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First Merchants Corporation Announces 3.8 Percent Increase in Second Quarter 2019 Earnings per Share
Globe Newswire 25-Jul-2019 8:00 AM
MUNCIE, Ind., July 25, 2019 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported second quarter 2019 net income of $41.1 million, an increase of 3.6 percent, compared to $39.6 million during the same period in 2018. Earnings per share for the period totaled $.83 per share, an increase of 3.8 percent, compared to the second quarter of 2018 result of $.80 per share.
Total assets equaled $10.7 billion as of quarter-end and loans totaled $7.5 billion. The Corporation's loan portfolio increased, by $434 million, or 6.1 percent, during the past twelve months. Investments increased $473 million, or 29.2 percent, during the same period and now total $2.1 billion. Total deposits equaled $8.3 billion as of quarter-end and increased by $816 million, or 10.9 percent, while borrowings, totaling $793 million, declined during the period by $46 million, or 5.5 percent. As a result, the loan-to-deposit ratio now totals 90.4 percent and loan-to-asset ratio totals 70 percent. Additionally, the Corporation's total risk-based capital ratio equaled 14.56 percent, common equity tier 1 capital ratio equaled 12.05 percent, and the tangible common equity ratio totaled 10.07 percent.
Michael C. Rechin, President and Chief Executive Officer, stated, "Our second quarter of 2019 results continued to reflect effective market coverage by our bankers coupled with healthy levels of activity from our commercial and consumer clients throughout our franchise. We are pleased with our execution producing second quarter organic loan growth of 11.8% and deposit growth of 13.5% on an annualized basis. Net Income and earnings per share improved during the quarter despite margin pressure and legal and settlement expenses of $1.3 million reflected in our marketing line item. We continue to anticipate closing our acquisition with Monroe Bank & Trust during the third quarter of 2019 and completing the integration in the fourth quarter of 2019."
Net interest income for the quarter totaled $85.3 million, an increase of $707,000, even as net interest margin totaling 3.71 percent declined from the same period in 2018 by 28 basis points. Yields on earning assets increased by 12 basis points totaling 4.86 percent and the cost of supporting liabilities increased by 40 basis points and totaled 1.15 percent. Fair value accretion negatively impacted yields as it declined from 18 basis points in second quarter of 2018 to 9 basis points in 2019. Additionally, strong growth in institutional deposits and deployment into the bond portfolio produced earnings per share of $.01 for the quarter but negatively impacted net interest margin by 10 basis points.
Non-interest income totaled $21.6 million for the quarter, a $3.4 million, or 18.8 percent increase from the second quarter of 2018. Customer-specific line items accounted for $2.4 million of the increase while being fueled by derivative hedge income growth of $1.3 million. Non-interest expense totaled $57.6 million up from the 2018 total of $53.5 million. Of the $4.1 million increase, $1.3 million was related to the fair lending legal and settlement expenses, with the remaining in professional services - $587,000, equipment - $561,000, other real estate expense - $541,000, and salary and benefits - $517,000.
The Corporation's provision expense totaled $500,000 and net charge-offs were just $128,000. The allowance for loan losses reached $81.3 million as of June 30, 2019, up from $77.5 million as of June 30, 2018. Non-accrual loans declined to $25.6 million as of quarter-end and the allowance was 1.08 percent of total loans and 1.19 percent of non-purchased loans.
CONFERENCE CALL
First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, July 25, 2019.
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 25, 2019. 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 10132272.
In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme190725.html during the time of the call. A replay of the web cast will be available until July 25, 2020.
