MUNCIE, Ind., April 25, 2023 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)
First Quarter 2023 Highlights:
- Net income available to common stockholders was $63.6 million for the first quarter and diluted earnings per common share totaled $1.07, compared to $48.6 million and $.91 in the first quarter of 2022, and $70.3 million and $1.19 in the fourth quarter of 2022.
- Adjusted net income available to common stockholders1 for the first quarter was $63.6 million and adjusted diluted earnings per common share1 totaled $1.07, compared to $47.3 million and $.88 in the first quarter of 2022, and $70.5 million and $1.19 in the fourth quarter of 2022.
- Strong liquidity and capital with Common Equity Tier 1 Capital Ratio of 10.82%.
- Deposit growth of $320.5 million, or 8.9% annualized on a linked quarter basis.
- Total loans grew $237.9 million, or 7.9% annualized on a linked quarter basis.
- Non-accrual loans totaled $46.6 million compared to $42.3 million on a linked quarter basis.
- The efficiency ratio totaled 51.72% for the quarter.
Mark Hardwick, Chief Executive Officer, stated, "Given the disruption in the banking industry, we are pleased to share a quarter-end balance sheet that reflects a very safe and sound institution with continued growth. Loans, Deposits, on-hand liquidity and capital all improved over year-end. We prioritized enhancing our liquidity position during the quarter while also meeting the demands of the customer base. Our team of bankers have been true brand ambassadors during the quarter by showing poise and confidence throughout the communities we serve. We remain focused on delivering our plan for the year."
First Quarter Financial Results:
First Merchants Corporation (the "Corporation) has reported first quarter 2023 net income available to common stockholders of $63.6 million compared to $48.6 million during the same period in 2022. Earnings per share for the period totaled $1.07 per share compared to the first quarter of 2022 result of $.91 per share.
Total assets equaled $18.2 billion as of quarter-end and loans totaled $12.3 billion. Total loans increased $2.9 billion during the past twelve months. The acquisition of Level One contributed $1.6 billion of loans. Excluding acquired loans and PPP forgiveness, the Corporation experienced organic loan growth of $1.3 billion, or 14.4 percent, during the past twelve months. This was offset by the forgiveness of PPP loans of $88.5 million. Total loans grew organically $237.9 or 7.9% annualized on a linked quarter basis.
Investments, totaling $4.1 billion, decreased $431.9 million, or 9.6 percent, during the last twelve months and decreased $206.4 million or 19.4% annualized on a linked quarter basis.
Total deposits equaled $14.7 billion as of quarter-end and increased by $1.8 billion over the past twelve months. The acquisition of Level One contributed $1.9 billion in deposits resulting in an organic deposit decline of $133.5 million or 1.0%. Total deposits grew $320.5 million or 8.9% annualized on a linked quarter basis. The loan to deposit ratio for the current quarter ended at 83.3 percent.
The Corporation's Allowance for Credit Losses - Loans (ACL) totaled $223.1 million as of quarter-end, or 1.82 percent of total loans, an increase of $27.1 million over prior year due to the acquisition of Level One. Loan charge offs, net of recoveries, for the quarter totaled $0.2 million. No provision expense was recorded during the quarter or during the last twelve months other than CECL Day 1 expense of $16.8 million due to the acquisition of Level One. Non-performing assets to total assets were 0.30% for the first quarter of 2023, a decrease of two basis points compared to 0.32% in the first quarter of 2022.
Net-interest income, totaling $144.1 million for the quarter, declined $4.9 million, or 3.3 percent, compared to prior quarter and increased $41.8 million, or 40.9 percent compared to the first quarter of 2022. Stated net-interest margin on a tax equivalent basis, totaling 3.58 percent, declined by 14 basis points compared to the fourth quarter of 2022 and increased 55 basis points compared to the first quarter of 2022. Net-interest margin excluding the impact of fair value accretion and PPP loans totaled 3.52%, a decrease of 13 basis points compared to 3.65% for the fourth quarter of 2022 and an increase of 55 basis points from the first quarter of 2022. During the quarter, increased deposit costs and mix offset the increase in earning asset yields causing a reduction of margin of eight basis points. The lower day count in the quarter caused a decline of five basis points.
Non-interest income, totaling $25.0 million for the quarter, increased $0.9 million compared to the fourth quarter of 2022 and decreased $0.9 million from the first quarter of 2022. The increase over the fourth quarter of 2022 was driven primarily by higher card payment fees, derivative hedge fees, offset by losses on the sale of available for sale securities.
Non-interest expense totaled $93.7 million for the quarter, an increase of $4.0 million from the fourth quarter of 2022. The increase was primarily due to higher salaries, incentives and employee benefits offset by lower marketing expenses and FDIC assessments. A one-time FDIC assessment credit of approximately $2.0 million was recorded lowering overall FDIC assessment cost for the quarter. Additionally, gains on the sales of properties were recorded in the fourth quarter and reflected in Other Expenses that did not recur in the current quarter, causing a negative quarter-over quarter variance.
The Corporation's total risk-based capital ratio equaled 13.23 percent, common equity tier 1 capital ratio equaled 10.82 percent, and the tangible common equity ratio totaled 7.75 percent. These ratios continue to reflect the Corporation's strong liquidity and capital positions.
