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First Merchants Corp.$37.22($.19)(.51%)

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 First Merchants Corporation Announces Record 2018 Earnings Per Share
   Thursday, January 31, 2019 8:00:00 AM ET

MUNCIE, Ind., Jan. 31, 2019 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported fourth quarter 2018 net income of $41.7 million, an increase of 71 percent, compared to $24.4 million during the same period in 2017. Earnings per share for the period totaled a record $.85 per share, an increase of 73 percent, compared to the fourth quarter of 2017 result of $.49 per share. Net income for the year ended December 31, 2018 totaled $159.1 million, compared to $96.1 million during the same period in 2017. Year-to-date earnings per share was $3.22, a record level as we celebrated the Corporation’s 125th anniversary. The result was an increase of $1.10 per share, or 52 percent, over the same period in 2017.

Total assets equaled $9.9 billion as of year-end and loans totaled $7.2 billion. The Corporation’s loan portfolio increased by $471 million, or 7 percent, during the past twelve months. Total deposits equaled $7.8 billion as of year-end and increased by $582 million, or 8 percent.

Michael C. Rechin, President and Chief Executive Officer, stated, “I am proud of our team for running through the tape in 2018 by posting a strong and balanced organic growth quarter. Quality low cost funding, loan growth and sound asset quality all contributed prominently in our record quarter capping off our record year. Our teammates connect with the needs of the marketplace and our communities while our execution produces results and efficiency.” Rechin also added, “We look forward to 2019 and extending our franchise into Michigan through our merger with Monroe Bank & Trust. We look to continue their tradition of superior service to Monroe’s communities through the combination of their skilled bankers and First Merchants’ delivery capabilities.”

Net-interest income totaled $338.9 million for the year, an increase of $61.6 million, or 22 percent. Net-interest margin for the year totaled 4.00 percent, down 2 basis points and includes a reduction of 13 basis points related to tax reform. Yield on earning assets totaled 4.79 percent and the cost of supporting liabilities totaled .79 percent.

Non-interest income totaled $76.5 million for the year, a $5.5 million increase over 2017. Non-interest expense totaled $220 million up from the 2017 total of $205.6 million.

Tax expense for 2018 totaled $29 million, or just 15.4 percent of pre-tax net income. In addition to the lower statutory tax rate as a result of tax reform, tax expense for the fourth quarter and year were less than normal by $1.8 million due to an increase in the Bank’s Indiana state tax liability offset by the release of a valuation allowance on state deferred tax assets.

The Corporation’s 2018 provision expense totaled $7.2 million due to loan growth. Net charge-offs totaled $1.7 million for the year. The allowance for loan losses totaled $80.6 million as of December 31, 2018, up from $75 million at the end of 2017. Non-performing assets totaled $29.4 million as of year-end and the allowance is 1.11 percent of total loans.

As of December 31, 2018, the Corporation’s total risk-based capital ratio equaled 14.61 percent, common equity tier 1 capital ratio equaled 11.98 percent, and the tangible common equity ratio totaled 9.97 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, January 31, 2019.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's fourth quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until March 2, 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 10127190.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme190131.html during the time of the call. A replay of the web cast will be available until January 31, 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)December 31,
 2018 2017
ASSETS   
Cash and cash equivalents$139,247  $154,905 
Interest-bearing time deposits36,963  35,027 
Investment securities1,632,582  1,560,602 
Loans held for sale4,778  7,216 
Loans7,224,467  6,751,199 
Less: Allowance for loan losses(80,552) (75,032)
Net loans7,143,915  6,676,167 
Premises and equipment93,420  95,852 
Federal Home Loan Bank stock24,588  23,825 
Interest receivable40,881  37,130 
Goodwill and other intangibles469,784  476,503 
Cash surrender value of life insurance224,939  223,557 
Other real estate owned2,179  10,373 
Tax asset, deferred and receivable23,668  23,983 
Other assets47,772  42,338 
TOTAL ASSETS$9,884,716  $9,367,478 
LIABILITIES   
Deposits:   
Noninterest-bearing$1,447,907  $1,761,553 
Interest-bearing6,306,686  5,410,977 
Total Deposits7,754,593  7,172,530 
Borrowings:   
Federal funds purchased104,000  144,038 
Securities sold under repurchase agreements113,512  136,623 
Federal Home Loan Bank advances314,986  414,377 
Subordinated debentures and term loans138,463  139,349 
Total Borrowings670,961  834,387 
Interest payable5,607  4,390 
Other liabilities45,295  52,708 
Total Liabilities8,476,456  8,064,015 
STOCKHOLDERS' EQUITY   
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:   
Authorized -- 600 shares   
Issued and outstanding - 125 shares125  125 
Common Stock, $.125 stated value:   
Authorized -- 100,000,000 shares   
Issued and outstanding - 49,349,800 and 49,158,238 shares6,169  6,145 
Additional paid-in capital840,052  834,870 
Retained earnings583,336  465,231 
Accumulated other comprehensive loss(21,422) (2,908)
Total Stockholders' Equity1,408,260  1,303,463 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$9,884,716  $9,367,478 



