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

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

First Merchants Corporation

MUNCIE, Ind., Oct. 26, 2023 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)

Third Quarter 2023 Highlights:

  • Net income available to common stockholders was $55.9 million and diluted earnings per common share totaled $0.94, compared to $63.3 million and $1.08 in the third quarter of 2022, and $60.4 million and $1.02 in the second quarter of 2023.
  • Strong capital position with Common Equity Tier 1 Capital Ratio of 11.26 percent.
  • Total loans grew $4.9 million, or 0.2 percent annualized on a linked quarter basis, and $743.6 million, or 6.4 percent during the last twelve months when excluding the impact of non-relationship based commercial loan sales that occurred during the prior quarter of $116.6 million.
  • Total deposits increased $65.4 million, or 1.8 percent annualized on a linked quarter basis, and $211.8 million, or 1.5 percent during the last twelve months.
  • Nonaccrual loans totaled $53.1 million compared to $69.2 million on a linked quarter basis.
  • The efficiency ratio totaled 53.91 percent for the quarter.

Mark Hardwick, Chief Executive Officer, stated, “First Merchants continued to deliver top quartile operating returns while tactically managing the inflationary interest rate environment. Our teams are focused on meeting the demands of our customer base while planning for continued 2024 growth and performance.”

Third Quarter Financial Results:

First Merchants Corporation (the “Corporation”) has reported third quarter 2023 net income available to common stockholders of $55.9 million compared to $63.3 million during the same period in 2022. Diluted earnings per common share for the period totaled $0.94 per share compared to the third quarter of 2022 result of $1.08 per 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 $743.6 million, or 6.4 percent and were offset by the non-relationship based commercial loan sale of $116.6 million. On a linked quarter basis, loans grew $4.9 million, or 0.2 percent.

Investments, totaling $3.7 billion, decreased $581.0 million, or 13.5 percent, during the last twelve months and decreased $177.8 million, or 18.3 percent annualized on a linked quarter basis. The decline during the quarter was due to $33.2 million of bond sales, $38.2 million of security paydowns and maturities, and the remainder was due to a decline in valuation of available for sale securities.

Total deposits equaled $14.6 billion as of quarter-end and increased by $211.8 million, or 1.5 percent, over the past twelve months. Total deposits increased $65.4 million, or 1.8 percent annualized on a linked quarter basis. During the quarter, commercial and consumer deposits increased $327.8 million which was offset by a reduction in brokered deposits of $133.6 million and municipal deposits of $128.8 million due to seasonality. The loan to deposit ratio declined slightly to 84.0 percent at period end from 84.3 percent in the prior quarter.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $205.8 million as of quarter-end, or 1.67 percent of total loans, a decrease of $15.4 million from prior quarter. Loan charge-offs, net of recoveries, for the quarter totaled $20.4 million primarily due to the charge-off of a previously reported nonaccrual loan to a syndicated specialty finance company resulting from an apparent fraud that impacted our borrower's ability to repay. Net charge-offs were offset with provision expense for loans recorded during the quarter of $5.0 million. Reserves for unfunded commitments were reduced by $3.0 million during the quarter and now total $20.3 million. Net provision expense for the quarter totaled $2.0 million. Nonperforming assets to total assets were 0.33 percent for the third quarter of 2023, a decrease of 10 basis points compared to 0.43 percent in the prior quarter.

Net interest income, totaling $133.4 million for the quarter, declined $4.5 million, or 3.2 percent, compared to prior quarter and decreased $6.9 million, or 4.9 percent, compared to the third quarter of 2022. Stated net interest margin on a tax equivalent basis totaling 3.29 percent, declined by 10 basis points compared to the second quarter of 2023 and decreased 26 basis points compared to the third quarter of 2022. 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 $27.8 million for the quarter, increased $1.5 million, or 5.8 percent, compared to the second quarter of 2023 but decreased $1.8 million from the third quarter of 2022. The increase over second quarter of 2023 was driven primarily by higher gains on the sales of loans.

