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First Merchants Corporation Announces Third Quarter 2020 Earnings per Share

Wednesday, October 28, 2020

First Merchants Corporation Announces Third Quarter 2020 Earnings per Share

 

MUNCIE, Ind., Oct. 28, 2020 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported third quarter 2020 net income of $36.2 million compared to $36.8 million during the same period in 2019.  Earnings per share for the period totaled $.67 per share compared to the third quarter of 2019 result of $.71 per share.  Year-to-date net income totaled $103.5 million compared to $116.6 million during the nine months ended September 30, 2019.  Year-to-date earnings per share totaled $1.91 compared to $2.32 during the same period in 2019.

Total assets equaled $13.7 billion as of September 30, 2020 and loans totaled $9.2 billion.  The Corporation’s loan portfolio increased by $940 million, or 11.3 percent, during the past twelve months.  Payroll Protection Program (PPP) loans accounted for $901 million of the period’s loan growth.  Investments increased $444 million, or 17.8 percent, during the same period and now total $2.9 billion.  Total deposits equaled $10.9 billion as of quarter-end and increased by $1.1 billion, or 11.7 percent.    

The loan to deposit ratio now totals 84.8 percent and the loan to asset ratio totals 67.3 percent.  As of September 30, 2020, the Corporation’s total risk-based capital ratio equaled 14.38 percent, the common equity tier 1 capital ratio equaled 12.02 percent, and the tangible common equity ratio totaled 9.57 percent.  Excluding PPP loans, our tangible common equity ratio totaled 10.19 percent.

The Corporation’s provision expense totaled $12.5 million and net charge-offs for the quarter totaled $6.9 million.  The allowance for loan losses totaled $126.7 million as of September 30, 2020, up from $80.6 million as of September 30, 2019.  The Corporation chose to defer the adoption of the current expected credit loss (“CECL”) model; therefore, the allowance for loan losses was calculated under the incurred loss method.  Allowance for loan losses was 1.37% of total loans, 1.65% including remaining fair value marks with allowance, and 1.83% excluding PPP loans from total loans.  The $51.9 million increase in year-to-date provision expense primarily reflects our view of increased credit risk related to the COVID-19 pandemic. 

Michael C. Rechin, President and Chief Executive Officer, stated, “Our third quarter results highlight increased earnings power as our net interest margin stabilizes while our fee levels reflect increasing activity in customer spending and treasury technology use.  Our clients and businesses remain healthy and resilient.  Their determination and results mirror the First Merchants’ employee base and the Bank’s performance.  Our earnings also increased due to a reduced provision level.  The provision level and resultant loan loss reserve reflect a loan portfolio which is granular, diversified and actively reviewed.  First Merchants’ exposure to higher risk industries is modest in any peer comparison and is borne out by the low level of customers (2%) utilizing the deferrals and modifications provided through the CARES Act.  Capital preservation and capital composition are strengths that will serve us well as we assess the recessionary climate that likely remains through 2021.” 

“My confidence regarding 2021 and our longer term future also reflects the executive succession plan announced September 29, 2020.  Our Board of Directors’ decision to choose internal candidates to lead First Merchants augers well for high performance and cultural continuity.  Mark Hardwick, who will become CEO on January 1, 2021, in tandem with Mike Stewart as President and Michele Kawiecki as Chief Financial Officer, form a trio who are experienced, skilled, and trusted.  I am excited about First Merchants’ future and the opportunity to expertly serve our communities, shareholders and teammates.”

Net-interest income for the quarter totaled $92.9 million, up nearly $4 million from the third quarter of 2019 despite margin compression year-over-year of 47 basis points.  Linked quarter net-interest margin stabilized as the decline totaled just 4 basis points, two basis points due to fair value accretion and one basis point due to the impact of PPP loans.  Yields on earning assets totaled 3.58 percent and the cost of supporting liabilities totaled 43 basis points resulting in quarterly net interest margin of 3.15 percent.

Non-interest income totaled $26.2 million for the quarter, a $4 million increase over the third quarter of 2019.  Gains from the sale of mortgage loans reached record levels totaling $5.8 million for the quarter.  Non-interest expense totaled $64.7 million for the quarter compared to $67.4 million in the third quarter of 2019, which included $11.2 million of acquisition related expense. 

