First Merchants Corporation (NASDAQ - FRME)

Fourth Quarter 2023 Highlights:

  • Net income available to common stockholders was $42.0 million and diluted earnings per common share totaled $0.71 compared to $70.3 million and $1.19 in the fourth quarter of 2022, and $55.9 million and $0.94 in the third quarter of 2023. Net income and diluted earnings per common share, excluding one-time charges of $12.7 million incurred during the quarter, totaled $51.6 million and $0.87, respectively.
  • Strong capital position with Common Equity Tier 1 Capital Ratio of 11.35 percent.
  • Total loans grew $202.6 million, or 6.6 percent annualized on a linked quarter basis, and $608.6 million, or 5.1 percent during the last twelve months when excluding the impact of a non-relationship commercial loan portfolio sale of $116.6 million that occurred during the second quarter.
  • Total deposits increased $174.9 million, or 4.8 percent annualized on a linked quarter basis, and $438.7 million, or 3.1 percent during the last twelve months.
  • Nonaccrual loans totaled $53.6 million compared to $53.1 million on a linked quarter basis.
  • The efficiency ratio totaled 63.26 percent for the quarter and 55.56% excluding $12.7 million of one-time charges incurred during the quarter.

Mark Hardwick, Chief Executive Officer, stated, "During a year where safety and soundness became the highest priority of stakeholders, we are very pleased with the positioning of our balance sheet. The Bank’s liquidity position improved by $585 million as cash increased by $300 million and borrowings declined by $285 million year over year. Our tangible common equity increased by $222 million driving our tangible common equity ratio from 7.37 percent to 8.44 percent and the allowance to loans continues to be top decile totaling 1.64 percent." Hardwick added, "Our team built this resilient balance sheet while also producing core loan growth of just over 5 percent and deposit growth of 3 percent. In a year with large bank failures, our company produced solid results with net income totaling $222 million, a strong ROA of 1.23%, and an efficiency ratio of 55%. These results are without any adjustments for one-time charges totaling $12.7 million which were incurred in the fourth quarter. The actions taken during the quarter to reduce costs will lead to an even more efficient franchise in 2024."

Fourth Quarter Financial Results:

First Merchants Corporation (the “Corporation”) has reported fourth quarter 2023 net income available to common stockholders of $42.0 million compared to $70.3 million during the same period in 2022. Diluted earnings per common share for the period totaled $0.71 per share compared to the fourth quarter of 2022 result of $1.19 per share. The corporation incurred $12.7 million of one-time charges during the quarter including $4.3 million from an FDIC special assessment, $6.3 million from employee early retirement and severance costs, and $2.1 million from a lease termination.

Total assets equaled $18.3 billion as of quarter-end and loans totaled $12.5 billion. During the past twelve months, total loans grew by $608.6 million, or 5.1 percent and were offset by a non-relationship based commercial loan sale of $116.6 million that occurred in the second quarter. On a linked quarter basis, loans grew $202.6 million, or 6.6 percent annualized.

Investments securities, totaling $3.8 billion, decreased $452.4 million, or 10.6 percent, during the last twelve months and increased $97.6 million, or 10.5 percent annualized on a linked quarter basis. The increase during the fourth quarter was due to a $163.1 million increase in value of available for sale securities offset by bond sales of $43.3 million and security paydowns and maturities.

Total deposits equaled $14.8 billion as of quarter-end and increased by $438.7 million, or 3.1 percent, over the past twelve months. Total deposits increased $174.9 million, or 4.8 percent annualized on a linked quarter basis. During the quarter, customer deposits increased $280.0 million which was offset by a reduction in brokered deposits of $105.1 million. The loan to deposit ratio increased slightly to 84.4 percent at period end from 84.0 percent in the prior quarter.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $204.9 million as of quarter-end, or 1.64 percent of total loans, a decrease of $0.8 million from prior quarter. Loan charge-offs, net of recoveries, for the quarter totaled $3.1 million. Net charge-offs were offset with provision expense for loans recorded during the quarter of $2.3 million. Reserves for unfunded commitments totaling $19.5 million declined during the quarter due to reserve release of $0.8 million. Net provision expense for the quarter totaled $1.5 million. Non-performing assets to total assets were 0.32 percent for the fourth quarter of 2023, a decrease of one basis point compared to 0.33 percent in the prior quarter.

