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home / news releases / FRME - First Merchants Corporation Announces Second Quarter 2023 Earnings Per Share

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

First Merchants Corporation

First Merchants Corporation (NASDAQ - FRME)

Second Quarter 2023 Highlights:

  • Net income available to common stockholders was $60.4 million and diluted earnings per common share totaled $1.02, compared to $38.5 million and $.63 in the second quarter of 2022, and $63.6 million and $1.07 in the first quarter of 2023.
  • Adjusted net income 1 was $60.4 million and adjusted diluted earnings per share 1 totaled $1.02, compared to $60.0 million and $1.01 in the second quarter of 2022, and $63.6 million and $1.07 in the first quarter of 2023.
  • Strong capital position with Common Equity Tier 1 Capital Ratio of 11.07 percent
  • Total loans grew $46.7 million, or 1.5 percent annualized on a linked quarter basis, and $163.2 million, or 5.4 percent annualized when excluding non-relationship based commercial loan sales that occurred during the quarter of $116.6 million.
  • Total deposits declined $122.1 million, or 3.3 percent annualized on a linked quarter basis
  • Nonaccrual loans totaled $69.2 million compared to $46.6 million on a linked quarter basis
  • The efficiency ratio totaled 52.21 percent for the quarter

MUNCIE, Ind., July 25, 2023 (GLOBE NEWSWIRE) -- Mark Hardwick, Chief Executive Officer, stated, “We are pleased to report our second quarter 2023 results. Performance remains healthy and strong and our teams continue to meet the demands of our communities and client base.”

Second Quarter Financial Results:

First Merchants Corporation (the “Corporation) has reported second quarter 2023 net income available to common stockholders of $60.4 million compared to $38.5 million during the same period in 2022. Diluted earnings per common share for the period totaled $1.02 per share compared to the second quarter of 2022 result of $.63 per share. Prior year results included acquisition costs related to the acquisition of Level One of $29.3 million resulting in a reduction of $.38 of diluted earnings per common share.

Total assets equaled $18.0 billion as of quarter-end and loans totaled $12.3 billion. During the past twelve months, total loans grew by $1.0 billion, or 9.2 percent and were offset by the non-relationship based commercial loan sale of $116.6 million and PPP loan forgiveness of $29.6 million. On a linked quarter basis, loans grew $163.2 million, or 5.4 percent, when excluding the loan sale that occurred during the quarter of $116.6 million.

Investments, totaling $3.9 billion, decreased $738.5 million, or 16.0 percent, during the last twelve months and decreased $165.9 million, or 16.4 percent annualized on a linked quarter basis. The decline during the quarter was primarily due to $101.0 million of bond sales.

Total deposits equaled $14.6 billion as of quarter-end and increased by $10.3 million over the past twelve months. Total deposits declined $122.1 million, or 3.3 percent annualized on a linked quarter basis. The loan to deposit ratio for the current quarter ended at 84.3 percent.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $221.1 million as of quarter-end, or 1.80 percent of total loans, a decrease of $5.1 million from prior year. Loan charge-offs, net of recoveries, for the quarter totaled $1.9 million. No provision expense was recorded during the quarter or during the last twelve months. Non-performing assets to total assets were 0.43 percent for the second quarter of 2023, an increase of 13 basis points compared to 0.30 percent in the second quarter of 2022.

Net-interest income, totaling $137.8 million for the quarter, declined $6.3 million, or 4.4 percent, compared to prior quarter and increased $9.2 million, or 7.1 percent compared to the second quarter of 2022. Stated net-interest margin on a tax equivalent basis, totaling 3.39 percent, declined by 19 basis points compared to the first quarter of 2023 but increased 11 basis points compared to the second quarter of 2022. Net-interest margin, excluding the impact of fair value accretion and PPP loans, totaled 3.34 percent, a decrease of 18 basis points compared to 3.52 percent for the first quarter of 2023 but an increase of 15 basis points from the second quarter of 2022. During the quarter, increased deposit costs and mix offset the increase in earning asset yields reducing net-interest margin.