CONFERENCE CALL

First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 2:30 p.m. (ET) on Wednesday, October 28, 2020.

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 26, 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 10147757.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme201026.html during the time of the call.  A replay of the web cast will be available until October 28, 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)September 30,
 2020 2019
ASSETS   
Cash and cash equivalents$164,632    $202,383   
Interest-bearing deposits273,936    230,101   
Investment securities2,933,286    2,489,420   
Loans held for sale3,183    7,910   
Loans9,243,833    8,299,260   
Less: Allowance for loan losses(126,726)
  (80,571
 
Net loans9,117,107    8,218,689   
Premises and equipment112,959    113,446   
Federal Home Loan Bank stock28,736    28,736   
Interest receivable52,992    45,923   
Goodwill and other intangibles574,369    579,751   
Cash surrender value of life insurance291,543    286,747   
Other real estate owned6,942    7,156   
Tax asset, deferred and receivable21,762    15,187   
Other assets155,903    99,612   
TOTAL ASSETS$13,737,350    $12,325,061   
LIABILITIES   
Deposits:   
Noninterest-bearing$2,187,607    $1,777,365   
Interest-bearing8,718,546 


7,988,086   
Total Deposits10,906,153    9,765,451   
Borrowings:   
Federal funds purchased80,000    
Securities sold under repurchase agreements187,732    191,603   
Federal Home Loan Bank advances399,522    354,609   
Subordinated debentures and other borrowings118,320    138,630   
Total Borrowings785,574    684,842   
Interest payable5,038    7,855   
Other liabilities206,929    117,901   
Total Liabilities11,903,694    10,576,049   
STOCKHOLDERS' EQUITY   
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:   
Authorized -- 600 shares   
Issued and outstanding - 125 shares125    125   
Common Stock, $.125 stated value:   
Authorized -- 100,000,000 shares   
Issued and outstanding - 53,891,733 and 55,345,672 shares6,736    6,918   
Additional paid-in capital1,003,777    1,053,148   
Retained earnings757,550    663,173   
Accumulated other comprehensive income (loss)65,468 


25,648   
Total Stockholders' Equity1,833,656    1,749,012   
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$13,737,350    $12,325,061   

 

CONSOLIDATED STATEMENTS OF INCOMEThree Months Ended Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts)September 30, September 30,
 2020 2019 2020 2019
INTEREST INCOME       
Loans receivable:       
Taxable$84,162   $96,850    $268,126   $280,155  
Tax-exempt5,395   4,500    16,069   12,897  
Investment securities:       
Taxable5,399   6,729    19,177   19,822  
Tax-exempt10,931   8,335    30,285   22,660  
Deposits with financial institutions90   1,363    799   3,022  
Federal Home Loan Bank stock248 

355    828   1,028  
Total Interest Income106,225   118,132    335,284   339,584  
INTEREST EXPENSE       
Deposits9,776   24,830    44,231   67,511  
Federal funds purchased  15    118   225  
Securities sold under repurchase agreements83   385    527   1,057  
Federal Home Loan Bank advances1,749   1,894    5,317   5,400  
Subordinated debentures and other borrowings 1,691   2,076    5,275   6,315  
Total Interest Expense13,304   29,200    55,468   80,508  
NET INTEREST INCOME92,921   88,932    279,816   259,076  
Provision for loan losses12,544   600    54,191   2,300  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES80,377   88,332    225,625   256,776  
OTHER INCOME       
Service charges on deposit accounts5,209   6,107    15,491   16,639  
Fiduciary and wealth management fees5,910   4,429    17,496   12,178  
Card payment fees3,996   5,158    16,000   14,813  
Net gains and fees on sales of loans5,841   2,227    12,878   5,258  
Derivative hedge fees1,715   1,684    4,696   3,952  
Other customer fees372   450    1,103   1,230  
Earnings on cash surrender value of life insurance1,171   1,144    3,857   3,079  
Net realized gains on sales of available for sale securities1,817   393    9,497   3,376  
Other income132   524    1,425   1,918  
Total Other Income26,163   22,116    82,443   62,443  
OTHER EXPENSES       
Salaries and employee benefits39,187   38,942    114,128   104,679  
Net occupancy5,855   4,777    17,103   14,273  
Equipment4,956   4,030    13,789   11,789  
Marketing1,311   1,332    4,846   5,158  
Outside data processing fees3,776   4,435    10,593   12,048  
Printing and office supplies331   312    997   961  
Intangible asset amortization1,486   1,356    4,511   4,404  
FDIC assessments1,249   (668)
  4,244   717  
Other real estate owned and foreclosure expenses717   294    1,906   2,362  
Professional and other outside services2,254   8,251    6,065   12,511  
Other expenses3,587   4,293    12,687   12,660  
Total Other Expenses64,709   67,354    190,869   181,562  
INCOME BEFORE INCOME TAX41,831   43,094    117,199   137,657  
Income tax expense5,621   6,337    13,734   21,027  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$36,210   $36,757    $103,465   $116,630  
Per Share Data:       
Basic Net Income Available to Common Stockholders$0.67   $0.71    $1.91   $2.33  
Diluted Net Income Available to Common Stockholders$0.67   $0.71    $1.91   $2.32  
Cash Dividends Paid$0.26   $0.26    $0.78   $0.74  
Average Diluted Shares Outstanding (in thousands)53,971   51,570    54,278   50,227  

