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CST: 26/05/2019 02:49:56   

First Merchants Corporation Announces Record 2018 Earnings Per Share

114 Days ago

MUNCIE, Ind., Jan. 31, 2019 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported fourth quarter 2018 net income of $41.7 million, an increase of 71 percent, compared to $24.4 million during the same period in 2017. Earnings per share for the period totaled a record $.85 per share, an increase of 73 percent, compared to the fourth quarter of 2017 result of $.49 per share. Net income for the year ended December 31, 2018 totaled $159.1 million, compared to $96.1 million during the same period in 2017. Year-to-date earnings per share was $3.22, a record level as we celebrated the Corporation’s 125th anniversary. The result was an increase of $1.10 per share, or 52 percent, over the same period in 2017.

Total assets equaled $9.9 billion as of year-end and loans totaled $7.2 billion. The Corporation’s loan portfolio increased by $471 million, or 7 percent, during the past twelve months. Total deposits equaled $7.8 billion as of year-end and increased by $582 million, or 8 percent.

Michael C. Rechin, President and Chief Executive Officer, stated, “I am proud of our team for running through the tape in 2018 by posting a strong and balanced organic growth quarter. Quality low cost funding, loan growth and sound asset quality all contributed prominently in our record quarter capping off our record year. Our teammates connect with the needs of the marketplace and our communities while our execution produces results and efficiency.” Rechin also added, “We look forward to 2019 and extending our franchise into Michigan through our merger with Monroe Bank & Trust. We look to continue their tradition of superior service to Monroe’s communities through the combination of their skilled bankers and First Merchants’ delivery capabilities.”

Net-interest income totaled $338.9 million for the year, an increase of $61.6 million, or 22 percent. Net-interest margin for the year totaled 4.00 percent, down 2 basis points and includes a reduction of 13 basis points related to tax reform. Yield on earning assets totaled 4.79 percent and the cost of supporting liabilities totaled .79 percent.

Non-interest income totaled $76.5 million for the year, a $5.5 million increase over 2017. Non-interest expense totaled $220 million up from the 2017 total of $205.6 million.

Tax expense for 2018 totaled $29 million, or just 15.4 percent of pre-tax net income. In addition to the lower statutory tax rate as a result of tax reform, tax expense for the fourth quarter and year were less than normal by $1.8 million due to an increase in the Bank’s Indiana state tax liability offset by the release of a valuation allowance on state deferred tax assets.

The Corporation’s 2018 provision expense totaled $7.2 million due to loan growth. Net charge-offs totaled $1.7 million for the year. The allowance for loan losses totaled $80.6 million as of December 31, 2018, up from $75 million at the end of 2017. Non-performing assets totaled $29.4 million as of year-end and the allowance is 1.11 percent of total loans.

As of December 31, 2018, the Corporation’s total risk-based capital ratio equaled 14.61 percent, common equity tier 1 capital ratio equaled 11.98 percent, and the tangible common equity ratio totaled 9.97 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, January 31, 2019.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's fourth quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until March 2, 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 10127190.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme190131.html during the time of the call. A replay of the web cast will be available until January 31, 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) December 31,
  2018   2017
ASSETS      
Cash and cash equivalents $ 139,247     $ 154,905  
Interest-bearing time deposits 36,963     35,027  
Investment securities 1,632,582     1,560,602  
Loans held for sale 4,778     7,216  
Loans 7,224,467     6,751,199  
Less: Allowance for loan losses (80,552 )   (75,032 )
Net loans 7,143,915     6,676,167  
Premises and equipment 93,420     95,852  
Federal Home Loan Bank stock 24,588     23,825  
Interest receivable 40,881     37,130  
Goodwill and other intangibles 469,784     476,503  
Cash surrender value of life insurance 224,939     223,557  
Other real estate owned 2,179     10,373  
Tax asset, deferred and receivable 23,668     23,983  
Other assets 47,772     42,338  
TOTAL ASSETS $ 9,884,716     $ 9,367,478  
LIABILITIES      
Deposits:      
Noninterest-bearing $ 1,447,907     $ 1,761,553  
Interest-bearing 6,306,686     5,410,977  
Total Deposits 7,754,593     7,172,530  
Borrowings:      
Federal funds purchased 104,000     144,038  
Securities sold under repurchase agreements 113,512     136,623  
Federal Home Loan Bank advances 314,986     414,377  
Subordinated debentures and term loans 138,463     139,349  
Total Borrowings 670,961     834,387  
Interest payable 5,607     4,390  
Other liabilities 45,295     52,708  
Total Liabilities 8,476,456     8,064,015  
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 - 49,349,800 and 49,158,238 shares 6,169     6,145  
Additional paid-in capital 840,052     834,870  
Retained earnings 583,336     465,231  
Accumulated other comprehensive loss (21,422 )   (2,908 )
Total Stockholders' Equity 1,408,260     1,303,463  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,884,716     $ 9,367,478  