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,
2019
2018
ASSETS
Cash and cash equivalents
$
128,185
$
133,893
Interest-bearing time deposits
129,614
36,599
Investment securities
2,092,924
1,619,683
Loans held for sale
5,854
2,046
Loans
7,511,370
7,081,059
Less: Allowance for loan losses
(81,274
)
(77,543
)
Net loans
7,430,096
7,003,516
Premises and equipment
91,767
94,397
Federal Home Loan Bank stock
24,588
24,588
Interest receivable
45,150
38,530
Goodwill and other intangibles
466,736
473,059
Cash surrender value of life insurance
226,241
222,905
Other real estate owned
1,131
9,071
Tax asset, deferred and receivable
12,340
24,619
Other assets
83,231
51,809
TOTAL ASSETS
$
10,737,857
$
9,734,715
LIABILITIES
Deposits:
Noninterest-bearing
$
1,353,165
$
1,571,194
Interest-bearing
6,966,163
5,932,621
Total Deposits
8,319,328
7,503,815
Borrowings:
Federal funds purchased
75,000
109,000
Securities sold under repurchase agreements
119,674
122,513
Federal Home Loan Bank advances
460,042
469,261
Subordinated debentures and term loans
138,574
138,352
Total Borrowings
793,290
839,126
Interest payable
6,740
4,807
Other liabilities
116,863
46,639
Total Liabilities
9,236,221
8,394,387
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 - 49,456,594 and 49,280,188 shares
6,182
6,160
Additional paid-in capital
841,365
836,549
Retained earnings
639,362
522,362
Accumulated other comprehensive income (loss)
14,602
(24,868
)
Total Stockholders' Equity
1,501,636
1,340,328
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
10,737,857
$
9,734,715
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
Six Months Ended
(Dollars In Thousands, Except Per Share Amounts)
June 30,
June 30,
2019
2018
2019
2018
INTEREST INCOME
Loans receivable:
Taxable
$
92,824
$
84,663
$
183,305
$
162,930
Tax-exempt
4,244
3,632
8,397
7,228
Investment securities:
Taxable
6,998
5,434
13,093
10,530
Tax-exempt
7,454
6,246
14,325
12,372
Deposits with financial institutions
784
633
1,659
764
Federal Home Loan Bank stock
335
263
673
667
Total Interest Income
112,639
100,871
221,452
194,491
INTEREST EXPENSE
Deposits
23,087
12,165
42,681
21,167
Federal funds purchased
117
61
210
441
Securities sold under repurchase agreements
342
172
672
345
Federal Home Loan Bank advances
1,692
1,845
3,506
4,004
Subordinated debentures and term loans
2,123
2,057
4,239
4,047
Total Interest Expense
27,361
16,300
51,308
30,004
NET INTEREST INCOME
85,278
84,571
170,144
164,487
Provision for loan losses
500
1,663
1,700
4,163
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
84,778
82,908
168,444
160,324
OTHER INCOME
Service charges on deposit accounts
5,437
5,038
10,532
9,815
Fiduciary and wealth management fees
3,931
3,595
7,749
7,391
Card payment fees
4,829
4,462
9,655
9,056
Net gains and fees on sales of loans
1,736
1,600
3,031
3,421
Derivative hedge fees
1,487
231
2,268
1,073
Other customer fees
341
455
780
897
Earnings on cash surrender value of life insurance
946
1,007
1,935
2,183
Net realized gains on sales of available for sale securities
1,843
1,122
2,983
2,731
Other income
1,064
681
1,394
1,185
Total Other Income
21,614
18,191
40,327
37,752
OTHER EXPENSES