 

FINANCIAL HIGHLIGHTS       
(Dollars in thousands)Three Months Ended Nine Months Ended
 September 30, September 30,
 2020 2019 2020 2019
NET CHARGE-OFFS$6,937   $1,303   $7,749   $2,281  
        
AVERAGE BALANCES:       
Total Assets$13,660,818   $11,277,742   $13,297,789   $10,623,664  
Total Loans9,252,839   7,773,328   8,987,645   7,464,910  
Total Earning Assets12,341,257   10,192,183   11,941,839   9,618,285  
Total Deposits10,944,721   8,922,222   10,541,777   8,397,056  
Total Stockholders' Equity1,831,300   1,596,595   1,814,471   1,502,474  
        
FINANCIAL RATIOS:       
Return on Average Assets1.06 % 1.30 % 1.04 % 1.46 %
Return on Average Stockholders' Equity7.91   9.21   7.60   10.35  
Return on Average Common Stockholders' Equity7.91   9.21   7.60   10.35  
Average Earning Assets to Average Assets90.34   90.37   89.80   90.54  
Allowance for Loan Losses as % of Total Loans1.37   0.97   1.37   0.97  
Net Charge-offs as % of Average Loans (Annualized)0.30   0.07   0.11   0.04  
Average Stockholders' Equity to Average Assets13.41   14.16   13.64   14.14  
Tax Equivalent Yield on Average Earning Assets3.58   4.77   3.88   4.84  
Interest Expense/Average Earning Assets0.43   1.15   0.62   1.12  
Net Interest Margin (FTE) on Average Earning Assets3.15   3.62   3.26   3.72  
Efficiency Ratio51.40   57.60   50.52   53.36  
Tangible Common Book Value Per Share$23.48   $21.26   $23.48   $21.26  

 

NON-PERFORMING ASSETS         
(Dollars In Thousands)September 30, June 30, March 31, December 31, September 30,
 2020 2020 2020 2019 2019
Non-Accrual Loans$56,739   $50,102   $15,649   $15,949   $22,728  
Renegotiated Loans2,677   1,086   665   841   576  
Non-Performing Loans (NPL)59,416   51,188   16,314   16,790   23,304  
Other Real Estate Owned and Repossessions6,984   7,409   8,017   7,527   7,156  
Non-Performing Assets (NPA)66,400   58,597   24,331   24,317   30,460  
90+ Days Delinquent1,330   4,981   312   69   82  
NPAs & 90 Day Delinquent$67,730   $63,578   $24,643   $24,386   $30,542  
          
Allowance for Loan Losses$126,726   $121,119   $99,454   $80,284   $80,571  
Quarterly Net Charge-offs6,937   230   582   787   1,303  
NPAs / Actual Assets %0.48 % 0.42 % 0.19 % 0.20 % 0.25 %
NPAs & 90 Day / Actual Assets %0.49 % 0.46 % 0.19 % 0.20 % 0.25 %
NPAs / Actual Loans and OREO %0.72 % 0.63 % 0.28 % 0.29 % 0.37 %
Allowance for Loan Losses / Actual Loans (%)1.37 % 1.30 % 1.15 % 0.95 % 0.97 %
Net Charge-offs as % of Average Loans (Annualized)0.30 % 0.01 % 0.03 % 0.04 % 0.07 %