Net interest income, totaling $130.1 million for the quarter, declined $3.3 million, or 2.5 percent, compared to prior quarter and decreased $18.9 million, or 12.7 percent, compared to the fourth quarter of 2022. Stated net-interest margin on a tax equivalent basis totaling 3.16 percent, declined by 13 basis points compared to the third quarter of 2023 and decreased 56 basis points compared to the fourth 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 $26.4 million for the quarter, decreased $1.4 million, or 5.0 percent, compared to the third quarter of 2023 but increased $2.3 million from the fourth quarter of 2022. The decrease from third quarter of 2023 was driven by lower gains on the sales of loans, higher realized losses on the sales of securities, and a negative valuation adjustment related to CRA investments. These declines were somewhat offset by an increase in fiduciary and wealth management fees and gains on bank-owned life insurance.

Noninterest expense totaled $108.1 million for the quarter, an increase of $14.2 million from the third quarter of 2023. The increase was from higher credit-related expenses and one-time charges totaling $12.7 million as described above.

The Corporation’s total risk-based capital ratio equaled 13.67 percent, common equity tier 1 capital ratio equaled 11.35 percent, and the tangible common equity ratio totaled 8.44 percent, which was an increase of 75 basis points from prior quarter. These ratios continue to demonstrate the Corporation’s strong capital and liquidity position.

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 11:30 a.m. (ET) on Thursday, January 25, 2024.

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/BIed9b1a3a96754f9abe7b067d12fe2826)

In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/9hsczd2t) during the time of the call. A replay of the webcast will be available until January 25, 2025.

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

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

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

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

Forward-Looking Statements

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

CONSOLIDATED BALANCE SHEETS      
(Dollars In Thousands) December 31,
    2023       2022  
ASSETS      
Cash and due from banks $ 112,649     $ 122,594  
Interest-bearing deposits   436,080       126,061  
Investment securities, net of allowance for credit losses of $245,000 and $245,000   3,811,364       4,263,788  
Loans held for sale   18,934       9,094  
Loans   12,486,027       12,003,894  
Less: Allowance for credit losses - loans   (204,934 )     (223,277 )
Net loans   12,281,093       11,780,617  
Premises and equipment   133,896       117,118  
Federal Home Loan Bank stock   41,769       38,525  
Interest receivable   97,664       85,070  
Goodwill and other intangibles   739,101       747,844  
Cash surrender value of life insurance   306,301       308,311  
Other real estate owned   4,831       6,431  
Tax asset, deferred and receivable   99,883       111,222  
Other assets   225,914       221,631  
TOTAL ASSETS $ 18,309,479     $ 17,938,306  
LIABILITIES      
Deposits:      
Noninterest-bearing $ 2,500,062     $ 3,173,417  
Interest-bearing   12,321,391       11,209,328  
Total Deposits   14,821,453       14,382,745  
Borrowings:      
Federal funds purchased   —       171,560  
Securities sold under repurchase agreements   157,280       167,413  
Federal Home Loan Bank advances   712,852       823,674  
Subordinated debentures and other borrowings   158,644       151,298  
Total Borrowings   1,028,776       1,313,945  
Interest payable   18,912       7,530  
Other liabilities   192,625       199,316  
Total Liabilities   16,061,766       15,903,536  
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 - 59,424,122 and 59,170,583 shares   7,428       7,396  
Additional paid-in capital   1,236,506       1,228,626  
Retained earnings   1,154,624       1,012,774  
Accumulated other comprehensive income (loss)   (175,970 )     (239,151 )
Total Stockholders' Equity   2,247,713       2,034,770  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,309,479     $ 17,938,306  
               
