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First Merchants Corporation Announces First Quarter 2022 Earnings Per Share

First Merchants Corporation
First Merchants Corporation

MUNCIE, Ind., April 26, 2022 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)

First Quarter 2022 Highlights:

  • Net income was $48.6 million and diluted earnings per share totaled $.91, compared to $49.5 million and $.91 in the first quarter of 2021, and $47.7 million and $.89 in the fourth quarter of 2021.

  • Diluted earnings per share excluding income on Paycheck Protection Program (“PPP”) loans totaled $.88 for the first quarter of 2022 compared to $.78 in the first quarter of 2021 and $.84 in the fourth quarter of 2021.1

  • Total loans, excluding PPP loans, grew $165 million or 7.2% on a linked quarter basis

  • Total deposits grew $173.4 million or 5.4% on a linked quarter basis

  • Non-accrual loans totaled $42.7 million compared to $43.1 million on a linked quarter basis

  • Net interest income totaled $102.3 million, an increase of $1.0 million on a linked quarter basis

  • Completed legal closing on the acquisition of Level One Bancorp, LLC on April 1, 2022

Mark Hardwick, Chief Executive Officer, stated, “The Bank’s loan, deposit and earnings growth were in line with expectations and my colleagues are focused on delivering our aspirational 2022 plan. The completion of our merger with Level One on April 1st is a milestone in First Merchants history that will propel our Bank into the future. I am proud of our new teammates and the professional winning attitude they exude.”

First Quarter Financial Results:

First Merchants Corporation (the “Corporation) has reported first quarter 2022 net income of $48.6 million compared to $49.5 million during the same period in 2021. Earnings per share for the period totaled $.91 per share compared to the first quarter of 2021 result of $.91 per share.

Total assets equaled $15.5 billion as of March 31, 2022 and loans totaled $9.4 billion. The Corporation experienced organic loan growth of $730.6 million, or 8.5 percent, during the past twelve months. This was offset by the forgiveness of Paycheck Protection Program (“PPP”) loans of $693.1 million, resulting in net loan growth of $37.5 million. PPP loans accounted for $48.7 million of the period end loan portfolio balance. Investments increased $788.4 million, or 21.3 percent, during the year and now total $4.5 billion. Total deposits equaled $12.9 billion as of quarter-end and increased by $954.2 million, or 8.0 percent over the same period in 2021.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $196.0 million as of quarter-end, or 2.09 percent of total loans. Net loan recoveries for the quarter totaled $0.6 million and no provision expense was recorded during the quarter or during the last twelve months. Non-performing assets to total assets were 0.32% for the first quarter of 2022, a decrease of eight basis points compared to 0.40% in the first quarter of 2021.

Net-interest income totaling $102.3 million for the quarter, continued to grow with an increase of $1.0 million, or 4.0 percent, over prior quarter and an increase of $1.9 million, or 1.8 percent compared to the first quarter of 2021. Stated net-interest margin on a tax equivalent basis, totaling 3.03 percent, declined by one basis point compared to the fourth quarter of 2021 and twenty basis points compared to the first quarter of 2021. Net-interest margin excluding the impact of fair value accretion and PPP loans totaled 2.97%, an increase of five basis points compared to 2.92% for the fourth quarter of 2021 and a decline of seven basis points from the first quarter of 2021. During the quarter, net-interest margin expanded nine basis points from growth in the loan and investment portfolios, higher investment portfolio yield and lower funding costs, offset by a decline of four basis points from the impact of a lower day count in the quarter.

Non-interest income, totaling $25.9 million for the quarter, was stable compared to the fourth quarter of 2021 and increased $1.8 million from the first quarter of 2021. Customer-specific line items accounted for $2.3 million of the increase over the first quarter of 2021 driven by higher service charges on deposits, fiduciary and wealth management fees and card payment fees. This was offset by a decline on gains on the sale of loans of $1.8 million driven by lower origination volume.

Non-interest expense totaled $72.3 million for the quarter, a decline of $0.1 million from the fourth quarter of 2021, and an increase of $6.3 million or 9.4% over the first quarter of 2021. The increase over the first quarter of 2021 was primarily due to higher salaries and employee benefits as well as higher FDIC assessments.