 

CONSOLIDATED BALANCE SHEETS         
(Dollars In Thousands)September 30, June 30, March 31, December 31, September 30,
 2020 2020 2020 2019 2019
ASSETS         
Cash and cash equivalents$164,632    $229,759    $127,731    $177,201    $202,383   
Interest-bearing deposits273,936    380,021    132,944    118,263    230,101   
Investment securities2,933,286    2,789,379    2,697,954    2,596,063    2,489,420   
Loans held for sale3,183    901    5,039    9,037    7,910   
Loans9,243,833    9,298,541    8,606,849    8,459,310    8,299,260   
Less: Allowance for loan losses(126,726)
  (121,119)
  (99,454)
  (80,284)
  (80,571)
 
Net loans9,117,107    9,177,422    8,507,395    8,379,026    8,218,689   
Premises and equipment112,959    112,548    114,045    113,055    113,446   
Federal Home Loan Bank stock28,736    28,736    28,736    28,736    28,736   
Interest receivable52,992    57,063    47,489    48,901    45,923   
Goodwill and other intangibles574,369    575,855    577,366    578,880    579,751   
Cash surrender value of life insurance291,543    290,715    289,574    288,206    286,747   
Other real estate owned6,942    7,367    7,972    7,527    7,156   
Tax asset, deferred and receivable21,762    13,126    9,497    12,165    15,187   
Other assets155,903    156,486    147,776    100,194    99,61  
TOTAL ASSETS$13,737,350    $13,819,378    $12,693,518    $12,457,254    $12,325,061   
LIABILITIES         
Deposits:         
Noninterest-bearing$2,187,607    $2,260,351    $1,688,205    $1,736,396    $1,777,365   
Interest-bearing8,718,546    8,705,637    8,182,279    8,103,560    7,988,086   
Total Deposits10,906,153    10,965,988    9,870,484    9,839,956    9,765,451   
Borrowings:         
Federal funds purchased80,000    —    47,000    55,000    —   
Securities sold under repurchase agreements187,732    181,150    183,317    187,946    191,603   
Federal Home Loan Bank advances399,522    400,817    480,995    351,072    354,609   
Subordinated debentures and other borrowings118,320    285,197    128,741    138,685    138,630   
Total Borrowings785,574    867,164    840,053    732,703    684,842   
Interest payable5,038    5,587    7,746    6,754    7,855   
Other liabilities206,929    171,544    197,275    91,404    117,901   
Total Liabilities11,903,694    12,010,283    10,915,558    10,670,817    10,576,049   
STOCKHOLDERS' EQUITY         
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:         
Authorized -- 600 shares         
Issued and outstanding125    125    125    125    125   
Common Stock, $.125 stated value:         
Authorized -- 100,000,000 shares         
Issued and outstanding6,736    6,724    6,719    6,921    6,918   
Additional paid-in capital1,003,777    1,002,962    1,000,942    1,054,997    1,053,148   
Retained earnings757,550    735,439    716,518    696,520    663,173   
Accumulated other comprehensive income (loss)65,468    63,845    53,656    27,874    25,648   
Total Stockholders' Equity1,833,656    1,809,095    1,777,960    1,786,437    1,749,01  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$13,737,350    $13,819,378    $12,693,518    $12,457,254    $12,325,061   
          

 