CONSOLIDATED STATEMENTS OF INCOME Three Months Ended   Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts) December 31,   December 31,
  2018   2017   2018   2017
               
INTEREST INCOME            
Loans receivable:            
Taxable $ 91,092     $ 76,470     $ 342,501     $ 263,704  
Tax-exempt 3,873     3,018     14,862     10,694  
Investment securities:            
Taxable 5,553     4,477     21,597     17,489  
Tax-exempt 6,644     5,830     25,509     21,379  
Deposits with financial institutions 1,207     294     2,241     736  
                       
                       
                       
                       
                       
Federal Home Loan Bank stock 284     259     1,234     894  
                       
                       
Total Interest Income 108,653     90,348     407,944     314,896  
                       
INTEREST EXPENSE            
Deposits 16,690     7,835     51,542     23,806  
Federal funds purchased 48     55     718     561  
Securities sold under repurchase agreements 243     146     762     477  
Federal Home Loan Bank advances 1,691     1,577     7,832     5,196  
Subordinated debentures and term loans 2,097     1,970     8,233     7,572  
                       
Total Interest Expense 20,769     11,583     69,087     37,612  
NET INTEREST INCOME 87,884     78,765     338,857     277,284  
Provision for loan losses 1,664     1,800     7,227     9,143  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 86,220     76,965     331,630     268,141  
                       
OTHER INCOME            
Service charges on deposit accounts 5,516     5,066     20,950     18,722  
Fiduciary and wealth management fees 3,842     4,126     14,906     14,682  
Other customer fees 4,904     4,565     19,895     17,863  
Earnings on cash surrender value of life insurance 1,074     1,133     4,218     6,577  
Net gains and fees on sales of loans 1,767     2,355     7,029     7,564  
Net realized gains on sales of available for sale securities 253     1,134     4,269     2,631  
Other income 1,824     682     5,192     2,970  
Total Other Income 19,180     19,061     76,459     71,009  
                       
OTHER EXPENSES            
Salaries and employee benefits 34,350     33,760     131,704     119,812  
Net occupancy 4,737     4,424     18,341     16,976  
Equipment 3,627     3,898     14,334     13,090  
Marketing 1,107     1,361     4,681     3,739  
Outside data processing fees 3,367     3,378     13,215     12,242  
Printing and office supplies 433     378     1,425     1,283  
Intangible asset amortization 1,625     2,055     6,719     5,647  
FDIC assessments 634     711     2,920     2,564  
Other real estate owned and foreclosure expenses 251     311     1,470     1,903  
Professional and other outside services 3,002     1,914     8,176     12,757  
Other expenses 4,605     4,243     16,966     15,543  
Total Other Expenses 57,738     56,433     219,951     205,556  
INCOME BEFORE INCOME TAX 47,662     39,593     188,138     133,594  
Income tax expense 5,949     15,210     28,999     37,524  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 41,713     $ 24,383     $ 159,139     $ 96,070  
                               
Per Share Data:            
Basic Net Income Available to Common Stockholders $ 0.85     $ 0.49     $ 3.23     $ 2.13  
Diluted Net Income Available to Common Stockholders $ 0.85     $ 0.49     $ 3.22     $ 2.12  
Cash Dividends Paid $ 0.22     $ 0.18     $ 0.84     $ 0.69  
Average Diluted Shares Outstanding (in thousands) 49,511     49,379     49,471     45,403  