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended   Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts) December 31.   December 31.
    2023       2022       2023       2022  
INTEREST INCOME              
Loans receivable:              
Taxable $ 197,523     $ 156,102     $ 747,837     $ 470,468  
Tax-exempt   8,197       6,930       31,954       25,124  
Investment securities:              
Taxable   8,644       9,417       35,207       38,354  
Tax-exempt   13,821       17,033       58,117       67,381  
Deposits with financial institutions   8,034       959       17,719       2,503  
Federal Home Loan Bank stock   771       541       3,052       1,176  
Total Interest Income   236,990       190,982       893,886       605,006  
INTEREST EXPENSE              
Deposits   96,655       33,516       306,092       62,939  
Federal funds purchased   1       808       1,421       1,302  
Securities sold under repurchase agreements   827       541       3,451       1,136  
Federal Home Loan Bank advances   6,431       4,932       27,206       11,417  
Subordinated debentures and other borrowings   3,013       2,229       10,316       8,009  
Total Interest Expense   106,927       42,026       348,486       84,803  
NET INTEREST INCOME   130,063       148,956       545,400       520,203  
Provision for credit losses   1,500       —       3,500       16,755  
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES   128,563       148,956       541,900       503,448  
NONINTEREST INCOME              
Service charges on deposit accounts   7,690       7,097       30,837       28,371  
Fiduciary and wealth management fees   8,187       7,501       30,840       29,688  
Card payment fees   4,437       4,533       18,862       20,207  
Net gains and fees on sales of loans   4,111       2,087       15,659       10,055  
Derivative hedge fees   1,049       326       3,385       3,388  
Other customer fees   237       362       1,880       1,935  
Earnings on cash surrender value of life insurance   3,202       1,515       8,347       11,174  
Net realized gains (losses) on sales of available for sale securities   (2,317 )     57       (6,930 )     1,194  
Other income (loss)   (152 )     672       2,722       1,929  
Total Noninterest Income   26,444       24,150       105,602       107,941  
NONINTEREST EXPENSES              
Salaries and employee benefits   60,967       52,331       228,745       206,893  
Net occupancy   9,089       6,638       29,859       26,211  
Equipment   6,108       6,148       24,113       23,945  
Marketing   2,647       3,157       7,427       7,708  
Outside data processing fees   5,875       5,611       25,165       21,682  
Printing and office supplies   402       390       1,552       1,588  
Intangible asset amortization   2,182       2,303       8,743       8,275  
FDIC assessments   7,557       2,295       14,674       10,235  
Other real estate owned and foreclosure expenses   1,743       197       3,318       823  
Professional and other outside services   3,981       3,961       16,172       21,642  
Other expenses   7,552       6,668       28,502       26,713  
Total Noninterest Expenses   108,103       89,699       388,270       355,715  
INCOME BEFORE INCOME TAX   46,904       83,407       259,232       255,674  
Income tax expense   4,425       12,647       35,446       33,585  
NET INCOME   42,479       70,760       223,786       222,089  
Preferred stock dividends   469       468       1,875       1,406  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 42,010     $ 70,292     $ 221,911     $ 220,683  
               
Per Share Data:              
Basic Net Income Available to Common Stockholders $ 0.71     $ 1.20     $ 3.74     $ 3.83  
Diluted Net Income Available to Common Stockholders $ 0.71     $ 1.19     $ 3.73     $ 3.81  
Cash Dividends Paid to Common Stockholders $ 0.34     $ 0.32     $ 1.34     $ 1.25  
Average Diluted Common Shares Outstanding (in thousands)   59,556       59,384       59,489       57,950  
                               
FINANCIAL HIGHLIGHTS              
(Dollars in thousands) Three Months Ended   Twelve Months Ended
  December 31,   December 31,
    2023       2022       2023       2022  
NET CHARGE-OFFS (RECOVERIES) $ 3,148     $ 3,425     $ 25,643     $ 2,674  
               
AVERAGE BALANCES:              
Total Assets $ 18,397,200     $ 17,834,468     $ 18,186,507     $ 17,220,002  
Total Loans   12,396,451       11,818,911       12,297,974       10,943,051  
Total Earning Assets   17,222,714       16,702,944       16,991,787       15,985,691  
Total Deposits   15,000,580       14,564,853       14,721,498       14,198,243  
Total Stockholders' Equity   2,130,993       1,958,041       2,127,262       1,972,445  
               
FINANCIAL RATIOS:              
Return on Average Assets   0.92 %     1.59 %     1.23 %     1.29 %
Return on Average Stockholders' Equity   7.89       14.36       10.43       11.19  
Return on Tangible Common Stockholders' Equity   12.75       24.21       16.76       18.12  
Average Earning Assets to Average Assets   93.62       93.66       93.43       92.83  
Allowance for Credit Losses - Loans as % of Total Loans   1.64       1.86       1.64       1.86  
Net Charge-offs as % of Average Loans (Annualized)   0.10       0.12       0.21       0.02  
Average Stockholders' Equity to Average Assets   11.58       10.98       11.70       11.45  
Tax Equivalent Yield on Average Earning Assets   5.64       4.73       5.40       3.94  
Interest Expense/Average Earning Assets   2.48       1.01       2.05       0.53  
Net Interest Margin (FTE) on Average Earning Assets   3.16       3.72       3.35       3.41  
Efficiency Ratio   63.26       48.60       55.17       53.20  
Tangible Common Book Value Per Share $ 25.06     $ 21.45     $ 25.06     $ 21.45  
                               
