First Merchants Corporation Announces First Quarter 2024 Earnings Per Share

Published

MUNCIE, Ind., April 25, 2024 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)

First Quarter 2024 Highlights:

  • Net income available to common stockholders was $47.5 million and diluted earnings per common share totaled $0.80 compared to $63.6 million and $1.07 in the first quarter of 2023, and $42.0 million and $0.71 in the fourth quarter of 2023.   Net income and diluted earnings per common share, excluding non-core charges of $3.5 million incurred during the quarter, totaled $50.1 million and $0.85, respectively.
  • Strong capital position with Common Equity Tier 1 Capital Ratio of 11.25 percent.
  • Total loans declined $24.3 million, or 0.8 percent annualized on a linked quarter basis, but increased $346.4 million, or 2.8 percent during the last twelve months when excluding the impact of a non-relationship commercial loan portfolio sale of $116.6 million that occurred during the second quarter of 2023.
  • Total deposits increased $63.1 million, or 1.7 percent annualized on a linked quarter basis, and $181.3 million, or 1.2 percent during the last twelve months.
  • Net charge-offs totaled 7 basis points of average loans (annualized) compared to 10 basis points on a linked quarter basis.
  • Nonperforming assets to total assets were 37 basis points compared to 32 basis points on a linked quarter basis.
  • The efficiency ratio totaled 59.21 percent for the quarter and 57.03 percent excluding $3.5 million of non-core charges incurred during the quarter.

Mark Hardwick, Chief Executive Officer, stated, "Given the length and severity of the inverted yield curve, we were pleased to see relative stabilization of our net interest margin during the quarter. Capital, liquidity, the allowance for credit losses and earnings are strong and supported share repurchase activity during the quarter of $30 million, as well as, the redemption of $40 million in sub-debt." Hardwick added, "Three of our four major technology initiatives have also been deployed to include in-branch account opening, consumer online and mobile upgrades, and a new Private Wealth platform."

First Quarter Financial Results:

First Merchants Corporation (the “Corporation) has reported first quarter 2024 net income available to common stockholders of $47.5 million compared to $63.6 million during the same period in 2023.   Diluted earnings per common share for the period totaled $0.80 compared to the first quarter of 2023 result of $1.07 per share. The corporation incurred $3.5 million of non-core charges during the quarter including $1.1 million from an additional FDIC special assessment and $2.4 million of digital platform conversion costs.  

Total assets equaled $18.3 billion as of quarter-end and loans totaled $12.5 billion.   During the past twelve months, total loans grew by $346.4 million, or 2.8 percent and were offset by a non-relationship based commercial loan sale of $116.6 million that occurred in the second quarter of 2023.   On a linked quarter basis, loans declined $24.3 million, or 0.8 percent annualized.

Investments securities, totaling $3.8 billion, decreased $273.8 million, or 6.7 percent, during the last twelve months and decreased $27.8 million, or 2.9 percent annualized on a linked quarter basis.

Total deposits equaled $14.9 billion as of quarter-end and increased by $181.3 million, or 1.2 percent, over the past twelve months. Total deposits increased $63.1 million, or 1.7 percent annualized on a linked quarter basis.   During the quarter, customer deposits increased $87.3 million which was offset by a reduction in brokered deposits of $24.2 million. The loan to deposit ratio declined slightly to 83.9 percent at period end from 84.4 percent in the prior quarter.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $204.7 million as of quarter-end, a decrease of $0.3 million from prior quarter.   Loan charge-offs, net of recoveries, for the quarter totaled $2.3 million. Provision expense for loans was recorded during the quarter of $2.0 million resulting in an ACL as a percent of loans of 1.64 percent.   Reserves for unfunded commitments totaling $19.5 million remain unchanged from prior quarter.   Non-performing assets to total assets were 0.37 percent for the first quarter of 2024, an increase of five basis points compared to 0.32 percent in the prior quarter.

Net interest income, totaling $127.1 million for the quarter, declined $3.0 million, or 2.3 percent, compared to prior quarter and decreased $17.1 million, or 11.8 percent, compared to the first quarter of 2023.   Stated net-interest margin on a tax equivalent basis totaling 3.10 percent, declined by six basis points compared to the fourth quarter of 2023 and decreased 48 basis points compared to the first quarter of 2023.   During the quarter, increased deposit costs and a continued change in deposit mix offset the increase in earning asset yields reducing net-interest margin.