1 See "Non-GAAP Financial Information" for reconciliation
CONFERENCE CALL
First Merchants Corporation will conduct a first quarter earnings conference call and web cast at 10:30 a.m. (ET) on Tuesday, April 25, 2023.
To access via phone, participants will need to register using the following link where they will be provided a phone number and access code: (https://register.vevent.com/register/BI257d3b7683714a4382f8765266a99667)
In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/trq9ekv4) during the time of the call. A replay of the webcast will be available until April 25, 2024.
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 (including the ability to grow and maintain core deposits and retain large, uninsured deposits), credit and interest rate risks associated with the First Merchants' business; and other risks and factors identified in each of First Merchants' filings with the Securities and Exchange Commission. First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, First Merchants' past results of operations do not necessarily indicate its anticipated future results.
| CONSOLIDATED BALANCE SHEETS | |||||||
| (Dollars In Thousands) | March 31, | ||||||
| 2023 | 2022 | ||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 125,818 | $ | 148,277 | |||
| Interest-bearing deposits | 352,695 | 395,262 | |||||
| Investment securities, net of allowance for credit losses of $245,000 and $245,000 | 4,057,389 | 4,489,263 | |||||
| Loans held for sale | 9,408 | 3,938 | |||||
| Loans | 12,241,461 | 9,356,241 | |||||
| Less: Allowance for credit losses - loans | (223,052 | ) | (195,984 | ) | |||
| Net loans | 12,018,409 | 9,160,257 | |||||
| Premises and equipment | 115,857 | 105,883 | |||||
| Federal Home Loan Bank stock | 41,878 | 26,422 | |||||
| Interest receivable | 85,515 | 56,081 | |||||
| Goodwill and other intangibles | 745,647 | 569,494 | |||||
| Cash surrender value of life insurance | 309,090 | 291,881 | |||||
| Other real estate owned | 7,777 | 6,271 | |||||
| Tax asset, deferred and receivable | 103,070 | 73,422 | |||||
| Other assets | 206,355 | 138,807 | |||||
| TOTAL ASSETS | $ | 18,178,908 | $ | 15,465,258 | |||
| LIABILITIES | |||||||
| Deposits: | |||||||
| Noninterest-bearing | $ | 2,964,355 | $ | 2,745,235 | |||
| Interest-bearing | 11,738,932 | 10,160,718 | |||||
| Total Deposits | 14,703,287 | 12,905,953 | |||||
| Borrowings: | |||||||
| Federal funds purchased | 20 | - | |||||
| Securities sold under repurchase agreements | 179,067 | 169,697 | |||||
| Federal Home Loan Bank advances | 823,577 | 308,960 | |||||
| Subordinated debentures and other borrowings | 151,312 | 118,677 | |||||
| Total Borrowings | 1,153,976 | 597,334 | |||||
| Interest payable | 11,979 | 3,589 | |||||
| Other liabilities | 187,218 | 150,749 | |||||
| Total Liabilities | 16,056,460 | 13,657,625 | |||||
| STOCKHOLDERS' EQUITY | |||||||
| Preferred Stock, $1,000 par value, $1,000 liquidation value: | |||||||
| Authorized -- 600 cumulative shares | |||||||
| Issued and outstanding - 125 cumulative shares | 125 | 125 | |||||
| Preferred Stock, Series A, no par value, $2,500 liquidation preference: | |||||||
| Authorized -- 10,000 non-cumulative perpetual shares | |||||||
| Issued and outstanding - 10,000 non-cumulative perpetual shares | 25,000 | - | |||||
| Common Stock, $.125 stated value: | |||||||
| Authorized -- 100,000,000 shares | |||||||
| Issued and outstanding - 59,257,051 and 53,424,823 shares | 7,407 | 6,678 | |||||
| Additional paid-in capital | 1,231,532 | 987,404 | |||||
| Retained earnings | 1,057,298 | 897,818 | |||||
| Accumulated other comprehensive loss | (198,914 | ) | (84,392 | ) | |||
| Total Stockholders' Equity | 2,122,448 | 1,807,633 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 18,178,908 | $ | 15,465,258 | |||
| CONSOLIDATED STATEMENTS OF INCOME | Three Months Ended | |||||
| (Dollars In Thousands, Except Per Share Amounts) | March 31, | |||||
| 2023 | 2022 | |||||
| INTEREST INCOME | ||||||
| Loans receivable: | ||||||
