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First Merchants Corporation Announces Second Quarter 2021 Earnings Per Share

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MUNCIE, Ind., July 26, 2021 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported second quarter 2021 net income of $55.6 million compared to $33 million during the same period in 2020. Earnings per share for the period totaled $1.03 per share compared to the second quarter of 2020 result of $.62 per share. Year-to-date net income totaled $105 million compared to $67.3 million during the six months ended June 30, 2020. Year-to-date earnings per share totaled $1.94 compared to $1.24 during the same period in 2020.

Total assets equaled $14.9 billion as of the quarter-ended June 30, 2021 and loans totaled $9.1 billion. The Corporation experienced organic loan growth of $289.6 million, or 3.4 percent during the last twelve months, offset by the forgiveness of Paycheck Protection Program (“PPP”) loans which accounted for a decline of $466.9 million. As a result, the loan portfolio decreased by $177.3 million, or 1.9 percent, during that period. Organic loan growth, on an annualized basis, was 6.7 percent in the second quarter 2021. Investments increased $1.4 billion, or 48.7 percent, during the last twelve months and now total $4.1 billion. Total deposits equaled $12.2 billion as of quarter-end and increased by $1.2 billion, or 11.3 percent, from the same period in 2020.

The Corporation’s Allowance for Credit Losses – Loans totaled $199.8 million as of quarter-end, or 2.19% of total loans. Net charge-offs for the quarter totaled $1.3 million and no provision expense was recorded. Provision expense taken during the three and six months ended June 30, 2020 of $21.9 million and $41.6 million, respectively, reflected our view of increased credit risk related to the COVID-19 pandemic. Non-accrual loans as of quarter-end totaled $57.6 million.

Mark Hardwick, Chief Executive Officer, stated, “Our management team is pleased with our record setting second quarter net income. It’s very satisfying to achieve great financial results while serving our clients and communities. Our healthy levels of loan growth, earning asset growth, credit quality, capital levels and efficiency will lead us into the future. I am proud of our teammates for staying focused on our goals and continuously finding ways to win for our stakeholders.”

Net-interest income for the quarter totaled $104.3 million, an increase of $11.2 million from the second quarter of 2020, or 12.1 percent. Net interest margin, on a tax equivalent basis, totaling 3.22 percent, increased by 3 basis points compared to the second quarter of 2020. Yields on earning assets for the second quarter totaled 3.49 percent and cost of supporting liabilities totaled 27 basis points. Fair value accretion contributed less to margin as it accounted for 7 basis points in the second quarter of 2021, compared to 12 basis points in the second quarter of 2020. PPP loans contributed 15 basis points to margin during the second quarter of 2021, but subtracted 6 basis points from margin in the same quarter of 2020.

Non-interest income totaled $30.9 million for the quarter, a $4.4 million increase over the second quarter of 2020. Gains from the sale of mortgage loans were exceptionally strong and enhanced by a large portfolio mortgage loan sale contributing a gain of $2.9 million during the quarter. Fiduciary and wealth management fees increased $1.9 million over the second quarter of 2020, which was offset by a decline in card payment fees due to the adoption of the Durbin Amendment. Non-interest expense totaled $69.3 million for the quarter compared to $60 million in the second quarter of 2020 and $66.1 million in the first quarter of 2021. Total expenses in the second quarter of 2020 were unusually low and reflected a $2.3 million deferral of salary expense related to PPP loan originations, a $1.1 million reduction in bonus accruals and a $1.6 million decrease in processing fees related to termination of a debit card rewards program. Total expenses increased on a linked quarter basis primarily due to increased salaries and incentives.

The loan to deposit ratio now totals 74.9 percent and loan to asset ratio totals 61.3 percent. As of June 30, 2021, the Corporation’s total risk-based capital ratio equaled 14.23 percent, the common equity tier 1 capital ratio equaled 11.94 percent, and the tangible common equity ratio totaled 9.04 percent. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

CONFERENCE CALL

First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 2:30 p.m. (ET) on Monday, July 26, 2021.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's second quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until August 26, 2021. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529, Canada participants should dial 855-669-9658, or for International participants, dial +1 412-317-0088. The replay access code is 10157361.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme210726.html during the time of the call. A replay of the web cast will be available until July 26, 2022.