NONPERFORMING ASSETS                  
(Dollars In Thousands) December 31,   September 30,   June 30,   March 31,   December 31,
    2023       2023       2023       2023       2022  
Nonaccrual Loans $ 53,580     $ 53,102     $ 69,240     $ 46,576     $ 42,324  
Troubled Debt Restructures (TDR)   —       —       —       —       224  
Nonperforming Loans (NPL)   53,580       53,102       69,240       46,576       42,548  
Other Real Estate Owned and Repossessions   4,831       6,480       7,685       7,777       6,431  
Nonperforming Assets (NPA)   58,411       59,582       76,925       54,353       48,979  
90+ Days Delinquent   172       89       428       7,032       1,737  
NPAs & 90 Day Delinquent $ 58,583     $ 59,671     $ 77,353     $ 61,385     $ 50,716  
                   
Allowance for Credit Losses - Loans $ 204,934     $ 205,782     $ 221,147     $ 223,052     $ 223,277  
Quarterly Net Charge-offs   3,148       20,365       1,905       225       2,674  
NPAs / Actual Assets %   0.32 %     0.33 %     0.43 %     0.30 %     0.27 %
NPAs & 90 Day / Actual Assets %   0.32 %     0.33 %     0.43 %     0.34 %     0.28 %
NPAs / Actual Loans and OREO %   0.47 %     0.48 %     0.63 %     0.44 %     0.41 %
Allowance for Credit Losses - Loans / Actual Loans (%)   1.64 %     1.67 %     1.80 %     1.82 %     1.86 %
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)   0.10 %     0.66 %     0.06 %     0.01 %     0.12 %
                                       
CONSOLIDATED BALANCE SHEETS                  
(Dollars In Thousands) December 31,   September 30,   June 30,   March 31,   December 31,
    2023       2023       2023       2023       2022  
ASSETS                  
Cash and due from banks $ 112,649     $ 125,173     $ 108,975     $ 125,818     $ 122,594  
Interest-bearing deposits   436,080       348,639       219,480       352,695       126,061  
Investment securities, net of allowance for credit losses   3,811,364       3,713,724       3,891,491       4,057,389       4,263,788  
Loans held for sale   18,934       30,972       27,297       9,408       9,094  
Loans   12,486,027       12,271,422       12,270,233       12,241,461       12,003,894  
Less: Allowance for credit losses - loans   (204,934 )     (205,782 )     (221,147 )     (223,052 )     (223,277 )
Net loans   12,281,093       12,065,640       12,049,086       12,018,409       11,780,617  
Premises and equipment   133,896       132,441       114,402       115,857       117,118  
Federal Home Loan Bank stock   41,769       41,797       41,842       41,878       38,525  
Interest receivable   97,664       90,011       89,784       85,515       85,070  
Goodwill and other intangibles   739,101       741,283       743,465       745,647       747,844  
Cash surrender value of life insurance   306,301       306,106       307,020       309,090       308,311  
Other real estate owned   4,831       6,480       7,685       7,777       6,431  
Tax asset, deferred and receivable   99,883       135,521       113,724       103,070       111,222  
Other assets   225,914       258,861       254,161       206,355       221,631  
TOTAL ASSETS $ 18,309,479     $ 17,996,648     $ 17,968,412     $ 18,178,908     $ 17,938,306  
LIABILITIES                  
Deposits:                  
Noninterest-bearing $ 2,500,062     $ 2,554,984     $ 2,636,017     $ 2,964,355     $ 3,173,417  
Interest-bearing   12,321,391       12,091,592       11,945,138       11,738,932       11,209,328  
Total Deposits   14,821,453       14,646,576       14,581,155       14,703,287       14,382,745  
Borrowings:                  
Federal funds purchased   —       —       —       20       171,560  
Securities sold under repurchase agreements   157,280       152,537       152,472       179,067       167,413  
Federal Home Loan Bank advances   712,852       713,384       723,480       823,577       823,674  
Subordinated debentures and other borrowings   158,644       158,665       151,325       151,312       151,298  
Total Borrowings   1,028,776       1,024,586       1,027,277       1,153,976       1,313,945  
Interest payable   18,912       16,473       13,595       11,979       7,530  
Other liabilities   192,625       216,369       200,820       187,218       199,316  
Total Liabilities   16,061,766       15,904,004       15,822,847       16,056,460       15,903,536  
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   7,428       7,425       7,412       7,407       7,396  
Additional paid-in capital   1,236,506       1,234,402       1,233,593       1,231,532       1,228,626  
Retained earnings   1,154,624       1,132,962       1,097,399       1,057,298       1,012,774  
Accumulated other comprehensive loss   (175,970 )     (307,270 )     (217,964 )     (198,914 )     (239,151 )
Total Stockholders' Equity   2,247,713       2,092,644       2,145,565       2,122,448       2,034,770  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,309,479     $ 17,996,648     $ 17,968,412     $ 18,178,908     $ 17,938,306  
                   