Non-interest income, totaling $26.3 million for the quarter, increased $1.3 million or 5.3 percent compared to the first quarter of 2023 but decreased $2.0 million from the second quarter of 2022. The increase over first quarter of 2023 was driven primarily by higher gains on the sales of loans and BOLI death benefit gains.

Non-interest expense totaled $92.6 million for the quarter, a decline of $1.1 million from the first quarter of 2023. The decrease was from lower salaries and employee benefits, partially offset by increases in FDIC assessments and other real estate owned and foreclosure expense.

The Corporation’s total risk-based capital ratio equaled 13.48 percent, common equity tier 1 capital ratio equaled 11.07 percent, and the tangible common equity ratio totaled 7.99 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 second quarter earnings conference call and web cast at 11:30 a.m. (ET) on Tuesday, July 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/BIc7becea7282048a2b5559e10b25ca4af)

In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/athyqu7i) during the time of the call. A replay of the webcast will be available until July 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)
June 30,
2023
2022
ASSETS
Cash and due from banks
$
108,975
$
212,559
Interest-bearing deposits
219,480
136,702
Investment securities, net of allowance for credit losses of $245,000 and $245,000
3,891,491
4,630,030
Loans held for sale
27,297
9,060
Loans
12,270,233
11,397,417
Less: Allowance for credit losses - loans
(221,147
)
(226,275
)
Net loans
12,049,086
11,171,142
Premises and equipment
114,402
117,757
Federal Home Loan Bank stock
41,842
38,111
Interest receivable
89,784
68,728
Goodwill and other intangibles
743,465
753,649
Cash surrender value of life insurance
307,020
323,013
Other real estate owned
7,685
6,521
Tax asset, deferred and receivable
113,724
114,965
Other assets
254,161
198,255
TOTAL ASSETS
$
17,968,412
$
17,780,492
LIABILITIES
Deposits:
Noninterest-bearing
$
2,636,017
$
3,435,331
Interest-bearing
11,945,138
11,135,538
Total Deposits
14,581,155
14,570,869
Borrowings:
Federal funds purchased
—
100,000
Securities sold under repurchase agreements
152,472
186,468
Federal Home Loan Bank advances
723,480
598,865
Subordinated debentures and other borrowings
151,325
151,299
Total Borrowings
1,027,277
1,036,632
Interest payable
13,595
2,978
Other liabilities
200,820
192,372
Total Liabilities
15,822,847
15,802,851
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 - 59,297,148 and 59,059,866 shares
7,412
7,383
Additional paid-in capital
1,233,593
1,226,378
Retained earnings
1,097,399
917,311
Accumulated other comprehensive loss
(217,964
)
(198,556
)
Total Stockholders' Equity
2,145,565
1,977,641
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
17,968,412
$
17,780,492


CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
Six Months Ended
(Dollars In Thousands, Except Per Share Amounts)
June 30,
June 30,
2023
2022
2023
2022
INTEREST INCOME
Loans receivable:
Taxable
$
186,256
$
106,787
$
358,609
$
185,862
Tax-exempt
7,760
5,990
15,469
11,694
Investment securities:
Taxable
8,886
10,372
17,973
18,882
Tax-exempt
14,279
17,212
30,349
33,087
Deposits with financial institutions
3,164
610
3,801
840
Federal Home Loan Bank stock
1,020
175
1,562
321
Total Interest Income
221,365
141,146
427,763
250,686
INTEREST EXPENSE
Deposits
73,201
8,485
123,886
12,779
Federal funds purchased
123
76
1,420
76
Securities sold under repurchase agreements
979
134
1,827
223
Federal Home Loan Bank advances
6,815
1,774
13,879
2,992
Subordinated debentures and other borrowings
2,412
2,016
4,797
3,675
Total Interest Expense
83,530
12,485
145,809
19,745
NET INTEREST INCOME
137,835
128,661
281,954
230,941
Provision for credit losses - loans
—
16,755
—
16,755
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
137,835
111,906
281,954
214,186
NON-INTEREST INCOME
Service charges on deposit accounts
7,813
7,690
15,172
14,109
Fiduciary and wealth management fees
7,397
7,634
15,259
14,966
Card payment fees
4,537
5,175
9,709
10,898
Net gains and fees on sales of loans
3,632
3,226
6,031
5,425
Derivative hedge fees
672
1,444
1,820
2,362
Other customer fees
742
662
1,259
1,072
Earnings on cash surrender value of life insurance
2,096
1,308
3,384
3,004
Net realized gains (losses) on sales of available for sale securities
(1,392
)
90
(2,963
)
656
Other income
822
1,048
1,645
1,682
Total Non-Interest Income
26,319
28,277
51,316
54,174
NON-INTEREST EXPENSES
Salaries and employee benefits
54,753
56,041
112,212
98,560
Net occupancy
6,674
6,648
13,933
12,835
Equipment
6,181
6,720
12,307
11,800
Marketing
1,102
1,414
2,411
2,150
Outside data processing fees
6,604
4,881
12,717
9,244
Printing and office supplies
434
381
817
726
Intangible asset amortization
2,182
2,303
4,379
3,669
FDIC assessments
2,740
2,924
4,136
5,116
Other real estate owned and foreclosure expenses
916
(266
)
898
298
Professional and other outside services
4,660
10,267
8,358
13,220
Other expenses
6,347
6,000
14,145
12,020
Total Non-Interest Expenses
92,593
97,313
186,313
169,638
INCOME BEFORE INCOME TAX
71,561
42,870
146,957
98,722
Income tax expense
10,699
3,879
22,016
11,145
NET INCOME
60,862
38,991
124,941
87,577
Preferred stock dividends
469
469
938
469
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
60,393
$
38,522
$
124,003
$
87,108
Per Share Data:
Basic Net Income Available to Common Stockholders
$
1.02
$
0.64
$
2.09
$
1.55
Diluted Net Income Available to Common Stockholders
$
1.02
$
0.63
$
2.09
$
1.54
Cash Dividends Paid to Common Stockholders
$
0.34
$
0.32
$
0.66
$
0.61
Average Diluted Common Shares Outstanding (in thousands)
59,448
59,308
59,446
56,516


FINANCIAL HIGHLIGHTS
(Dollars in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
NET CHARGE-OFFS (RECOVERIES)
$
1,905
$
263
$
2,130
$
(324
)
AVERAGE BALANCES:
Total Assets
$
18,170,649
$
17,778,221
$
18,096,832
$
16,627,804
Total Loans
12,369,673
11,175,188
12,253,176
10,220,860
Total Earning Assets
16,968,465
16,435,747
16,896,834
15,355,265
Total Deposits
14,719,913
14,809,528
14,572,480
13,819,111
Total Stockholders' Equity
2,139,877
2,021,123
2,111,658
1,956,532
FINANCIAL RATIOS:
Return on Average Assets
1.34
%
0.88
%
1.38
%
1.05
%
Return on Average Stockholders' Equity
11.29
7.62
11.74
8.90
Return on Tangible Common Stockholders' Equity
18.04
12.91
18.91
13.98
Average Earning Assets to Average Assets
93.38
92.45
93.37
92.35
Allowance for Credit Losses - Loans as % of Total Loans
1.80
1.98
1.80
1.98
Net Charge-offs as % of Average Loans (Annualized)
0.06
0.01
0.03
(0.01
)
Average Stockholders' Equity to Average Assets
11.78
11.37
11.67
11.77
Tax Equivalent Yield on Average Earning Assets
5.36
3.58
5.21
3.42
Interest Expense/Average Earning Assets
1.97
0.30
1.73
0.26
Net Interest Margin (FTE) on Average Earning Assets
3.39
3.28
3.48
3.16
Efficiency Ratio
52.21
58.45
51.96
55.90
Tangible Common Book Value Per Share
$
23.34
$
20.45
$
23.34
$
20.45