Salaries and employee benefits
32,709
32,192
65,737
64,418
Net occupancy
4,469
4,348
9,496
9,018
Equipment
4,117
3,556
7,759
7,224
Marketing
2,752
1,474
3,826
2,358
Outside data processing fees
3,929
3,462
7,613
6,426
Printing and office supplies
334
324
649
658
Intangible asset amortization
1,520
1,718
3,048
3,444
FDIC assessments
678
711
1,385
1,430
Other real estate owned and foreclosure expenses
903
362
2,068
764
Professional and other outside services
2,376
1,789
4,260
3,330
Other expenses
3,800
3,568
8,367
8,121
Total Other Expenses
57,587
53,504
114,208
107,191
INCOME BEFORE INCOME TAX
48,805
47,595
94,563
90,885
Income tax expense
7,749
7,961
14,690
14,572
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
41,056
$
39,634
$
79,873
$
76,313
Per Share Data:
Basic Net Income Available to Common Stockholders
$
0.83
$
0.80
$
1.62
$
1.55
Diluted Net Income Available to Common Stockholders
$
0.83
$
0.80
$
1.61
$
1.54
Cash Dividends Paid
$
0.26
$
0.22
$
0.48
$
0.40
Average Diluted Shares Outstanding (in thousands)
49,550
49,451
49,545
49,440
FINANCIAL HIGHLIGHTS
(Dollars in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
NET CHARGE-OFFS
$
128
$
540
$
978
$
1,652
AVERAGE BALANCES:
Total Assets
$
10,499,948
$
9,697,020
$
10,291,205
$
9,535,774
Total Loans
7,385,315
6,975,737
7,308,146
6,893,867
Total Earning Assets
9,518,892
8,741,173
9,326,579
8,579,076
Total Deposits
8,321,459
7,636,821
8,130,120
7,396,328
Total Stockholders' Equity
1,479,254
1,327,341
1,454,633
1,318,124
FINANCIAL RATIOS:
Return on Average Assets
1.56
%
1.63
%
1.55
%
1.60
%
Return on Average Stockholders' Equity
11.10
11.94
10.98
11.58
Return on Average Common Stockholders' Equity
11.10
11.95
10.98
11.58
Average Earning Assets to Average Assets
90.66
90.14
90.63
89.97
Allowance for Loan Losses as % of Total Loans
1.08
1.09
1.08
1.09
Net Charge-offs as % of Average Loans (Annualized)
0.01
0.03
0.03
0.05
Average Stockholders' Equity to Average Assets
14.09
13.69
14.13
13.82
Tax Equivalent Yield on Average Earning Assets
4.86
4.74
4.88
4.66
Interest Expense/Average Earning Assets
1.15
0.75
1.10
0.70
Net Interest Margin (FTE) on Average Earning Assets
3.71
3.99
3.78
3.96
Efficiency Ratio
51.00
49.32
51.09
50.30
Tangible Common Book Value Per Share
$
21.01
$
17.71
$
21.01
$
17.71
NON-PERFORMING ASSETS
(Dollars In Thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2019
2019
2018
2018
2018
Non-Accrual Loans
$
25,635
$
27,949
$
26,148
$
20,421
$
20,143
Renegotiated Loans
640
709
1,103
968
544
Non-Performing Loans (NPL)
26,275
28,658
27,251
21,389
20,687
Other Real Estate Owned
1,131
1,877
2,179
8,859
9,071
Non-Performing Assets (NPA)
27,406
30,535
29,430
30,248
29,758
90+ Days Delinquent
209
134
1,855
50
184
NPAs & 90 Day Delinquent
$
27,615
$
30,669
$
31,285
$
30,298
$
29,942
Allowance for Loan Losses
$
81,274
$
80,902
$
80,552
$
78,406
$
77,543
Quarterly Net Charge-offs
128
850
(482
)
537
540
NPAs / Actual Assets %
0.26
%
0.30
%
0.30
%
0.31
%
0.31
%
NPAs & 90 Day / Actual Assets %
0.26
%
0.30
%
0.32
%
0.31
%
0.31
%
NPAs / Actual Loans and OREO %
0.36
%
0.42
%
0.41
%
0.43
%
0.42
%
Allowance for Loan Losses / Actual Loans (%)
1.08
%
1.11