FINANCIAL HIGHLIGHTS              
(Dollars in thousands) Three Months Ended   Twelve Months Ended
  December 31,   December 31,
  2018   2017   2018   2017
NET CHARGE-OFFS $ (482 )   $ 122     $ 1,707     $ 148  
               
AVERAGE BALANCES:              
Total Assets $ 9,923,001     $ 9,174,237     $ 9,689,057     $ 8,196,229  
Total Loans 7,102,552     6,575,055     6,997,771     5,881,284  
Total Earning Assets 8,971,432     8,139,993     8,736,367     7,335,702  
Total Deposits 7,875,998     7,142,375     7,569,482     6,368,751  
Total Stockholders' Equity 1,379,453     1,294,810     1,343,861     1,110,524  
               
FINANCIAL RATIOS:              
Return on Average Assets 1.68 %   1.06 %   1.64 %   1.17 %
Return on Average Stockholders' Equity 12.10     7.53     11.84     8.65  
Return on Average Common Stockholders' Equity 12.10     7.53     11.84     8.65  
Average Earning Assets to Average Assets 90.41     88.73     90.17     89.50  
Allowance for Loan Losses as % of Total Loans 1.11     1.11     1.11     1.11  
Net Charge-offs as % of Average Loans (Annualized) (0.03 )   0.01     0.02      
Average Stockholders' Equity to Average Assets 13.90     14.11     13.87     13.55  
Tax Equivalent Yield on Average Earning Assets 4.97     4.67     4.79     4.53  
Interest Expense/Average Earning Assets 0.93     0.57     0.79     0.51  
Net Interest Margin (FTE) on Average Earning Assets 4.04     4.10     4.00     4.02  
Efficiency Ratio 50.97     53.29     50.21     54.56  
Tangible Common Book Value Per Share $ 19.12     $ 16.96     $ 19.12     $ 16.96  


NON-PERFORMING ASSETS                  
(Dollars In Thousands) December 31,   September 30,   June 30,   March 31,   December 31,
  2018   2018   2018   2018   2017
Non-Accrual Loans $ 26,148     $ 20,421     $ 20,143     $ 27,497     $ 28,724  
Renegotiated Loans 1,103     968     544     579     1,013  
Non-Performing Loans (NPL) 27,251     21,389     20,687     28,076     29,737  
Other Real Estate Owned 2,179     8,859     9,071     9,698     10,373  
Non-Performing Assets (NPA) 29,430     30,248     29,758     37,774     40,110  
90+ Days Delinquent 1,855     50     184     738     924  
NPAs & 90 Day Delinquent $ 31,285     $ 30,298     $ 29,942     $ 38,512     $ 41,034  
                   
Allowance for Loan Losses $ 80,552     $ 78,406     $ 77,543     $ 76,420     $ 75,032  
Quarterly Net Charge-offs (482 )   537     540     1,112     122  
NPAs / Actual Assets % 0.30 %   0.31 %   0.31 %   0.40 %   0.43 %
NPAs & 90 Day / Actual Assets % 0.32 %   0.31 %   0.31 %   0.41 %   0.44 %
NPAs / Actual Loans and OREO % 0.41 %   0.43 %   0.42 %   0.55 %   0.59 %
Allowance for Loan Losses / Actual Loans (%) 1.11 %   1.11 %   1.09 %   1.11 %   1.11 %
Net Charge-offs as % of Average Loans (Annualized) (0.03 )%   0.03 %   0.03 %   0.07 %   0.01 %