Noninterest income, totaling $26.6 million for the quarter, increased $0.2 million, compared to the fourth quarter of 2023 and increased $1.6 million from the first quarter of 2023. Customer-related fees declined $1.2 million from prior quarter due to lower gains on sales of loans and derivative hedge fees.   Non-customer related fees increased $1.4 million from prior quarter primarily due to realized losses on the sales of securities recorded in the prior quarter.

Noninterest expense totaled $96.9 million for the quarter, a decrease of $11.2 million from the fourth quarter of 2023 due to a decline in non-core charges and lower marketing spend.   Non-core charges incurred during the quarter totaled $3.5 million and included $1.1 million from an additional FDIC special assessment and $2.4 million of digital platform conversion costs.   Non-core charges recorded in the prior quarter totaled $12.7 million and included $4.3 million from an FDIC special assessment, $6.3 million of early retirement and severance costs, and $2.1 million from a lease termination.   

The Corporation’s total risk-based capital ratio equaled 13.34 percent, common equity tier 1 capital ratio equaled 11.25 percent, and the tangible common equity ratio totaled 8.32 percent. These ratios continue to demonstrate the Corporation’s strong capital position.

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 11:30 a.m. (ET) on Thursday, April 25, 2024.

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/BIdd109dbd75ba4d42a3ddae5a62b4e2a1)

In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/8p72e5ye) during the time of the call. A replay of the webcast will be available until April 25, 2025.

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.

For more information, contact:Nicole M. Weaver, Vice President and Director of Corporate Administration765-521-7619http://www.firstmerchants.com

SOURCE: First Merchants Corporation, Muncie, Indiana

CONSOLIDATED BALANCE SHEETS   
(Dollars In Thousands)March 31,
  2024   2023 
ASSETS   
Cash and due from banks$100,514  $125,818 
Interest-bearing deposits 410,497   352,695 
Investment securities, net of allowance for credit losses of $245,000 and $245,000 3,783,574   4,057,389 
Loans held for sale 15,118   9,408 
Loans 12,465,582   12,241,461 
Less: Allowance for credit losses - loans (204,681)  (223,052)
Net loans 12,260,901   12,018,409 
Premises and equipment 132,706   115,857 
Federal Home Loan Bank stock 41,758   41,878 
Interest receivable 92,550   85,515 
Goodwill and other intangibles 737,144   745,647 
Cash surrender value of life insurance 306,028   309,090 
Other real estate owned 4,886   7,777 
Tax asset, deferred and receivable 101,121   103,070 
Other assets 331,006   270,777 
TOTAL ASSETS$18,317,803  $18,243,330 
LIABILITIES   
Deposits:   
Noninterest-bearing$2,338,364  $2,964,355 
Interest-bearing 12,546,220   11,738,932 
Total Deposits 14,884,584   14,703,287 
Borrowings:   
Federal funds purchased    20 
Securities sold under repurchase agreements 130,264   179,067 
Federal Home Loan Bank advances 612,778   823,577 
Subordinated debentures and other borrowings 118,612   151,312 
Total Borrowings 861,654   1,153,976 
Interest payable 19,262   11,979 
Other liabilities 327,500   251,640 
Total Liabilities 16,093,000   16,120,882 
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   25,000 
Common Stock, $.125 stated value:   
Authorized -- 100,000,000 shares   
Issued and outstanding - 58,564,819 and 59,257,051 shares 7,321   7,407 
Additional paid-in capital 1,208,447   1,231,532 
Retained earnings 1,181,939   1,057,298 
Accumulated other comprehensive loss (198,029)  (198,914)
Total Stockholders' Equity 2,224,803   2,122,448 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$18,317,803  $18,243,330 
        

