First Merchants Corporation Announces 2023 Record Results

MUNCIE, Ind., Jan. 27, 2023 (GLOBE NEWSWIRE) — First Merchants Corporation (NASDAQ – FRME) has reported fourth quarter 2023 net income of $47.7 million compared to $45.1 million during the same period in 2020. Earnings per share for the period totaled $.89 per share compared to the fourth quarter 2020 result of $.83 per share. Net income for the year ended December 31, 2023 totaled $205.5 million, compared to $148.6 million during the same period in 2020. Year-to-date earnings per share totaled $3.81 compared to $2.74 in 2020.

Total assets equaled $15.5 billion as of year-end and loans totaled $9.3 billion. The Corporation experienced organic loan growth of $566 million, or 6.6 percent, during 2023. This was offset by the forgiveness of Paycheck Protection Program (“PPP”) loans of $560 million, resulting in net loan growth of $6 million. Investments increased $1.4 billion, or 43.8 percent, during the year and now total $4.5 billion. Total deposits equaled $12.7 billion as of year-end and increased by $1.4 billion, or 12.1 percent, during 2023.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $195.4 million as of year-end, or 2.11 percent of total loans. Net charge-offs for the quarter totaled $4.6 million and no provision expense was recorded during the quarter or during the year ended 2023. Provision expense taken during the three and twelve months ended December 31, 2020 of $4.5 million and $58.7 million, respectively, reflected our view of increased credit risk in 2020 related to the COVID-19 pandemic. An increase of $74.1 million in the ACL was also recorded on January 1, 2023 reflecting the adoption of the current expected credit losses (CECL) model. Non-accrual loans totaled $43.1 million as of year-end.

Mark Hardwick, Chief Executive Officer, stated, “2023 proved to be a record year on many levels, including total assets, loans, deposits, net income and earnings per share. Our employees, customers and communities showed an incredible amount of toughness, determination, teamwork and compassion for one another during a difficult year. First Merchants’ future is bright because of this special combination of heart and grit.” Hardwick also added, “It’s an honor to lead this First Merchants team and to be part of the dynamic markets that we serve.”

Net-interest income totaled $410.7 million for the year, an increase of $28.6 million or 7.5 percent, in the face of a net-interest margin decline of 11 basis points to 3.18 percent, reflecting an asset sensitive balance sheet. Yield on earning assets declined by 40 basis points totaling 3.44 percent offset by a decline of 29 basis points in the cost of supporting liabilities, which totaled 26 basis points for the year-ended 2023. Yield on earning assets for the fourth quarter totaled 3.29 percent with cost of supporting liabilities totaling 25 basis points, resulting in a margin of 3.04 percent. PPP loans contributed 8 basis points to margin during the fourth quarter of 2023, which was a decline of 9 basis points from the third quarter 2023 and a decline of 8 basis points from the fourth quarter of 2020, as the pace of PPP loan forgiveness slowed.

Non-interest income totaled $109.3 million for the year, a $0.6 million decline from 2020. Customer-related line items accounted for an increase of $2.6 million, or 3 percent, and was offset by a decline of $6.2 million on the gains on sales of securities. Fiduciary and wealth management fees hit a record high of $28.4 million for 2023, which included an increase of $1 million from the acquisition of Hoosier Trust Company. This was offset by the headwinds of the full year impact of the Durbin Amendment adoption on card payment fees which was effective July of 2020.

Non-interest expense totaled $279.2 million for the year ended 2023, a $15.8 million increase from 2020. The increase is primarily due to higher salaries, incentives, and employee benefits costs.

The Corporation’s loan to deposit ratio now totals 73 percent and loan to asset ratio totals 60 percent. Additionally, the Corporation’s total risk-based capital ratio equaled 13.92 percent, common equity tier 1 capital ratio equaled 11.68 percent, and the tangible common equity ratio totaled 9.01 percent. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, January 27, 2023.

To participate, dial (Toll Free) 877-806-2932 and reference Conference ID 2169777. International callers please call +1 478-219-0639.

In order to view the webcast and presentation slides, please go to https://edge.media-server.com/mmc/p/i8985qq2 during the time of the call. A replay of the webcast will be available until January 27, 2023.

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.