CONSOLIDATED BALANCE SHEETS                  
(Dollars In Thousands) December 31,   September 30,   June 30,   March 31,   December 31,
  2018   2018   2018   2018   2017
ASSETS                  
Cash and cash equivalents $ 139,247     $ 142,501     $ 133,893     $ 128,828     $ 154,905  
Interest-bearing time deposits 36,963     66,763     36,599     24,233     35,027  
Investment securities 1,632,582     1,625,251     1,619,683     1,543,820     1,560,602  
Loans held for sale 4,778     3,022     2,046     4,469     7,216  
Loans 7,224,467     7,088,071     7,081,059     6,901,696     6,751,199  
Less: Allowance for loan losses (80,552 )   (78,406 )   (77,543 )   (76,420 )   (75,032 )
Net loans 7,143,915     7,009,665     7,003,516     6,825,276     6,676,167  
Premises and equipment 93,420     93,728     94,397     94,741     95,852  
Federal Home Loan Bank stock 24,588     24,588     24,588     24,588     23,825  
Interest receivable 40,881     38,531     38,530     35,223     37,130  
Goodwill and other intangibles 469,784     471,409     473,059     474,777     476,503  
Cash surrender value of life insurance 224,939     223,865     222,905     221,949     223,557  
Other real estate owned 2,179     8,859     9,071     9,698     10,373  
Tax asset, deferred and receivable 23,668     25,933     24,619     24,177     23,983  
Other assets 47,772     53,167     51,809     61,017     42,338  
TOTAL ASSETS $ 9,884,716     $ 9,787,282     $ 9,734,715     $ 9,472,796     $ 9,367,478  
LIABILITIES                  
Deposits:                  
Noninterest-bearing $ 1,447,907     $ 1,464,190     $ 1,571,194     $ 1,698,958     $ 1,761,553  
Interest-bearing 6,306,686     6,168,962     5,932,621     5,628,677     5,410,977  
Total Deposits 7,754,593     7,633,152     7,503,815     7,327,635     7,172,530  
Borrowings:                  
Federal funds purchased 104,000     90,000     109,000     50,000     144,038  
Securities sold under repurchase agreements 113,512     118,824     122,513     138,910     136,623  
Federal Home Loan Bank advances 314,986     385,458     469,261     449,419     414,377  
Subordinated debentures and term loans 138,463     138,408     138,352     138,297     139,349  
Total Borrowings 670,961     732,690     839,126     776,626     834,387  
Interest payable 5,607     5,920     4,807     5,376     4,390  
Other liabilities 45,295     54,094     46,639     50,086     52,708  
Total Liabilities 8,476,456     8,425,856     8,394,387     8,159,723     8,064,015  
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 6,169     6,163     6,160     6,155     6,145  
Additional paid-in capital 840,052     837,996     836,549     834,894     834,870  
Retained earnings 583,336     552,551     522,362     493,624     465,231  
Accumulated other comprehensive loss (21,422 )   (35,409 )   (24,868 )   (21,725 )   (2,908 )
Total Stockholders' Equity 1,408,260     1,361,426     1,340,328     1,313,073     1,303,463  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,884,716     $ 9,787,282     $ 9,734,715     $ 9,472,796     $ 9,367,478  