NON-PERFORMING ASSETS
(Dollars In Thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2023
2023
2022
2022
2022
Non-Accrual Loans
$
69,240
$
46,576
$
42,324
$
43,508
$
45,970
Troubled Debt Restructures (TDR)
—
—
224
195
233
Non-Performing Loans (NPL)
69,240
46,576
42,548
43,703
46,203
Other Real Estate Owned and Repossessions
7,685
7,777
6,431
6,454
6,521
Non-Performing Assets (NPA)
76,925
54,353
48,979
50,157
52,724
90+ Days Delinquent
428
7,032
1,737
764
592
NPAs & 90 Day Delinquent
$
77,353
$
61,385
$
50,716
$
50,921
$
53,316
Allowance for Credit Losses - Loans
$
221,147
$
223,052
$
223,277
$
226,702
$
226,275
Quarterly Net Charge-offs (Recoveries)
1,905
225
2,674
(427
)
263
NPAs / Actual Assets %
0.43
%
0.30
%
0.27
%
0.28
%
0.30
%
NPAs & 90 Day / Actual Assets %
0.43
%
0.34
%
0.28
%
0.29
%
0.30
%
NPAs / Actual Loans and OREO %
0.63
%
0.44
%
0.41
%
0.43
%
0.46
%
Allowance for Credit Losses - Loans / Actual Loans (%)
1.80
%
1.82
%
1.86
%
1.94
%
1.98
%
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)
0.06
%
0.01
%
0.12
%
(0.01)        %
0.01
%


CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2023
2023
2022
2022
2022
ASSETS
Cash and due from banks
$
108,975
$
125,818
$
122,594
$
119,532
$
212,559
Interest-bearing deposits
219,480
352,695
126,061
179,593
136,702
Investment securities, net of allowance for credit losses
3,891,491
4,057,389
4,263,788
4,294,768
4,630,030
Loans held for sale
27,297
9,408
9,094
25,394
9,060
Loans
12,270,233
12,241,461
12,003,894
11,650,002
11,397,417
Less: Allowance for credit losses - loans
(221,147
)
(223,052
)
(223,277
)
(226,702
)
(226,275
)
Net loans
12,049,086
12,018,409
11,780,617
11,423,300
11,171,142
Premises and equipment
114,402
115,857
117,118
116,306
117,757
Federal Home Loan Bank stock
41,842
41,878
38,525
38,056
38,111
Interest receivable
89,784
85,515
85,070
71,605
68,728
Goodwill and other intangibles
743,465
745,647
747,844
750,713
753,649
Cash surrender value of life insurance
307,020
309,090
308,311
306,932
323,013
Other real estate owned
7,685
7,777
6,431
6,454
6,521
Tax asset, deferred and receivable
113,724
103,070
111,222
142,110
114,965
Other assets
254,161
206,355
221,631
244,222
198,255
TOTAL ASSETS
$
17,968,412
$
18,178,908
$
17,938,306
$
17,718,985
$
17,780,492
LIABILITIES
Deposits:
Noninterest-bearing
$
2,636,017
$
2,964,355
$
3,173,417
$
3,356,651
$
3,435,331
Interest-bearing
11,945,138
11,738,932
11,209,328
11,078,174
11,135,538
Total Deposits
14,581,155
14,703,287
14,382,745
14,434,825
14,570,869
Borrowings:
Federal funds purchased
—
20
171,560
185,000
100,000
Securities sold under repurchase agreements
152,472
179,067
167,413
194,482
186,468
Federal Home Loan Bank advances
723,480
823,577
823,674
643,769
598,865
Subordinated debentures and other borrowings
151,325
151,312
151,298
151,301
151,299
Total Borrowings
1,027,277
1,153,976
1,313,945
1,174,552
1,036,632
Interest payable
13,595
11,979
7,530
4,971
2,978
Other liabilities
200,820
187,218
199,316
197,971
192,372
Total Liabilities
15,822,847
16,056,460
15,903,536
15,812,319
15,802,851
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
7,412
7,407
7,396
7,393
7,383
Additional paid-in capital
1,233,593
1,231,532
1,228,626
1,226,695
1,226,378
Retained earnings
1,097,399
1,057,298
1,012,774
961,542
917,311
Accumulated other comprehensive loss
(217,964
)
(198,914
)
(239,151
)
(314,089
)
(198,556
)
Total Stockholders' Equity
2,145,565
2,122,448
2,034,770
1,906,666
1,977,641
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
17,968,412
$
18,178,908
$
17,938,306
$
17,718,985
$
17,780,492


CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)
June 30,
March 31,
December 31,
September 30,
June 30,
2023
2023
2022
2022
2022
INTEREST INCOME
Loans receivable:
Taxable
$
186,256
$
172,353
$
156,102
$
128,504
$
106,787
Tax-exempt
7,760
7,709
6,930
6,500
5,990
Investment securities:
Taxable
8,886
9,087
9,417
10,055
10,372
Tax-exempt
14,279
16,070
17,033
17,261
17,212
Deposits with financial institutions
3,164
637
959
704
610
Federal Home Loan Bank stock
1,020
542
541
314
175
Total Interest Income
221,365
206,398
190,982
163,338
141,146
INTEREST EXPENSE
Deposits
73,201
50,685
33,516
16,644
8,485
Federal funds purchased
123
1,297
808
418
76
Securities sold under repurchase agreements
979
848
541
372
134
Federal Home Loan Bank advances
6,815
7,064
4,932
3,493
1,774
Subordinated debentures and other borrowings
2,412
2,385
2,229
2,105
2,016
Total Interest Expense
83,530
62,279
42,026
23,032
12,485
NET INTEREST INCOME
137,835
144,119
148,956
140,306
128,661
Provision for credit losses - loans
—
—
—
—
16,755
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
137,835
144,119
148,956
140,306
111,906
NON-INTEREST INCOME
Service charges on deposit accounts
7,813
7,359
7,097
7,165
7,690
Fiduciary and wealth management fees
7,397
7,862
7,501
7,221
7,634
Card payment fees
4,537
5,172
4,533
4,776
5,175
Net gains and fees on sales of loans
3,632
2,399
2,087
2,543
3,226
Derivative hedge fees
672
1,148
326
700
1,444
Other customer fees
742
517
362
501
662
Earnings on cash surrender value of life insurance
2,096
1,288
1,515
6,655
1,308
Net realized gains (losses) on sales of available for sale securities
(1,392
)
(1,571
)
57
481
90
Other income (loss)
822
823
672
(425
)
1,048
Total Non-Interest Income
26,319
24,997
24,150
29,617
28,277
NON-INTEREST EXPENSES
Salaries and employee benefits
54,753
57,459
52,331
56,002
56,041
Net occupancy
6,674
7,259
6,638
6,738
6,648
Equipment
6,181
6,126
6,148
5,997
6,720
Marketing
1,102
1,309
3,157
2,401
1,414
Outside data processing fees
6,604
6,113
5,611
6,827
4,881
Printing and office supplies
434
383
390
472
381
Intangible asset amortization
2,182
2,197
2,303
2,303
2,303
FDIC assessments
2,740
1,396
2,295
2,824
2,924
Other real estate owned and foreclosure expenses
916
(18
)
197
328
(266
)
Professional and other outside services
4,660
3,698
3,961
4,461
10,267
Other expenses
6,347
7,798
6,668
8,025
6,000
Total Non-Interest Expenses
92,593
93,720
89,699
96,378
97,313
INCOME BEFORE INCOME TAX
71,561
75,396
83,407
73,545
42,870
Income tax expense
10,699
11,317
12,647
9,793
3,879
NET INCOME
60,862
64,079
70,760
63,752
38,991
Preferred stock dividends
469
469
468
469
469
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
60,393
$
63,610
$
70,292
$
63,283
$
38,522
Per Share Data:
Basic Net Income Available to Common Stockholders
$
1.02
$
1.07
$
1.20
$
1.08
$
0.64
Diluted Net Income Available to Common Stockholders
$
1.02
$
1.07
$
1.19
$
1.08
$
0.63
Cash Dividends Paid to Common Stockholders
$
0.34
$
0.32
$
0.32
$
0.32
$
0.32
Average Diluted Common Shares Outstanding (in thousands)
59,448
59,441
59,384
59,339
59,308
FINANCIAL RATIOS:
Return on Average Assets
1.34
%
1.42
%
1.59
%
1.43
%
0.88
%
Return on Average Stockholders' Equity
11.29
12.21
14.36
12.54
7.62
Return on Tangible Common Stockholders' Equity
18.04
19.82
24.21
20.85
12.91
Average Earning Assets to Average Assets
93.38
93.35
93.66
92.90
92.45
Allowance for Credit Losses - Loans as % of Total Loans
1.80
1.82
1.86
1.94
1.98
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)
0.06
0.01
0.12
(0.01
)
0.01
Average Stockholders' Equity to Average Assets
11.78
11.56
10.98
11.36
11.37
Tax Equivalent Yield on Average Earning Assets
5.36
5.06
4.73
4.11
3.58
Interest Expense/Average Earning Assets
1.97
1.48
1.01
0.56
0.30
Net Interest Margin (FTE) on Average Earning Assets
3.39
3.58
3.72
3.55
3.28
Efficiency Ratio
52.21
51.72
48.60
53.34
58.45
Tangible Common Book Value Per Share
$
23.34
$
22.93
$
21.45
$
19.26
$
20.45