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank. The Bank also operates as First Merchants Private Wealth Advisors (as a division of First Merchants Bank).

First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company’s Internet web page (http://www.firstmerchants.com).

FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.

Forward-Looking Statements

This release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These statements include statements of First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity, credit and interest rate risks associated with the First Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, First Merchants’ past results of operations do not necessarily indicate its anticipated future results.


CONSOLIDATED BALANCE SHEETS

(Dollars In Thousands)

June 30,

2021

2020

ASSETS

Cash and cash equivalents

$

167,596

$

229,759

Interest-bearing deposits

438,863

380,021

Investment securities, net of allowance for credit losses of $245,000 and $0

4,148,314

2,789,379

Loans held for sale

18,582

901

Loans

9,121,250

9,298,541

Less: Allowance for credit losses - loans

(199,775

)

(121,119

)

Net loans

8,921,475

9,177,422

Premises and equipment

103,822

112,548

Federal Home Loan Bank stock

28,736

28,736

Interest receivable

54,173

57,063

Goodwill and other intangibles

573,786

575,855

Cash surrender value of life insurance

294,462

290,715

Other real estate owned

601

7,367

Tax asset, deferred and receivable

36,924

13,126

Other assets

135,763

156,486

TOTAL ASSETS

$

14,923,097

$

13,819,378

LIABILITIES

Deposits:

Noninterest-bearing

$

2,479,853

$

2,260,351

Interest-bearing

9,723,547

8,705,637

Total Deposits

12,203,400

10,965,988

Borrowings:

Securities sold under repurchase agreements

146,904

181,150

Federal Home Loan Bank advances

334,243

400,817

Subordinated debentures and other borrowings

118,498

285,197

Total Borrowings

599,645

867,164

Interest payable

2,929

5,587

Other liabilities

245,323

171,544

Total Liabilities

13,051,297

12,010,283

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 - 53,972,386 and 53,795,500 shares

6,747

6,724

Additional paid-in capital

1,009,182

1,002,962

Retained earnings

795,666

735,439

Accumulated other comprehensive income

60,080

63,845

Total Stockholders' Equity

1,871,800

1,809,095

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

14,923,097

$

13,819,378


CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

Six Months Ended

(Dollars In Thousands, Except Per Share Amounts)

June 30,

June 30,

2021

2020

2021

2020

INTEREST INCOME

Loans receivable:

Taxable

$

87,002

$

87,312

$

172,107

$

183,964

Tax-exempt

5,545

5,359

10,884

10,674

Investment securities:

Taxable

7,440

6,147

14,135

13,778

Tax-exempt

13,071

10,019

25,456

19,354

Deposits with financial institutions

129

134

243

709

Federal Home Loan Bank stock

88

281

266

580

Total Interest Income

113,275

109,252

223,091

229,059

INTEREST EXPENSE

Deposits

5,823

12,707

12,023

34,455

Federal funds purchased

2

2

4

113

Securities sold under repurchase agreements

75

92

162

444

Federal Home Loan Bank advances

1,452

1,794

2,894

3,568

Subordinated debentures and other borrowings

1,659

1,639

3,316

3,584

Total Interest Expense

9,011

16,234

18,399

42,164

NET INTEREST INCOME

104,264

93,018

204,692

186,895

Provision for credit losses - loans

21,895

41,647

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

104,264

71,123

204,692

145,248

OTHER INCOME

Service charges on deposit accounts

5,596

4,312

10,860

10,282

Fiduciary and wealth management fees

7,510

5,601

13,932

11,586

Card payment fees

4,159

6,097

8,526

12,004

Net gains and fees on sales of loans

8,325

3,674

12,311

7,037

Derivative hedge fees

943

1,042

1,260

2,981

Other customer fees

368

333

736

731

Earnings on cash surrender value of life insurance

1,205

1,326

2,541

2,686

Net realized gains on sales of available for sale securities

1,761

3,068

3,560

7,680

Other income

1,017

1,028

1,249

1,293

Total Other Income

30,884

26,481

54,975

56,280

OTHER EXPENSES

Salaries and employee benefits

42,438

35,698

81,249

74,941

Net occupancy

5,615

5,447

12,106

11,248

Equipment

4,848

4,489

9,878

8,833

Marketing

1,122

2,092

2,246

3,535

Outside data processing fees

4,698

2,618

8,942

6,817

Printing and office supplies

313

279

596

666

Intangible asset amortization

1,464

1,511

2,821

3,025

FDIC assessments

1,461

1,472

2,829

2,995

Other real estate owned and foreclosure expenses

178

684

912

1,189

Professional and other outside services

2,976

1,553

5,519

3,811

Other expenses

4,182

4,146

8,295

9,100

Total Other Expenses

69,295

59,989

135,393

126,160

INCOME BEFORE INCOME TAX

65,853

37,615

124,274

75,368

Income tax expense

10,294

4,623

19,246

8,113

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS

$

55,559

$

32,992

$

105,028

$

67,255

Per Share Data:

Basic Net Income Available to Common Stockholders

$

1.03

$

0.62

$

1.95

$

1.24

Diluted Net Income Available to Common Stockholders

$

1.03

$

0.62

$

1.94

$

1.24

Cash Dividends Paid

$

0.29

$

0.26

$

0.55

$

0.52

Average Diluted Shares Outstanding (in thousands)

54,184

53,943

54,159

54,430


FINANCIAL HIGHLIGHTS

(Dollars in thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

NET CHARGE-OFFS

$

1,307

$

230

$

4,928

$

812

AVERAGE BALANCES:

Total Assets

$

14,758,597

$

13,655,322

$

14,503,087

$

13,114,280

Total Loans

9,282,524

9,180,610

9,259,600

8,853,591

Total Earning Assets

13,558,956

12,187,442

13,292,617

11,739,936

Total Deposits

12,125,153

10,789,909

11,848,075

10,338,091

Total Stockholders' Equity

1,846,037

1,795,509

1,843,250

1,805,963

FINANCIAL RATIOS:

Return on Average Assets

1.51

%

0.97

%

1.45

%

1.03

%

Return on Average Stockholders' Equity

12.04

7.35

11.40

7.45

Return on Average Common Stockholders' Equity

12.04

7.35

11.40

7.45

Average Earning Assets to Average Assets

91.87

89.25

91.65

89.52

Allowance for Credit Losses - Loans as % of Total Loans

2.19

1.30

2.19

1.30

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

0.06

0.01

0.11

0.02

Average Stockholders' Equity to Average Assets

12.51

13.15

12.71

13.77

Tax Equivalent Yield on Average Earning Assets

3.49

3.72

3.51

4.04

Interest Expense/Average Earning Assets

0.27

0.53

0.28

0.72

Net Interest Margin (FTE) on Average Earning Assets

3.22

3.19

3.23

3.32

Efficiency Ratio

48.91

47.95

49.54

50.09

Tangible Common Book Value Per Share

$

24.15

$

23.04

$

24.15

$

23.04


NON-PERFORMING ASSETS

(Dollars In Thousands)

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

Non-Accrual Loans

$

57,556

$

57,923

$

61,471

$

56,739

$

50,102

Renegotiated Loans

629

655

3,240

2,677

1,086

Non-Performing Loans (NPL)

58,185

58,578

64,711

59,416

51,188

Other Real Estate Owned and Repossessions

601

604

940

6,984

7,409

Non-Performing Assets (NPA)

58,786

59,182

65,651

66,400

58,597

90+ Days Delinquent

183

1,093

746

1,330

4,981

NPAs & 90 Day Delinquent

$

58,969

$

60,275

$

66,397

$

67,730

$

63,578

Allowance for Credit Losses - Loans

$

199,775

$

201,082

$

130,648

$

126,726

$

121,119

Quarterly Net Charge-offs

1,307

3,621

560

6,937

230

NPAs / Actual Assets %

0.39

%

0.40

%

0.47

%

0.48

%

0.42

%

NPAs & 90 Day / Actual Assets %

0.40

%

0.41

%

0.47

%

0.49

%

0.46

%

NPAs / Actual Loans and OREO %

0.64

%

0.63

%

0.71

%

0.72

%

0.63

%

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

2.19

%

2.16

%

1.41

%

1.37

%

1.30

%

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

0.06

%

0.16

%

0.02

%

0.30

%

0.01

%


CONSOLIDATED BALANCE SHEETS

(Dollars In Thousands)