Noninterest expense totaled $93.9 million for the quarter, an increase of $1.3 million from the second quarter of 2023. The increase was from higher marketing costs and salaries and employee benefits, partially offset by a decline in professional and other outside service fees.

The Corporation’s total risk-based capital ratio equaled 13.66 percent, common equity tier 1 capital ratio equaled 11.26 percent, and the tangible common equity ratio totaled 7.69 percent. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

CONFERENCE CALL

First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 11:30 a.m. (ET) on Thursday, October 26, 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/BIf859606184ad4e98a66ef43d61469d2c )

In order to view the webcast and presentation slides, please go to ( https://edge.media-server.com/mmc/p/t8uajbb8 ) during the time of the call. A replay of the webcast will be available until October 26, 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.

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

SOURCE: First Merchants Corporation, Muncie, Indiana

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)
September 30,
2023
2022
ASSETS
Cash and due from banks
$
125,173
$
119,532
Interest-bearing deposits
348,639
179,593
Investment securities, net of allowance for credit losses of $245,000 and $245,000
3,713,724
4,294,768
Loans held for sale
30,972
25,394
Loans
12,271,422
11,650,002
Less: Allowance for credit losses - loans
(205,782
)
(226,702
)
Net loans
12,065,640
11,423,300
Premises and equipment
132,441
116,306
Federal Home Loan Bank stock
41,797
38,056
Interest receivable
90,011
71,605
Goodwill and other intangibles
741,283
750,713
Cash surrender value of life insurance
306,106
306,932
Other real estate owned
6,480
6,454
Tax asset, deferred and receivable
135,521
142,110
Other assets
258,861
244,222
TOTAL ASSETS
$
17,996,648
$
17,718,985
LIABILITIES
Deposits:
Noninterest-bearing
$
2,554,984
$
3,356,651
Interest-bearing
12,091,592
11,078,174
Total Deposits
14,646,576
14,434,825
Borrowings:
Federal funds purchased
—
185,000
Securities sold under repurchase agreements
152,537
194,482
Federal Home Loan Bank advances
713,384
643,769
Subordinated debentures and other borrowings
158,665
151,301
Total Borrowings
1,024,586
1,174,552
Interest payable
16,473
4,971
Other liabilities
216,369
197,971
Total Liabilities
15,904,004
15,812,319
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 - 59,398,022 and 59,145,414 shares
7,425
7,393
Additional paid-in capital
1,234,402
1,226,695
Retained earnings
1,132,962
961,542
Accumulated other comprehensive loss
(307,270
)
(314,089
)
Total Stockholders' Equity
2,092,644
1,906,666
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
17,996,648
$
17,718,985


CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts)
September 30,
September 30,
2023
2022
2023
2022
INTEREST INCOME
Loans receivable:
Taxable
$
191,705
$
128,504
$
550,314
$
314,366
Tax-exempt
8,288
6,500
23,757
18,194
Investment securities:
Taxable
8,590
10,055
26,563
28,937
Tax-exempt
13,947
17,261
44,296
50,348
Deposits with financial institutions
5,884
704
9,685
1,544
Federal Home Loan Bank stock
719
314
2,281
635
Total Interest Income
229,133
163,338
656,896
414,024
INTEREST EXPENSE
Deposits
85,551
16,644
209,437
29,423
Federal funds purchased
—
418
1,420
494
Securities sold under repurchase agreements
797
372
2,624
595
Federal Home Loan Bank advances
6,896
3,493
20,775
6,485
Subordinated debentures and other borrowings
2,506
2,105
7,303
5,780
Total Interest Expense
95,750
23,032
241,559
42,777
NET INTEREST INCOME
133,383
140,306
415,337
371,247
Provision for credit losses
2,000
—
2,000
16,755
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
131,383
140,306
413,337
354,492
NONINTEREST INCOME
Service charges on deposit accounts
7,975
7,165
23,147
21,274
Fiduciary and wealth management fees
7,394
7,221
22,653
22,187
Card payment fees
4,716
4,776
14,425
15,674
Net gains and fees on sales of loans
5,517
2,543
11,548
7,968
Derivative hedge fees
516
700
2,336
3,062
Other customer fees
384
501
1,643
1,573
Earnings on cash surrender value of life insurance
1,761
6,655
5,145
9,659
Net realized gains (losses) on sales of available for sale securities
(1,650
)
481
(4,613
)
1,137
Other income (loss)
1,229
(425
)
2,874
1,257
Total Noninterest Income
27,842
29,617
79,158
83,791
NONINTEREST EXPENSES
Salaries and employee benefits
55,566
56,002
167,778
154,562
Net occupancy
6,837
6,738
20,770
19,573
Equipment
5,698
5,997
18,005
17,797
Marketing
2,369
2,401
4,780
4,551
Outside data processing fees
6,573
6,827
19,290
16,071
Printing and office supplies
333
472
1,150
1,198
Intangible asset amortization
2,182
2,303
6,561
5,972
FDIC assessments
2,981
2,824
7,117
7,940
Other real estate owned and foreclosure expenses
677
328
1,575
626
Professional and other outside services
3,833
4,461
12,191
17,681
Other expenses
6,805
8,025
20,950
20,045
Total Noninterest Expenses
93,854
96,378
280,167
266,016
INCOME BEFORE INCOME TAX
65,371
73,545
212,328
172,267
Income tax expense
9,005
9,793
31,021
20,938
NET INCOME
56,366
63,752
181,307
151,329
Preferred stock dividends
468
469
1,406
938
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
55,898
$
63,283
$
179,901
$
150,391
Per Share Data:
Basic Net Income Available to Common Stockholders
$
0.95
$
1.08
$
3.04
$
2.63
Diluted Net Income Available to Common Stockholders
$
0.94
$
1.08
$
3.03
$
2.62
Cash Dividends Paid to Common Stockholders
$
0.34
$
0.32
$
1.00
$
0.93
Average Diluted Common Shares Outstanding (in thousands)
59,503
59,339
59,465
57,468


FINANCIAL HIGHLIGHTS
(Dollars in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
NET CHARGE-OFFS (RECOVERIES)
$
20,365
$
(427
)
$
22,495
$
(751
)
AVERAGE BALANCES:
Total Assets
$
18,152,239
$
17,770,623
$
18,115,504
$
17,012,930
Total Loans
12,287,632
11,488,203
12,264,787
10,647,950
Total Earning Assets
16,947,669
16,508,914
16,913,965
15,744,040
Total Deposits
14,735,592
14,577,532
14,627,448
14,074,696
Total Stockholders' Equity
2,154,232
2,018,156
2,126,005
1,977,299
FINANCIAL RATIOS:
Return on Average Assets
1.24
%
1.43
%
1.33
%
1.19
%
Return on Average Stockholders' Equity
10.38
12.54
11.28
10.14
Return on Tangible Common Stockholders' Equity
16.54
20.85
18.10
16.22
Average Earning Assets to Average Assets
93.36
92.90
93.37
92.54
Allowance for Credit Losses - Loans as % of Total Loans
1.67
1.94
1.67
1.94
Net Charge-offs as % of Average Loans (Annualized)
0.66
(0.01
)
0.24
(0.01
)
Average Stockholders' Equity to Average Assets
11.87
11.36
11.74
11.62
Tax Equivalent Yield on Average Earning Assets
5.55
4.11
5.32
3.66
Interest Expense/Average Earning Assets
2.26
0.56
1.90
0.36
Net Interest Margin (FTE) on Average Earning Assets
3.29
3.55
3.42
3.30
Efficiency Ratio
53.91
53.34
52.60
54.95
Tangible Common Book Value Per Share
$
22.43
$
19.26
$
22.43
$
19.26