| Taxable | $ | 172,353 | $ | 79,075 | ||
| Tax-exempt | 7,709 | 5,704 | ||||
| Investment securities: | ||||||
| Taxable | 9,087 | 8,510 | ||||
| Tax-exempt | 16,070 | 15,875 | ||||
| Deposits with financial institutions | 637 | 230 | ||||
| Federal Home Loan Bank stock | 542 | 146 | ||||
| Total Interest Income | 206,398 | 109,540 | ||||
| INTEREST EXPENSE | ||||||
| Deposits | 50,685 | 4,294 | ||||
| Federal funds purchased | 1,297 | - | ||||
| Securities sold under repurchase agreements | 848 | 89 | ||||
| Federal Home Loan Bank advances | 7,064 | 1,218 | ||||
| Subordinated debentures and other borrowings | 2,385 | 1,659 | ||||
| Total Interest Expense | 62,279 | 7,260 | ||||
| NET INTEREST INCOME | 144,119 | 102,280 | ||||
| Provision for credit losses - loans | - | - | ||||
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 144,119 | 102,280 | ||||
| NON-INTEREST INCOME | ||||||
| Service charges on deposit accounts | 7,359 | 6,419 | ||||
| Fiduciary and wealth management fees | 7,862 | 7,332 | ||||
| Card payment fees | 5,172 | 5,723 | ||||
| Net gains and fees on sales of loans | 2,399 | 2,199 | ||||
| Derivative hedge fees | 1,148 | 918 | ||||
| Other customer fees | 517 | 410 | ||||
| Earnings on cash surrender value of life insurance | 1,288 | 1,696 | ||||
| Net realized gains (losses) on sales of available for sale securities | (1,571 | ) | 566 | |||
| Other income | 823 | 634 | ||||
| Total Non-Interest Income | 24,997 | 25,897 | ||||
| NON-INTEREST EXPENSES | ||||||
| Salaries and employee benefits | 57,459 | 42,519 | ||||
| Net occupancy | 7,259 | 6,187 | ||||
| Equipment | 6,126 | 5,080 | ||||
| Marketing | 1,309 | 736 | ||||
| Outside data processing fees | 6,113 | 4,363 | ||||
| Printing and office supplies | 383 | 345 | ||||
| Intangible asset amortization | 2,197 | 1,366 | ||||
| FDIC assessments | 1,396 | 2,192 | ||||
| Other real estate owned and foreclosure expenses | (18 | ) | 564 | |||
| Professional and other outside services | 3,698 | 2,953 | ||||
| Other expenses | 7,798 | 6,020 | ||||
| Total Non-Interest Expenses | 93,720 | 72,325 | ||||
| INCOME BEFORE INCOME TAX | 75,396 | 55,852 | ||||
| Income tax expense | 11,317 | 7,266 | ||||
| NET INCOME | 64,079 | 48,586 | ||||
| Preferred stock dividends | 469 | - | ||||
| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 63,610 | $ | 48,586 | ||
| Per Share Data: | ||||||
| Basic Net Income Available to Common Stockholders | $ | 1.07 | $ | 0.91 | ||
| Diluted Net Income Available to Common Stockholders | $ | 1.07 | $ | 0.91 | ||
| Cash Dividends Paid to Common Stockholders | $ | 0.32 | $ | 0.29 | ||
| Average Diluted Common Shares Outstanding (in thousands) | 59,441 | 53,616 | ||||
| FINANCIAL HIGHLIGHTS | |||||||
| (Dollars in thousands) | Three Months Ended | ||||||
| March 31, | |||||||
| 2023 | 2022 | ||||||
| NET CHARGE-OFFS (RECOVERIES) | $ | 225 | $ | (587 | ) | ||
| AVERAGE BALANCES: | |||||||
| Total Assets | $ | 18,022,195 | $ | 15,464,605 | |||
| Total Loans | 12,135,384 | 9,255,928 | |||||
| Total Earning Assets | 16,824,407 | 14,262,777 | |||||
| Total Deposits | 14,423,409 | 12,817,690 | |||||
| Total Stockholders' Equity | 2,083,125 | 1,891,223 | |||||
| FINANCIAL RATIOS: | |||||||
| Return on Average Assets | 1.42 | % | 1.26 | % | |||
| Return on Average Stockholders' Equity | 12.21 | 10.28 | |||||
| Return on Tangible Common Stockholders' Equity | 19.82 | 14.99 | |||||
| Average Earning Assets to Average Assets | 93.35 | 92.23 | |||||
| Allowance for Credit Losses - Loans as % of Total Loans | 1.82 | 2.09 | |||||
| Net Charge-offs as % of Average Loans (Annualized) | 0.01 | (0.03 | ) | ||||
| Average Stockholders' Equity to Average Assets | 11.56 | 12.23 | |||||
| Tax Equivalent Yield on Average Earning Assets | 5.06 | 3.23 | |||||
| Interest Expense/Average Earning Assets | 1.48 | 0.20 | |||||
| Net Interest Margin (FTE) on Average Earning Assets | 3.58 | 3.03 | |||||
| Efficiency Ratio | 51.72 | 52.79 | |||||
| Tangible Common Book Value Per Share | $ | 22.93 | $ | 23.26 | |||