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

ASSETS

Cash and cash equivalents

$

167,596

$

187,901

$

192,896

$

164,632

$

229,759

Interest-bearing deposits

438,863

392,806

392,305

273,936

380,021

Investment securities, net of allowance for credit losses

4,148,314

3,700,857

3,146,787

2,933,286

2,789,379

Loans held for sale

18,582

4,430

3,966

3,183

901

Loans

9,121,250

9,318,228

9,243,174

9,243,833

9,298,541

Less: Allowance for credit losses - loans

(199,775

)

(201,082

)

(130,648

)

(126,726

)

(121,119

)

Net loans

8,921,475

9,117,146

9,112,526

9,117,107

9,177,422

Premises and equipment

103,822

109,432

111,062

112,959

112,548

Federal Home Loan Bank stock

28,736

28,736

28,736

28,736

28,736

Interest receivable

54,173

54,662

53,948

52,992

57,063

Goodwill and other intangibles

573,786

571,536

572,893

574,369

575,855

Cash surrender value of life insurance

294,462

293,766

292,745

291,543

290,715

Other real estate owned

601

604

940

6,942

7,367

Tax asset, deferred and receivable

36,924

40,163

12,340

21,762

13,126

Other assets

135,763

127,027

146,066

155,903

156,486

TOTAL ASSETS

$

14,923,097

$

14,629,066

$

14,067,210

$

13,737,350

$

13,819,378

LIABILITIES

Deposits:

Noninterest-bearing

$

2,479,853

$

2,494,891

$

2,298,138

$

2,187,607

$

2,260,351

Interest-bearing

9,723,547

9,456,889

9,063,472

8,718,546

8,705,637

Total Deposits

12,203,400

11,951,780

11,361,610

10,906,153

10,965,988

Borrowings:

Federal funds purchased

80,000

Securities sold under repurchase agreements

146,904

185,721

177,102

187,732

181,150

Federal Home Loan Bank advances

334,243

359,337

389,430

399,522

400,817

Subordinated debentures and other borrowings

118,498

118,439

118,380

118,320

285,197

Total Borrowings

599,645

663,497

684,912

785,574

867,164

Interest payable

2,929

4,020

3,287

5,038

5,587

Other liabilities

245,323

203,913

141,756

206,929

171,544

Total Liabilities

13,051,297

12,823,210

12,191,565

11,903,694

12,010,283

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

6,747

6,744

6,740

6,736

6,724

Additional paid-in capital

1,009,182

1,007,300

1,005,366

1,003,777

1,002,962

Retained earnings

795,666

755,877

788,578

757,550

735,439

Accumulated other comprehensive income

60,080

35,810

74,836

65,468

63,845

Total Stockholders' Equity

1,871,800

1,805,856

1,875,645

1,833,656

1,809,095

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

14,923,097

$

14,629,066

$

14,067,210

$

13,737,350

$

13,819,378


CONSOLIDATED STATEMENTS OF INCOME

(Dollars In Thousands, Except Per Share Amounts)

June 30

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

INTEREST INCOME

Loans receivable:

Taxable

$

87,002

$

85,105

$

90,138

$

84,162

$

87,312

Tax-exempt

5,545

5,339

5,414

5,395

5,359

Investment securities:

Taxable

7,440

6,695

5,263

5,399

6,147

Tax-exempt

13,071

12,385

12,056

10,931

10,019

Deposits with financial institutions

129

114

139

90

134

Federal Home Loan Bank stock

88

178

214

248

281

Total Interest Income

113,275

109,816

113,224

106,225

109,252

INTEREST EXPENSE

Deposits

5,823

6,200

7,509

9,776

12,707

Federal funds purchased

2

2

2

5

2

Securities sold under repurchase agreements

75

87

77

83

92

Federal Home Loan Bank advances

1,452

1,442

1,656

1,749

1,794

Subordinated debentures and other borrowings

1,659

1,657

1,669

1,691

1,639

Total Interest Expense

9,011

9,388

10,913

13,304

16,234

NET INTEREST INCOME

104,264

100,428

102,311

92,921

93,018

Provision for credit losses - loans

4,482

12,544

21,895

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

104,264

100,428

97,829

80,377

71,123

OTHER INCOME

Service charges on deposit accounts

5,596

5,264

5,508

5,209

4,312

Fiduciary and wealth management fees

7,510

6,422

6,251

5,910

5,601

Card payment fees

4,159

4,367

3,502

3,996

6,097

Net gains and fees on sales of loans

8,325

3,986

5,393

5,841

3,674

Derivative hedge fees

943

317

2,281

1,715

1,042

Other customer fees

368

368

394

372

333

Earnings on cash surrender value of life insurance

1,205

1,336

1,283

1,171

1,326

Net realized gains on sales of available for sale securities

1,761

1,799

2,398

1,817

3,068

Other income

1,017

232

473

132

1,028

Total Other Income

30,884

24,091

27,483

26,163

26,481

OTHER EXPENSES

Salaries and employee benefits

42,438

38,811

41,809

39,187

35,698

Net occupancy

5,615

6,491

9,653

5,855

5,447

Equipment

4,848

5,030

5,555

4,956

4,489

Marketing

1,122

1,124

1,763

1,311

2,092

Outside data processing fees

4,698

4,244

3,839

3,776

2,618

Printing and office supplies

313

283

307

331

279

Intangible asset amortization

1,464

1,357

1,476

1,486

1,511

FDIC assessments

1,461

1,368

1,560

1,249

1,472

Other real estate owned and foreclosure expenses

178

734

(1,576

)

717

684

Professional and other outside services

2,976

2,543

2,836

2,254

1,553

Other expenses

4,182

4,113

5,314

3,587

4,146

Total Other Expenses

69,295

66,098

72,536

64,709

59,989

INCOME BEFORE INCOME TAX

65,853

58,421

52,776

41,831

37,615

Income tax expense

10,294

8,952

7,641

5,621

4,623

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS

$

55,559

$

49,469

$

45,135

$

36,210

$

32,992

Per Share Data:

Basic Net Income Available to Common Stockholders

$

1.03

$

0.92

$

0.83

$

0.67

$

0.62

Diluted Net Income Available to Common Stockholders

$

1.03

$

0.91

$

0.83

$

0.67

$

0.62

Cash Dividends Paid

$

0.29

$

0.26

$

0.26

$

0.26

$

0.26

Average Diluted Shares Outstanding (in thousands)

54,184

54,134

54,050

53,971

53,943

FINANCIAL RATIOS:

Return on Average Assets

1.51

%

1.39

%

1.29

%

1.06

%

0.97

%

Return on Average Stockholders' Equity

12.04

10.75

9.72

7.91

7.35

Return on Average Common Stockholders' Equity

12.04

10.75

9.72

7.91

7.35

Average Earning Assets to Average Assets

91.87

91.43

90.66

90.34

89.25

Allowance for Credit Losses - Loans as % of Total Loans

2.19

2.16

1.41

1.37

1.30

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

0.06

0.16

0.02

0.30

0.01

Average Stockholders' Equity to Average Assets

12.51

12.92

13.29

13.41

13.15

Tax Equivalent Yield on Average Earning Assets

3.49

3.52

3.72

3.58

3.72

Interest Expense/Average Earning Assets

0.27

0.29

0.34

0.43

0.53

Net Interest Margin (FTE) on Average Earning Assets

3.22

3.23

3.38

3.15

3.19

Efficiency Ratio

48.91

50.23

55.01

51.40

47.95

Tangible Common Book Value Per Share

$

24.15

$

22.98

$

24.27

$

23.48

$

23.04


LOANS

(Dollars In Thousands)