%
1.11
%
1.11
%
1.09
%
Net Charge-offs as % of Average Loans (Annualized)
0.01
%
0.05
%
(0.03
)%
0.03
%
0.03
%
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2019
2019
2018
2018
2018
ASSETS
Cash and cash equivalents
$
128,185
$
115,878
$
139,247
$
142,501
$
133,893
Interest-bearing time deposits
129,614
70,672
36,963
66,763
36,599
Investment securities
2,092,924
1,862,659
1,632,582
1,625,251
1,619,683
Loans held for sale
5,854
3,330
4,778
3,022
2,046
Loans
7,511,370
7,299,320
7,224,467
7,088,071
7,081,059
Less: Allowance for loan losses
(81,274
)
(80,902
)
(80,552
)
(78,406
)
(77,543
)
Net loans
7,430,096
7,218,418
7,143,915
7,009,665
7,003,516
Premises and equipment
91,767
91,863
93,420
93,728
94,397
Federal Home Loan Bank stock
24,588
24,588
24,588
24,588
24,588
Interest receivable
45,150
40,931
40,881
38,531
38,530
Goodwill and other intangibles
466,736
468,256
469,784
471,409
473,059
Cash surrender value of life insurance
226,241
225,928
224,939
223,865
222,905
Other real estate owned
1,131
1,877
2,179
8,859
9,071
Tax asset, deferred and receivable
12,340
16,094
23,668
25,933
24,619
Other assets
83,231
70,431
47,772
53,167
51,809
TOTAL ASSETS
$
10,737,857
$
10,210,925
$
9,884,716
$
9,787,282
$
9,734,715
LIABILITIES
Deposits:
Noninterest-bearing
$
1,353,165
$
1,381,183
$
1,447,907
$
1,464,190
$
1,571,194
Interest-bearing
6,966,163
6,666,615
6,306,686
6,168,962
5,932,621
Total Deposits
8,319,328
8,047,798
7,754,593
7,633,152
7,503,815
Borrowings:
Federal funds purchased
75,000
20,000
104,000
90,000
109,000
Securities sold under repurchase agreements
119,674
111,783
113,512
118,824
122,513
Federal Home Loan Bank advances
460,042
345,013
314,986
385,458
469,261
Subordinated debentures and term loans
138,574
138,519
138,463
138,408
138,352
Total Borrowings
793,290
615,315
670,961
732,690
839,126
Interest payable
6,740
7,313
5,607
5,920
4,807
Other liabilities
116,863
84,651
45,295
54,094
46,639
Total Liabilities
9,236,221
8,755,077
8,476,456
8,425,856
8,394,387
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
6,182
6,179
6,169
6,163
6,160
Additional paid-in capital
841,365
839,919
840,052
837,996
836,549
Retained earnings
639,362
611,220
583,336
552,551
522,362
Accumulated other comprehensive income (loss)
14,602
(1,595
)
(21,422
)
(35,409
)
(24,868
)
Total Stockholders' Equity
1,501,636
1,455,848
1,408,260
1,361,426
1,340,328
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
10,737,857
$
10,210,925
$
9,884,716
$
9,787,282
$
9,734,715
CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)
June 30,
March 31,
December 31,
September 30,
June 30,
2019
2019
2018
2018
2018
INTEREST INCOME
Loans receivable:
Taxable
$
92,824
$
90,481
$
91,092
$
88,479
$
84,663
Tax-exempt
4,244
4,153
3,873
3,761
3,632
Investment securities:
Taxable
6,998
6,095
5,553
5,514
5,434
Tax-exempt
7,454
6,871
6,644
6,493
6,246
Deposits with financial institutions
784
875
1,207
270
633
Federal Home Loan Bank stock
335
338
284
283
263
Total Interest Income
112,639
108,813
108,653
104,800
100,871
INTEREST EXPENSE
Deposits
23,087
19,594
16,690
13,685
12,165
Federal funds purchased
117
93
48
229
61
Securities sold under repurchase agreements