CONSOLIDATED STATEMENTS OF INCOME                  
(Dollars In Thousands, Except Per Share Amounts) December 31,   September 30,   June 30,   March 31,   December 31,
    2023       2023       2023       2023       2022  
INTEREST INCOME                  
Loans receivable:                  
Taxable $ 197,523     $ 191,705     $ 186,256     $ 172,353     $ 156,102  
Tax-exempt   8,197       8,288       7,760       7,709       6,930  
Investment securities:                  
Taxable   8,644       8,590       8,886       9,087       9,417  
Tax-exempt   13,821       13,947       14,279       16,070       17,033  
Deposits with financial institutions   8,034       5,884       3,164       637       959  
Federal Home Loan Bank stock   771       719       1,020       542       541  
Total Interest Income   236,990       229,133       221,365       206,398       190,982  
INTEREST EXPENSE                  
Deposits   96,655       85,551       73,201       50,685       33,516  
Federal funds purchased   1       —       123       1,297       808  
Securities sold under repurchase agreements   827       797       979       848       541  
Federal Home Loan Bank advances   6,431       6,896       6,815       7,064       4,932  
Subordinated debentures and other borrowings   3,013       2,506       2,412       2,385       2,229  
Total Interest Expense   106,927       95,750       83,530       62,279       42,026  
NET INTEREST INCOME   130,063       133,383       137,835       144,119       148,956  
Provision for credit losses   1,500       2,000       —       —       —  
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES   128,563       131,383       137,835       144,119       148,956  
NONINTEREST INCOME                  
Service charges on deposit accounts   7,690       7,975       7,813       7,359       7,097  
Fiduciary and wealth management fees   8,187       7,394       7,397       7,862       7,501  
Card payment fees   4,437       4,716       4,537       5,172       4,533  
Net gains and fees on sales of loans   4,111       5,517       3,632       2,399       2,087  
Derivative hedge fees   1,049       516       672       1,148       326  
Other customer fees   237       384       742       517       362  
Earnings on cash surrender value of life insurance   3,202       1,761       2,096       1,288       1,515  
Net realized gains (losses) on sales of available for sale securities   (2,317 )     (1,650 )     (1,392 )     (1,571 )     57  
Other income (loss)   (152 )     1,229       822       823       672  
Total Noninterest Income   26,444       27,842       26,319       24,997       24,150  
NONINTEREST EXPENSES                  
Salaries and employee benefits   60,967       55,566       54,753       57,459       52,331  
Net occupancy   9,089       6,837       6,674       7,259       6,638  
Equipment   6,108       5,698       6,181       6,126       6,148  
Marketing   2,647       2,369       1,102       1,309       3,157  
Outside data processing fees   5,875       6,573       6,604       6,113       5,611  
Printing and office supplies   402       333       434       383       390  
Intangible asset amortization   2,182       2,182       2,182       2,197       2,303  
FDIC assessments   7,557       2,981       2,740       1,396       2,295  
Other real estate owned and foreclosure expenses   1,743       677       916       (18 )     197  
Professional and other outside services   3,981       3,833       4,660       3,698       3,961  
Other expenses   7,552       6,805       6,347       7,798       6,668  
Total Noninterest Expenses   108,103       93,854       92,593       93,720       89,699  
INCOME BEFORE INCOME TAX   46,904       65,371       71,561       75,396       83,407  
Income tax expense   4,425       9,005       10,699       11,317       12,647  
NET INCOME   42,479       56,366       60,862       64,079       70,760  
Preferred stock dividends   469       468       469       469       468  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 42,010     $ 55,898     $ 60,393     $ 63,610     $ 70,292  
Per Share Data:                  
Basic Net Income Available to Common Stockholders $ 0.71     $ 0.95     $ 1.02     $ 1.07     $ 1.20  
Diluted Net Income Available to Common Stockholders $ 0.71     $ 0.94     $ 1.02     $ 1.07     $ 1.19  
Cash Dividends Paid to Common Stockholders $ 0.34     $ 0.34     $ 0.34     $ 0.32     $ 0.32  
Average Diluted Common Shares Outstanding (in thousands)   59,556       59,503       59,448       59,441       59,384  
FINANCIAL RATIOS:                  
Return on Average Assets   0.92 %     1.24 %     1.34 %     1.42 %     1.59 %
Return on Average Stockholders' Equity   7.89       10.38       11.29       12.21       14.36  
Return on Tangible Common Stockholders' Equity   12.75       16.54       18.04       19.82       24.21  
Average Earning Assets to Average Assets   93.62       93.36       93.38       93.35       93.66  
Allowance for Credit Losses - Loans as % of Total Loans   1.64       1.67       1.80       1.82       1.86  
Net Charge-offs as % of Average Loans (Annualized)   0.10       0.66       0.06       0.01       0.12  
Average Stockholders' Equity to Average Assets   11.58       11.87       11.78       11.56       10.98  
Tax Equivalent Yield on Average Earning Assets   5.64       5.55       5.36       5.06       4.73  
Interest Expense/Average Earning Assets   2.48       2.26       1.97       1.48       1.01  
Net Interest Margin (FTE) on Average Earning Assets   3.16       3.29       3.39       3.58       3.72  
Efficiency Ratio   63.26       53.91       52.21       51.72       48.60  
Tangible Common Book Value Per Share $ 25.06     $ 22.43     $ 23.34     $ 22.93     $ 21.45  
                                       