CONSOLIDATED STATEMENTS OF INCOME         
(Dollars In Thousands, Except Per Share Amounts)September 30, June 30, March 31, December 31, September 30,
 2020 2020 2020 2019 2019
INTEREST INCOME         
Loans receivable:         
Taxable$84,162   $87,312   $96,652   $102,617   $96,850   
Tax-exempt5,395   5,359   5,315   4,671   4,500   
Investment securities:         
Taxable5,399   6,147   7,631   7,993   6,729   
Tax-exempt10,931   10,019   9,335   8,995   8,335   
Deposits with financial institutions90   134   575   1,203   1,363   
Federal Home Loan Bank stock248   281   299   342   355   
Total Interest Income106,225   109,252   119,807   125,821   118,132   
INTEREST EXPENSE         
Deposits9,776   12,707   21,748   24,074   24,830   
Federal funds purchased    111   26   15   
Securities sold under repurchase agreements83   92   352   367   385   
Federal Home Loan Bank advances1,749   1,794   1,774   1,776   1,894   
Subordinated debentures and other borrowings1,691   1,639   1,945   1,994   2,076   
Total Interest Expense13,304   16,234   25,930   28,237   29,200   
NET INTEREST INCOME92,921   93,018   93,877   97,584   88,932   
Provision for loan losses12,544   21,895   19,752   500   600   
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES80,377   71,123   74,125   97,084   88,332   
OTHER INCOME         
Service charges on deposit accounts5,209   4,312   5,970   6,312   6,107   
Fiduciary and wealth management fees5,910   5,601   5,985   5,384   4,429   
Card payment fees3,996   6,097   5,907   5,430   5,158   
Net gains and fees on sales of loans5,841   3,674   3,363   2,633   2,227   
Derivative hedge fees1,715   1,042   1,939   1,405   1,684   
Other customer fees372   333   398   434   450   
Earnings on cash surrender value of life insurance1,171   1,326   1,360   1,458   1,144   
Net realized gains on sales of available for sale securities1,817   3,068   4,612   1,039   393   
Other income132   1,028   265   150   524   
Total Other Income26,163   26,481   29,799   24,245   22,116   
OTHER EXPENSES         
Salaries and employee benefits39,187   35,698   39,243   39,358   38,942   
Net occupancy5,855   5,447   5,801   5,311   4,777   
Equipment4,956   4,489   4,344   4,429   4,030   
Marketing1,311   2,092   1,443   1,492   1,332   
Outside data processing fees3,776   2,618   4,199   4,428   4,435   
Printing and office supplies331   279   387   484   312   
Intangible asset amortization1,486   1,511   1,514   1,590   1,356   
FDIC assessments1,249   1,472   1,523   —   (668)
 
Other real estate owned and foreclosure expenses717   684   505   66   294   
Professional and other outside services2,254   1,553   2,258   2,899   8,251   
Other expenses3,587   4,146   4,954   5,144   4,293   
Total Other Expenses64,709   59,989   66,171   65,201   67,354   
INCOME BEFORE INCOME TAX41,831   37,615   37,753   56,128   43,094   
Income tax expense5,621   4,623   3,490   8,298   6,337   
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$36,210   $32,992   $34,263   $47,830   $36,757   
          
Per Share Data:         
Basic Net Income Available to Common Stockholders$0.67   $0.62   $0.63   $0.87   $0.71   
Diluted Net Income Available to Common Stockholders$0.67   $0.62   $0.62   $0.87   $0.71   
Cash Dividends Paid$0.26   $0.26   $0.26   $0.26   $0.26   
Average Diluted Shares Outstanding (in thousands)53,971   53,943   54,918   55,520   51,570   
FINANCIAL RATIOS:         
Return on Average Assets1.06 % 0.97 % 1.09 % 1.53 % 1.30  %
Return on Average Stockholders' Equity7.91   7.35   7.55   10.82   9.21   
Return on Average Common Stockholders' Equity7.91   7.35   7.55   10.82   9.21   
Average Earning Assets to Average Assets90.34   89.25   89.81   89.71   90.37   
Allowance for Loan Losses as % of Total Loans1.37   1.30   1.15   0.95   0.97   
Net Charge-offs as % of Average Loans (Annualized)0.30   0.01   0.03   0.04   0.07   
Average Stockholders' Equity to Average Assets13.41   13.15   14.45   14.17   14.16   
Tax Equivalent Yield on Average Earning Assets3.58   3.72   4.38   4.63   4.77   
Interest Expense/Average Earning Assets0.43   0.53   0.92   1.01   1.15   
Net Interest Margin (FTE) on Average Earning Assets3.15   3.19   3.46   3.62   3.62   
Efficiency Ratio51.40   47.95   52.17   51.07   57.60   
Tangible Common Book Value Per Share$23.48   $23.04   $22.46   $21.94   $21.26   

 