NONPERFORMING ASSETS
(Dollars In Thousands)
September 30,
June 30,
March 31,
December 31,
September 30,
2023
2023
2023
2022
2022
Nonaccrual Loans
$
53,102
$
69,240
$
46,576
$
42,324
$
43,508
Troubled Debt Restructures (TDR)
—
—
—
224
195
Nonperforming Loans (NPL)
53,102
69,240
46,576
42,548
43,703
Other Real Estate Owned and Repossessions
6,480
7,685
7,777
6,431
6,454
Nonperforming Assets (NPA)
59,582
76,925
54,353
48,979
50,157
90+ Days Delinquent
89
428
7,032
1,737
764
NPAs & 90 Day Delinquent
$
59,671
$
77,353
$
61,385
$
50,716
$
50,921
Allowance for Credit Losses - Loans
$
205,782
$
221,147
$
223,052
$
223,277
$
226,702
Quarterly Net Charge-offs (Recoveries)
20,365
1,905
225
2,674
(427
)
NPAs / Actual Assets %
0.33
%
0.43
%
0.30
%
0.27
%
0.28
%
NPAs & 90 Day / Actual Assets %
0.33
%
0.43
%
0.34
%
0.28
%
0.29
%
NPAs / Actual Loans and OREO %
0.48
%
0.63
%
0.44
%
0.41
%
0.43
%
Allowance for Credit Losses - Loans / Actual Loans (%)
1.67
%
1.80
%
1.82
%
1.86
%
1.94
%
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)
0.66
%
0.06
%
0.01
%
0.12
%
(0.01)
%


CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
September 30,
June 30,
March 31,
December 31,
September 30,
2023
2023
2023
2022
2022
ASSETS
Cash and due from banks
$
125,173
$
108,975
$
125,818
$
122,594
$
119,532
Interest-bearing deposits
348,639
219,480
352,695
126,061
179,593
Investment securities, net of allowance for credit losses
3,713,724
3,891,491
4,057,389
4,263,788
4,294,768
Loans held for sale
30,972
27,297
9,408
9,094
25,394
Loans
12,271,422
12,270,233
12,241,461
12,003,894
11,650,002
Less: Allowance for credit losses - loans
(205,782
)
(221,147
)
(223,052
)
(223,277
)
(226,702
)
Net loans
12,065,640
12,049,086
12,018,409
11,780,617
11,423,300
Premises and equipment
132,441
114,402
115,857
117,118
116,306
Federal Home Loan Bank stock
41,797
41,842
41,878
38,525
38,056
Interest receivable
90,011
89,784
85,515
85,070
71,605
Goodwill and other intangibles
741,283
743,465
745,647
747,844
750,713
Cash surrender value of life insurance
306,106
307,020
309,090
308,311
306,932
Other real estate owned
6,480
7,685
7,777
6,431
6,454
Tax asset, deferred and receivable
135,521
113,724
103,070
111,222
142,110
Other assets
258,861
254,161
206,355
221,631
244,222
TOTAL ASSETS
$
17,996,648
$
17,968,412
$
18,178,908
$
17,938,306
$
17,718,985
LIABILITIES
Deposits:
Noninterest-bearing
$
2,554,984
$
2,636,017
$
2,964,355
$
3,173,417
$
3,356,651
Interest-bearing
12,091,592
11,945,138
11,738,932
11,209,328
11,078,174
Total Deposits
14,646,576
14,581,155
14,703,287
14,382,745
14,434,825
Borrowings:
Federal funds purchased
—
—
20
171,560
185,000
Securities sold under repurchase agreements
152,537
152,472
179,067
167,413
194,482
Federal Home Loan Bank advances
713,384
723,480
823,577
823,674
643,769
Subordinated debentures and other borrowings
158,665
151,325
151,312
151,298
151,301
Total Borrowings
1,024,586
1,027,277
1,153,976
1,313,945
1,174,552
Interest payable
16,473
13,595
11,979
7,530
4,971
Other liabilities
216,369
200,820
187,218
199,316
197,971
Total Liabilities
15,904,004
15,822,847
16,056,460
15,903,536
15,812,319
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
7,425
7,412
7,407
7,396
7,393
Additional paid-in capital
1,234,402
1,233,593
1,231,532
1,228,626
1,226,695
Retained earnings
1,132,962
1,097,399
1,057,298
1,012,774
961,542
Accumulated other comprehensive loss
(307,270
)
(217,964
)
(198,914
)
(239,151
)
(314,089
)
Total Stockholders' Equity
2,092,644
2,145,565
2,122,448
2,034,770
1,906,666
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
17,996,648
$
17,968,412
$
18,178,908
$
17,938,306
$
17,718,985


CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)
September 30,
June 30,
March 31,
December 31,
September 30,
2023
2023
2023
2022
2022
INTEREST INCOME
Loans receivable:
Taxable
$
191,705
$
186,256
$
172,353
$
156,102
$
128,504
Tax-exempt
8,288
7,760
7,709
6,930
6,500
Investment securities:
Taxable
8,590
8,886
9,087
9,417
10,055
Tax-exempt
13,947
14,279
16,070
17,033
17,261
Deposits with financial institutions
5,884
3,164
637
959
704
Federal Home Loan Bank stock
719
1,020
542
541
314
Total Interest Income
229,133
221,365
206,398
190,982
163,338
INTEREST EXPENSE
Deposits
85,551
73,201
50,685
33,516
16,644
Federal funds purchased
—
123
1,297
808
418
Securities sold under repurchase agreements
797
979
848
541
372
Federal Home Loan Bank advances
6,896
6,815
7,064
4,932
3,493
Subordinated debentures and other borrowings
2,506
2,412
2,385
2,229
2,105
Total Interest Expense
95,750
83,530
62,279
42,026
23,032
NET INTEREST INCOME
133,383
137,835
144,119
148,956
140,306
Provision for credit losses
2,000
—
—
—
—
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
131,383
137,835
144,119
148,956
140,306
NONINTEREST INCOME
Service charges on deposit accounts
7,975
7,813
7,359
7,097
7,165
Fiduciary and wealth management fees
7,394
7,397
7,862
7,501
7,221
Card payment fees
4,716
4,537
5,172
4,533
4,776
Net gains and fees on sales of loans
5,517
3,632
2,399
2,087
2,543
Derivative hedge fees
516
672
1,148
326
700
Other customer fees
384
742
517
362
501
Earnings on cash surrender value of life insurance
1,761
2,096
1,288
1,515
6,655
Net realized gains (losses) on sales of available for sale securities
(1,650
)
(1,392
)
(1,571
)
57
481
Other income (loss)
1,229
822
823
672
(425
)
Total Noninterest Income
27,842
26,319
24,997
24,150
29,617
NONINTEREST EXPENSES
Salaries and employee benefits
55,566
54,753
57,459
52,331
56,002
Net occupancy
6,837
6,674
7,259
6,638
6,738
Equipment
5,698
6,181
6,126
6,148
5,997
Marketing
2,369
1,102
1,309
3,157
2,401
Outside data processing fees
6,573
6,604
6,113
5,611
6,827
Printing and office supplies
333
434
383
390
472
Intangible asset amortization
2,182
2,182
2,197
2,303
2,303
FDIC assessments
2,981
2,740
1,396
2,295
2,824
Other real estate owned and foreclosure expenses
677
916
(18
)
197
328
Professional and other outside services
3,833
4,660
3,698
3,961
4,461
Other expenses
6,805
6,347
7,798
6,668
8,025
Total Noninterest Expenses
93,854
92,593
93,720
89,699
96,378
INCOME BEFORE INCOME TAX
65,371
71,561
75,396
83,407
73,545
Income tax expense
9,005
10,699
11,317
12,647
9,793
NET INCOME
56,366
60,862
64,079
70,760
63,752
Preferred stock dividends
468
469
469
468
469
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
55,898
$
60,393
$
63,610
$
70,292
$
63,283
Per Share Data:
Basic Net Income Available to Common Stockholders
$
0.95
$
1.02
$
1.07
$
1.20
$
1.08
Diluted Net Income Available to Common Stockholders
$
0.94
$
1.02
$
1.07
$
1.19
$
1.08
Cash Dividends Paid to Common Stockholders
$
0.34
$
0.34
$
0.32
$
0.32
$
0.32
Average Diluted Common Shares Outstanding (in thousands)
59,503
59,448
59,441
59,384
59,339
FINANCIAL RATIOS:
Return on Average Assets
1.24
%
1.34
%
1.42
%
1.59
%
1.43
%
Return on Average Stockholders' Equity
10.38
11.29
12.21
14.36
12.54
Return on Tangible Common Stockholders' Equity
16.54
18.04
19.82
24.21
20.85
Average Earning Assets to Average Assets
93.36
93.38
93.35
93.66
92.90
Allowance for Credit Losses - Loans as % of Total Loans
1.67
1.80
1.82
1.86
1.94
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)
0.66
0.06
0.01
0.12
(0.01
)
Average Stockholders' Equity to Average Assets
11.87
11.78
11.56
10.98
11.36
Tax Equivalent Yield on Average Earning Assets
5.55
5.36
5.06
4.73
4.11
Interest Expense/Average Earning Assets
2.26
1.97
1.48
1.01
0.56
Net Interest Margin (FTE) on Average Earning Assets
3.29
3.39
3.58
3.72
3.55
Efficiency Ratio
53.91
52.21
51.72
48.60
53.34
Tangible Common Book Value Per Share
$
22.43
$
23.34
$
22.93
$
21.45
$
19.26