LOANS                  
(Dollars In Thousands) December 31,   September 30,   June 30,   March 31,   December 31,
    2023       2023       2023       2023       2022  
Commercial and industrial loans $ 3,670,948     $ 3,490,953     $ 3,531,395     $ 3,502,204     $ 3,437,126  
Agricultural land, production and other loans to farmers   263,414       233,838       230,003       219,598       241,793  
Real estate loans:                  
Construction   957,545       1,022,261       949,918       960,979       835,582  
Commercial real estate, non-owner occupied   2,400,839       2,360,596       2,379,819       2,375,410       2,407,475  
Commercial real estate, owner occupied   1,162,083       1,153,707       1,179,739       1,244,117       1,246,528  
Residential   2,288,921       2,257,385       2,248,473       2,185,943       2,096,655  
Home equity   617,571       609,352       614,366       621,354       630,632  
Individuals' loans for household and other personal expenditures   168,388       176,523       172,896       172,389       175,211  
Public finance and other commercial loans   956,318       966,807       963,624       959,467       932,892  
Loans   12,486,027       12,271,422       12,270,233       12,241,461       12,003,894  
Allowance for credit losses - loans   (204,934 )     (205,782 )     (221,147 )     (223,052 )     (223,277 )
NET LOANS $ 12,281,093     $ 12,065,640     $ 12,049,086     $ 12,018,409     $ 11,780,617  
                                       
DEPOSITS                  
(Dollars In Thousands) December 31,   September 30,   June 30,   March 31,   December 31,
    2023       2023       2023       2023       2022  
Demand deposits $ 7,965,862     $ 7,952,040     $ 8,045,455     $ 8,422,387     $ 8,448,797  
Savings deposits   4,516,433       4,572,162       4,530,255       4,499,487       4,657,140  
Certificates and other time deposits of $100,000 or more   1,408,985       1,280,607       1,160,303       1,040,379       742,539  
Other certificates and time deposits   849,906       761,196       680,965       574,886       468,712  
Brokered certificates of deposits   80,267       80,571       164,177       166,148       65,557  
TOTAL DEPOSITS $ 14,821,453     $ 14,646,576     $ 14,581,155     $ 14,703,287     $ 14,382,745  
                                       
CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS            
(Dollars in Thousands)                      
  For the Three Months Ended
  December 31, 2023   December 31, 2022
  Average Balance   Interest Income /Expense   AverageRate   Average Balance   Interest Income /Expense   AverageRate
ASSETS                      
Interest-bearing deposits $ 700,705     $ 8,034       4.59 %   $ 187,204     $ 959       2.05 %
Federal Home Loan Bank stock   41,792       771       7.38       38,066       541       5.68  
Investment Securities: (1)                      
Taxable   1,801,533       8,644       1.92       1,987,161       9,417       1.90  
Tax-exempt (2)   2,282,233       17,495       3.07       2,671,602       21,561       3.23  
Total Investment Securities   4,083,766       26,139       2.56       4,658,763       30,978       2.66  
Loans held for sale   16,355       246       6.02       4,732       71       6.00  
Loans: (3)                      
Commercial   8,533,233       159,190       7.46       8,309,561       126,850       6.11  
Real estate mortgage   2,118,060       21,829       4.12       1,827,749       16,654       3.64  
Installment   820,728       16,258       7.92       843,562       12,527       5.94  
Tax-exempt (2)   908,075       10,376       4.57       833,307       8,772       4.21  
Total Loans   12,396,451       207,899       6.71       11,818,911       164,874       5.58  
Total Earning Assets   17,222,714       242,843       5.64 %     16,702,944       197,352       4.73 %
Total Non-Earning Assets   1,174,486               1,131,524          
TOTAL ASSETS $ 18,397,200             $ 17,834,468          
LIABILITIES                      
Interest-Bearing Deposits:                      
Interest-bearing deposits $ 5,504,725     $ 40,996       2.98 %   $ 5,238,422     $ 16,810       1.28 %
Money market deposits   3,096,085       27,909       3.61       3,018,644       10,778       1.43  
Savings deposits   1,587,758       3,913       0.99       1,895,551       2,125       0.45  
Certificates and other time deposits   2,225,528       23,837       4.28       1,038,502       3,803       1.46  
Total Interest-Bearing Deposits   12,414,096       96,655       3.11       11,191,119       33,516       1.20  
Borrowings   1,013,856       10,272       4.05       1,097,586       8,510       3.10  
Total Interest-Bearing Liabilities   13,427,952       106,927       3.19       12,288,705       42,026       1.37  
Noninterest-bearing deposits   2,586,484               3,373,734          
Other liabilities   251,771               213,988          
Total Liabilities   16,266,207               15,876,427          
STOCKHOLDERS' EQUITY   2,130,993               1,958,041          
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,397,200       106,927         $ 17,834,468       42,026      
Net Interest Income (FTE)     $ 135,916             $ 155,326      
Net Interest Spread (FTE) (4)           2.45 %             3.36 %
                       