CONSOLIDATED STATEMENTS OF INCOME                  
(Dollars In Thousands, Except Per Share Amounts) December 31,   September 30,   June 30,   March 31,   December 31,
  2018   2018   2018   2018   2017
INTEREST INCOME                  
Loans receivable:                  
Taxable $ 91,092     $ 88,479     $ 84,663     $ 78,267     $ 76,470  
Tax-exempt 3,873     3,761     3,632     3,596     3,018  
Investment securities:                  
Taxable 5,553     5,514     5,434     5,096     4,477  
Tax-exempt 6,644     6,493     6,246     6,126     5,830  
Deposits with financial institutions 1,207     270     633     131     294  
Federal Home Loan Bank stock 284     283     263     404     259  
Total Interest Income 108,653     104,800     100,871     93,620     90,348  
INTEREST EXPENSE                  
Deposits 16,690     13,685     12,165     9,002     7,835  
Federal funds purchased 48     229     61     380     55  
Securities sold under repurchase agreements 243     174     172     173     146  
Federal Home Loan Bank advances 1,691     2,137     1,845     2,159     1,577  
Subordinated debentures and term loans 2,097     2,089     2,057     1,990     1,970  
Total Interest Expense 20,769     18,314     16,300     13,704     11,583  
NET INTEREST INCOME 87,884     86,486     84,571     79,916     78,765  
Provision for loan losses 1,664     1,400     1,663     2,500     1,800  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 86,220     85,086     82,908     77,416     76,965  
OTHER INCOME                  
Service charges on deposit accounts 5,516     5,619     5,038     4,777     5,066  
Fiduciary and wealth management fees 3,842     3,673     3,595     3,796     4,126  
Other customer fees 4,904     5,038     4,917     5,036     4,565  
Earnings on cash surrender value of life insurance 1,074     961     1,007     1,176     1,133  
Net gains and fees on sales of loans 1,767     1,841     1,600     1,821     2,355  
Net realized gains on sales of available for sale securities 253     1,285     1,122     1,609     1,134  
Other income 1,824     1,110     912     1,346     682  
Total Other Income 19,180     19,527     18,191     19,561     19,061  
OTHER EXPENSES                  
Salaries and employee benefits 34,350     32,936     32,192     32,226     33,760  
Net occupancy 4,737     4,586     4,348     4,670     4,424  
Equipment 3,627     3,483     3,556     3,668     3,898  
Marketing 1,107     1,216     1,474     884     1,361  
Outside data processing fees 3,367     3,422     3,462     2,964     3,378  
Printing and office supplies 433     334     324     334     378  
Intangible asset amortization 1,625     1,650     1,718     1,726     2,055  
FDIC assessments 634     856     711     719     711  
Other real estate owned and foreclosure expenses 251     455     362     402     311  
Professional and other outside services 3,002     1,844     1,789     1,541     1,914  
Other expenses 4,605     4,240     3,568     4,553     4,243  
Total Other Expenses 57,738     55,022     53,504     53,687     56,433  
INCOME BEFORE INCOME TAX 47,662     49,591     47,595     43,290     39,593  
Income tax expense 5,949     8,478     7,961     6,611     15,210  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 41,713     $ 41,113     $ 39,634     $ 36,679     $ 24,383  
                   
Per Share Data:                  
Basic Net Income Available to Common Stockholders $ 0.85     $ 0.83     $ 0.80     $ 0.75     $ 0.49  
Diluted Net Income Available to Common Stockholders $ 0.85     $ 0.83     $ 0.80     $ 0.74     $ 0.49  
Cash Dividends Paid $ 0.22     $ 0.22     $ 0.22     $ 0.18     $ 0.18  
Average Diluted Shares Outstanding (in thousands) 49,511     49,492     49,451     49,428     49,379  
FINANCIAL RATIOS:                  
Return on Average Assets 1.68 %   1.69 %   1.63 %   1.57 %   1.06 %
Return on Average Stockholders' Equity 12.10     12.10     11.94     11.21     7.53  
Return on Average Common Stockholders' Equity 12.10     12.10     11.95     11.21     7.53  
Average Earning Assets to Average Assets 90.41     90.30     90.14     89.78     88.73  
Allowance for Loan Losses as % of Total Loans 1.11     1.11     1.09     1.11     1.11  
Net Charge-offs as % of Average Loans (Annualized) (0.03 )   0.03     0.03     0.07     0.01  
Average Stockholders' Equity to Average Assets 13.90     13.93     13.69     13.96     14.11  
Tax Equivalent Yield on Average Earning Assets 4.97     4.88     4.74     4.57     4.67  
Interest Expense/Average Earning Assets 0.93     0.83     0.75     0.65     0.57  
Net Interest Margin (FTE) on Average Earning Assets 4.04     4.05     3.99     3.92     4.10  
Efficiency Ratio 50.97     49.25     49.32     51.33     53.29  
Tangible Common Book Value Per Share $ 19.12     $ 18.16     $ 17.71     $ 17.14     $ 16.96  