| NON-PERFORMING ASSETS | |||||||||||||||||||
| (Dollars In Thousands) | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Non-Accrual Loans | $ | 46,576 | $ | 42,324 | $ | 43,508 | $ | 45,970 | $ | 42,698 | |||||||||
| Troubled Debt Restructures (TDR) | - | 224 | 195 | 233 | 141 | ||||||||||||||
| Non-Performing Loans (NPL) | 46,576 | 42,548 | 43,703 | 46,203 | 42,839 | ||||||||||||||
| Other Real Estate Owned and Repossessions | 7,777 | 6,431 | 6,454 | 6,521 | 6,271 | ||||||||||||||
| Non-Performing Assets (NPA) | 54,353 | 48,979 | 50,157 | 52,724 | 49,110 | ||||||||||||||
| 90+ Days Delinquent | 7,032 | 1,737 | 764 | 592 | 2,085 | ||||||||||||||
| NPAs & 90 Day Delinquent | $ | 61,385 | $ | 50,716 | $ | 50,921 | $ | 53,316 | $ | 51,195 | |||||||||
| Allowance for Credit Losses - Loans | $ | 223,052 | $ | 223,277 | $ | 226,702 | $ | 226,275 | $ | 195,984 | |||||||||
| Quarterly Net Charge-offs (Recoveries) | 225 | 2,674 | (427 | ) | 263 | (587 | ) | ||||||||||||
| NPAs / Actual Assets % | 0.30 | % | 0.27 | % | 0.28 | % | 0.30 | % | 0.32 | % | |||||||||
| NPAs & 90 Day / Actual Assets % | 0.34 | % | 0.28 | % | 0.29 | % | 0.30 | % | 0.33 | % | |||||||||
| NPAs / Actual Loans and OREO % | 0.44 | % | 0.41 | % | 0.43 | % | 0.46 | % | 0.52 | % | |||||||||
| Allowance for Credit Losses - Loans / Actual Loans (%) | 1.82 | % | 1.86 | % | 1.94 | % | 1.98 | % | 2.09 | % | |||||||||
| Net Charge-offs (Recoveries) as % of Average Loans (Annualized) | 0.01 | % | 0.12 | % | (0.01 | )% | 0.01 | % | (0.03 | )% | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||
| (Dollars In Thousands) | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 125,818 | $ | 122,594 | $ | 119,532 | $ | 212,559 | $ | 148,277 | |||||||||
| Interest-bearing deposits | 352,695 | 126,061 | 179,593 | 136,702 | 395,262 | ||||||||||||||
| Investment securities, net of allowance for credit losses | 4,057,389 | 4,263,788 | 4,294,768 | 4,630,030 | 4,489,263 | ||||||||||||||
| Loans held for sale | 9,408 | 9,094 | 25,394 | 9,060 | 3,938 | ||||||||||||||
| Loans | 12,241,461 | 12,003,894 | 11,650,002 | 11,397,417 | 9,356,241 | ||||||||||||||
| Less: Allowance for credit losses - loans | (223,052 | ) | (223,277 | ) | (226,702 | ) | (226,275 | ) | (195,984 | ) | |||||||||
| Net loans | 12,018,409 | 11,780,617 | 11,423,300 | 11,171,142 | 9,160,257 | ||||||||||||||
| Premises and equipment | 115,857 | 117,118 | 116,306 | 117,757 | 105,883 | ||||||||||||||
| Federal Home Loan Bank stock | 41,878 | 38,525 | 38,056 | 38,111 | 26,422 | ||||||||||||||
| Interest receivable | 85,515 | 85,070 | 71,605 | 68,728 | 56,081 | ||||||||||||||
| Goodwill and other intangibles | 745,647 | 747,844 | 750,713 | 753,649 | 569,494 | ||||||||||||||
| Cash surrender value of life insurance | 309,090 | 308,311 | 306,932 | 323,013 | 291,881 | ||||||||||||||
| Other real estate owned | 7,777 | 6,431 | 6,454 | 6,521 | 6,271 | ||||||||||||||
| Tax asset, deferred and receivable | 103,070 | 111,222 | 142,110 | 114,965 | 73,422 | ||||||||||||||
| Other assets | 206,355 | 221,631 | 244,222 | 198,255 | 138,807 | ||||||||||||||
| TOTAL ASSETS | $ | 18,178,908 | $ | 17,938,306 | $ | 17,718,985 | $ | 17,780,492 | $ | 15,465,258 | |||||||||
| LIABILITIES | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing | $ | 2,964,355 | $ | 3,173,417 | $ | 3,356,651 | $ | 3,435,331 | $ | 2,745,235 | |||||||||
| Interest-bearing | 11,738,932 | 11,209,328 | 11,078,174 | 11,135,538 | 10,160,718 | ||||||||||||||
| Total Deposits | 14,703,287 | 14,382,745 | 14,434,825 | 14,570,869 | 12,905,953 | ||||||||||||||
| Borrowings: | |||||||||||||||||||
| Federal funds purchased | 20 | 171,560 | 185,000 | 100,000 | - | ||||||||||||||
| Securities sold under repurchase agreements | 179,067 | 167,413 | 194,482 | 186,468 | 169,697 | ||||||||||||||
| Federal Home Loan Bank advances | 823,577 | 823,674 | 643,769 | 598,865 | 308,960 | ||||||||||||||
| Subordinated debentures and other borrowings | 151,312 | 151,298 | 151,301 | 151,299 | 118,677 | ||||||||||||||