Net Interest Margin (FTE):                      
Interest Income (FTE) / Average Earning Assets           5.64 %             4.73 %
Interest Expense / Average Earning Assets           2.48 %             1.01 %
Net Interest Margin (FTE) (5)           3.16 %             3.72 %
                       
(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 $5,853 and $6.370 for the three months ended December 31, 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 Twelve Months Ended
  December 31, 2023   December 31, 2022
  Average Balance   Interest Income /Expense   AverageRate   Average Balance   Interest Income /Expense   AverageRate
Assets:                      
Interest-bearing deposits $ 431,581     $ 17,719       4.11 %   $ 296,863     $ 2,503       0.84 %
Federal Home Loan Bank stock   41,319       3,052       7.39       35,580       1,176       3.31  
Investment Securities: (1)                      
Taxable   1,854,438       35,207       1.90       2,056,586       38,354       1.86  
Tax-exempt (2)   2,366,475       73,566       3.11       2,653,611       85,292       3.21  
Total Investment Securities   4,220,913       108,773       2.58       4,710,197       123,646       2.63  
Loans held for sale   21,766       1,292       5.94       14,715       692       4.70  
Loans: (3)                      
Commercial   8,519,706       603,611       7.08       7,877,271       380,621       4.83  
Real estate mortgage   2,035,488       82,183       4.04       1,471,802       51,853       3.52  
Installment   830,006       60,751       7.32       785,520       37,302       4.75  
Tax-exempt (2)   891,008       40,448       4.54       793,743       31,803       4.01  
Total Loans   12,297,974       788,285       6.41       10,943,051       502,271       4.59  
Total Earning Assets   16,991,787       917,829       5.40 %     15,985,691       629,596       3.94 %
Total Non-Earning Assets   1,194,720               1,234,311          
Total Assets $ 18,186,507             $ 17,220,002          
Liabilities:                      
Interest-Bearing deposits:                      
Interest-bearing deposits $ 5,435,733     $ 138,012       2.54 %   $ 5,206,131     $ 32,511       0.62 %
Money market deposits   2,884,271       83,777       2.90       2,915,397       19,170       0.66  
Savings deposits   1,694,230       14,606       0.86       1,927,122       5,019       0.26  
Certificates and other time deposits   1,923,268       69,697       3.62       881,176       6,239       0.71  
Total Interest-Bearing Deposits   11,937,502       306,092       2.56       10,929,826       62,939       0.58  
Borrowings   1,111,472       42,394       3.81       888,392       21,864       2.46  
Total Interest-Bearing Liabilities   13,048,974       348,486       2.67       11,818,218       84,803       0.72  
Noninterest-bearing deposits   2,783,996               3,268,417          
Other liabilities   226,275               160,922          
Total Liabilities   16,059,245               15,247,557          
Stockholders' Equity   2,127,262               1,972,445          
Total Liabilities and Stockholders' Equity $ 18,186,507       348,486         $ 17,220,002       84,803      
Net Interest Income (FTE)     $ 569,343             $ 544,793      
Net Interest Spread (FTE) (4)           2.73 %             3.22 %
                       
Net Interest Margin (FTE):                      
Interest Income (FTE) / Average Earning Assets           5.40 %             3.94 %
Interest Expense / Average Earning Assets           2.05 %             0.53 %
Net Interest Margin (FTE) (5)           3.35 %             3.41 %
                       