LOANS
(Dollars In Thousands)
September 30,
June 30,
March 31,
December 31,
September 30,
2023
2023
2023
2022
2022
Commercial and industrial loans
$
3,490,953
$
3,531,395
$
3,502,204
$
3,437,126
$
3,330,529
Agricultural land, production and other loans to farmers
233,838
230,003
219,598
241,793
221,954
Real estate loans:
Construction
1,022,261
949,918
960,979
835,582
828,923
Commercial real estate, non-owner occupied
2,360,596
2,379,819
2,375,410
2,407,475
2,299,272
Commercial real estate, owner occupied
1,153,707
1,179,739
1,244,117
1,246,528
1,268,567
Residential
2,257,385
2,248,473
2,185,943
2,096,655
1,990,668
Home equity
609,352
614,366
621,354
630,632
621,619
Individuals' loans for household and other personal expenditures
176,523
172,896
172,389
175,211
173,225
Public finance and other commercial loans
966,807
963,624
959,467
932,892
915,245
Loans
12,271,422
12,270,233
12,241,461
12,003,894
11,650,002
Allowance for credit losses - loans
(205,782
)
(221,147
)
(223,052
)
(223,277
)
(226,702
)
NET LOANS
$
12,065,640
$
12,049,086
$
12,018,409
$
11,780,617
$
11,423,300


DEPOSITS
(Dollars In Thousands)
September 30,
June 30,
March 31,
December 31,
September 30,
2023
2023
2023
2022
2022
Demand deposits
$
7,952,040
$
8,045,455
$
8,422,387
$
8,448,797
$
8,534,950
Savings deposits
4,572,162
4,530,255
4,499,487
4,657,140
5,054,490
Certificates and other time deposits of $100,000 or more
1,280,607
1,160,303
1,040,379
742,539
443,588
Other certificates and time deposits
761,196
680,965
574,886
468,712
381,365
Brokered certificates of deposits
80,571
164,177
166,148
65,557
20,432
TOTAL DEPOSITS
$
14,646,576
$
14,581,155
$
14,703,287
$
14,382,745
$
14,434,825