LOANS         
(Dollars In Thousands)September 30, June 30, March 31, December 31, September 30,
 2020 2020 2020 2019 2019
Commercial and industrial loans$2,875,331    $2,898,329    $2,199,226    $2,109,879    $2,034,311   
Agricultural production financing and other loans to farmers83,090    93,838    87,421    93,861    90,462   
Real estate loans:         
Construction622,084    640,560    643,674    787,568    670,138   
Commercial and farmland3,248,506    3,239,998    3,268,168    3,052,698    3,144,649   
Residential1,146,406    1,145,187    1,121,556    1,143,217    1,155,403   
Home equity527,458    532,314    570,398    588,984    601,335   
Individuals' loans for household and other personal expenditures125,411    123,611    129,765    135,989    131,246   
Public finance and other commercial loans615,547    624,704    586,641    547,114    471,716   
Loans9,243,833    9,298,541    8,606,849    8,459,310    8,299,260   
Allowance for loan losses(126,726)
  (121,119)
  (99,454)
  (80,284)
  (80,571)
 
NET LOANS$9,117,107    $9,177,422    $8,507,395    $8,379,026    $8,218,689   

 

DEPOSITS         
(Dollars In Thousands)September 30, June 30, March 31, December 31, September 30,
 2020 2020 2020 2019 2019
Demand deposits$6,279,554   $6,288,360   $5,293,200   $5,250,568   $5,183,971  
Savings deposits3,518,286   3,278,156   2,962,821   2,896,177   2,808,745  
Certificates and other time deposits of $100,000 or more467,610   607,474   694,062   736,843   731,693  
Other certificates and time deposits542,919   669,119   717,723   741,759   811,780  
Brokered deposits97,784   122,879   202,678   214,609   229,262  
TOTAL DEPOSITS$10,906,153   $10,965,988   $9,870,484   $9,839,956   $9,765,451  

 

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS      
(Dollars in Thousands)           
 For the Three Months Ended
 September 30, 2020 September 30, 2019
 Average Balance Interest
 Income /
Expense
 Average
Rate
 Average Balance Interest
 Income /
Expense
 Average
Rate
Assets:           
Interest-bearing deposits$301,529    $90   0.12 % $262,082    $1,363   2.06 %
Federal Home Loan Bank stock28,736    248   3.45   24,633    355   5.76  
Investment Securities: (1)           
Taxable1,258,690    5,399   1.72   1,104,612    6,729   2.44  
Tax-Exempt (2)1,499,463    13,837   3.69   1,027,528    10,551   4.11  
Total Investment Securities2,758,153    19,236   2.79   2,132,140    17,280   3.24  
Loans held for sale24,705    257   4.16   21,913    274   5.00  
Loans: (3)           
Commercial6,965,837    66,826   3.84   5,674,956    77,370   5.45  
Real Estate Mortgage887,661    9,996   4.50   822,874    9,518   4.63  
Installment693,363    7,083   4.09   715,428    9,688   5.42  
Tax-Exempt (2) 681,273    6,829   4.01   538,157    5,696   4.23  
Total Loans9,252,839    90,991   3.93   7,773,328    102,546   5.28  
Total Earning Assets12,341,257    110,565   3.58 % 10,192,183    121,544   4.77 %
Net unrealized gain (loss) on securities available for sale70,277        30,353       
Allowance for loan losses(125,150)
      (80,918)
     
Cash and cash equivalents169,539        143,266       
Premises and equipment113,216        99,021       
Other assets1,091,679        893,837       
Total Assets$13,660,818        $11,277,742       
Liabilities:           
Interest-bearing deposits:           
Interest-bearing deposits$4,098,017    $3,890   0.38 % $3,134,675    $9,285   1.18 %
Money market deposits1,813,392    1,167   0.26   1,307,647    3,766   1.14  
Savings deposits1,574,700    583   0.15   1,244,859    2,523   0.80  
Certificates and other time deposits1,267,152    4,136   1.31   1,736,759    9,256   2.11  
Total Interest-bearing Deposits8,753,261    9,776   0.45   7,423,940    24,830   1.33  
Borrowings733,757    3,528   1.92   660,107    4,370   2.59  
Total Interest-bearing Liabilities9,487,018    13,304   0.56   8,084,047    29,200   1.43  
Noninterest-bearing deposits2,191,460        1,498,282       
Other liabilities151,040        98,818       
Total Liabilities11,829,518        9,681,147       
Stockholders' Equity1,831,300        1,596,595       
Total Liabilities and Stockholders' Equity$13,660,818    13,304     $11,277,742    29,200    
Net Interest Income (FTE)  $97,261       $92,344    
Net Interest Spread (FTE) (4)    3.02 %     3.34 %
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    3.58 %     4.77 %
Interest Expense / Average Earning Assets    0.43 %     1.15 %
Net Interest Margin (FTE) (5)    3.15 %     3.62 %
            