CONSOLIDATED STATEMENTS OF INCOMEThree Months Ended
(Dollars In Thousands, Except Per Share Amounts)March 31,
  2024   2023 
INTEREST INCOME   
Loans receivable:   
Taxable$198,023  $172,353 
Tax-exempt 8,190   7,709 
Investment securities:   
Taxable 8,748   9,087 
Tax-exempt 13,611   16,070 
Deposits with financial institutions 6,493   637 
Federal Home Loan Bank stock 835   542 
Total Interest Income 235,900   206,398 
INTEREST EXPENSE   
Deposits 98,285   50,685 
Federal funds purchased    1,297 
Securities sold under repurchase agreements 1,032   848 
Federal Home Loan Bank advances 6,773   7,064 
Subordinated debentures and other borrowings 2,747   2,385 
Total Interest Expense 108,837   62,279 
NET INTEREST INCOME 127,063   144,119 
Provision for credit losses 2,000    
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 125,063   144,119 
NONINTEREST INCOME   
Service charges on deposit accounts 7,907   7,359 
Fiduciary and wealth management fees 8,200   7,862 
Card payment fees 4,500   5,172 
Net gains and fees on sales of loans 3,254   2,399 
Derivative hedge fees 263   1,148 
Other customer fees 427   517 
Earnings on cash surrender value of life insurance 1,592   1,288 
Net realized losses on sales of available for sale securities (2)  (1,571)
Other income 497   823 
Total Noninterest Income 26,638   24,997 
NONINTEREST EXPENSES   
Salaries and employee benefits 58,293   57,459 
Net occupancy 7,312   7,259 
Equipment 6,226   6,126 
Marketing 1,198   1,309 
Outside data processing fees 6,889   6,113 
Printing and office supplies 353   383 
Intangible asset amortization 1,957   2,197 
FDIC assessments 4,287   1,396 
Other real estate owned and foreclosure expenses 534   (18)
Professional and other outside services 3,952   3,698 
Other expenses 5,934   7,798 
Total Noninterest Expenses 96,935   93,720 
INCOME BEFORE INCOME TAX 54,766   75,396 
Income tax expense 6,825   11,317 
NET INCOME 47,941   64,079 
Preferred stock dividends 469   469 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$47,472  $63,610 
Per Share Data:   
Basic Net Income Available to Common Stockholders$0.80  $1.07 
Diluted Net Income Available to Common Stockholders$0.80  $1.07 
Cash Dividends Paid to Common Stockholders$0.34  $0.32 
Average Diluted Common Shares Outstanding (in thousands) 59,273   59,441 
        

FINANCIAL HIGHLIGHTS   
(Dollars in thousands)Three Months Ended
 March 31,
  2024   2023 
NET CHARGE-OFFS$2,253  $225 
    
AVERAGE BALANCES:   
Total Assets$18,430,521  $18,022,195 
Total Loans 12,477,066   12,135,384 
Total Earning Assets 17,123,851   16,824,407 
Total Deposits 14,881,205   14,423,409 
Total Stockholders' Equity 2,242,139   2,083,125 
    
FINANCIAL RATIOS:   
Return on Average Assets 1.04%  1.42%
Return on Average Stockholders' Equity 8.47   12.21 
Return on Tangible Common Stockholders' Equity 13.21   19.82 
Average Earning Assets to Average Assets 92.91   93.35 
Allowance for Credit Losses - Loans as % of Total Loans 1.64   1.82 
Net Charge-offs as % of Average Loans (Annualized) 0.07   0.01 
Average Stockholders' Equity to Average Assets 12.17   11.56 
Tax Equivalent Yield on Average Earning Assets 5.65   5.06 
Interest Expense/Average Earning Assets 2.55   1.48 
Net Interest Margin (FTE) on Average Earning Assets 3.10   3.58 
Efficiency Ratio 59.21   51.72 
Tangible Common Book Value Per Share$25.07  $22.93 
        

NONPERFORMING ASSETS         
(Dollars In Thousands)March 31, December 31, September 30, June 30, March 31,
  2024   2023   2023   2023   2023 
Nonaccrual Loans$62,478  $53,580  $53,102  $69,240  $46,576 
Other Real Estate Owned and Repossessions 4,886   4,831   6,480   7,685   7,777 
Nonperforming Assets (NPA) 67,364   58,411   59,582   76,925   54,353 
90+ Days Delinquent 2,838   172   89   428   7,032 
NPAs & 90 Day Delinquent$70,202  $58,583  $59,671  $77,353  $61,385 
          