The Corporation’s loan to deposit ratio totals 73 percent and loan to asset ratio totals 61 percent. Additionally, the Corporation’s total risk-based capital ratio equaled 13.85 percent, common equity tier 1 capital ratio equaled 11.63 percent, and the tangible common equity ratio totaled 8.31 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 10:00 a.m. (ET) on Tuesday, April 26, 2022.

To participate, dial (Toll Free) 877-806-2932 and reference Conference ID 6838926. 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/vucpzk7j) during the time of the call. A replay of the webcast will be available until April 26, 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 and Level One Bank (as divisions 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.

CONSOLIDATED BALANCE SHEETS

(Dollars In Thousands)

March 31,

2022

2021

ASSETS

Cash and due from banks

$

148,277

$

187,901

Interest-bearing deposits

395,262

392,806

Investment securities, net of allowance for credit losses of $245,000 and $245,000

4,489,263

3,700,857

Loans held for sale

3,938

4,430

Loans

9,356,241

9,318,228

Less: Allowance for credit losses - loans

(195,984

)

(201,082

)

Net loans

9,160,257

9,117,146

Premises and equipment

105,883

109,432

Federal Home Loan Bank stock

26,422

28,736

Interest receivable

56,081

54,662

Goodwill and other intangibles

569,494

571,536

Cash surrender value of life insurance

291,881

293,766

Other real estate owned

6,271

604

Tax asset, deferred and receivable

73,422

40,163

Other assets

138,807

127,027

TOTAL ASSETS

$

15,465,258

$

14,629,066

LIABILITIES

Deposits:

Noninterest-bearing

$

2,745,235

$

2,494,891

Interest-bearing

10,160,718

9,456,889

Total Deposits

12,905,953

11,951,780

Borrowings:

Securities sold under repurchase agreements

169,697

185,721

Federal Home Loan Bank advances

308,960

359,337

Subordinated debentures and other borrowings

118,677

118,439

Total Borrowings

597,334

663,497

Interest payable

3,589

4,020

Other liabilities

150,749

203,913

Total Liabilities

13,657,625

12,823,210

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 - 53,424,823 and 53,953,723 shares

6,678

6,744

Additional paid-in capital

987,404

1,007,300

Retained earnings

897,818

755,877

Accumulated other comprehensive income

(84,392

)

35,810

Total Stockholders' Equity

1,807,633

1,805,856

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

15,465,258

$

14,629,066


CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

(Dollars In Thousands, Except Per Share Amounts)

March 31,

2022

2021

INTEREST INCOME

Loans receivable:

Taxable

$

79,075

$

85,105

Tax-exempt

5,704

5,339

Investment securities:

Taxable

8,510

6,695

Tax-exempt

15,875

12,385

Deposits with financial institutions

230

114

Federal Home Loan Bank stock

146

178

Total Interest Income

109,540

109,816

INTEREST EXPENSE

Deposits

4,294

6,200

Federal funds purchased

2

Securities sold under repurchase agreements

89

87

Federal Home Loan Bank advances

1,218

1,442

Subordinated debentures and other borrowings

1,659

1,657

Total Interest Expense

7,260

9,388

NET INTEREST INCOME

102,280

100,428

Provision for credit losses - loans

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

102,280

100,428

OTHER INCOME

Service charges on deposit accounts

6,419

5,264

Fiduciary and wealth management fees

7,332

6,422

Card payment fees

5,723

4,367

Net gains and fees on sales of loans

2,199

3,986

Derivative hedge fees

918

317

Other customer fees

410

368

Earnings on cash surrender value of life insurance

1,696

1,336

Net realized gains on sales of available for sale securities

566

1,799

Other income

634

232

Total Other Income

25,897

24,091

OTHER EXPENSES

Salaries and employee benefits

42,519

38,811

Net occupancy

6,187

6,491

Equipment

5,080

5,030

Marketing

736

1,124

Outside data processing fees

4,363

4,244

Printing and office supplies

345

283

Intangible asset amortization

1,366

1,357

FDIC assessments

2,192

1,368

Other real estate owned and foreclosure expenses

564

734

Professional and other outside services

2,953

2,543

Other expenses

6,020

4,113

Total Other Expenses

72,325

66,098

INCOME BEFORE INCOME TAX

55,852

58,421

Income tax expense

7,266

8,952

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS

$

48,586

$

49,469

Per Share Data:

Basic Net Income Available to Common Stockholders

$

0.91

$

0.92

Diluted Net Income Available to Common Stockholders

$

0.91

$

0.91

Cash Dividends Paid

$

0.29

$

0.26

Average Diluted Shares Outstanding (in thousands)

53,616

54,134


FINANCIAL HIGHLIGHTS

(Dollars in thousands)

Three Months Ended

March 31,

2022

2021

NET CHARGE-OFFS (RECOVERIES)

$

(587

)

$

3,621

AVERAGE BALANCES:

Total Assets

$

15,464,605

$

14,244,739

Total Loans

9,255,928

9,236,421

Total Earning Assets

14,262,777

13,023,318

Total Deposits

12,817,690

11,567,918

Total Stockholders' Equity

1,891,223

1,840,432

FINANCIAL RATIOS:

Return on Average Assets

1.26

%

1.39

%

Return on Average Stockholders' Equity

10.28

10.75

Return on Average Common Stockholders' Equity

10.28

10.75

Average Earning Assets to Average Assets

92.23

91.43

Allowance for Credit Losses - Loans as % of Total Loans

2.09

2.16

Net Charge-offs as % of Average Loans (Annualized)

(0.03

)

0.16

Average Stockholders' Equity to Average Assets

12.23

12.92

Tax Equivalent Yield on Average Earning Assets

3.23

3.52

Interest Expense/Average Earning Assets

0.20

0.29

Net Interest Margin (FTE) on Average Earning Assets

3.03

3.23

Efficiency Ratio

52.79

50.23

Tangible Common Book Value Per Share

$

23.26

$

22.98


NON-PERFORMING ASSETS

(Dollars In Thousands)

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

2021

2021

2021

Non-Accrual Loans

$

42,698

$

43,062

$

51,502

$

57,556

$

57,923

Renegotiated Loans

141

329

439

629

655

Non-Performing Loans (NPL)

42,839

43,391

51,941

58,185

58,578

Other Real Estate Owned and Repossessions

6,271

558

698

601

604

Non-Performing Assets (NPA)

49,110

43,949

52,639

58,786

59,182

90+ Days Delinquent

2,085

963

157

183

1,093

NPAs & 90 Day Delinquent

$

51,195

$

44,912

$

52,796

$

58,969

$

60,275

Allowance for Credit Losses - Loans

$

195,984

$

195,397

$

199,972

$

199,775

$

201,082

Quarterly Net Charge-offs (Recoveries)

(587

)

4,575

(197

)

1,307

3,621

NPAs / Actual Assets %

0.32

%

0.28

%

0.35

%

0.39

%

0.40

%

NPAs & 90 Day / Actual Assets %

0.33

%

0.29

%

0.35

%

0.40

%

0.41

%

NPAs / Actual Loans and OREO %

0.52

%

0.47

%

0.58

%

0.64

%

0.63

%

Allowance for Credit Losses - Loans / Actual Loans (%)

2.09

%

2.11

%

2.21

%

2.19

%

2.16

%

Net Charge-offs as % of Average Loans (Annualized)

(0.03

)%

0.20

%

(0.01

)%

0.06

%

0.16

%


CONSOLIDATED BALANCE SHEETS

(Dollars In Thousands)

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

2021

2021

2021

ASSETS

Cash and due from banks

$

148,277

$

167,146

$

169,261

$

167,596

$

187,901

Interest-bearing deposits

395,262

474,154

369,447

438,863

392,806

Investment securities, net of allowance for credit losses

4,489,263

4,524,353

4,445,516

4,148,314

3,700,857

Loans held for sale

3,938

11,187

5,990

18,582

4,430

Loans

9,356,241

9,241,861

9,041,576

9,121,250

9,318,228

Less: Allowance for credit losses - loans

(195,984

)

(195,397

)

(199,972

)

(199,775

)

(201,082

)