LOANS                  
(Dollars In Thousands) December 31,   September 30,   June 30,   March 31,   December 31,
  2018   2018   2018   2018   2017
Commercial and industrial loans $ 1,726,664     $ 1,655,569     $ 1,657,591     $ 1,554,169     $ 1,493,493  
Agricultural production financing and other loans to farmers 92,404     88,504     89,093     98,315     121,757  
Real estate loans:                  
Construction 545,729     668,608     714,866     590,093     612,219  
Commercial and farmland 2,832,102     2,699,629     2,652,782     2,713,994     2,562,691  
Residential 966,421     965,893     965,720     948,644     962,765  
Home equity 528,157     517,303     518,699     510,545     514,021  
Individuals' loans for household and other personal expenditures 99,788     98,709     92,809     88,235     86,935  
Lease financing receivables, net of unearned income 1,600     1,830     1,945     2,193     2,527  
Other commercial loans 431,602     392,026     387,554     395,508     394,791  
Loans 7,224,467     7,088,071     7,081,059     6,901,696     6,751,199  
Allowance for loan losses (80,552 )   (78,406 )   (77,543 )   (76,420 )   (75,032 )
NET LOANS $ 7,143,915     $ 7,009,665     $ 7,003,516     $ 6,825,276     $ 6,676,167  


DEPOSITS                  
(Dollars In Thousands) December 31,   September 30,   June 30,   March 31,   December 31,
  2018   2018   2018   2018   2017
Demand deposits $ 3,985,178     $ 3,870,816     $ 3,933,233     $ 3,740,395     $ 3,746,654  
Savings deposits 2,282,701     2,212,675     2,099,771     2,109,071     1,994,366  
Certificates and other time deposits of $100,000 or more 593,592     602,002     555,910     552,643     468,895  
Other certificates and time deposits 646,682     625,341     602,239     584,377     581,894  
Brokered deposits 246,440     322,318     312,662     341,149     380,721  
TOTAL DEPOSITS $ 7,754,593     $ 7,633,152     $ 7,503,815     $ 7,327,635     $ 7,172,530  


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)                      
  For the Three Months Ended
  December 31, 2018   December 31, 2017
  Average
Balance
  Interest
Income /
Expense
  Average
Rate
  Average
Balance
  Interest
Income /
Expense
  Average
Rate
Assets:                      
Interest-bearing time deposits $ 210,121     $ 1,207     2.30 %   $ 87,172     $ 294     1.35 %
Federal Home Loan Bank stock 24,588     284     4.62     23,825     259     4.35  
Investment Securities: (1)                      
Taxable 843,514     5,553     2.63     755,341     4,477     2.37  
Tax-Exempt (2) 790,657     8,410     4.25     698,600     8,969     5.14  
Total Investment Securities 1,634,171     13,963     3.42     1,453,941     13,446     3.70  
Loans held for sale 15,142     177     4.68     13,657     216     6.33  
Loans: (3)                      
Commercial 5,224,202     73,416     5.62     4,806,978     60,015     4.99  
Real Estate Mortgage 739,325     8,375     4.53     737,668     8,320     4.51  
Installment 649,717     9,124     5.62     617,591     7,919     5.13  
Tax-Exempt (2) 474,166     4,903     4.14     399,161     4,643     4.65  
Total Loans 7,102,552     95,995     5.41     6,575,055     81,113     4.93  
Total Earning Assets 8,971,432     111,449     4.97     8,139,993     95,112     4.67  
Net unrealized gain (loss) on securities available for sale (24,206 )           4,131          
Allowance for loan losses (78,926 )           (73,675 )        
Cash and cash equivalents 140,065             182,970          
Premises and equipment 93,589             102,605          
Other assets 821,047             818,213          
Total Assets $ 9,923,001             $ 9,174,237          
Liabilities:                      
Interest-bearing deposits:                      
Interest-bearing deposits $ 2,563,703     $ 5,565     0.87 %   $ 1,970,916     $ 2,185     0.44 %
Money market deposits 1,157,022     2,450     0.85     1,071,037     1,101     0.41  
Savings deposits 1,134,559     2,016     0.71     922,052     214     0.09  
Certificates and other time deposits 1,542,222     6,659     1.73     1,458,365     4,335     1.19  
Total Interest-bearing Deposits 6,397,506     16,690     1.04     5,422,370     7,835     0.58  
Borrowings 611,255     4,079     2.67     678,242     3,748     2.21  
Total Interest-bearing Liabilities 7,008,761     20,769     1.19     6,100,612     11,583     0.76  
Noninterest-bearing deposits 1,478,492             1,720,005          
Other liabilities 56,295             58,810          
Total Liabilities 8,543,548             7,879,427          
Stockholders' Equity 1,379,453             1,294,810          
Total Liabilities and Stockholders' Equity $ 9,923,001     20,769         $ 9,174,237     11,583      
Net Interest Income (FTE)     $ 90,680             $ 83,529      
Net Interest Spread (FTE) (4)         3.78 %           3.91 %
                       
