FRME - First Merchants Corporation Announces First Quarter 2023 Earnings Per Share

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 stockholders ¹ for the first quarter was $63.6 million and adjusted diluted earnings per common share ¹ 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.