |
|
|
1,814 |
|
| Subordinated debentures and term loans |
1,945 |
|
|
1,994 |
|
|
2,076 |
|
|
2,123 |
|
|
2,116 |
|
| Total Interest Expense |
25,930 |
|
|
28,237 |
|
|
29,200 |
|
|
27,361 |
|
|
23,947 |
|
| NET INTEREST INCOME |
93,877 |
|
|
97,584 |
|
|
88,932 |
|
|
85,278 |
|
|
84,866 |
|
| Provision for loan losses |
19,752 |
|
|
500 |
|
|
600 |
|
|
500 |
|
|
1,200 |
|
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
74,125 |
|
|
97,084 |
|
|
88,332 |
|
|
84,778 |
|
|
83,666 |
|
| OTHER INCOME |
|
|
|
|
|
|
|
|
|
| Service charges on deposit accounts |
5,970 |
|
|
6,312 |
|
|
6,107 |
|
|
5,437 |
|
|
5,095 |
|
| Fiduciary and wealth management fees |
5,985 |
|
|
5,384 |
|
|
4,429 |
|
|
3,931 |
|
|
3,818 |
|
| Card payment fees |
5,907 |
|
|
5,430 |
|
|
5,158 |
|
|
4,829 |
|
|
4,826 |
|
| Net gains and fees on sales of loans |
3,363 |
|
|
2,633 |
|
|
2,227 |
|
|
1,736 |
|
|
1,295 |
|
| Derivative hedge fees |
1,939 |
|
|
1,405 |
|
|
1,684 |
|
|
1,487 |
|
|
781 |
|
| Other customer fees |
398 |
|
|
434 |
|
|
450 |
|
|
341 |
|
|
439 |
|
| Earnings on cash surrender value of life insurance |
1,360 |
|
|
1,458 |
|
|
1,144 |
|
|
946 |
|
|
989 |
|
| Net realized gains on sales of available for sale securities |
4,612 |
|
|
1,039 |
|
|
393 |
|
|
1,843 |
|
|
1,140 |
|
| Other income |
265 |
|
|
150 |
|
|
524 |
|
|
1,064 |
|
|
330 |
|
| Total Other Income |
29,799 |
|
|
24,245 |
|
|
22,116 |
|
|
21,614 |
|
|
18,713 |
|
| OTHER EXPENSES |
|
|
|
|
|
|
|
|
|
| Salaries and employee benefits |
39,243 |
|
|
39,358 |
|
|
38,942 |
|
|
32,709 |
|
|
33,028 |
|
| Net occupancy |
5,801 |
|
|
5,311 |
|
|
4,777 |
|
|
4,469 |
|
|
5,027 |
|
| Equipment |
4,344 |
|
|
4,429 |
|
|
4,030 |
|
|
4,117 |
|
|
3,642 |
|
| Marketing |
1,443 |
|
|
1,492 |
|
|
1,332 |
|
|
2,752 |
|
|
1,074 |
|
| Outside data processing fees |
4,199 |
|
|
4,428 |
|
|
4,435 |
|
|
3,929 |
|
|
3,684 |
|
| Printing and office supplies |
387 |
|
|
484 |
|
|
312 |
|
|
334 |
|
|
315 |
|
| Intangible asset amortization |
1,514 |
|
|
1,590 |
|
|
1,356 |
|
|
1,520 |
|
|
1,528 |
|
| FDIC assessments |
1,523 |
|
|
— |
|
|
(668 |
) |
|
678 |
|
|
707 |
|
| Other real estate owned and foreclosure expenses |
505 |
|
|
66 |
|
|
294 |
|
|
903 |
|
|
1,165 |
|
| Professional and other outside services |
2,258 |
|
|
2,899 |
|
|
8,251 |
|
|
2,376 |
|
|
1,884 |
|
| Other expenses |
4,954 |
|
|
5,144 |
|
|
4,293 |
|
|
3,800 |
|
|
4,567 |
|
| Total Other Expenses |
66,171 |
|
|
65,201 |
|
|
67,354 |
|
|
57,587 |
|
|
56,621 |
|
| INCOME BEFORE INCOME TAX |
37,753 |
|
|
56,128 |
|
|
43,094 |
|
|
48,805 |
|
|
45,758 |
|
| Income tax expense |
3,490 |
|
|
8,298 |
|
|
6,337 |
|
|
7,749 |
|
|
6,941 |
|
| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS |
$ |
34,263 |
|
|
$ |
47,830 |
|
|
$ |
36,757 |
|
|
$ |
41,056 |
|
|
$ |
38,817 |
|
|
|
|
|
|
|
|
|
|
|
| Per Share Data: |
|
|
|
|
|
|
|
|
|
| Basic Net Income Available to Common Stockholders |
$ |
0.63 |
|
|
$ |
0.87 |
|
|
$ |
0.71 |
|
|
$ |
0.83 |
|
|
$ |
0.79 |
|
| Diluted Net Income Available to Common Stockholders |
$ |
0.62 |
|
|
$ |
0.87 |
|
|
$ |
0.71 |
|
|
$ |
0.83 |
|
|
$ |
0.78 |
|
| Cash Dividends Paid |
$ |
0.26 |
|
|
$ |
0.26 |
|
|
$ |
0.26 |
|
|
$ |
0.26 |
|
|
$ |
0.22 |
|
| Average Diluted Shares Outstanding (in thousands) |
54,918 |
|
|
55,520 |
|
|
51,570 |
|
|
49,550 |
|
|
49,541 |
|
| FINANCIAL RATIOS: |
|
|
|
|
|
|
|
|
|
| Return on Average Assets |
1.09 |
% |
|
1.53 |
% |
|
1.30 |
% |
|
1.56 |
% |
|
1.54 |
% |
| Return on Average Stockholders' Equity |
7.55 |
|
|
10.82 |
|
|
9.21 |
|
|
11.10 |
|
|
10.86 |
|
| Return on Average Common Stockholders' Equity |
7.55 |
|
|
10.82 |
|
|
9.21 |
|
|
11.10 |
|
|
10.86 |
|
| Average Earning Assets to Average Assets |
89.81 |
|
|
89.71 |
|
|
90.37 |
|
|
90.66 |
|
|
90.60 |
|
| Allowance for Loan Losses as % of Total Loans |
1.15 |
|
|
0.95 |
|
|
0.97 |
|
|
1.08 |
|
|
1.11 |
|
| Net Charge-offs as % of Average Loans (Annualized) |
0.03 |
|
|
0.04 |
|
|
0.07 |
|
|
0.01 |
|
|
0.05 |
|
| Average Stockholders' Equity to Average Assets |
14.45 |
|
|
14.17 |
|
|
14.16 |
|
|
14.09 |
|
|
14.18 |
|
| Tax Equivalent Yield on Average Earning Assets |
4.38 |
|
|
4.63 |
|
|
4.77 |
|
|
4.86 |
|
|
4.89 |
|
| Interest Expense/Average Earning Assets |
0.92 |
|
|
1.01 |
|
|
1.15 |
|
|
1.15 |
|
|
1.05 |
|
| Net Interest Margin (FTE) on Average Earning Assets |
3.46 |
|
|
3.62 |
|
|
3.62 |
|
|
3.71 |
|
|
3.84 |
|
| Efficiency Ratio |
52.17 |
|
|
51.07 |
|
|
57.60 |
|
|
51.00 |
|
|
51.18 |
|
| Tangible Common Book Value Per Share |
$ |
22.46 |
|
|
$ |
21.94 |
|
|
$ |
21.26 |
|
|
$ |
21.01 |
|
|
$ |
20.07 |
|
| LOANS |
|
|
|
|
|
|
|
|
|
| (Dollars In Thousands) |
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
| Commercial and industrial loans |
$ |
2,199,226 |
|
|
$ |
2,109,879 |
|
|
$ |
2,034,311 |
|
|
$ |
1,877,042 |
|
|
$ |
1,788,628 |
|
| Agricultural production financing and other loans to farmers |
87,421 |
|
|
93,861 |
|
|
90,462 |
|
|
83,452 |
|
|
80,357 |
|
| Real estate loans: |
|
|
|
|
|
|
|
|
|
| Construction |
643,674 |
|
|
787,568 |
|
|
670,138 |
|
|
624,548 |
|
|
542,501 |
|
| Commercial and farmland |
3,268,168 |
|
|
3,052,698 |
|
|
3,144,649 |
|
|
2,821,689 |
|
|
2,838,798 |
|
| Residential |
1,121,556 |
|
|
1,143,217 |
|
|
1,155,403 |
|
|
993,802 |
|
|
976,668 |
|
| Home equity |
570,398 |
|
|
588,984 |
|
|
601,335 |
|
|
548,006 |
|
|
536,208 |