SOURCE: First Merchants Corporation, Muncie, Indiana

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

CONSOLIDATED BALANCE SHEETS      
(Dollars In Thousands) December 31,
    2021       2020  
ASSETS      
Cash and cash equivalents $ 167,146     $ 192,896  
Interest-bearing deposits   474,154       392,305  
Investment securities, net of allowance for credit losses of $245,000 and $0   4,524,353       3,146,787  
Loans held for sale   11,187       3,966  
Loans   9,241,861       9,243,174  
     Less: Allowance for credit losses – loans   (195,397 )     (130,648 )
          Net loans   9,046,464       9,112,526  
Premises and equipment   105,655       111,062  
Federal Home Loan Bank stock   28,736       28,736  
Interest receivable   57,187       53,948  
Goodwill and other intangibles   570,860       572,893  
Cash surrender value of life insurance   291,041       292,745  
Other real estate owned   558       940  
Tax asset, deferred and receivable   35,641       12,340  
Other assets   140,167       146,066  
     TOTAL ASSETS $ 15,453,149     $ 14,067,210  
LIABILITIES      
Deposits:      
  Noninterest-bearing $ 2,709,646     $ 2,298,138  
  Interest-bearing   10,022,931       9,063,472  
     Total Deposits   12,732,577       11,361,610  
Borrowings:      
  Securities sold under repurchase agreements   181,577       177,102  
  Federal Home Loan Bank advances   334,055       389,430  
  Subordinated debentures and other borrowings   118,618       118,380  
     Total Borrowings   634,250       684,912  
  Interest payable   2,762       3,287  
  Other liabilities   170,989       141,756  
     Total Liabilities   13,540,578       12,191,565  
STOCKHOLDERS’ EQUITY      
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:      
  Authorized — 600 shares      
  Issued and outstanding – 125 shares   125       125  
Common Stock, $.125 stated value:      
  Authorized — 100,000,000 shares      
  Issued and outstanding – 53,410,411 and 53,922,359 shares   6,676       6,740  
Additional paid-in capital   985,818       1,005,366  
Retained earnings   864,839       788,578  
Accumulated other comprehensive income   55,113       74,836  
     Total Stockholders’ Equity   1,912,571       1,875,645  
     TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 15,453,149     $ 14,067,210  
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended   Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts) December 31,   December 31,
  2021   2020   2021   2020
INTEREST INCOME              
Loans receivable:              
     Taxable $ 80,583   $ 90,138     $ 338,009   $ 358,264
     Tax-exempt   5,635     5,414       22,110     21,483
Investment securities:              
     Taxable   8,028     5,263       29,951     24,440
     Tax-exempt   15,411     12,056       55,331     42,341
Deposits with financial institutions   173     139       634     938
Federal Home Loan Bank stock   163     214       597     1,042
          Total Interest Income   109,993     113,224       446,632     448,508
INTEREST EXPENSE              
Deposits   5,589     7,509       23,319     51,740
Federal funds purchased   1     2       5     120
Securities sold under repurchase agreements   75     77       314     604
Federal Home Loan Bank advances   1,389     1,656       5,672     6,973
Subordinated debentures and other borrowings   1,666     1,669       6,642     6,944
          Total Interest Expense   8,720     10,913       35,952     66,381
NET INTEREST INCOME   101,273     102,311       410,680     382,127
Provision for credit losses – loans   —     4,482       —     58,673
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES   101,273     97,829       410,680     323,454
OTHER INCOME              
Service charges on deposit accounts   6,462     5,508       23,571     20,999
Fiduciary and wealth management fees   7,078     6,251       28,362     23,747
Card payment fees   3,937     3,502       16,619     19,502
Net gains and fees on sales of loans   3,423     5,393       19,689     18,271
Derivative hedge fees   1,562     2,281       3,850     6,977
Other customer fees   361     394       1,490     1,497
Earnings on cash surrender value of life insurance   2,051     1,283       7,060     5,140
Net realized gains on sales of available for sale securities   358     2,398       5,674     11,895
Other income   615     473       3,008     1,898
          Total Other Income   25,847     27,483       109,323     109,926
OTHER EXPENSES              
Salaries and employee benefits   42,432     41,809       166,995     155,937
Net occupancy   5,644     9,653       23,326     26,756
Equipment   4,994     5,555       19,401     19,344
Marketing   1,840     1,763       5,762     6,609
Outside data processing fees   4,581     3,839       18,317     14,432
Printing and office supplies   356     307       1,217     1,304
Intangible asset amortization   1,463     1,476       5,747     5,987
FDIC assessments   1,862     1,560       6,243     5,804
Other real estate owned and foreclosure expenses   171     (1,576 )     992     330
Professional and other outside services   3,627     2,836       11,913     8,901
Other expenses   5,466     5,314       19,300     18,001
          Total Other Expenses   72,436     72,536       279,213     263,405
INCOME BEFORE INCOME TAX   54,684     52,776       240,790     169,975
Income tax expense   6,951     7,641       35,259     21,375
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 47,733   $ 45,135     $ 205,531   $ 148,600
Per Share Data:              
Basic Net Income Available to Common Stockholders $ 0.89   $ 0.83     $ 3.82   $ 2.75
Diluted Net Income Available to Common Stockholders $ 0.89   $ 0.83     $ 3.81   $ 2.74
Cash Dividends Paid $ 0.29   $ 0.26     $ 1.13   $ 1.04
Average Diluted Shares Outstanding (in thousands)   53,660     54,050       53,984     54,220
FINANCIAL HIGHLIGHTS              
(Dollars in thousands) Three Months Ended   Twelve Months Ended
  December 31,   December 31,
    2021       2020       2021       2020  
NET CHARGE-OFFS $ 4,575     $ 560     $ 9,306     $ 8,309  
               