Net loans

9,160,257

9,046,464

8,841,604

8,921,475

9,117,146

Premises and equipment

105,883

105,655

104,814

103,822

109,432

Federal Home Loan Bank stock

26,422

28,736

28,736

28,736

28,736

Interest receivable

56,081

57,187

53,079

54,173

54,662

Goodwill and other intangibles

569,494

570,860

572,323

573,786

571,536

Cash surrender value of life insurance

291,881

291,041

291,825

294,462

293,766

Other real estate owned

6,271

558

698

601

604

Tax asset, deferred and receivable

73,422

35,641

39,504

36,924

40,163

Other assets

138,807

140,167

137,928

135,763

127,027

TOTAL ASSETS

$

15,465,258

$

15,453,149

$

15,060,725

$

14,923,097

$

14,629,066

LIABILITIES

Deposits:

Noninterest-bearing

$

2,745,235

$

2,709,646

$

2,554,323

$

2,479,853

$

2,494,891

Interest-bearing

10,160,718

10,022,931

9,794,366

9,723,547

9,456,889

Total Deposits

12,905,953

12,732,577

12,348,689

12,203,400

11,951,780

Borrowings:

Securities sold under repurchase agreements

169,697

181,577

183,589

146,904

185,721

Federal Home Loan Bank advances

308,960

334,055

334,149

334,243

359,337

Subordinated debentures and other borrowings

118,677

118,618

118,558

118,498

118,439

Total Borrowings

597,334

634,250

636,296

599,645

663,497

Interest payable

3,589

2,762

3,736

2,929

4,020

Other liabilities

150,749

170,989

203,914

245,323

203,913

Total Liabilities

13,657,625

13,540,578

13,192,635

13,051,297

12,823,210

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

6,678

6,676

6,689

6,747

6,744

Additional paid-in capital

987,404

985,818

988,659

1,009,182

1,007,300

Retained earnings

897,818

864,839

832,728

795,666

755,877

Accumulated other comprehensive income

(84,392

)

55,113

39,889

60,080

35,810

Total Stockholders' Equity

1,807,633

1,912,571

1,868,090

1,871,800

1,805,856

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

15,465,258

$

15,453,149

$

15,060,725

$

14,923,097

$

14,629,066


CONSOLIDATED STATEMENTS OF INCOME

(Dollars In Thousands, Except Per Share Amounts)

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

2021

2021

2021

INTEREST INCOME

Loans receivable:

Taxable

$

79,075

$

80,583

$

85,319

$

87,002

$

85,105

Tax-exempt

5,704

5,635

5,591

5,545

5,339

Investment securities:

Taxable

8,510

8,028

7,788

7,440

6,695

Tax-exempt

15,875

15,411

14,464

13,071

12,385

Deposits with financial institutions

230

173

218

129

114

Federal Home Loan Bank stock

146

163

168

88

178

Total Interest Income

109,540

109,993

113,548

113,275

109,816

INTEREST EXPENSE

Deposits

4,294

5,589

5,707

5,823

6,200

Federal funds purchased

1

2

2

Securities sold under repurchase agreements

89

75

77

75

87

Federal Home Loan Bank advances

1,218

1,389

1,389

1,452

1,442

Subordinated debentures and other borrowings

1,659

1,666

1,660

1,659

1,657

Total Interest Expense

7,260

8,720

8,833

9,011

9,388

NET INTEREST INCOME

102,280

101,273

104,715

104,264

100,428

Provision for credit losses - loans

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

102,280

101,273

104,715

104,264

100,428

OTHER INCOME

Service charges on deposit accounts

6,419

6,462

6,249

5,596

5,264

Fiduciary and wealth management fees

7,332

7,078

7,352

7,510

6,422

Card payment fees

5,723

3,937

4,156

4,159

4,367

Net gains and fees on sales of loans

2,199

3,423

3,955

8,325

3,986

Derivative hedge fees

918

1,562

1,028

943

317

Other customer fees

410

361

393

368

368

Earnings on cash surrender value of life insurance

1,696

2,051

2,468

1,205

1,336

Net realized gains on sales of available for sale securities

566

358

1,756

1,761

1,799

Other income

634

615

1,144

1,017

232

Total Other Income

25,897

25,847

28,501

30,884

24,091

OTHER EXPENSES

Salaries and employee benefits

42,519

42,432

43,314

42,438

38,811

Net occupancy

6,187

5,644

5,576

5,615

6,491

Equipment

5,080

4,994

4,529

4,848

5,030

Marketing

736

1,840

1,676

1,122

1,124

Outside data processing fees

4,363

4,581

4,794

4,698

4,244

Printing and office supplies

345

356

265

313

283

Intangible asset amortization

1,366

1,463

1,463

1,464

1,357

FDIC assessments

2,192

1,862

1,552

1,461

1,368

Other real estate owned and foreclosure expenses

564

171

(91

)