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

Commercial and industrial loans

$

2,671,076

$

2,876,212

$

2,776,699

$

2,875,331

$

2,898,329

Agricultural land, production and other loans to farmers

235,020

245,631

281,884

301,192

316,815

Real estate loans:

Construction

491,200

541,224

484,723

622,084

640,560

Commercial real estate, non-owner occupied

2,263,497

2,178,832

2,220,949

2,098,589

2,097,767

Commercial real estate, owner occupied

953,501

950,038

958,501

931,815

919,254

Residential

1,127,442

1,239,925

1,234,741

1,146,406

1,145,187

Home equity

489,997

482,229

508,259

527,458

532,314

Individuals' loans for household and other personal expenditures

130,819

126,387

129,479

125,411

123,611

Public finance and other commercial loans

758,698

677,750

647,939

615,547

624,704

Loans

9,121,250

9,318,228

9,243,174

9,243,833

9,298,541

Allowance for credit losses - loans

(199,775

)

(201,082

)

(130,648

)

(126,726

)

(121,119

)

NET LOANS

$

8,921,475

$

9,117,146

$

9,112,526

$

9,117,107

$

9,177,422


DEPOSITS

(Dollars In Thousands)

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

Demand deposits

$

7,261,603

$

7,245,850

$

6,821,152

$

6,279,554

$

6,288,360

Savings deposits

4,157,552

3,857,624

3,661,713

3,518,286

3,278,156

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

304,394

332,745

346,194

467,610

607,474

Other certificates and time deposits

423,922

449,655

459,168

542,919

669,119

Brokered deposits

55,929

65,906

73,383

97,784

122,879

TOTAL DEPOSITS

$

12,203,400

$

11,951,780

$

11,361,610

$

10,906,153

$

10,965,988


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS

(Dollars in Thousands)

For the Three Months Ended

June 30, 2021

June 30, 2020

Average Balance

Interest
Income /
Expense

Average
Rate

Average Balance

Interest
Income /
Expense

Average
Rate

Assets:

Interest-bearing deposits

$

545,752

$

129

0.09

%

$

378,489

$

134

0.14

%

Federal Home Loan Bank stock

28,736

88

1.22

28,736

281

3.91

Investment Securities: (1)

Taxable

1,732,367

7,440

1.72

1,282,080

6,147

1.92

Tax-Exempt (2)

1,969,577

16,546

3.36

1,317,527

12,682

3.85

Total Investment Securities

3,701,944

23,986

2.59

2,599,607

18,829

2.90

Loans held for sale

25,039

237

3.79

12,630

131

4.15

Loans: (3)

Commercial

6,953,227

70,886

4.08

6,890,010

69,463

4.03

Real Estate Mortgage

912,662

9,488

4.16

887,257

10,122

4.56

Installment

659,515

6,391

3.88

724,165

7,596

4.20

Tax-Exempt (2)

732,081

7,019

3.84

666,548

6,784

4.07

Total Loans

9,282,524

94,021

4.05

9,180,610

94,096

4.10

Total Earning Assets

13,558,956

118,224

3.49

%

12,187,442

113,340

3.72

%

Net unrealized gain (loss) on securities available for sale

44,250

56,807

Allowance for credit losses

(201,051

)

(106,858

)

Cash and cash equivalents

171,489

303,491

Premises and equipment

107,369

113,528

Other assets

1,077,584

1,100,912

Total Assets

$

14,758,597

$

13,655,322

Liabilities:

Interest-bearing deposits:

Interest-bearing deposits

$

4,745,181

$

3,560

0.30

%

$

3,951,819

$

4,186

0.42

%

Money market deposits

2,337,143

796

0.14

1,673,104

1,696

0.41

Savings deposits

1,740,233

462

0.11

1,521,312

596

0.16

Certificates and other time deposits

812,370

1,005

0.49

1,498,002

6,229

1.66

Total Interest-bearing Deposits

9,634,927

5,823

0.24

8,644,237

12,707

0.59

Borrowings

644,702

3,188

1.98

909,258

3,527

1.55

Total Interest-bearing Liabilities

10,279,629

9,011

0.35

9,553,495

16,234

0.68

Noninterest-bearing deposits

2,490,226

2,145,672

Other liabilities

142,705

160,646

Total Liabilities

12,912,560

11,859,813

Stockholders' Equity

1,846,037

1,795,509

Total Liabilities and Stockholders' Equity

$

14,758,597

9,011

$

13,655,322

16,234

Net Interest Income (FTE)