AVERAGE BALANCES:              
Total Assets $ 15,298,655     $ 13,968,047     $ 14,830,397     $ 13,466,269  
Total Loans   9,076,652       9,240,304       9,170,650       9,051,155  
Total Earning Assets   14,053,310       12,663,803       13,579,113       12,123,317  
Total Deposits   12,647,737       11,283,040       12,176,231       10,728,106  
Total Stockholders’ Equity   1,890,229       1,856,896       1,866,632       1,825,135  
               
FINANCIAL RATIOS:              
Return on Average Assets   1.25 %     1.29 %     1.39 %     1.10 %
Return on Average Stockholders’ Equity   10.10       9.72       11.01       8.14  
Return on Average Common Stockholders’ Equity   10.10       9.72       11.01       8.14  
Average Earning Assets to Average Assets   91.86       90.66       91.56       90.03  
Allowance for Credit Losses – Loans as % of Total Loans   2.11       1.41       2.11       1.41  
Net Charge-offs as % of Average Loans (Annualized)   0.20       0.02       0.10       0.09  
Average Stockholders’ Equity to Average Assets   12.36       13.29       12.59       13.55  
Tax Equivalent Yield on Average Earning Assets   3.29       3.72       3.44       3.84  
Interest Expense/Average Earning Assets   0.25       0.34       0.26       0.55  
Net Interest Margin (FTE) on Average Earning Assets   3.04       3.38       3.18       3.29  
Efficiency Ratio   53.49       55.01       50.94       51.71  
Tangible Common Book Value Per Share $ 25.21     $ 24.27     $ 25.21     $ 24.27  
NON-PERFORMING ASSETS                  
(Dollars In Thousands) December 31,   September 30,   June 30,   March 31,   December 31,
    2021       2021       2021       2021       2020  
Non-Accrual Loans $ 43,062     $ 51,502     $ 57,556     $ 57,923     $ 61,471  
Renegotiated Loans   329       439       629       655       3,240  
Non-Performing Loans (NPL)   43,391       51,941       58,185       58,578       64,711  
Other Real Estate Owned and Repossessions   558       698       601       604       940  
Non-Performing Assets (NPA)   43,949       52,639       58,786       59,182       65,651  
90+ Days Delinquent   963       157       183       1,093       746  
NPAs & 90 Day Delinquent $ 44,912     $ 52,796     $ 58,969     $ 60,275     $ 66,397  
                   