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
For the Three Months Ended
September 30, 2023
September 30, 2022
Average Balance
Interest
Income /
Expense
Average
Rate
Average Balance
Interest
Income /
Expense
Average
Rate
ASSETS
Interest-bearing deposits
$
502,967
$
5,884
4.68
%
$
190,434
$
704
1.48
%
Federal Home Loan Bank stock
41,826
719
6.88
38,089
314
3.30
Investment Securities: (1)
Taxable
1,817,219
8,590
1.89
2,091,608
10,055
1.92
Tax-exempt (2)
2,298,025
17,655
3.07
2,700,580
21,849
3.24
Total Investment Securities
4,115,244
26,245
2.55
4,792,188
31,904
2.66
Loans held for sale
24,227
386
6.37
20,039
266
5.74
Loans: (3)
Commercial
8,456,527
153,993
7.28
8,177,895
103,227
5.05
Real estate mortgage
2,079,067
21,618
4.16
1,666,173
14,701
3.53
Installment
827,318
15,708
7.59
813,112
10,310
5.07
Tax-exempt (2)
900,493
10,491
4.66
810,984
8,228
4.06
Total Loans
12,287,632
202,196
6.58
11,488,203
136,732
4.76
Total Earning Assets
16,947,669
235,044
5.55
%
16,508,914
169,654
4.11
%
Total Non-Earning Assets
1,204,570
1,261,709
TOTAL ASSETS
$
18,152,239
$
17,770,623
LIABILITIES
Interest-Bearing Deposits:
Interest-bearing deposits
$
5,425,829
$
37,780
2.79
%
$
5,184,087
$
8,723
0.67
%
Money market deposits
2,923,798
23,607
3.23
3,096,423
5,390
0.70
Savings deposits
1,641,338
3,844
0.94
1,978,596
1,538
0.31
Certificates and other time deposits
2,106,910
20,320
3.86
857,033
993
0.46
Total Interest-Bearing Deposits
12,097,875
85,551
2.83
11,116,139
16,644
0.60
Borrowings
1,032,180
10,199
3.95
1,013,893
6,388
2.52
Total Interest-Bearing Liabilities
13,130,055
95,750
2.92
12,130,032
23,032
0.76
Noninterest-bearing deposits
2,637,717
3,461,393
Other liabilities
230,235
161,042
Total Liabilities
15,998,007
15,752,467
STOCKHOLDERS' EQUITY
2,154,232
2,018,156
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
18,152,239
95,750
$
17,770,623
23,032
Net Interest Income (FTE)
$
139,294
$
146,622
Net Interest Spread (FTE) (4)
2.63
%
3.35
%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets
5.55
%
4.11
%
Interest Expense / Average Earning Assets
2.26
%
0.56
%
Net Interest Margin (FTE) (5)
3.29
%
3.55
%
(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 $5,911 and $6.316 for the three months ended September 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 Nine Months Ended
September 30, 2023
September 30, 2022
Average Balance
Interest
Income /
Expense
Average
Rate
Average Balance
Interest
Income /
Expense
Average
Rate
Assets:
Interest-bearing deposits
$
340,887
$
9,685
3.79
%
$
333,818
$
1,544
0.62
%
Federal Home Loan Bank stock
41,160
2,281
7.39
34,742
635
2.44
Investment Securities: (1)
Taxable
1,872,267
26,563
1.89
2,079,983
28,937
1.85
Tax-exempt (2)
2,394,864
56,071
3.12
2,647,547
63,732
3.21
Total Investment Securities
4,267,131
82,634
2.58
4,727,530
92,669
2.61
Loans held for sale
22,398
1,046
6.23
19,020
622
4.36
Loans: (3)
Commercial
8,515,148
444,422
6.96
7,731,591
253,770
4.38
Real estate mortgage
2,008,852
60,354
4.01
1,350,969
35,199
3.47
Installment
833,133
44,492
7.12
765,960
24,775
4.31
Tax-exempt (2)
885,256
30,072
4.53
780,410
23,030
3.93
Total Loans
12,264,787
580,386
6.31
10,647,950
337,396
4.22
Total Earning Assets
16,913,965
674,986
5.32
%
15,744,040
432,244
3.66
%
Total Non-Earning Assets
1,201,539
1,268,890
Total Assets
$
18,115,504
$
17,012,930
Liabilities:
Interest-Bearing deposits:
Interest-bearing deposits
$
5,412,482
$
97,016
2.39
%
$
5,195,249
$
15,699
0.40
%
Money market deposits
2,812,891
55,868
2.65
2,880,603
8,392
0.39
Savings deposits
1,730,110
10,693
0.82
1,937,761
2,895
0.20
Certificates and other time deposits
1,821,408
45,860
3.36
828,158
2,437
0.39
Total Interest-Bearing Deposits
11,776,891
209,437
2.37
10,841,771
29,423
0.36
Borrowings
1,144,368
32,122
3.74
817,894
13,354
2.18
Total Interest-Bearing Liabilities
12,921,259
241,559
2.49
11,659,665
42,777
0.49
Noninterest-bearing deposits
2,850,557
3,232,925
Other liabilities
217,683
143,041
Total Liabilities
15,989,499
15,035,631
Stockholders' Equity
2,126,005
1,977,299
Total Liabilities and Stockholders' Equity
$
18,115,504
241,559
$
17,012,930
42,777
Net Interest Income (FTE)
$
433,427
$
389,467
Net Interest Spread (FTE) (4)
2.83
%
3.17
%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets
5.32
%
3.66
%
Interest Expense / Average Earning Assets
1.90
%
0.36
%
Net Interest Margin (FTE) (5)
3.42
%
3.30
%
(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 $18,090 and $18,220 for the nine months ended September 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
Nine Months Ended
September 30,
June 30,
March 31,
December 31,
September 30,
September 30,
September 30,
2023
2023
2023
2022
2022
2023
2022
Net Income Available to Common Stockholders - GAAP
$
55,898
$
60,393
$
63,610
$
70,292
$
63,283
$
179,901
$
150,391
Adjustments:
PPP loan income
(8
)
(9
)
(25
)
(109
)
(323
)
(42
)
(3,098
)
Acquisition-related expenses
—
—
—
413
3,417
—
16,118
Acquisition-related provision expense
—
—
—
—
—
—
16,755
Tax on adjustment
2
2
6
(75
)
(759
)
10
(7,301
)
Adjusted Net Income Available to Common Stockholders - Non-GAAP
$
55,892
$
60,386
$
63,591
$
70,521
$
65,618
$
179,869
$
172,865
Average Diluted Common Shares Outstanding (in thousands)
59,503
59,448
59,441
59,384
59,339
59,465
57,468
Diluted Earnings Per Common Share - GAAP
$
0.94
$
1.02
$
1.07
$
1.19
$
1.08
$
3.03
$
2.62
Adjustments:
PPP loan income
—
—
—
(0.01
)
—
—
(0.05
)
Acquisition-related expenses
—
—
—
0.01
0.05
—
0.27
Acquisition-related provision expense
—
—
—
—
—
—
0.30
Tax on adjustment
—
—
—
—
(0.01
)
—
(0.13
)
Adjusted Diluted Earnings Per Common Share - Non-GAAP
$
0.94
$
1.02
$
1.07
$
1.19
$
1.12
$
3.03
$
3.01