(1)  Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.  Annualized amounts are computed using a 30/360 day basis.
(2)  Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2020 and 2019.  These totals equal $4,340 and $3,412 for the three months ended September 30, 2020 and 2019, respectively. 
(3)  Non accruing loans have been included in the average balances.
(4)  Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5)  Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

 

 

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS      
(Dollars in Thousands)           
 For the Nine Months Ended
 September 30, 2020 September 30, 2019
 Average Balance Interest
 Income /
Expense
 Average
Rate
 Average Balance Interest
 Income /
Expense
 Average
Rate
Assets:           
Federal Funds Sold           
Interest-bearing deposits$280,038    $799   0.38 % $184,640    $3,022   2.18 %
Federal Home Loan Bank stock28,736    828   3.84   24,603    1,028   5.57  
Investment Securities: (1)           
Taxable1,302,943    19,177   1.96   1,021,102    19,822   2.59  
Tax-Exempt (2)1,342,477    38,335   3.81   923,030    28,684   4.14  
Total Investment Securities2,645,420    57,512   2.90   1,944,132    48,506   3.33  
Loans held for sale17,175    581   4.51   13,618    512   5.01  
Loans: (3)           
Commercial6,698,042    213,241   4.24   5,469,377    224,766   5.48  
Real Estate Mortgage882,911    30,520   4.61   778,778    26,526   4.54  
Installment725,596    23,784   4.37   686,055    28,351   5.51  
Tax-Exempt (2)663,921    20,341   4.09   517,082    16,325   4.21  
Total Loans8,987,645    288,467   4.28   7,464,910    296,480   5.30  
Total Earning Assets11,941,839    347,606   3.88 % 9,618,285    349,036   4.84 %
Net unrealized gain on securities available for sale58,623        12,856       
Allowance for loan losses(104,465)
      (81,172)
     
Cash and cash equivalents210,778        130,587       
Premises and equipment113,517        94,628       
Other assets1,077,497        848,480       
Total Assets$13,297,789        $10,623,664       
Liabilities:           
Interest-bearing deposits:           
Interest-bearing deposits$3,880,489    $16,351   0.56 % $2,921,762    $24,844   1.13 %
Money market deposits1,674,622    6,647   0.53   1,222,860    10,057   1.10  
Savings deposits1,507,269    3,007   0.27   1,187,173    7,315   0.82  
Certificates and other time deposits1,476,499    18,226   1.65   1,652,141    25,295   2.04  
Total Interest-bearing Deposits8,538,879    44,231   0.69   6,983,936    67,511   1.29  
Borrowings796,836    11,237   1.88   636,295    12,997   2.72  
Total Interest-bearing Liabilities9,335,715    55,468   0.79   7,620,231    80,508   1.41  
Noninterest-bearing deposits2,002,898        1,413,120       
Other liabilities144,705        87,839       
Total Liabilities11,483,318        9,121,190       
Stockholders' Equity1,814,471        1,502,474       
Total Liabilities and Stockholders' Equity$13,297,789    55,468     $10,623,664    80,508    
Net Interest Income (FTE)  $292,138       $268,528    
Net Interest Spread (FTE) (4)    3.09 %     3.43 %
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    3.88 %     4.84 %
Interest Expense / Average Earning Assets    0.62 %     1.12 %
Net Interest Margin (FTE) (5)    3.26 %     3.72 %
            

(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 $12,322 and $9,452 for the nine months ended September 30, 2020 and 2019, respectively.

(3) Non accruing loans have been included in the average balances.

(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.

(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

For more information, contact:
Nicole M. Weaver, Vice President and Director of Corporate Administration
765-521-7619
http://www.firstmerchants.com

SOURCE: First Merchants Corporation, Muncie, Indiana