Allowance for Credit Losses – Loans $ 195,397     $ 199,972     $ 199,775     $ 201,082     $ 130,648  
Quarterly Net Charge-offs   4,575       (197 )     1,307       3,621       560  
NPAs / Actual Assets %   0.28 %     0.35 %     0.39 %     0.40 %     0.47 %
NPAs & 90 Day / Actual Assets %   0.29 %     0.35 %     0.40 %     0.41 %     0.47 %
NPAs / Actual Loans and OREO %   0.47 %     0.58 %     0.64 %     0.63 %     0.71 %
Allowance for Credit Losses – Loans / Actual Loans (%)   2.11 %     2.21 %     2.19 %     2.16 %     1.41 %
Net Charge-offs as % of Average Loans (Annualized)   0.20 %     (0.01 )%     0.06 %     0.16 %     0.02 %
CONSOLIDATED BALANCE SHEETS                  
(Dollars In Thousands) December 31,   September 30,   June 30,   March 31,   December 31,
    2021       2021       2021       2021       2020  
ASSETS                  
Cash and cash equivalents $ 167,146     $ 169,261     $ 167,596     $ 187,901     $ 192,896  
Interest-bearing deposits   474,154       369,447       438,863       392,806       392,305  
Investment securities, net of allowance for credit losses   4,524,353       4,445,516       4,148,314       3,700,857       3,146,787  
Loans held for sale   11,187       5,990       18,582       4,430       3,966  
Loans   9,241,861       9,041,576       9,121,250       9,318,228       9,243,174  
     Less: Allowance for credit losses – loans   (195,397 )     (199,972 )     (199,775 )     (201,082 )     (130,648 )
          Net loans   9,046,464       8,841,604       8,921,475       9,117,146       9,112,526  
Premises and equipment   105,655       104,814       103,822       109,432       111,062  
Federal Home Loan Bank stock   28,736       28,736       28,736       28,736       28,736  
Interest receivable   57,187       53,079       54,173       54,662       53,948  
Goodwill and other intangibles   570,860       572,323       573,786       571,536       572,893  
Cash surrender value of life insurance   291,041       291,825       294,462       293,766       292,745  
Other real estate owned   558       698       601       604       940  
Tax asset, deferred and receivable   35,641       39,504       36,924       40,163       12,340  
Other assets   140,167       137,928       135,763       127,027       146,066  
     TOTAL ASSETS $ 15,453,149     $ 15,060,725     $ 14,923,097     $ 14,629,066     $ 14,067,210  
LIABILITIES                  
Deposits:                  
Noninterest-bearing $ 2,709,646     $ 2,554,323     $ 2,479,853     $ 2,494,891     $ 2,298,138  
Interest-bearing   10,022,931       9,794,366       9,723,547       9,456,889       9,063,472  
     Total Deposits   12,732,577       12,348,689       12,203,400       11,951,780       11,361,610  
Borrowings:                  
Securities sold under repurchase agreements   181,577       183,589       146,904       185,721       177,102  
Federal Home Loan Bank advances   334,055       334,149       334,243       359,337       389,430  
Subordinated debentures and other borrowings   118,618       118,558       118,498       118,439       118,380  
     Total Borrowings   634,250       636,296       599,645       663,497       684,912  
Interest payable   2,762       3,736       2,929       4,020       3,287  
Other liabilities   170,989       203,914       245,323       203,913       141,756  
     Total Liabilities   13,540,578       13,192,635       13,051,297       12,823,210       12,191,565  
STOCKHOLDERS’ EQUITY                  
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:                  
  Authorized — 600 shares                  
  Issued and outstanding   125       125       125       125       125  
Common Stock, $.125 stated value:                  
  Authorized — 100,000,000 shares                  
  Issued and outstanding   6,676       6,689       6,747       6,744       6,740  
Additional paid-in capital   985,818       988,659       1,009,182       1,007,300       1,005,366  
Retained earnings   864,839       832,728       795,666       755,877       788,578  
Accumulated other comprehensive income   55,113       39,889       60,080       35,810       74,836  
     Total Stockholders’ Equity   1,912,571       1,868,090       1,871,800       1,805,856       1,875,645  
     TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 15,453,149     $ 15,060,725     $ 14,923,097     $ 14,629,066     $ 14,067,210  
                   