342
330
243
174
172
Federal Home Loan Bank advances
1,692
1,814
1,691
2,137
1,845
Subordinated debentures and term loans
2,123
2,116
2,097
2,089
2,057
Total Interest Expense
27,361
23,947
20,769
18,314
16,300
NET INTEREST INCOME
85,278
84,866
87,884
86,486
84,571
Provision for loan losses
500
1,200
1,664
1,400
1,663
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
84,778
83,666
86,220
85,086
82,908
OTHER INCOME
Service charges on deposit accounts
5,437
5,095
5,516
5,619
5,038
Fiduciary and wealth management fees
3,931
3,818
3,842
3,673
3,595
Card payment fees
4,829
4,826
4,393
4,586
4,462
Net gains and fees on sales of loans
1,736
1,295
1,767
1,841
1,600
Derivative hedge fees
1,487
781
645
775
231
Other customer fees
341
439
511
452
455
Earnings on cash surrender value of life insurance
946
989
1,074
961
1,007
Net realized gains on sales of available for sale securities
1,843
1,140
253
1,285
1,122
Other income
1,064
330
1,179
335
681
Total Other Income
21,614
18,713
19,180
19,527
18,191
OTHER EXPENSES
Salaries and employee benefits
32,709
33,028
34,350
32,936
32,192
Net occupancy
4,469
5,027
4,737
4,586
4,348
Equipment
4,117
3,642
3,627
3,483
3,556
Marketing
2,752
1,074
1,107
1,216
1,474
Outside data processing fees
3,929
3,684
3,367
3,422
3,462
Printing and office supplies
334
315
433
334
324
Intangible asset amortization
1,520
1,528
1,625
1,650
1,718
FDIC assessments
678
707
634
856
711
Other real estate owned and foreclosure expenses
903
1,165
251
455
362
Professional and other outside services
2,376
1,884
3,002
1,844
1,789
Other expenses
3,800
4,567
4,605
4,240
3,568
Total Other Expenses
57,587
56,621
57,738
55,022
53,504
INCOME BEFORE INCOME TAX
48,805
45,758
47,662
49,591
47,595
Income tax expense
7,749
6,941
5,949
8,478
7,961
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
41,056
$
38,817
$
41,713
$
41,113
$
39,634
Per Share Data:
Basic Net Income Available to Common Stockholders
$
0.83
$
0.79
$
0.85
$
0.83
$
0.80
Diluted Net Income Available to Common Stockholders
$
0.83
$
0.78
$
0.85
$
0.83
$
0.80
Cash Dividends Paid
$
0.26
$
0.22
$
0.22
$
0.22
$
0.22
Average Diluted Shares Outstanding (in thousands)
49,550
49,541
49,511
49,492
49,451
FINANCIAL RATIOS:
Return on Average Assets
1.56
%
1.54
%
1.68
%
1.69
%
1.63
%
Return on Average Stockholders' Equity
11.10
10.86
12.10
12.10
11.94
Return on Average Common Stockholders' Equity
11.10
10.86
12.10
12.10
11.95
Average Earning Assets to Average Assets
90.66
90.60
90.41
90.30
90.14
Allowance for Loan Losses as % of Total Loans
1.08
1.11
1.11
1.11
1.09
Net Charge-offs as % of Average Loans (Annualized)
0.01
0.05
(0.03
)
0.03
0.03
Average Stockholders' Equity to Average Assets
14.09
14.18
13.90
13.93
13.69
Tax Equivalent Yield on Average Earning Assets
4.86
4.89
4.97
4.88
4.74
Interest Expense/Average Earning Assets
1.15
1.05
0.93
0.83
0.75
Net Interest Margin (FTE) on Average Earning Assets
3.71
3.84
4.04
4.05
3.99
Efficiency Ratio
51.00
51.18
50.97
49.25
49.32
Tangible Common Book Value Per Share
$
21.01
$
20.07
$
19.12
$
18.16
$
17.71
LOANS
(Dollars In Thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2019
2019
2018
2018
2018