LOANS
(Dollars In Thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2023
2023
2022
2022
2022
Commercial and industrial loans
$
3,531,395
$
3,502,204
$
3,437,126
$
3,330,529
$
3,297,477
Agricultural land, production and other loans to farmers
230,003
219,598
241,793
221,954
214,904
Real estate loans:
Construction
949,918
960,979
835,582
828,923
745,983
Commercial real estate, non-owner occupied
2,379,819
2,375,410
2,407,475
2,299,272
2,423,185
Commercial real estate, owner occupied
1,179,739
1,244,117
1,246,528
1,268,567
1,264,563
Residential
2,248,473
2,185,943
2,096,655
1,990,668
1,813,297
Home equity
614,366
621,354
630,632
621,619
586,108
Individuals' loans for household and other personal expenditures
172,896
172,389
175,211
173,225
157,264
Public finance and other commercial loans
963,624
959,467
932,892
915,245
894,636
Loans
12,270,233
12,241,461
12,003,894
11,650,002
11,397,417
Allowance for credit losses - loans
(221,147
)
(223,052
)
(223,277
)
(226,702
)
(226,275
)
NET LOANS
$
12,049,086
$
12,018,409
$
11,780,617
$
11,423,300
$
11,171,142


DEPOSITS
(Dollars In Thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2023
2023
2022
2022
2022
Demand deposits
$
8,045,455
$
8,422,387
$
8,448,797
$
8,534,950
$
8,785,889
Savings deposits
4,530,255
4,499,487
4,657,140
5,054,490
4,875,880
Certificates and other time deposits of $100,000 or more
1,160,303
1,040,379
742,539
443,588
436,942
Other certificates and time deposits
680,965
574,886
468,712
381,365
446,973
Brokered certificates of deposits
164,177
166,148
65,557
20,432
25,185
TOTAL DEPOSITS
$
14,581,155
$
14,703,287
$
14,382,745
$
14,434,825
$
14,570,869