CONSOLIDATED STATEMENTS OF INCOME                  
(Dollars In Thousands, Except Per Share Amounts) December 31,   September 30,   June 30,   March 31,   December 31,
    2021       2021       2021       2021       2020  
INTEREST INCOME                  
Loans receivable:                  
     Taxable $ 80,583     $ 85,319     $ 87,002     $ 85,105     $ 90,138  
     Tax-exempt   5,635       5,591       5,545       5,339       5,414  
Investment securities:                  
     Taxable   8,028       7,788       7,440       6,695       5,263  
     Tax-exempt   15,411       14,464       13,071       12,385       12,056  
Deposits with financial institutions   173       218       129       114       139  
Federal Home Loan Bank stock   163       168       88       178       214  
          Total Interest Income   109,993       113,548       113,275       109,816       113,224  
INTEREST EXPENSE                  
Deposits   5,589       5,707       5,823       6,200       7,509  
Federal funds purchased   1       —       2       2       2  
Securities sold under repurchase agreements   75       77       75       87       77  
Federal Home Loan Bank advances   1,389       1,389       1,452       1,442       1,656  
Subordinated debentures and other borrowings   1,666       1,660       1,659       1,657       1,669  
          Total Interest Expense   8,720       8,833       9,011       9,388       10,913  
NET INTEREST INCOME   101,273       104,715       104,264       100,428       102,311  
Provision for credit losses – loans   —       —       —       —       4,482  
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES   101,273       104,715       104,264       100,428       97,829  
OTHER INCOME                  
Service charges on deposit accounts   6,462       6,249       5,596       5,264       5,508  
Fiduciary and wealth management fees   7,078       7,352       7,510       6,422       6,251  
Card payment fees   3,937       4,156       4,159       4,367       3,502  
Net gains and fees on sales of loans   3,423       3,955       8,325       3,986       5,393  
Derivative hedge fees   1,562       1,028       943       317       2,281  
Other customer fees   361       393       368       368       394  
Earnings on cash surrender value of life insurance   2,051       2,468       1,205       1,336       1,283  
Net realized gains on sales of available for sale securities   358       1,756       1,761       1,799       2,398  
Other income   615       1,144       1,017       232       473  
          Total Other Income   25,847       28,501       30,884       24,091       27,483  
OTHER EXPENSES                  
Salaries and employee benefits   42,432       43,314       42,438       38,811       41,809  
Net occupancy   5,644       5,576       5,615       6,491       9,653  
Equipment   4,994       4,529       4,848       5,030       5,555  
Marketing   1,840       1,676       1,122       1,124       1,763  
Outside data processing fees   4,581       4,794       4,698       4,244       3,839  
Printing and office supplies   356       265       313       283       307  
Intangible asset amortization   1,463       1,463       1,464       1,357       1,476  
FDIC assessments   1,862       1,552       1,461       1,368       1,560  
Other real estate owned and foreclosure expenses   171       (91 )     178       734       (1,576 )
Professional and other outside services   3,627       2,767       2,976       2,543       2,836  
Other expenses   5,466       5,539       4,182       4,113       5,314  
          Total Other Expenses   72,436       71,384       69,295       66,098       72,536  
INCOME BEFORE INCOME TAX   54,684       61,832       65,853       58,421       52,776  
Income tax expense   6,951       9,062       10,294       8,952       7,641  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 47,733     $ 52,770     $ 55,559     $ 49,469     $ 45,135  
                   