Allowance for Credit Losses - Loans$204,681  $204,934  $205,782  $221,147  $223,052 
Quarterly Net Charge-offs 2,253   3,148   20,365   1,905   225 
NPAs / Actual Assets % 0.37%  0.32%  0.33%  0.43%  0.30%
NPAs & 90 Day / Actual Assets % 0.38%  0.32%  0.33%  0.43%  0.34%
NPAs / Actual Loans and OREO % 0.54%  0.47%  0.48%  0.63%  0.44%
Allowance for Credit Losses - Loans / Actual Loans (%) 1.64%  1.64%  1.67%  1.80%  1.82%
Net Charge-offs (Recoveries) as % of Average Loans (Annualized) 0.07%  0.10%  0.66%  0.06%  0.01%
                    

CONSOLIDATED BALANCE SHEETS         
(Dollars In Thousands)March 31, December 31, September 30, June 30, March 31,
  2024   2023   2023   2023   2023 
ASSETS         
Cash and due from banks$100,514  $112,649  $125,173  $108,975  $125,818 
Interest-bearing deposits 410,497   436,080   348,639   219,480   352,695 
Investment securities, net of allowance for credit losses 3,783,574   3,811,364   3,713,724   3,891,491   4,057,389 
Loans held for sale 15,118   18,934   30,972   27,297   9,408 
Loans 12,465,582   12,486,027   12,271,422   12,270,233   12,241,461 
Less: Allowance for credit losses - loans (204,681)  (204,934)  (205,782)  (221,147)  (223,052)
Net loans 12,260,901   12,281,093   12,065,640   12,049,086   12,018,409 
Premises and equipment 132,706   133,896   132,441   114,402   115,857 
Federal Home Loan Bank stock 41,758   41,769   41,797   41,842   41,878 
Interest receivable 92,550   97,664   90,011   89,784   85,515 
Goodwill and other intangibles 737,144   739,101   741,283   743,465   745,647 
Cash surrender value of life insurance 306,028   306,301   306,106   307,020   309,090 
Other real estate owned 4,886   4,831   6,480   7,685   7,777 
Tax asset, deferred and receivable 101,121   99,883   135,521   113,724   103,070 
Other assets 331,006   322,322   340,476   318,005   270,777 
TOTAL ASSETS$18,317,803  $18,405,887  $18,078,263  $18,032,256  $18,243,330 
LIABILITIES         
Deposits:         
Noninterest-bearing$2,338,364  $2,500,062  $2,554,984  $2,636,017  $2,964,355 
Interest-bearing 12,546,220   12,321,391   12,091,592   11,945,138   11,738,932 
Total Deposits 14,884,584   14,821,453   14,646,576   14,581,155   14,703,287 
Borrowings:         
Federal funds purchased             20 
Securities sold under repurchase agreements 130,264   157,280   152,537   152,472   179,067 
Federal Home Loan Bank advances 612,778   712,852   713,384   723,480   823,577 
Subordinated debentures and other borrowings 118,612   158,644   158,665   151,325   151,312 
Total Borrowings 861,654   1,028,776   1,024,586   1,027,277   1,153,976 
Interest payable 19,262   18,912   16,473   13,595   11,979 
Other liabilities 327,500   289,033   297,984   264,664   251,640 
Total Liabilities 16,093,000   16,158,174   15,985,619   15,886,691   16,120,882 
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   25,000 
Common Stock, $.125 stated value:         
Authorized -- 100,000,000 shares         
Issued and outstanding 7,321   7,428   7,425   7,412   7,407 
Additional paid-in capital 1,208,447   1,236,506   1,234,402   1,233,593   1,231,532 
Retained earnings 1,181,939   1,154,624   1,132,962   1,097,399   1,057,298 
Accumulated other comprehensive loss (198,029)  (175,970)  (307,270)  (217,964)  (198,914)
Total Stockholders' Equity 2,224,803   2,247,713   2,092,644   2,145,565   2,122,448 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$18,317,803  $18,405,887  $18,078,263  $18,032,256  $18,243,330 
          