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
For the Three Months Ended
June 30, 2023
June 30, 2022
Average Balance
Interest
Income /
Expense
Average
Rate
Average Balance
Interest
Income /
Expense
Average
Rate
ASSETS
Interest-bearing deposits
$
343,253
$
3,164
3.69
%
$
329,626
$
610
0.74
%
Federal Home Loan Bank stock
41,873
1,020
9.74
38,111
175
1.84
Investment Securities: (1)
Taxable
1,876,676
8,886
1.89
2,189,193
10,372
1.90
Tax-exempt (2)
2,336,990
18,075
3.09
2,703,629
21,788
3.22
Total Investment Securities
4,213,666
26,961
2.56
4,892,822
32,160
2.63
Loans held for sale
19,328
300
6.21
28,491
315
4.42
Loans: (3)
Commercial
8,605,339
150,766
7.01
8,134,050
85,867
4.22
Real estate mortgage
2,031,136
20,345
4.01
1,458,317
12,657
3.47
Installment
831,775
14,844
7.14
772,610
7,948
4.11
Tax-exempt (2)
882,095
9,823
4.45
781,720
7,582
3.88
Total Loans
12,369,673
196,078
6.34
11,175,188
114,369
4.09
Total Earning Assets
16,968,465
227,223
5.36
%
16,435,747
147,314
3.58
%
Total Non-Earning Assets
1,202,184
1,342,474
TOTAL ASSETS
$
18,170,649
$
17,778,221
LIABILITIES
Interest-Bearing Deposits:
Interest-bearing deposits
$
5,546,232
$
34,574
2.49
%
$
5,372,474
$
4,569
0.34
%
Money market deposits
2,766,876
18,684
2.70
3,024,560
2,130
0.28
Savings deposits
1,724,816
3,884
0.90
1,966,054
916
0.19
Certificates and other time deposits
1,883,998
16,059
3.41
948,799
870
0.37
Total Interest-Bearing Deposits
11,921,922
73,201
2.46
11,311,887
8,485
0.30
Borrowings
1,110,486
10,329
3.72
818,851
4,000
1.95
Total Interest-Bearing Liabilities
13,032,408
83,530
2.56
12,130,738
12,485
0.41
Noninterest-bearing deposits
2,797,991
3,497,641
Other liabilities
200,373
128,719
Total Liabilities
16,030,772
15,757,098
STOCKHOLDERS' EQUITY
2,139,877
2,021,123
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
18,170,649
83,530
$
17,778,221
12,485
Net Interest Income (FTE)
$
143,693
$
134,829
Net Interest Spread (FTE) (4)
2.80
%
3.17
%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets
5.36
%
3.58
%
Interest Expense / Average Earning Assets
1.97
%
0.30
%
Net Interest Margin (FTE) (5)
3.39
%
3.28
%
(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 $5,858 and $6,168 for the three months ended June 30, 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.