Per Share Data:                  
Basic Net Income Available to Common Stockholders $ 0.89     $ 0.98     $ 1.03     $ 0.92     $ 0.83  
Diluted Net Income Available to Common Stockholders $ 0.89     $ 0.98     $ 1.03     $ 0.91     $ 0.83  
Cash Dividends Paid $ 0.29     $ 0.29     $ 0.29     $ 0.26     $ 0.26  
Average Diluted Shares Outstanding (in thousands)   53,660       53,960       54,184       54,134       54,050  
FINANCIAL RATIOS:                  
Return on Average Assets   1.25 %     1.41 %     1.51 %     1.39 %     1.29 %
Return on Average Stockholders’ Equity   10.10       11.17       12.04       10.75       9.72  
Return on Average Common Stockholders’ Equity   10.10       11.17       12.04       10.75       9.72  
Average Earning Assets to Average Assets   91.86       91.57       91.87       91.43       90.66  
Allowance for Credit Losses – Loans as % of Total Loans   2.11       2.21       2.19       2.16       1.41  
Net Charge-offs as % of Average Loans (Annualized)   0.20       (0.01 )     0.06       0.16       0.02  
Average Stockholders’ Equity to Average Assets   12.36       12.59       12.51       12.92       13.29  
Tax Equivalent Yield on Average Earning Assets   3.29       3.46       3.49       3.52       3.72  
Interest Expense/Average Earning Assets   0.25       0.26       0.27       0.29       0.34  
Net Interest Margin (FTE) on Average Earning Assets   3.04       3.20       3.22       3.23       3.38  
Efficiency Ratio   53.49       51.18       48.91       50.23       55.01  
Tangible Common Book Value Per Share $ 25.21     $ 24.31     $ 24.15     $ 22.98     $ 24.27  
LOANS                  
(Dollars In Thousands) December 31,   September 30,   June 30,   March 31,   December 31,
    2021       2021       2021       2021       2020  
Commercial and industrial loans $ 2,714,565     $ 2,573,615     $ 2,671,076     $ 2,876,212     $ 2,776,699  
Agricultural land, production and other loans to farmers   246,442       240,686       235,020       245,631       281,884  
Real estate loans:                  
Construction   523,066       521,889       491,200       541,224       484,723  
Commercial real estate, non-owner occupied   2,135,459       2,150,387       2,263,497       2,178,832       2,220,949  
Commercial real estate, owner occupied   986,720       952,441       953,501       950,038       958,501  
Residential   1,159,127       1,154,373       1,127,442       1,239,925       1,234,741  
Home equity   523,754       531,307       489,997       482,229       508,259  
Individuals’ loans for household and other personal expenditures   146,092       135,093       130,819       126,387       129,479  
Public finance and other commercial loans   806,636       781,785       758,698       677,750       647,939  
Loans   9,241,861       9,041,576       9,121,250       9,318,228       9,243,174  
Allowance for credit losses – loans   (195,397 )     (199,972 )     (199,775 )     (201,082 )     (130,648 )
     NET LOANS $ 9,046,464     $ 8,841,604     $ 8,921,475     $ 9,117,146     $ 9,112,526  
DEPOSITS                  
(Dollars In Thousands) December 31,   September 30,   June 30,   March 31,   December 31,
    2021     2021     2021     2021     2020
Demand deposits $ 7,704,190   $ 7,317,399   $ 7,261,603   $ 7,245,850   $ 6,821,152
Savings deposits   4,334,802     4,301,483     4,157,552     3,857,624     3,661,713
Certificates and other time deposits of $100,000 or more   273,379     283,396     304,394     332,745     346,194
Other certificates and time deposits   389,752     404,010     423,922     449,655     459,168
Brokered deposits   30,454     42,401     55,929     65,906     73,383
   TOTAL DEPOSITS $ 12,732,577   $ 12,348,689   $ 12,203,400   $ 11,951,780   $ 11,361,610
CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS            
(Dollars in Thousands)                      
  For the Three Months Ended
  December 31, 2023   December 31, 2020
  Average Balance   Interest
 Income /
Expense		   Average
Rate		   Average Balance   Interest
 Income /
Expense		   Average
Rate
Assets:                      
Interest-bearing deposits $ 558,677   $ 173   0.12 %   $ 437,766   $ 139   0.13 %
Federal Home Loan Bank stock   28,736     163   2.27       28,736     214   2.98  
Investment Securities: (1)                      
Taxable   1,936,519     8,028   1.66       1,222,916     5,263   1.72  
Tax-Exempt (2)   2,452,726     19,508   3.18       1,734,081     15,261   3.52  
     Total Investment Securities   4,389,245     27,536   2.51       2,956,997     20,524   2.78  
Loans held for sale   20,688     196   3.79       19,103     200   4.19  
Loans: (3)                      
Commercial   6,703,241     65,867   3.93       6,925,491     73,530   4.25  
Real Estate Mortgage   889,571     7,866   3.54       911,042     9,482   4.16  
Installment   711,309     6,654   3.74       698,619     6,925   3.96  
Tax-Exempt (2)   751,843     7,133   3.79       686,049     6,854   4.00  
     Total Loans   9,076,652     87,716   3.87       9,240,304     96,991   4.20  
     Total Earning Assets   14,053,310     115,588   3.29 %     12,663,803     117,868   3.72 %
     Total Non-Earning Assets   1,245,345             1,304,244        
     Total Assets $ 15,298,655           $ 13,968,047        
Liabilities:                      
Interest-bearing deposits:                      
Interest-bearing deposits $ 4,912,556   $ 3,637   0.30 %   $ 4,393,991   $ 3,888   0.35 %
Money market deposits   2,518,612     809   0.13       2,051,985     1,164   0.23  
Savings deposits   1,828,631     461   0.10       1,613,886     634   0.16  
Certificates and other time deposits   706,617     682   0.39       961,187     1,823   0.76  
     Total Interest-bearing Deposits   9,966,416     5,589   0.22       9,021,049     7,509   0.33  
Borrowings   620,398     3,131   2.02       683,068     3,404   1.99  
     Total Interest-bearing Liabilities   10,586,814     8,720   0.33       9,704,117     10,913   0.45  
Noninterest-bearing deposits   2,681,321             2,261,991        
Other liabilities   140,291             145,043        
     Total Liabilities   13,408,426             12,111,151        
Stockholders’ Equity   1,890,229             1,856,896        
Total Liabilities and Stockholders’ Equity $ 15,298,655     8,720       $ 13,968,047     10,913    
     Net Interest Income (FTE)     $ 106,868           $ 106,955    
     Net Interest Spread (FTE) (4)         2.96 %           3.27 %
                       