Commercial and industrial loans
$
1,877,042
$
1,788,628
$
1,726,664
$
1,655,569
$
1,657,591
Agricultural production financing and other loans to farmers
83,452
80,357
92,404
88,504
89,093
Real estate loans:
Construction
624,548
542,501
545,729
668,608
714,866
Commercial and farmland
2,821,689
2,838,798
2,832,102
2,699,629
2,652,782
Residential
993,802
976,668
966,421
965,893
965,720
Home equity
548,006
536,208
528,157
517,303
518,699
Individuals' loans for household and other personal expenditures
98,384
108,216
99,788
98,709
92,809
Public finance and other commercial loans
464,447
427,944
433,202
393,856
389,499
Loans
7,511,370
7,299,320
7,224,467
7,088,071
7,081,059
Allowance for loan losses
(81,274
)
(80,902
)
(80,552
)
(78,406
)
(77,543
)
NET LOANS
$
7,430,096
$
7,218,418
$
7,143,915
$
7,009,665
$
7,003,516
DEPOSITS
(Dollars In Thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2019
2019
2018
2018
2018
Demand deposits
$
4,309,473
$
4,101,156
$
3,985,178
$
3,870,816
$
3,933,233
Savings deposits
2,358,720
2,338,266
2,282,701
2,212,675
2,099,771
Certificates and other time deposits of $100,000 or more
720,536
670,199
593,592
602,002
555,910
Other certificates and time deposits
729,392
704,527
646,682
625,341
602,239
Brokered deposits
201,207
233,650
246,440
322,318
312,662
TOTAL DEPOSITS
$
8,319,328
$
8,047,798
$
7,754,593
$
7,633,152
$
7,503,815
CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
For the Three Months Ended
June 30, 2019
June 30, 2018
Average Balance
Interest Income / Expense
Average Rate
Average Balance
Interest Income / Expense
Average Rate
Assets:
Interest-bearing time deposits
$
144,626
$
784
2.17
%
$
142,385
$
633
1.78
%
Federal Home Loan Bank stock
24,588
335
5.45
24,588
263
4.28
Investment Securities: (1)
Taxable
1,054,068
6,998
2.66
852,865
5,434
2.55
Tax-Exempt (2)
910,295
9,435
4.15
745,598
7,906
4.24
Total Investment Securities
1,964,363
16,433
3.35
1,598,463
13,340
3.34
Loans held for sale
11,430
127
4.44
6,408
83
5.18
Loans: (3)
Commercial
5,419,169
74,638
5.51
5,142,093
67,510
5.25
Real Estate Mortgage
766,528
8,686
4.53
729,681
8,792
4.82
Installment
677,133
9,373
5.54
631,897
8,278
5.24
Tax-Exempt (2)
511,055
5,372
4.20
465,658
4,597
3.95
Total Loans
7,385,315
98,196
5.32
6,975,737
89,260
5.12
Total Earning Assets
9,518,892
115,748
4.86
%
8,741,173
103,496
4.74
%
Net unrealized gain (loss) on securities available for sale
12,841
(13,068
)
Allowance for loan losses
(81,691
)
(77,197
)
Cash and cash equivalents
130,987
132,481
Premises and equipment
91,563
94,757
Other assets
827,356
818,874
Total Assets
$
10,499,948
$
9,697,020
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits
$
2,935,925
$
8,541
1.16
%
$
2,325,705
$
4,276
0.74
%
Money market deposits
1,220,020
3,509
1.15
1,081,830
1,583
0.59
Savings deposits
1,164,901
2,525
0.87
1,096,003
1,332
0.49
Certificates and other time deposits
1,652,203
8,512
2.06
1,491,207
4,974
1.33
Total Interest-bearing Deposits
6,973,049
23,087
1.32
5,994,745
12,165
0.81
Borrowings
613,446
4,274
2.79
674,040
4,135
2.45
Total Interest-bearing Liabilities
7,586,495
27,361
1.44
6,668,785
16,300
0.98
Noninterest-bearing deposits
1,348,410