178

734

Professional and other outside services

2,953

3,627

2,767

2,976

2,543

Other expenses

6,020

5,466

5,539

4,182

4,113

Total Other Expenses

72,325

72,436

71,384

69,295

66,098

INCOME BEFORE INCOME TAX

55,852

54,684

61,832

65,853

58,421

Income tax expense

7,266

6,951

9,062

10,294

8,952

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS

$

48,586

$

47,733

$

52,770

$

55,559

$

49,469

Per Share Data:

Basic Net Income Available to Common Stockholders

$

0.91

$

0.89

$

0.98

$

1.03

$

0.92

Diluted Net Income Available to Common Stockholders

$

0.91

$

0.89

$

0.98

$

1.03

$

0.91

Cash Dividends Paid

$

0.29

$

0.29

$

0.29

$

0.29

$

0.26

Average Diluted Shares Outstanding (in thousands)

53,616

53,660

53,960

54,184

54,134

FINANCIAL RATIOS:

Return on Average Assets

1.26

%

1.25

%

1.41

%

1.51

%

1.39

%

Return on Average Stockholders' Equity

10.28

10.10

11.17

12.04

10.75

Return on Average Common Stockholders' Equity

10.28

10.10

11.17

12.04

10.75

Average Earning Assets to Average Assets

92.23

91.86

91.57

91.87

91.43

Allowance for Credit Losses - Loans as % of Total Loans

2.09

2.11

2.21

2.19

2.16

Net Charge-offs (Recoveries) as % of Average Loans (Annualized)

(0.03

)

0.20

(0.01

)

0.06

0.16

Average Stockholders' Equity to Average Assets

12.23

12.36

12.59

12.51

12.92

Tax Equivalent Yield on Average Earning Assets

3.23

3.29

3.46

3.49

3.52

Interest Expense/Average Earning Assets

0.20

0.25

0.26

0.27

0.29

Net Interest Margin (FTE) on Average Earning Assets

3.03

3.04

3.20

3.22

3.23

Efficiency Ratio

52.79

53.49

51.18

48.91

50.23

Tangible Common Book Value Per Share

$

23.26

$

25.21

$

24.31

$

24.15

$

22.98


LOANS

(Dollars In Thousands)

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

2021

2021

2021

Commercial and industrial loans

$

2,826,660

$

2,714,565

$

2,573,615

$

2,671,076

$

2,876,212

Agricultural land, production and other loans to farmers

209,077

246,442

240,686

235,020

245,631

Real estate loans:

Construction

552,975

523,066

521,889

491,200

541,224

Commercial real estate, non-owner occupied

2,073,197

2,135,459

2,150,387

2,263,497

2,178,832

Commercial real estate, owner occupied

974,521

986,720

952,441

953,501

950,038

Residential

1,226,695

1,159,127

1,154,373

1,127,442

1,239,925

Home equity

512,641

523,754

531,307

489,997

482,229

Individuals' loans for household and other personal expenditures

147,593

146,092

135,093

130,819

126,387

Public finance and other commercial loans

832,882

806,636

781,785

758,698

677,750

Loans

9,356,241

9,241,861

9,041,576

9,121,250

9,318,228

Allowance for credit losses - loans

(195,984

)

(195,397

)

(199,972

)

(199,775

)

(201,082

)

NET LOANS

$

9,160,257

$

9,046,464

$

8,841,604

$

8,921,475

$

9,117,146


DEPOSITS

(Dollars In Thousands)

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

2021

2021

2021

Demand deposits

$

7,806,033

$

7,704,190

$

7,317,399

$

7,261,603

$

7,245,850

Savings deposits

4,444,417

4,334,802

4,301,483

4,157,552

3,857,624

Certificates and other time deposits of $100,000 or more

252,033

273,379

283,396

304,394

332,745

Other certificates and time deposits

380,293

389,752

404,010

423,922

449,655

Brokered deposits

23,177

30,454

42,401

55,929

65,906

TOTAL DEPOSITS

$

12,905,953

$

12,732,577

$

12,348,689

$

12,203,400

$

11,951,780


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS

(Dollars in Thousands)