$

109,213

$

97,106

Net Interest Spread (FTE) (4)

3.14

%

3.04

%

Net Interest Margin (FTE):

Interest Income (FTE) / Average Earning Assets

3.49

%

3.72

%

Interest Expense / Average Earning Assets

0.27

%

0.53

%

Net Interest Margin (FTE) (5)

3.22

%

3.19

%

(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 2021 and 2020. These totals equal $4,949 and $4,088 for the three months ended June 30, 2021 and 2020, respectively.

(3) Non accruing loans have been included in the average balances.

(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.

(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS

(Dollars in Thousands)

For the Six Months Ended

June 30, 2021

June 30, 2020

Average Balance

Interest
Income /
Expense

Average
Rate

Average Balance

Interest
Income /
Expense

Average
Rate

Assets:

Interest-bearing deposits

$

493,791

$

243

0.10

%

$

269,174

$

709

0.53

%

Federal Home Loan Bank stock

28,736

266

1.85

28,736

580

4.04

Investment Securities: (1)

Taxable

1,613,847

14,135

1.75

1,325,313

13,778

2.08

Tax-Exempt (2)

1,896,643

32,223

3.40

1,263,122

24,499

3.88

Total Investment Securities

3,510,490

46,358

2.64

2,588,435

38,277

2.96

Loans held for sale

20,572

393

3.82

14,924

324

4.34

Loans: (3)

Commercial

6,915,234

140,060

4.05

6,562,673

146,415

4.46

Real Estate Mortgage

943,830

18,774

3.98

878,956

20,524

4.67

Installment

666,870

12,880

3.86

741,889

16,701

4.50

Tax-Exempt (2)

713,094

13,777

3.86

655,149

13,511

4.12

Total Loans

9,259,600

185,884

4.01

8,853,591

197,475

4.46

Total Earning Assets

13,292,617

232,751

3.51

%

11,739,936

237,041

4.04

%

Net unrealized gain on securities available for sale

49,922

52,732

Allowance for credit losses

(202,693

)

(94,009

)

Cash and cash equivalents

168,647

231,624

Premises and equipment

109,170

113,670

Other assets

1,085,424

1,070,327

Total Assets

$

14,503,087

$

13,114,280

Liabilities:

Interest-bearing deposits:

Interest-bearing deposits

$

4,681,439

$

7,269

0.31

%

$

3,770,530

$

12,461

0.66

%

Money market deposits

2,212,425

1,631

0.15

1,604,474

5,479

0.68

Savings deposits

1,700,601

938

0.11

1,473,183

2,424

0.33

Certificates and other time deposits

835,722

2,185

0.52

1,582,322

14,091

1.78

Total Interest-bearing Deposits

9,430,187

12,023

0.25

8,430,509

34,455

0.82

Borrowings

659,826

6,376

1.93

828,721

7,709

1.86

Total Interest-bearing Liabilities

10,090,013

18,399

0.36

9,259,230

42,164

0.91

Noninterest-bearing deposits

2,417,888

1,907,582

Other liabilities

151,936

141,505

Total Liabilities

12,659,837

11,308,317

Stockholders' Equity

1,843,250

1,805,963

Total Liabilities and Stockholders' Equity

$

14,503,087

18,399

$

13,114,280

42,164

Net Interest Income (FTE)

$

214,352

$

194,877

Net Interest Spread (FTE) (4)

3.15

%

3.13

%

Net Interest Margin (FTE):

Interest Income (FTE) / Average Earning Assets

3.51

%

4.04

%

Interest Expense / Average Earning Assets

0.28

%

0.72

%

Net Interest Margin (FTE) (5)

3.23

%

3.32

%

(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 2021 and 2020. These totals equal $9,660 and $7,982 for the six months ended June 30, 2021 and 2020, respectively.

(3) Non accruing loans have been included in the average balances.

(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.

(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

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