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CST: 20/11/2019 15:51:45   

First Merchants Corporation Announces Third Quarter 2019 Results With the Addition of Monroe Bank and Trust

27 Days ago

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 

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