For the Three Months Ended

March 31, 2022

March 31, 2021

Average
Balance

Interest
Income /
Expense

Average
Rate

Average
Balance

Interest
Income /
Expense

Average
Rate

Assets:

Interest-bearing deposits

$

484,626

$

230

0.19

%

$

441,254

$

114

0.10

%

Federal Home Loan Bank stock

27,914

146

2.09

28,736

178

2.48

Investment Securities:(1)

Taxable

1,957,675

8,510

1.74

1,494,008

6,695

1.79

Tax-Exempt(2)

2,536,634

20,095

3.17

1,822,899

15,677

3.44

Total Investment Securities

4,494,309

28,605

2.55

3,316,907

22,372

2.70

Loans held for sale

4,352

40

3.68

16,139

156

3.87

Loans:(3)

Commercial

6,868,438

64,679

3.77

6,876,818

69,174

4.02

Real Estate Mortgage

924,268

7,840

3.39

975,262

9,286

3.81

Installment

711,038

6,516

3.67

674,307

6,489

3.85

Tax-Exempt(2)

747,832

7,220

3.86

693,895

6,758

3.90

Total Loans

9,255,928

86,295

3.73

9,236,421

91,863

3.98

Total Earning Assets

14,262,777

115,276

3.23

%

13,023,318

114,527

3.52

%

Total Non-Earning Assets

1,201,828

1,221,421

Total Assets

$

15,464,605

$

14,244,739

Liabilities:

Interest-bearing deposits:

Interest-bearing deposits

$

5,027,466

$

2,408

0.19

%

$

4,616,988

$

3,709

0.32

%

Money market deposits

2,514,429

872

0.14

2,086,322

835

0.16

Savings deposits

1,867,411

441

0.09

1,660,528

476

0.11

Certificates and other time deposits

676,661

573

0.34

859,334

1,180

0.55

Total Interest-bearing Deposits

10,085,967

4,294

0.17

9,223,172

6,200

0.27

Borrowings

616,572

2,966

1.92

675,117

3,188

1.89

Total Interest-bearing Liabilities

10,702,539

7,260

0.27

9,898,289

9,388

0.38

Noninterest-bearing deposits

2,731,723

2,344,746

Other liabilities

139,120

161,272

Total Liabilities

13,573,382

12,404,307

Stockholders' Equity

1,891,223

1,840,432

Total Liabilities and Stockholders' Equity

$

15,464,605

7,260

$

14,244,739

9,388

Net Interest Income (FTE)

$

108,016

$

105,139

Net Interest Spread (FTE)(4)

2.96

%

3.14

%

Net Interest Margin (FTE):

Interest Income (FTE) / Average Earning Assets

3.23

%

3.52

%

Interest Expense / Average Earning Assets

0.20

%

0.29

%

Net Interest Margin (FTE)(5)

3.03

%

3.23

%

(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 2022 and 2021. These totals equal $5,736 and $4,711 for the three months ended March 31, 2022 and 2021, 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") - NON-GAAP

(Dollars In Thousands, Except Per Share Amounts)

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

2021

2021

2021

Net Income Available to Common Shareholders - GAAP

$

48,586

$

47,733

$

52,770

$

55,559

$

49,469

Adjustments:

PPP loan income

(1,884

)

(3,721

)

(8,211

)

(9,725

)

(9,243

)

Tax on adjustment

462

912

2,013

2,385

2,266

Adjust Net Income Available to Common Stockholders - Non-GAAP

$

47,164

$

44,924

$

46,572

$

48,219

$

42,492

Average Diluted Shares Outstanding (in thousands)

53,616

53,660

53,960

54,184

54,134

Diluted Earnings Per Share - GAAP

$

0.91

$

0.89

$

0.98

$

1.03

$

0.91

Adjustments:

PPP loan income

(0.04

)

(0.07

)

(0.15

)

(0.18

)

(0.17

)

Tax on adjustment

0.01

0.02

0.04

0.04

0.04

Adjusted Diluted Earnings Per Share - Non-GAAP

$

0.88

$

0.84

$

0.87

$

0.89

$

0.78

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


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