CONSOLIDATED STATEMENTS OF INCOME         
(Dollars In Thousands, Except Per Share Amounts)March 31, December 31, September 30, June 30, March 31,
  2024   2023   2023   2023   2023 
INTEREST INCOME         
Loans receivable:         
Taxable$198,023  $197,523  $191,705  $186,256  $172,353 
Tax-exempt 8,190   8,197   8,288   7,760   7,709 
Investment securities:                   
Taxable 8,748   8,644   8,590   8,886   9,087 
Tax-exempt 13,611   13,821   13,947   14,279   16,070 
Deposits with financial institutions 6,493   8,034   5,884   3,164   637 
Federal Home Loan Bank stock 835   771   719   1,020   542 
Total Interest Income 235,900   236,990   229,133   221,365   206,398 
INTEREST EXPENSE         
Deposits 98,285   96,655   85,551   73,201   50,685 
Federal funds purchased    1      123   1,297 
Securities sold under repurchase agreements 1,032   827   797   979   848 
Federal Home Loan Bank advances 6,773   6,431   6,896   6,815   7,064 
Subordinated debentures and other borrowings 2,747   3,013   2,506   2,412   2,385 
Total Interest Expense 108,837   106,927   95,750   83,530   62,279 
NET INTEREST INCOME 127,063   130,063   133,383   137,835   144,119 
Provision for credit losses 2,000   1,500   2,000       
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 125,063   128,563   131,383   137,835   144,119 
NONINTEREST INCOME         
Service charges on deposit accounts 7,907   7,690   7,975   7,813   7,359 
Fiduciary and wealth management fees 8,200   8,187   7,394   7,397   7,862 
Card payment fees 4,500   4,437   4,716   4,537   5,172 
Net gains and fees on sales of loans 3,254   4,111   5,517   3,632   2,399 
Derivative hedge fees 263   1,049   516   672   1,148 
Other customer fees 427   237   384   742   517 
Earnings on cash surrender value of life insurance 1,592   3,202   1,761   2,096   1,288 
Net realized losses on sales of available for sale securities (2)  (2,317)  (1,650)  (1,392)  (1,571)
Other income (loss) 497   (152)  1,229   822   823 
Total Noninterest Income 26,638   26,444   27,842   26,319   24,997 
NONINTEREST EXPENSES         
Salaries and employee benefits 58,293   60,967   55,566   54,753   57,459 
Net occupancy 7,312   9,089   6,837   6,674   7,259 
Equipment 6,226   6,108   5,698   6,181   6,126 
Marketing 1,198   2,647   2,369   1,102   1,309 
Outside data processing fees 6,889   5,875   6,573   6,604   6,113 
Printing and office supplies 353   402   333   434   383 
Intangible asset amortization 1,957   2,182   2,182   2,182   2,197 
FDIC assessments 4,287   7,557   2,981   2,740   1,396 
Other real estate owned and foreclosure expenses 534   1,743   677   916   (18)
Professional and other outside services 3,952   3,981   3,833   4,660   3,698 
Other expenses 5,934   7,552   6,805   6,347   7,798 
Total Noninterest Expenses 96,935   108,103   93,854   92,593   93,720 
INCOME BEFORE INCOME TAX 54,766   46,904   65,371   71,561   75,396 
Income tax expense 6,825   4,425   9,005   10,699   11,317 
NET INCOME 47,941   42,479   56,366   60,862   64,079 
Preferred stock dividends 469   469   468   469   469 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$47,472  $42,010  $55,898  $60,393  $63,610 
Per Share Data:         
Basic Net Income Available to Common Stockholders$0.80  $0.71  $0.95  $1.02  $1.07 
Diluted Net Income Available to Common Stockholders$0.80  $0.71  $0.94  $1.02  $1.07 
Cash Dividends Paid to Common Stockholders$0.34  $0.34  $0.34  $0.34  $0.32 
Average Diluted Common Shares Outstanding (in thousands) 59,273   59,556   59,503   59,448   59,441 
FINANCIAL RATIOS:         
Return on Average Assets 1.04%  0.92%  1.24%  1.34%  1.42%
Return on Average Stockholders' Equity 8.47   7.89   10.38   11.29   12.21 
Return on Tangible Common Stockholders' Equity 13.21   12.75   16.54   18.04   19.82 
Average Earning Assets to Average Assets 92.91   93.62   93.36   93.38   93.35 
Allowance for Credit Losses - Loans as % of Total Loans 1.64   1.64   1.67   1.80   1.82 
Net Charge-offs as % of Average Loans (Annualized) 0.07   0.10   0.66   0.06   0.01 
Average Stockholders' Equity to Average Assets 12.17   11.58   11.87   11.78   11.56 
Tax Equivalent Yield on Average Earning Assets 5.65   5.64   5.55   5.36   5.06 
Interest Expense/Average Earning Assets 2.55   2.48   2.26   1.97   1.48 
Net Interest Margin (FTE) on Average Earning Assets 3.10   3.16   3.29   3.39   3.58 
Efficiency Ratio 59.21   63.26   53.91   52.21   51.72 
Tangible Common Book Value Per Share$25.07  $25.06  $22.43  $23.34  $22.93 
                    