CONSOLIDATED STATEMENTS OF INCOMEThree Months Ended Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts)December 31, December 31,
 2018 2017 2018 2017
        
INTEREST INCOME      
Loans receivable:      
Taxable$91,092  $76,470  $342,501  $263,704 
Tax-exempt3,873  3,018  14,862  10,694 
Investment securities:      
Taxable5,553  4,477  21,597  17,489 
Tax-exempt6,644  5,830  25,509  21,379 
Deposits with financial institutions1,207  294  2,241  736 
            
            
            
            
            
Federal Home Loan Bank stock284  259  1,234  894 
            
            
Total Interest Income108,653  90,348  407,944  314,896 
            
INTEREST EXPENSE      
Deposits16,690  7,835  51,542  23,806 
Federal funds purchased48  55  718  561 
Securities sold under repurchase agreements243  146  762  477 
Federal Home Loan Bank advances1,691  1,577  7,832  5,196 
Subordinated debentures and term loans2,097  1,970  8,233  7,572 
            
Total Interest Expense20,769  11,583  69,087  37,612 
NET INTEREST INCOME87,884  78,765  338,857  277,284 
Provision for loan losses1,664  1,800  7,227  9,143 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES86,220  76,965  331,630  268,141 
            
OTHER INCOME      
Service charges on deposit accounts5,516  5,066  20,950  18,722 
Fiduciary and wealth management fees3,842  4,126  14,906  14,682 
Other customer fees4,904  4,565  19,895  17,863 
Earnings on cash surrender value of life insurance1,074  1,133  4,218  6,577 
Net gains and fees on sales of loans1,767  2,355  7,029  7,564 
Net realized gains on sales of available for sale securities253  1,134  4,269  2,631 
Other income1,824  682  5,192  2,970 
Total Other Income19,180  19,061  76,459  71,009 
            
OTHER EXPENSES      
Salaries and employee benefits34,350  33,760  131,704  119,812 
Net occupancy4,737  4,424  18,341  16,976 
Equipment3,627  3,898  14,334  13,090 
Marketing1,107  1,361  4,681  3,739 
Outside data processing fees3,367  3,378  13,215  12,242 
Printing and office supplies433  378  1,425  1,283 
Intangible asset amortization1,625  2,055  6,719  5,647 
FDIC assessments634  711  2,920  2,564 
Other real estate owned and foreclosure expenses251  311  1,470  1,903 
Professional and other outside services3,002  1,914  8,176  12,757 
Other expenses4,605  4,243  16,966  15,543 
Total Other Expenses57,738  56,433  219,951  205,556 
INCOME BEFORE INCOME TAX47,662  39,593  188,138  133,594 
Income tax expense5,949  15,210  28,999  37,524 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$41,713  $24,383  $159,139  $96,070 
                
Per Share Data:      
Basic Net Income Available to Common Stockholders$0.85  $0.49  $3.23  $2.13 
Diluted Net Income Available to Common Stockholders$0.85  $0.49  $3.22  $2.12 
Cash Dividends Paid$0.22  $0.18  $0.84  $0.69 
Average Diluted Shares Outstanding (in thousands)49,511  49,379  49,471  45,403 


FINANCIAL HIGHLIGHTS       
(Dollars in thousands)Three Months Ended Twelve Months Ended
 December 31, December 31,
 2018 2017 2018 2017
NET CHARGE-OFFS$(482) $122  $1,707  $148 
        
AVERAGE BALANCES:       
Total Assets$9,923,001  $9,174,237  $9,689,057  $8,196,229 
Total Loans7,102,552  6,575,055  6,997,771  5,881,284 
Total Earning Assets8,971,432  8,139,993  8,736,367  7,335,702 
Total Deposits7,875,998  7,142,375  7,569,482  6,368,751 
Total Stockholders' Equity1,379,453  1,294,810  1,343,861  1,110,524 
        