| Total Borrowings | 1,153,976 | 1,313,945 | 1,174,552 | 1,036,632 | 597,334 | ||||||||||||||
| Interest payable | 11,979 | 7,530 | 4,971 | 2,978 | 3,589 | ||||||||||||||
| Other liabilities | 187,218 | 199,316 | 197,971 | 192,372 | 150,749 | ||||||||||||||
| Total Liabilities | 16,056,460 | 15,903,536 | 15,812,319 | 15,802,851 | 13,657,625 | ||||||||||||||
| STOCKHOLDERS' EQUITY | |||||||||||||||||||
| Preferred Stock, $1,000 par value, $1,000 liquidation value: | |||||||||||||||||||
| Authorized -- 600 cumulative shares | |||||||||||||||||||
| Issued and outstanding - 125 cumulative shares | 125 | 125 | 125 | 125 | 125 | ||||||||||||||
| Preferred Stock, Series A, no par value, $2,500 liquidation preference: | |||||||||||||||||||
| Authorized -- 10,000 non-cumulative perpetual shares | |||||||||||||||||||
| Issued and outstanding - 10,000 non-cumulative perpetual shares | 25,000 | 25,000 | 25,000 | 25,000 | - | ||||||||||||||
| Common Stock, $.125 stated value: | |||||||||||||||||||
| Authorized -- 100,000,000 shares | |||||||||||||||||||
| Issued and outstanding | 7,407 | 7,396 | 7,393 | 7,383 | 6,678 | ||||||||||||||
| Additional paid-in capital | 1,231,532 | 1,228,626 | 1,226,695 | 1,226,378 | 987,404 | ||||||||||||||
| Retained earnings | 1,057,298 | 1,012,774 | 961,542 | 917,311 | 897,818 | ||||||||||||||
| Accumulated other comprehensive loss | (198,914 | ) | (239,151 | ) | (314,089 | ) | (198,556 | ) | (84,392 | ) | |||||||||
| Total Stockholders' Equity | 2,122,448 | 2,034,770 | 1,906,666 | 1,977,641 | 1,807,633 | ||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 18,178,908 | $ | 17,938,306 | $ | 17,718,985 | $ | 17,780,492 | $ | 15,465,258 | |||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||
| (Dollars In Thousands, Except Per Share Amounts) | March | December 31, | September 30, | June 30, | March 31, | ||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| INTEREST INCOME | |||||||||||||||||||
| Loans receivable: | |||||||||||||||||||
| Taxable | $ | 172,353 | $ | 156,102 | $ | 128,504 | $ | 106,787 | $ | 79,075 | |||||||||
| Tax-exempt | 7,709 | 6,930 | 6,500 | 5,990 | 5,704 | ||||||||||||||
| Investment securities: | |||||||||||||||||||
| Taxable | 9,087 | 9,417 | 10,055 | 10,372 | 8,510 | ||||||||||||||
| Tax-exempt | 16,070 | 17,033 | 17,261 | 17,212 | 15,875 | ||||||||||||||
| Deposits with financial institutions | 637 | 959 | 704 | 610 | 230 | ||||||||||||||
| Federal Home Loan Bank stock | 542 | 541 | 314 | 175 | 146 | ||||||||||||||
| Total Interest Income | 206,398 | 190,982 | 163,338 | 141,146 | 109,540 | ||||||||||||||
| INTEREST EXPENSE | |||||||||||||||||||
| Deposits | 50,685 | 33,516 | 16,644 | 8,485 | 4,294 | ||||||||||||||
| Federal funds purchased | 1,297 | 808 | 418 | 76 | - | ||||||||||||||
| Securities sold under repurchase agreements | 848 | 541 | 372 | 134 | 89 | ||||||||||||||
| Federal Home Loan Bank advances | 7,064 | 4,932 | 3,493 | 1,774 | 1,218 | ||||||||||||||
| Subordinated debentures and other borrowings | 2,385 | 2,229 | 2,105 | 2,016 | 1,659 | ||||||||||||||
| Total Interest Expense | 62,279 | 42,026 | 23,032 | 12,485 | 7,260 | ||||||||||||||
| NET INTEREST INCOME | 144,119 | 148,956 | 140,306 | 128,661 | 102,280 | ||||||||||||||
| Provision for credit losses - loans | - | - | - | 16,755 | - | ||||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 144,119 | 148,956 | 140,306 | 111,906 | 102,280 | ||||||||||||||
| NON-INTEREST INCOME | |||||||||||||||||||
| Service charges on deposit accounts | 7,359 | 7,097 | 7,165 | 7,690 | 6,419 | ||||||||||||||
| Fiduciary and wealth management fees | 7,862 | 7,501 | 7,221 | 7,634 | 7,332 | ||||||||||||||
| Card payment fees | 5,172 | 4,533 | 4,776 | 5,175 | 5,723 | ||||||||||||||
| Net gains and fees on sales of loans | 2,399 | 2,087 | 2,543 | 3,226 | 2,199 | ||||||||||||||
| Derivative hedge fees | 1,148 | 326 | 700 | 1,444 | 918 | ||||||||||||||
| Other customer fees | 517 | 362 | 501 | 662 | 410 | ||||||||||||||
| Earnings on cash surrender value of life insurance | 1,288 | 1,515 | 6,655 | 1,308 | 1,696 | ||||||||||||||