|
| Individuals' loans for household and other personal expenditures |
129,765 |
|
|
135,989 |
|
|
131,246 |
|
|
98,384 |
|
|
108,216 |
|
| Public finance and other commercial loans |
586,641 |
|
|
547,114 |
|
|
471,716 |
|
|
464,447 |
|
|
427,944 |
|
| Loans |
8,606,849 |
|
|
8,459,310 |
|
|
8,299,260 |
|
|
7,511,370 |
|
|
7,299,320 |
|
| Allowance for loan losses |
(99,454 |
) |
|
(80,284 |
) |
|
(80,571 |
) |
|
(81,274 |
) |
|
(80,902 |
) |
| NET LOANS |
$ |
8,507,395 |
|
|
$ |
8,379,026 |
|
|
$ |
8,218,689 |
|
|
$ |
7,430,096 |
|
|
$ |
7,218,418 |
|
| DEPOSITS |
|
|
|
|
|
|
|
|
|
| (Dollars In Thousands) |
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
| Demand deposits |
$ |
5,293,200 |
|
|
$ |
5,250,568 |
|
|
$ |
5,183,971 |
|
|
$ |
4,309,473 |
|
|
$ |
4,101,156 |
|
| Savings deposits |
2,962,821 |
|
|
2,896,177 |
|
|
2,808,745 |
|
|
2,358,720 |
|
|
2,338,266 |
|
| Certificates and other time deposits of $100,000 or more |
694,062 |
|
|
736,843 |
|
|
731,693 |
|
|
720,536 |
|
|
670,199 |
|
| Other certificates and time deposits |
717,723 |
|
|
741,759 |
|
|
811,780 |
|
|
729,392 |
|
|
704,527 |
|
| Brokered deposits |
202,678 |
|
|
214,609 |
|
|
229,262 |
|
|
201,207 |
|
|
233,650 |
|
| TOTAL DEPOSITS |
$ |
9,870,484 |
|
|
$ |
9,839,956 |
|
|
$ |
9,765,451 |
|
|
$ |
8,319,328 |
|
|
$ |
8,047,798 |
|
| CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS |
|
|
|
|
|
|
|
| (Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
March 31, 2020 |
|
March 31, 2019 |
|
Average Balance |
|
Interest
Income /
Expense |
|
Average
Rate |
|
Average Balance |
|
Interest
Income /
Expense |
|
Average
Rate |
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing time deposits |
$ |
159,859 |
|
|
$ |
575 |
|
|
1.44 |
% |
|
$ |
145,935 |
|
|
$ |
875 |
|
|
2.40 |
% |
| Federal Home Loan Bank stock |
28,737 |
|
|
299 |
|
|
4.16 |
|
|
24,588 |
|
|
338 |
|
|
5.50 |
|
| Investment Securities: (1) |
|
|
|
|
|
|
|
|
|
|
|
| Taxable |
1,368,546 |
|
|
7,631 |
|
|
2.23 |
|
|
902,402 |
|
|
6,095 |
|
|
2.70 |
|
| Tax-Exempt (2) |
1,208,717 |
|
|
11,816 |
|
|
3.91 |
|
|
829,085 |
|
|
8,697 |
|
|
4.20 |
|
| Total Investment Securities |
2,577,263 |
|
|
19,447 |
|
|
3.02 |
|
|
1,731,487 |
|
|
14,792 |
|
|
3.42 |
|
| Loans held for sale |
17,217 |
|
|
193 |
|
|
4.48 |
|
|
9,703 |
|
|
112 |
|
|
4.62 |
|
| Loans: (3) |
|
|
|
|
|
|
|
|
|
|
|
| Commercial |
6,235,336 |
|
|
76,952 |
|
|
4.94 |
|
|
5,309,998 |
|
|
72,758 |
|
|
5.48 |
|
| Real Estate Mortgage |
870,654 |
|
|
10,402 |
|
|
4.78 |
|
|
743,736 |
|
|
8,321 |
|
|
4.48 |
|
| Installment |
759,614 |
|
|
9,105 |
|
|
4.79 |
|
|
665,050 |
|
|
9,290 |
|
|
5.59 |
|
| Tax-Exempt (2) |
643,750 |
|
|
6,728 |
|
|