RETURN ON TANGIBLE COMMON EQUITY - NON-GAAP
(Dollars In Thousands)
Three Months Ended
Nine Months Ended
September 30,
June 30,
March 31,
December 31,
September 30,
September 30,
September 30,
2023
2023
2023
2022
2022
2023
2022
Total Average Stockholders' Equity (GAAP)
$
2,154,232
$
2,139,877
$
2,083,125
$
1,958,041
$
2,018,156
$
2,126,005
$
1,977,299
Less: Average Preferred Stock
(25,125
)
(25,125
)
(25,125
)
(25,125
)
(25,125
)
(25,125
)
(16,792
)
Less: Average Intangible Assets, Net of Tax
(735,787
)
(737,489
)
(739,190
)
(741,632
)
(744,069
)
(737,476
)
(685,707
)
Average Tangible Common Equity, Net of Tax (Non-GAAP)
$
1,393,320
$
1,377,263
$
1,318,810
$
1,191,284
$
1,248,962
$
1,363,404
$
1,274,800
Net Income Available to Common Stockholders (GAAP)
$
55,898
$
60,393
$
63,610
$
70,292
$
63,283
$
179,901
$
150,391
Plus: Intangible Asset Amortization, Net of Tax
1,724
1,724
1,734
1,819
1,819
5,182
4,718
Tangible Net Income (Non-GAAP)
$
57,622
$
62,117
$
65,344
$
72,111
$
65,102
$
185,083
$
155,109
Return on Tangible Common Equity (Non-GAAP)
16.54
%
18.04
%
19.82
%
24.21
%
20.85
%
18.10
%
16.22
%


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