| Net realized gains (losses) on sales of available for sale securities | (1,571 | ) | 57 | 481 | 90 | 566 | |||||||||||||
| Other income (loss) | 823 | 672 | (425 | ) | 1,048 | 634 | |||||||||||||
| Total Non-Interest Income | 24,997 | 24,150 | 29,617 | 28,277 | 25,897 | ||||||||||||||
| NON-INTEREST EXPENSES | |||||||||||||||||||
| Salaries and employee benefits | 57,459 | 52,331 | 56,002 | 56,041 | 42,519 | ||||||||||||||
| Net occupancy | 7,259 | 6,638 | 6,738 | 6,648 | 6,187 | ||||||||||||||
| Equipment | 6,126 | 6,148 | 5,997 | 6,720 | 5,080 | ||||||||||||||
| Marketing | 1,309 | 3,157 | 2,401 | 1,414 | 736 | ||||||||||||||
| Outside data processing fees | 6,113 | 5,611 | 6,827 | 4,881 | 4,363 | ||||||||||||||
| Printing and office supplies | 383 | 390 | 472 | 381 | 345 | ||||||||||||||
| Intangible asset amortization | 2,197 | 2,303 | 2,303 | 2,303 | 1,366 | ||||||||||||||
| FDIC assessments | 1,396 | 2,295 | 2,824 | 2,924 | 2,192 | ||||||||||||||
| Other real estate owned and foreclosure expenses | (18 | ) | 197 | 328 | (266 | ) | 564 | ||||||||||||
| Professional and other outside services | 3,698 | 3,961 | 4,461 | 10,267 | 2,953 | ||||||||||||||
| Other expenses | 7,798 | 6,668 | 8,025 | 6,000 | 6,020 | ||||||||||||||
| Total Non-Interest Expenses | 93,720 | 89,699 | 96,378 | 97,313 | 72,325 | ||||||||||||||
| INCOME BEFORE INCOME TAX | 75,396 | 83,407 | 73,545 | 42,870 | 55,852 | ||||||||||||||
| Income tax expense | 11,317 | 12,647 | 9,793 | 3,879 | 7,266 | ||||||||||||||
| NET INCOME | 64,079 | 70,760 | 63,752 | 38,991 | 48,586 | ||||||||||||||
| Preferred stock dividends | 469 | 468 | 469 | 469 | - | ||||||||||||||
| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 63,610 | $ | 70,292 | $ | 63,283 | $ | 38,522 | $ | 48,586 | |||||||||
| Per Share Data: | |||||||||||||||||||
| Basic Net Income Available to Common Stockholders | $ | 1.07 | $ | 1.20 | $ | 1.08 | $ | 0.64 | $ | 0.91 | |||||||||
| Diluted Net Income Available to Common Stockholders | $ | 1.07 | $ | 1.19 | $ | 1.08 | $ | 0.63 | $ | 0.91 | |||||||||
| Cash Dividends Paid to Common Stockholders | $ | 0.32 | $ | 0.32 | $ | 0.32 | $ | 0.32 | $ | 0.29 | |||||||||
| Average Diluted Common Shares Outstanding (in thousands) | 59,441 | 59,384 | 59,339 | 59,308 | 53,616 | ||||||||||||||
| FINANCIAL RATIOS: | |||||||||||||||||||
| Return on Average Assets | 1.42 | % | 1.59 | % | 1.43 | % | 0.88 | % | 1.26 | % | |||||||||
| Return on Average Stockholders' Equity | 12.21 | 14.36 | 12.54 | 7.62 | 10.28 | ||||||||||||||
| Return on Tangible Common Stockholders' Equity | 19.82 | 24.21 | 20.85 | 12.91 | 14.99 | ||||||||||||||
| Average Earning Assets to Average Assets | 93.35 | 93.66 | 92.90 | 92.45 | 92.23 | ||||||||||||||
| Allowance for Credit Losses - Loans as % of Total Loans | 1.82 | 1.86 | 1.94 | 1.98 | 2.09 | ||||||||||||||
| Net Charge-offs (Recoveries) as % of Average Loans (Annualized) | 0.01 | 0.12 | (0.01 | ) | 0.01 | (0.03 | ) | ||||||||||||
| Average Stockholders' Equity to Average Assets | 11.56 | 10.98 | 11.36 | 11.37 | 12.23 | ||||||||||||||
| Tax Equivalent Yield on Average Earning Assets | 5.06 | 4.73 | 4.11 | 3.58 | 3.23 | ||||||||||||||
| Interest Expense/Average Earning Assets | 1.48 | 1.01 | 0.56 | 0.30 | 0.20 | ||||||||||||||
| Net Interest Margin (FTE) on Average Earning Assets | 3.58 | 3.72 | 3.55 | 3.28 | 3.03 | ||||||||||||||
| Efficiency Ratio | 51.72 | 48.60 | 53.34 | 58.45 | 52.79 | ||||||||||||||
| Tangible Common Book Value Per Share | $ | 22.93 | $ | 21.45 | $ | 19.26 | $ | 20.45 | $ | 23.26 | |||||||||
| LOANS | |||||||||||||||||||
| (Dollars In Thousands) | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Commercial and industrial loans | $ | 3,502,204 | $ | 3,437,126 | $ | 3,330,529 | $ | 3,297,477 | $ | 2,826,660 | |||||||||
| Agricultural land, production and other loans to farmers | 219,598 | 241,793 | 221,954 | 214,904 | 209,077 | ||||||||||||||
| Real estate loans: | |||||||||||||||||||
| Construction | 960,979 | 835,582 | 828,923 | 745,983 | 552,975 | ||||||||||||||