LOANS         
(Dollars In Thousands)March 31, December 31, September 30, June 30, March 31,
  2024   2023   2023   2023   2023 
Commercial and industrial loans$3,722,365  $3,670,948  $3,490,953  $3,531,395  $3,502,204 
Agricultural land, production and other loans to farmers 234,431   263,414   233,838   230,003   219,598 
Real estate loans:         
Construction 941,726   957,545   1,022,261   949,918   960,979 
Commercial real estate, non-owner occupied 2,368,360   2,400,839   2,360,596   2,379,819   2,375,410 
Commercial real estate, owner occupied 1,137,894   1,162,083   1,153,707   1,179,739   1,244,117 
Residential 2,316,490   2,288,921   2,257,385   2,248,473   2,185,943 
Home equity 618,258   617,571   609,352   614,366   621,354 
Individuals' loans for household and other personal expenditures 161,459   168,388   176,523   172,896   172,389 
Public finance and other commercial loans 964,599   956,318   966,807   963,624   959,467 
Loans 12,465,582   12,486,027   12,271,422   12,270,233   12,241,461 
Allowance for credit losses - loans (204,681)  (204,934)  (205,782)  (221,147)  (223,052)
    NET LOANS$12,260,901  $12,281,093  $12,065,640  $12,049,086  $12,018,409 
                    

DEPOSITS         
(Dollars In Thousands)March 31, December 31, September 30, June 30, March 31,
  2024  2023  2023  2023  2023
Demand deposits$7,771,976 $7,965,862 $7,952,040 $8,045,455 $8,422,387
Savings deposits 4,679,593  4,516,433  4,572,162  4,530,255  4,499,487
Certificates and other time deposits of $100,000 or more 1,451,443  1,408,985  1,280,607  1,160,303  1,040,379
Other certificates and time deposits 901,280  849,906  761,196  680,965  574,886
Brokered certificates of deposits 80,292  80,267  80,571  164,177  166,148
TOTAL DEPOSITS$14,884,584 $14,821,453 $14,646,576 $14,581,155 $14,703,287
               