Net Interest Margin (FTE):                      
Interest Income (FTE) / Average Earning Assets         3.29 %           3.72 %
Interest Expense / Average Earning Assets         0.25 %           0.34 %
     Net Interest Margin (FTE) (5)         3.04 %           3.38 %
                       
(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 2020. These totals equal $5,595 and $4,644 for the three months ended December 31, 2023 and 2020, respectively.
(3) Non accruing loans have been included in the average balances.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.
CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS            
(Dollars in Thousands)                      
  For the Twelve Months Ended
  December 31, 2023   December 31, 2020
  Average Balance   Interest
 Income /
Expense		   Average
Rate		   Average Balance   Interest
 Income /
Expense		   Average
Rate
Assets:                      
Interest-bearing deposits $ 521,637   $ 634   0.12 %   $ 319,686   $ 938   0.29 %
Federal Home Loan Bank stock   28,736     597   2.08       28,736     1,042   3.63  
Investment Securities: (1)                      
Taxable   1,751,910     29,951   1.71       1,282,827     24,440   1.91  
Tax-Exempt (2)   2,106,180     70,039   3.33       1,440,913     53,596   3.72  
     Total Investment Securities   3,858,090     99,990   2.59       2,723,740     78,036   2.87  
Loans held for sale   19,190     747   3.89       18,559     781   4.21  
Loans: (3)                      
Commercial   6,818,968     276,368   4.05       6,755,215     286,773   4.25  
Real Estate Mortgage   916,314     34,783   3.80       889,083     40,002   4.50  
Installment   683,925     26,111   3.82       718,815     30,708   4.27  
Tax-Exempt (2)   732,253     27,987   3.82       669,483     27,194   4.06  
     Total Loans   9,170,650     365,996   3.99       9,051,155     385,458   4.26  
     Total Earning Assets   13,579,113     467,217   3.44 %     12,123,317     465,474   3.84 %
     Total Non-Earning Assets   1,251,284             1,342,952        
     Total Assets $ 14,830,397           $ 13,466,269        
Liabilities:                      
Interest-bearing deposits:                      
Interest-bearing deposits $ 4,769,482   $ 14,512   0.30 %   $ 4,009,566   $ 20,239   0.50 %
Money market deposits   2,351,803     3,203   0.14       1,769,478     7,810   0.44  
Savings deposits   1,754,972     1,886   0.11       1,534,069     3,641   0.24  
Certificates and other time deposits   783,733     3,718   0.47       1,346,967     20,050   1.49  
     Total Interest-bearing Deposits   9,659,990     23,319   0.24       8,660,080     51,740   0.60  
Borrowings   639,791     12,633   1.97       768,238     14,641   1.91  
     Total Interest-bearing Liabilities   10,299,781     35,952   0.35       9,428,318     66,381   0.70  
Noninterest-bearing deposits   2,516,241             2,068,026        
Other liabilities   147,743             144,790        
     Total Liabilities   12,963,765             11,641,134        
Stockholders’ Equity   1,866,632             1,825,135        
Total Liabilities and Stockholders’ Equity $ 14,830,397     35,952       $ 13,466,269     66,381    
     Net Interest Income (FTE)     $ 431,265           $ 399,093    
     Net Interest Spread (FTE) (4)         3.09 %           3.14 %
                       
Net Interest Margin (FTE):                      
Interest Income (FTE) / Average Earning Assets         3.44 %           3.84 %
Interest Expense / Average Earning Assets         0.26 %           0.55 %
     Net Interest Margin (FTE) (5)         3.18 %           3.29 %
                       
(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 2020. These totals equal $20,585 and $16,966 for the twelve months ended December 31, 2023 and 2020, 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.

 

First Merchants Corporation

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