| Commercial real estate, non-owner occupied | 2,375,410 | 2,407,475 | 2,299,272 | 2,423,185 | 2,073,197 | ||||||||||||||
| Commercial real estate, owner occupied | 1,244,117 | 1,246,528 | 1,268,567 | 1,264,563 | 974,521 | ||||||||||||||
| Residential | 2,185,943 | 2,096,655 | 1,990,668 | 1,813,297 | 1,226,695 | ||||||||||||||
| Home equity | 621,354 | 630,632 | 621,619 | 586,108 | 512,641 | ||||||||||||||
| Individuals' loans for household and other personal expenditures | 172,389 | 175,211 | 173,225 | 157,264 | 147,593 | ||||||||||||||
| Public finance and other commercial loans | 959,467 | 932,892 | 915,245 | 894,636 | 832,882 | ||||||||||||||
| Loans | 12,241,461 | 12,003,894 | 11,650,002 | 11,397,417 | 9,356,241 | ||||||||||||||
| Allowance for credit losses - loans | (223,052 | ) | (223,277 | ) | (226,702 | ) | (226,275 | ) | (195,984 | ) | |||||||||
| NET LOANS | $ | 12,018,409 | $ | 11,780,617 | $ | 11,423,300 | $ | 11,171,142 | $ | 9,160,257 | |||||||||
| DEPOSITS | ||||||||||||||
| (Dollars In Thousands) | March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||
| Demand deposits | $ | 8,422,387 | $ | 8,448,797 | $ | 8,534,950 | $ | 8,785,889 | $ | 7,806,033 | ||||
| Savings deposits | 4,499,487 | 4,657,140 | 5,054,490 | 4,875,880 | 4,444,417 | |||||||||
| Certificates and other time deposits of $100,000 or more | 1,040,379 | 742,539 | 443,588 | 436,942 | 252,033 | |||||||||
| Other certificates and time deposits | 574,886 | 468,712 | 381,365 | 446,973 | 380,293 | |||||||||
| Brokered certificates of deposits | 166,148 | 65,557 | 20,432 | 25,185 | 23,177 | |||||||||
| TOTAL DEPOSITS | $ | 14,703,287 | $ | 14,382,745 | $ | 14,434,825 | $ | 14,570,869 | $ | 12,905,953 | ||||
| CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS | |||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||
| For the Three Months Ended | |||||||||||||||||
| March 31, 2023 | March 31, 2022 | ||||||||||||||||
| Average Balance | Interest Income / Expense | Average Rate | Average Balance | Interest Income / Expense | Average Rate | ||||||||||||
| ASSETS | |||||||||||||||||
| Interest-bearing deposits | $ | 172,814 | $ | 637 | 1.47 | % | $ | 484,626 | $ | 230 | 0.19 | % | |||||
| Federal Home Loan Bank stock | 39,759 | 542 | 5.45 | 27,914 | 146 | 2.09 | |||||||||||
| Investment securities:(1) | |||||||||||||||||
| Taxable | 1,924,079 | 9,087 | 1.89 | 1,957,675 | 8,510 | 1.74 | |||||||||||
| Tax-exempt(2) | 2,552,371 | 20,342 | 3.19 | 2,536,634 | 20,095 | 3.17 | |||||||||||
| Total Investment Securities | 4,476,450 | 29,429 | 2.63 | 4,494,309 | 28,605 | 2.55 | |||||||||||
| Loans held for sale | 23,538 | 360 | 6.12 | 4,352 | 40 | 3.68 | |||||||||||
| Loans:(3) | |||||||||||||||||
| Commercial | 8,483,879 | 139,661 | 6.58 | 6,868,438 | 64,679 | 3.77 | |||||||||||
| Real estate mortgage | 1,914,640 | 18,391 | 3.84 | 924,268 | 7,840 | 3.39 | |||||||||||
| Installment | 840,450 | 13,941 | 6.64 | 711,038 | 6,516 | 3.67 | |||||||||||
| Tax-exempt(2) | 872,877 | 9,758 | 4.47 | 747,832 | 7,220 | 3.86 | |||||||||||
| Total Loans | 12,135,384 | 182,111 | 6.00 | 9,255,928 | 86,295 | 3.73 | |||||||||||
| Total Earning Assets | 16,824,407 | 212,719 | 5.06 | % | 14,262,777 | 115,276 | 3.23 | % | |||||||||
| Total Non-Earning Assets | 1,197,788 | 1,201,828 | |||||||||||||||
| TOTAL ASSETS | $ | 18,022,195 | $ | 15,464,605 | |||||||||||||
| LIABILITIES | |||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||
| Interest-bearing deposits | $ | 5,263,601 | $ | 24,662 | 1.87 | % | $ | 5,027,466 | $ | 2,408 | 0.19 | % | |||||
| Money market deposits | 2,746,047 | 13,577 | 1.98 | 2,514,429 | 872 | 0.14 | |||||||||||
| Savings deposits | 1,826,209 | 2,965 | 0.65 | 1,867,411 | 441 | 0.09 | |||||||||||
| Certificates and other time deposits | 1,466,275 | 9,481 | 2.59 | 676,661 | 573 | 0.34 | |||||||||||
| Total Interest-Bearing Deposits | 11,302,132 | 50,685 | 1.79 | 10,085,967 | 4,294 | 0.17 | |||||||||||
| Borrowings: | 1,293,309 | 11,594 | 3.59 | 616,572 | 2,966 | 1.92 | |||||||||||