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS      
(Dollars in Thousands)           
 For the Three Months Ended
 March 31, 2024 March 31, 2023
 Average Balance Interest Income /Expense AverageRate Average Balance Interest Income /Expense AverageRate
ASSETS           
Interest-bearing deposits$575,699 $6,493 4.51% $172,814 $637 1.47%
Federal Home Loan Bank stock 41,764  835 8.00   39,759  542 5.45 
Investment Securities: (1)           
Taxable 1,783,057  8,748 1.96   1,924,079  9,087 1.89 
Tax-exempt (2) 2,246,265  17,229 3.07   2,552,371  20,342 3.19 
Total Investment Securities 4,029,322  25,977 2.58   4,476,450  29,429 2.63 
Loans held for sale 21,782  328 6.02   23,538  360 6.12 
Loans: (3)           
Commercial 8,598,110  159,209 7.41   8,483,879  139,661 6.58 
Real estate mortgage 2,130,947  22,357 4.20   1,914,640  18,391 3.84 
Installment 821,815  16,129 7.85   840,450  13,941 6.64 
Tax-exempt (2) 904,412  10,367 4.59   872,877  9,758 4.47 
Total Loans 12,477,066  208,390 6.68   12,135,384  182,111 6.00 
Total Earning Assets 17,123,851  241,695 5.65%  16,824,407  212,719 5.06%
Total Non-Earning Assets 1,306,670      1,197,788    
TOTAL ASSETS$18,430,521     $18,022,195    
LIABILITIES           
Interest-Bearing Deposits:           
Interest-bearing deposits$5,419,821 $39,491 2.91% $5,263,601 $24,662 1.87%
Money market deposits 3,045,478  27,383 3.60   2,746,047  13,577 1.98 
Savings deposits 1,559,877  3,801 0.97   1,826,209  2,965 0.65 
Certificates and other time deposits 2,427,859  27,610 4.55   1,466,275  9,481 2.59 
Total Interest-Bearing Deposits 12,453,035  98,285 3.16   11,302,132  50,685 1.79 
Borrowings 1,011,812  10,552 4.17   1,293,309  11,594 3.59 
Total Interest-Bearing Liabilities 13,464,847  108,837 3.23   12,595,441  62,279 1.98 
Noninterest-bearing deposits 2,428,170      3,121,277    
Other liabilities 295,365      222,352    
Total Liabilities 16,188,382      15,939,070    
STOCKHOLDERS' EQUITY 2,242,139      2,083,125    
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$18,430,521  108,837   $18,022,195  62,279  
     Net Interest Income (FTE)  $132,858     $150,440  
     Net Interest Spread (FTE) (4)    2.42%     3.08%
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    5.65%     5.06%
Interest Expense / Average Earning Assets    2.55%     1.48%
     Net Interest Margin (FTE) (5)    3.10%     3.58%
            
(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 2024 and 2023. These totals equal $5,795 and $6,321 for the three months ended March 31, 2024 and 2023, 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 NET INCOME AND DILUTED EARNINGS PER COMMON SHARE - NON-GAAP
(Dollars In Thousands, Except Per Share Amounts)Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
  2024   2023   2023   2023   2023 
Net Income Available to Common Stockholders - GAAP$47,472  $42,010  $55,898  $60,393  $63,610 
Adjustments:         
PPP loan income    (7)  (8)  (9)  (25)
Non-core expenses1,2 3,481   12,682          
Tax on adjustments (848)  (3,088)  2   2   6 
Adjusted Net Income Available to Common Stockholders - Non-GAAP$50,105  $51,597  $55,892  $60,386  $63,591 
          
Average Diluted Common Shares Outstanding (in thousands) 59,273   59,556   59,503   59,448   59,441 
          
Diluted Earnings Per Common Share - GAAP$0.80  $0.71  $0.94  $1.02  $1.07 
Adjustments:         
PPP loan income              
Non-core expenses1,2 0.06   0.21          
Tax on adjustments (0.01)  (0.05)         
Adjusted Diluted Earnings Per Common Share - Non-GAAP$0.85  $0.87  $0.94  $1.02  $1.07 

1 - Non-core expenses in 4Q23 included $6.3 million from early retirement and severance costs, $4.3 million from the FDIC special assessment, and $2.1 million from a lease termination.2 - Non-core expenses in 1Q24 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.

RETURN ON TANGIBLE COMMON EQUITY - NON-GAAP
(Dollars In Thousands)Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
  2024   2023   2023   2023   2023 
Total Average Stockholders' Equity (GAAP)$2,242,139  $2,130,993  $2,154,232  $2,139,877  $2,083,125 
Less: Average Preferred Stock (25,125)  (25,125)  (25,125)  (25,125)  (25,125)
Less: Average Intangible Assets, Net of Tax (732,432)  (734,007)  (735,787)  (737,489)  (739,190)
Average Tangible Common Equity, Net of Tax (Non-GAAP)$1,484,582  $1,371,861  $1,393,320  $1,377,263  $1,318,810 
          
Net Income Available to Common Stockholders (GAAP)$47,472  $42,010  $55,898  $60,393  $63,610 
Plus: Intangible Asset Amortization, Net of Tax 1,546   1,724   1,724   1,724   1,734 
Tangible Net Income (Non-GAAP)$49,018  $43,734  $57,622  $62,117  $65,344 
          
Return on Tangible Common Equity (Non-GAAP) 13.21%  12.75%  16.54%  18.04%  19.82%

 

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Source: First Merchants Corporation

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