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
For the Six Months Ended
June 30, 2023
June 30, 2022
Average
Balance
Interest
Income /
Expense
Average
Rate
Average
Balance
Interest
Income /
Expense
Average
Rate
Assets:
Interest-bearing deposits
$
258,504
$
3,801
2.94
%
$
406,698
$
840
0.41
%
Federal Home Loan Bank stock
40,821
1,562
7.65
33,040
321
1.94
Investment Securities: (1)
Taxable
1,900,247
17,973
1.89
2,074,074
18,882
1.82
Tax-exempt (2)
2,444,086
38,416
3.14
2,620,593
41,882
3.20
Total Investment Securities
4,344,333
56,389
2.60
4,694,667
60,764
2.59
Loans held for sale
21,952
660
6.01
18,181
355
3.91
Loans: (3)
Commercial
8,544,945
290,428
6.80
7,504,740
150,545
4.01
Real estate mortgage
1,972,680
38,736
3.93
1,191,075
20,497
3.44
Installment
836,088
28,785
6.89
741,994
14,465
3.90
Tax-exempt (2)
877,511
19,581
4.46
764,870
14,803
3.87
Total Loans
12,253,176
378,190
6.17
10,220,860
200,665
3.93
Total Earning Assets
16,896,834
439,942
5.21
%
15,355,265
262,590
3.42
%
Total Non-Earning Assets
1,199,998
1,272,539
Total Assets
$
18,096,832
$
16,627,804
Liabilities:
Interest-Bearing deposits:
Interest-bearing deposits
$
5,405,696
$
59,237
2.19
%
$
5,200,923
$
6,977
0.27
%
Money market deposits
2,756,519
32,261
2.34
2,770,904
3,002
0.22
Savings deposits
1,775,233
6,849
0.77
1,917,005
1,357
0.14
Certificates and other time deposits
1,676,291
25,539
3.05
813,482
1,443
0.35
Total Interest-Bearing Deposits
11,613,739
123,886
2.13
10,702,314
12,779
0.24
Borrowings
1,201,392
21,923
3.65
718,270
6,966
1.94
Total Interest-Bearing Liabilities
12,815,131
145,809
2.28
11,420,584
19,745
0.35
Noninterest-bearing deposits
2,958,741
3,116,797
Other liabilities
211,302
133,891
Total Liabilities
15,985,174
14,671,272
Stockholders' Equity
2,111,658
1,956,532
Total Liabilities and Stockholders' Equity
$
18,096,832
145,809
$
16,627,804
19,745
Net Interest Income (FTE)
$
294,133
$
242,845
Net Interest Spread (FTE) (4)
2.93
%
3.07
%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets
5.21
%
3.42
%
Interest Expense / Average Earning Assets
1.73
%
0.26
%
Net Interest Margin (FTE) (5)
3.48
%
3.16
%
(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 $12,179 and $11,904 for the six months ended June 30, 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
Six Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
June 30,
June 30,
2023
2023
2022
2022
2022
2023
2022
Net Income Available to Common Stockholders - GAAP
$
60,393
$
63,610
$
70,292
$
63,283
$
38,522
$
124,003
$
87,108
Adjustments:
PPP loan income
(9
)
(25
)
(109
)
(323
)
(891
)
(34
)
(2,775
)
Acquisition-related expenses
—
—
413
3,417
12,549
—
12,701
Acquisition-related provision expense
—
—
—
—
16,755
—
16,755
Tax on adjustment
2
6
(75
)
(759
)
(6,967
)
8
(6,542
)
Adjusted Net Income Available to Common Stockholders - Non-GAAP
$
60,386
$
63,591
$
70,521
$
65,618
$
59,968
$
123,977
$
107,247
Average Diluted Common Shares Outstanding (in thousands)
59,448
59,441
59,384
59,339
59,308
59,446
56,516
Diluted Earnings Per Common Share - GAAP
$
1.02
$
1.07
$
1.19
$
1.08
$
0.63
$
2.09
$
1.54
Adjustments:
PPP loan income
—
—
(0.01
)
—
(0.01
)
—
(0.05
)
Acquisition-related expenses
—
—
0.01
0.05
0.22
—
0.22
Acquisition-related provision expense
—
—
—
—
0.30
—
0.30
Tax on adjustment
—
—
—
(0.01
)
(0.13
)
—
(0.12
)
Adjusted Diluted Earnings Per Common Share - Non-GAAP
$
1.02
$
1.07
$
1.19
$
1.12
$
1.01
$
2.09
$
1.89


RETURN ON TANGIBLE COMMON EQUITY - NON-GAAP
(Dollars In Thousands)
Three Months Ended
Six Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
June 30,
June 30,
2023
2023
2022
2022
2022
2023
2022
Total Average Stockholders' Equity (GAAP)
$
2,139,877
$
2,083,125
$
1,958,041
$
2,018,156
$
2,021,123
$
2,111,658
$
1,956,532
Less: Average Preferred Stock
(25,125
)
(25,125
)
(25,125
)
(25,125
)
(25,125
)
(25,125
)
(12,625
)
Less: Average Intangible Assets, Net of Tax
(737,489
)
(739,190
)
(741,632
)
(744,069
)
(745,614
)
(738,334
)
(656,042
)
Average Tangible Common Equity, Net of Tax (Non-GAAP)
$
1,377,263
$
1,318,810
$
1,191,284
$
1,248,962
$
1,250,384
$
1,348,199
$
1,287,865
Net Income Available to Common Stockholders (GAAP)
$
60,393
$
63,610
$
70,292
$
63,283
$
38,521
$
124,003
$
87,108
Plus: Intangible Asset Amortization, Net of Tax
1,724
1,734
1,819
1,819
1,820
3,458
2,898
Tangible Net Income (Non-GAAP)
$
62,117
$
65,344
$
72,111
$
65,102
$
40,341
$
127,461
$
90,006
Return on Tangible Common Equity (Non-GAAP)
18.04
%
19.82
%
24.21
%
20.85
%
12.91
%
18.91
%
13.98
%

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


Stock Information
Company Name: First Merchants Corporation
Stock Symbol: FRME
Market: NASDAQ
Website: firstmerchants.com
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