4.18 |
|
|
501,632 |
|
|
5,257 |
|
|
4.19 |
|
| Total Loans |
8,526,571 |
|
|
103,380 |
|
|
4.85 |
|
|
7,230,119 |
|
|
95,738 |
|
|
5.30 |
|
| Total Earning Assets |
11,292,430 |
|
|
123,701 |
|
|
4.38 |
% |
|
9,132,129 |
|
|
111,743 |
|
|
4.89 |
% |
| Net unrealized gain (loss) on securities available for sale |
48,656 |
|
|
|
|
|
|
(5,015 |
) |
|
|
|
|
| Allowance for loan losses |
(81,160 |
) |
|
|
|
|
|
(80,907 |
) |
|
|
|
|
| Cash and cash equivalents |
159,757 |
|
|
|
|
|
|
117,224 |
|
|
|
|
|
| Premises and equipment |
113,812 |
|
|
|
|
|
|
93,236 |
|
|
|
|
|
| Other assets |
1,039,743 |
|
|
|
|
|
|
823,475 |
|
|
|
|
|
| Total Assets |
$ |
12,573,238 |
|
|
|
|
|
|
$ |
10,080,142 |
|
|
|
|
|
| Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing deposits: |
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing deposits |
$ |
3,589,240 |
|
|
$ |
8,276 |
|
|
0.92 |
% |
|
$ |
2,689,797 |
|
|
$ |
7,019 |
|
|
1.04 |
% |
| Money market deposits |
1,535,844 |
|
|
3,783 |
|
|
0.99 |
|
|
1,139,062 |
|
|
2,782 |
|
|
0.98 |
|
| Savings deposits |
1,425,054 |
|
|
1,827 |
|
|
0.51 |
|
|
1,150,725 |
|
|
2,267 |
|
|
0.79 |
|
| Certificates and other time deposits |
1,666,642 |
|
|
7,862 |
|
|
1.89 |
|
|
1,565,578 |
|
|
7,526 |
|
|
1.92 |
|
| Total Interest-bearing Deposits |
8,216,780 |
|
|
21,748 |
|
|
1.06 |
|
|
6,545,162 |
|
|
19,594 |
|
|
1.20 |
|
| Borrowings |
748,185 |
|
|
4,182 |
|
|
2.24 |
|
|
635,058 |
|
|
4,353 |
|
|
2.74 |
|
| Total Interest-bearing Liabilities |
8,964,965 |
|
|
25,930 |
|
|
1.16 |
|
|
7,180,220 |
|
|
23,947 |
|
|
1.33 |
|
| Noninterest-bearing deposits |
1,669,493 |
|
|
|
|
|
|
1,391,494 |
|
|
|
|
|
| Other liabilities |
122,362 |
|
|
|
|
|
|
78,689 |
|
|
|
|
|
| Total Liabilities |
10,756,820 |
|
|
|
|
|
|
8,650,403 |
|
|
|
|
|
| Stockholders' Equity |
1,816,418 |
|
|
|
|
|
|
1,429,739 |
|
|
|
|
|
| Total Liabilities and Stockholders' Equity |
$ |
12,573,238 |
|
|
25,930 |
|
|
|
|
$ |
10,080,142 |
|
|
23,947 |
|
|
|
| Net Interest Income (FTE) |
|
|
$ |
97,771 |
|
|
|
|
|
|
$ |
87,796 |
|
|
|
| Net Interest Spread (FTE) (4) |
|
|
|
|
3.22 |
% |
|
|
|
|
|
3.56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
| Net Interest Margin (FTE): |
|
|
|
|
|
|
|
|
|
|
|
| Interest Income (FTE) / Average Earning Assets |
|
|
|
|
4.38 |
% |
|
|
|
|
|
4.89 |
% |
| Interest Expense / Average Earning Assets |
|
|
|
|
0.92 |
% |
|
|
|
|
|
1.05 |
% |
| Net Interest Margin (FTE) (5) |
|
|
|
|
3.46 |
% |
|
|
|
|
|
3.84 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
| (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 $3,894 and $2,930 for the three months ended March 31, 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