Net Interest Margin (FTE):                      
Interest Income (FTE) / Average Earning Assets         4.97 %           4.67 %
Interest Expense / Average Earning Assets         0.93 %           0.57 %
Net Interest Margin (FTE) (5)         4.04 %           4.10 %
                       
(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 and 35 percent for 2018 and 2017, respectively. These totals equal $2,796 and $4,764 for the three months ended December 31, 2018 and 2017, respectively.
(3) Non accruing loans have been included in the average balances.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)                      
  For the Twelve Months Ended
  December 31, 2018   December 31, 2017
  Average
Balance
  Interest
Income /
Expense
  Average
Rate
  Average
Balance
  Interest
Income /
Expense
  Average
Rate
Assets:                      
Interest-bearing time deposits $ 110,232     $ 2,241     2.03 %   $ 75,417     $ 736     0.98 %
Federal Home Loan Bank stock 24,538     1,234     5.03     20,921     894     4.27  
Investment Securities: (1)                      
Taxable 841,203     21,597     2.57     726,004     17,489     2.41  
Tax-Exempt (2) 762,623     32,290     4.23     632,076     32,891     5.20  
Total Investment Securities 1,603,826     53,887     3.36     1,358,080     50,380     3.71  
Loans held for sale 11,425     540     4.73     7,707     462     5.99  
Loans: (3)                      
Commercial 5,143,576     274,302     5.33     4,267,651     204,771     4.80  
Real Estate Mortgage 733,709     33,549     4.57     679,284     30,267     4.46  
Installment 640,310     34,110     5.33     573,100     28,204     4.92  
Tax-Exempt (2) 468,751     18,813     4.01     353,542     16,452     4.65  
Total Loans 6,997,771     361,314     5.16     5,881,284     280,156     4.76  
Total Earning Assets 8,736,367     418,676     4.79     7,335,702     332,166     4.53  
Net unrealized gain on securities available for sale (14,790 )           4,360          
Allowance for loan losses (77,444 )           (70,380 )        
Cash and cash equivalents 131,925             142,503          
Premises and equipment 94,567             97,446          
Other assets 818,432             686,598          
Total Assets $ 9,689,057             $ 8,196,229          
Liabilities:                      
Interest-bearing deposits:                      
Interest-bearing deposits $ 2,319,081     $ 17,577     0.76 %   $ 1,730,272     $ 5,817     0.34 %
Money market deposits 1,097,762     6,721     0.61     938,959     2,788     0.30  
Savings deposits 1,065,031     5,230     0.49     844,825     734     0.09  
Certificates and other time deposits 1,514,271     22,014     1.45     1,339,866     14,467     1.08  
Total Interest-bearing Deposits 5,996,145     51,542     0.86     4,853,922     23,806     0.49  
Borrowings 718,061     17,545     2.44     664,045     13,806     2.08  
Total Interest-bearing Liabilities 6,714,206     69,087     1.03     5,517,967     37,612     0.68  
Noninterest-bearing deposits 1,573,337             1,514,829          
Other liabilities 57,653             52,909          
Total Liabilities 8,345,196             7,085,705          
Stockholders' Equity 1,343,861             1,110,524          
Total Liabilities and Stockholders' Equity $ 9,689,057     69,087         $ 8,196,229     37,612      
Net Interest Income (FTE)     $ 349,589             $ 294,554      
Net Interest Spread (FTE) (4)         3.76 %           3.85 %
                       
Net Interest Margin (FTE):                      
Interest Income (FTE) / Average Earning Assets         4.79 %           4.53 %
Interest Expense / Average Earning Assets         0.79 %           0.51 %
Net Interest Margin (FTE) (5)         4.00 %           4.02 %
                       
(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 and 35 percent for 2018 and 2017, respectively. These totals equal $10,732 and $17,270 for the twelve months ended December 31, 2018 and 2017, 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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