| Total Interest-Bearing Liabilities | 12,595,441 | 62,279 | 1.98 | 10,702,539 | 7,260 | 0.27 | |||||||||||
| Noninterest-bearing deposits | 3,121,277 | 2,731,723 | |||||||||||||||
| Other liabilities | 222,352 | 139,120 | |||||||||||||||
| Total Liabilities | 15,939,070 | 13,573,382 | |||||||||||||||
| STOCKHOLDERS' EQUITY | 2,083,125 | 1,891,223 | |||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 18,022,195 | 62,279 | $ | 15,464,605 | 7,260 | |||||||||||
| Net Interest Income (FTE) | $ | 150,440 | $ | 108,016 | |||||||||||||
| Net Interest Spread (FTE)(4) | 3.08 | % | 2.96 | % | |||||||||||||
| Net Interest Margin (FTE): | |||||||||||||||||
| Interest Income (FTE) / Average Earning Assets | 5.06 | % | 3.23 | % | |||||||||||||
| Interest Expense / Average Earning Assets | 1.48 | % | 0.20 | % | |||||||||||||
| Net Interest Margin (FTE)(5) | 3.58 | % | 3.03 | % | |||||||||||||
| (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 2023 and 2022. These totals equal $6,321 and $5,736 for the three months ended March 31, 2023 and 2022, 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. | |||||||||||||||||
| ADJUSTED EPS EXCLUDING PAYCHECK PROTECTION PROGRAM ("PPP") AND ACQUISITION-RELATED EXPENSES - NON-GAAP | |||||||||||||||||||
| (Dollars In Thousands, Except Per Share Amounts) | Three Months Ended | ||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Net Income Available to Common Stockholders - GAAP | $ | 63,610 | $ | 70,292 | $ | 63,283 | $ | 38,522 | $ | 48,586 | |||||||||
| Adjustments: | |||||||||||||||||||
| PPP loan income | (25 | ) | (109 | ) | (323 | ) | (891 | ) | (1,884 | ) | |||||||||
| Acquisition-related expenses | - | 413 | 3,417 | 12,549 | 152 | ||||||||||||||
| Acquisition-related provision expense | - | - | - | 16,755 | - | ||||||||||||||
| Tax on adjustment | 6 | (75 | ) | (759 | ) | (6,967 | ) | 425 | |||||||||||
| Adjusted Net Income Available to Common Stockholders - Non-GAAP | $ | 63,591 | $ | 70,521 | $ | 65,618 | $ | 59,968 | $ | 47,279 | |||||||||
| Average Diluted Common Shares Outstanding (in thousands) | 59,441 | 59,384 | 59,339 | 59,308 | 53,616 | ||||||||||||||
| Diluted Earnings Per Common Share - GAAP | $ | 1.07 | $ | 1.19 | $ | 1.08 | $ | 0.63 | $ | 0.91 | |||||||||
| Adjustments: | |||||||||||||||||||
| PPP loan income | - | (0.01 | ) | - | (0.01 | ) | (0.04 | ) | |||||||||||
| Acquisition-related expenses | - | 0.01 | 0.05 | 0.22 | - | ||||||||||||||
| Acquisition-related provision expense | - | - | - | 0.30 | - | ||||||||||||||
| Tax on adjustment | - | - | (0.01 | ) | (0.13 | ) | 0.01 | ||||||||||||
| Adjusted Diluted Earnings Per Common Share - Non-GAAP | $ | 1.07 | $ | 1.19 | $ | 1.12 | $ | 1.01 | $ | 0.88 | |||||||||
| RETURN ON TANGIBLE COMMON EQUITY | |||||||||||||||||||
| (Dollars In Thousands) | Three Months Ended | ||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Total Average Stockholders' Equity (GAAP) | $ | 2,083,125 | $ | 1,958,041 | $ | 2,018,156 | $ | 2,021,123 | $ | 1,891,223 | |||||||||
| Less: Average Preferred Stock | (25,125 | ) | (25,125 | ) | (25,125 | ) | (25,125 | ) | (125 | ) | |||||||||
| Less: Average Intangible Assets, Net of Tax | (739,190 | ) | (741,632 | ) | (744,069 | ) | (745,614 | ) | (565,476 | ) | |||||||||
| Average Tangible Common Equity, Net of Tax (Non-GAAP) | $ | 1,318,810 | $ | 1,191,284 | $ | 1,248,962 | $ | 1,250,384 | $ | 1,325,622 | |||||||||
| Net Income Available to Common Stockholders (GAAP) | $ | 63,610 | $ | 70,292 | $ | 63,283 | $ | 38,521 | $ | 48,586 | |||||||||
| Plus: Intangible Asset Amortization, Net of Tax | 1,734 | 1,819 | 1,819 | 1,820 | 1,079 | ||||||||||||||
| Tangible Net Income (Non-GAAP) | $ | 65,344 | $ | 72,111 | $ | 65,102 | $ | 40,341 | $ | 49,665 | |||||||||
| Return on Tangible Common Equity (Non-GAAP) | 19.82 | % | 24.21 | % | 20.85 | % | 12.91 | % | 14.99 | % | |||||||||
For more information, contact:
Nicole M. Weaver, Vice President and Director of Corporate Administration
765-521-7619
http://www.firstmerchants.com