(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 $23,943 and $24,590 for the years ended December 31, 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 NET INCOME AND DILUTED EARNINGS PER COMMON SHARE - NON-GAAP
(Dollars In Thousands, Except Per Share Amounts) Three Months Ended   Twelve Months Ended
  December 31,   September 30,   June 30,   March 31,   December 31,   December 31,   December 31,
    2023       2023       2023       2023       2022       2023       2022  
Net Income Available to Common Stockholders - GAAP $ 42,010     $ 55,898     $ 60,393     $ 63,610     $ 70,292     $ 221,911     $ 220,683  
Adjustments:                          
PPP loan income   (7 )     (8 )     (9 )     (25 )     (109 )     (49 )     (3,207 )
Acquisition-related expenses   —       —       —       —       413       —       16,531  
Acquisition-related provision expense   —       —       —       —       —       —       16,755  
Non-core expenses1   12,682       —       —       —       —       12,682       —  
Tax on adjustments   (3,088 )     2       2       6       (75 )     (3,078 )     (7,376 )
Adjusted Net Income Available to Common Stockholders - Non-GAAP $ 51,597     $ 55,892     $ 60,386     $ 63,591     $ 70,521     $ 231,466     $ 243,386  
                           
Average Diluted Common Shares Outstanding (in thousands)   59,556       59,503       59,448       59,441       59,384       59,489       57,590  
                           
Diluted Earnings Per Common Share - GAAP $ 0.71     $ 0.94     $ 1.02     $ 1.07     $ 1.19     $ 3.73     $ 3.81  
Adjustments:                          
PPP loan income   —       —       —       —       (0.01 )     —       (0.06 )
Acquisition-related expenses   —       —       —       —       0.01       —       0.28  
Acquisition-related provision expense   —       —       —       —       —       —       0.30  
Non-core expenses1   0.21       —       —       —       —       0.21       —  
Tax on adjustments   (0.05 )     —       —       —       —       (0.05 )     (0.13 )
Adjusted Diluted Earnings Per Common Share - Non-GAAP $ 0.87     $ 0.94     $ 1.02     $ 1.07     $ 1.19     $ 3.89     $ 4.20  
                                                       

1 - Non-core expenses include one-time charges consisting of $6.3 million from early retirement and severance costs, $4.3 million from the FDIC special assessment, and $2.1 million from a lease termination.

RETURN ON TANGIBLE COMMON EQUITY - NON-GAAP
(Dollars In Thousands) Three Months Ended   Twelve Months Ended
  December 31,   September 30,   June 30,   March 31,   December 31,   December 31,   December 31,
    2023       2023       2023       2023       2022       2023       2022  
Total Average Stockholders' Equity (GAAP) $ 2,130,993     $ 2,154,232     $ 2,139,877     $ 2,083,125     $ 1,958,041     $ 2,127,262     $ 1,972,445  
Less: Average Preferred Stock   (25,125 )     (25,125 )     (25,125 )     (25,125 )     (25,125 )     (25,125 )     (18,875 )
Less: Average Intangible Assets, Net of Tax   (734,007 )     (735,787 )     (737,489 )     (739,190 )     (741,632 )     (736,601 )     (699,803 )
Average Tangible Common Equity, Net of Tax (Non-GAAP) $ 1,371,861     $ 1,393,320     $ 1,377,263     $ 1,318,810     $ 1,191,284     $ 1,365,536     $ 1,253,767  
                           
Net Income Available to Common Stockholders (GAAP) $ 42,010     $ 55,898     $ 60,393     $ 63,610     $ 70,292     $ 221,911     $ 220,683  
Plus: Intangible Asset Amortization, Net of Tax   1,724       1,724       1,724       1,734       1,819       6,906       6,537  
Tangible Net Income (Non-GAAP) $ 43,734     $ 57,622     $ 62,117     $ 65,344     $ 72,111     $ 228,817     $ 227,220  
                           
Return on Tangible Common Equity (Non-GAAP)   12.75 %     16.54 %     18.04 %     19.82 %     24.21 %     16.76 %     18.12 %
                                                       

For more information, contact:Nicole M. Weaver, Vice President and Director of Corporate Administration765-521-7619http://www.firstmerchants.com

Grafico Azioni First Merchants (NASDAQ:FRME)
Storico
Da Dic 2024 a Gen 2025 Clicca qui per i Grafici di First Merchants
Grafico Azioni First Merchants (NASDAQ:FRME)
Storico
Da Gen 2024 a Gen 2025 Clicca qui per i Grafici di First Merchants