1,642,076
Other liabilities
85,789
58,818
Total Liabilities
9,020,694
8,369,679
Stockholders' Equity
1,479,254
1,327,341
Total Liabilities and Stockholders' Equity
$
10,499,948
27,361
$
9,697,020
16,300
Net Interest Income (FTE)
$
88,387
$
87,196
Net Interest Spread (FTE) (4)
3.42
%
3.76
%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets
4.86
%
4.74
%
Interest Expense / Average Earning Assets
1.15
%
0.75
%
Net Interest Margin (FTE) (5)
3.71
%
3.99
%
(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.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2019 and 2018. These totals equal $3,109 and $2,625 for the three months ended June 30, 2019 and 2018, 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, 2019
June 30, 2018
Average Balance
Interest Income / Expense
Average Rate
Average Balance
Interest Income / Expense
Average Rate
Assets:
Interest-bearing time deposits
$
145,277
$
1,659
2.28
%
$
87,883
$
764
1.74
%
Federal Home Loan Bank stock
24,588
673
5.47
24,487
667
5.45
Investment Securities: (1)
Taxable
978,654
13,093
2.68
831,743
10,530
2.53
Tax-Exempt (2)
869,914
18,133
4.17
741,096
15,661
4.23
Total Investment Securities
1,848,568
31,226
3.38
1,572,839
26,191
3.33
Loans held for sale
10,697
239
4.47
8,515
221
5.19
Loans: (3)
Commercial
5,364,884
147,394
5.49
5,061,717
129,663
5.12
Real Estate Mortgage
755,070
17,008
4.51
729,202
16,791
4.61
Installment
671,125
18,664
5.56
627,686
16,255
5.18
Tax-Exempt (2)
506,370
10,629
4.20
466,747
9,149
3.92
Total Loans
7,308,146
193,934
5.31
6,893,867
172,079
4.99
Total Earning Assets
9,326,579
227,492
4.88
%
8,579,076
199,701
4.66
%
Net unrealized gain on securities available for sale
3,963
(9,772
)
Allowance for loan losses
(81,301
)
(76,528
)
Cash and cash equivalents
124,143
129,499
Premises and equipment
92,395
95,139
Other assets
825,426
818,360
Total Assets
$
10,291,205
$
9,535,774
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits
$
2,813,541
$
15,560
1.11
%
$
2,153,878
$
6,965
0.65
%
Money market deposits
1,179,765
6,291
1.07
1,085,740
2,858
0.53
Savings deposits
1,157,852
4,792
0.83
1,021,386
1,714
0.34
Certificates and other time deposits
1,609,130
16,038
1.99
1,488,664
9,630
1.29
Total Interest-bearing Deposits
6,760,288
42,681
1.26
5,749,668
21,167
0.74
Borrowings
624,192
8,627
2.76
760,643
8,837
2.32
Total Interest-bearing Liabilities
7,384,480
51,308
1.39
6,510,311
30,004
0.92
Noninterest-bearing deposits
1,369,832
1,646,660
Other liabilities
82,260
60,679
Total Liabilities
8,836,572
8,217,650
Stockholders' Equity
1,454,633
1,318,124
Total Liabilities and Stockholders' Equity
$
10,291,205
51,308
$
9,535,774
30,004
Net Interest Income (FTE)
$
176,184
$
169,697
Net Interest Spread (FTE) (4)
3.49
%
3.74
%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets
4.88
%
4.66
%
Interest Expense / Average Earning Assets
1.10
%
0.70
%
Net Interest Margin (FTE) (5)
3.78
%
3.96
%
(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.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2019 and 2018. These totals equal $6,040 and $5,210 for the six months ended June 30, 2019 and 2018, 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