FINANCIAL RATIOS:       
Return on Average Assets1.68% 1.06% 1.64% 1.17%
Return on Average Stockholders' Equity12.10  7.53  11.84  8.65 
Return on Average Common Stockholders' Equity12.10  7.53  11.84  8.65 
Average Earning Assets to Average Assets90.41  88.73  90.17  89.50 
Allowance for Loan Losses as % of Total Loans1.11  1.11  1.11  1.11 
Net Charge-offs as % of Average Loans (Annualized)(0.03) 0.01  0.02   
Average Stockholders' Equity to Average Assets13.90  14.11  13.87  13.55 
Tax Equivalent Yield on Average Earning Assets4.97  4.67  4.79  4.53 
Interest Expense/Average Earning Assets0.93  0.57  0.79  0.51 
Net Interest Margin (FTE) on Average Earning Assets4.04  4.10  4.00  4.02 
Efficiency Ratio50.97  53.29  50.21  54.56 
Tangible Common Book Value Per Share$19.12  $16.96  $19.12  $16.96 


NON-PERFORMING ASSETS         
(Dollars In Thousands)December 31, September 30, June 30, March 31, December 31,
 2018 2018 2018 2018 2017
Non-Accrual Loans$26,148  $20,421  $20,143  $27,497  $28,724 
Renegotiated Loans1,103  968  544  579  1,013 
Non-Performing Loans (NPL)27,251  21,389  20,687  28,076  29,737 
Other Real Estate Owned2,179  8,859  9,071  9,698  10,373 
Non-Performing Assets (NPA)29,430  30,248  29,758  37,774  40,110 
90+ Days Delinquent1,855  50  184  738  924 
NPAs & 90 Day Delinquent$31,285  $30,298  $29,942  $38,512  $41,034 
          
Allowance for Loan Losses$80,552  $78,406  $77,543  $76,420  $75,032 
Quarterly Net Charge-offs(482) 537  540  1,112  122 
NPAs / Actual Assets %0.30% 0.31% 0.31% 0.40% 0.43%
NPAs & 90 Day / Actual Assets %0.32% 0.31% 0.31% 0.41% 0.44%
NPAs / Actual Loans and OREO %0.41% 0.43% 0.42% 0.55% 0.59%
Allowance for Loan Losses / Actual Loans (%)1.11% 1.11% 1.09% 1.11% 1.11%
Net Charge-offs as % of Average Loans (Annualized)(0.03)% 0.03% 0.03% 0.07% 0.01%


CONSOLIDATED BALANCE SHEETS         
(Dollars In Thousands)December 31, September 30, June 30, March 31, December 31,
 2018 2018 2018 2018 2017
ASSETS         
Cash and cash equivalents$139,247  $142,501  $133,893  $128,828  $154,905 
Interest-bearing time deposits36,963  66,763  36,599  24,233  35,027 
Investment securities1,632,582  1,625,251  1,619,683  1,543,820  1,560,602 
Loans held for sale4,778  3,022  2,046  4,469  7,216 
Loans7,224,467  7,088,071  7,081,059  6,901,696  6,751,199 
Less: Allowance for loan losses(80,552) (78,406) (77,543) (76,420) (75,032)
Net loans7,143,915  7,009,665  7,003,516  6,825,276  6,676,167 
Premises and equipment93,420  93,728  94,397  94,741  95,852 
Federal Home Loan Bank stock24,588  24,588  24,588  24,588  23,825 
Interest receivable40,881  38,531  38,530  35,223  37,130 
Goodwill and other intangibles469,784  471,409  473,059  474,777  476,503 
Cash surrender value of life insurance224,939  223,865  222,905  221,949  223,557 
Other real estate owned2,179  8,859  9,071  9,698  10,373 
Tax asset, deferred and receivable23,668  25,933  24,619  24,177  23,983 
Other assets47,772  53,167  51,809  61,017  42,338 
TOTAL ASSETS$9,884,716  $9,787,282  $9,734,715  $9,472,796  $9,367,478 
LIABILITIES         
Deposits:         
Noninterest-bearing$1,447,907  $1,464,190  $1,571,194  $1,698,958  $1,761,553 
Interest-bearing6,306,686  6,168,962  5,932,621  5,628,677  5,410,977 
Total Deposits7,754,593  7,633,152  7,503,815  7,327,635  7,172,530 
Borrowings:         
Federal funds purchased104,000  90,000  109,000  50,000  144,038 
Securities sold under repurchase agreements113,512  118,824  122,513  138,910  136,623 
Federal Home Loan Bank advances314,986  385,458  469,261  449,419  414,377 
Subordinated debentures and term loans138,463  138,408  138,352  138,297  139,349 
Total Borrowings670,961  732,690  839,126  776,626  834,387 
Interest payable5,607  5,920  4,807  5,376  4,390 
Other liabilities45,295  54,094  46,639  50,086  52,708 
Total Liabilities8,476,456  8,425,856  8,394,387  8,159,723  8,064,015 
STOCKHOLDERS' EQUITY         
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:         
Authorized -- 600 shares         
Issued and outstanding125  125  125  125  125 
Common Stock, $.125 stated value:         
Authorized -- 100,000,000 shares         
Issued and outstanding6,169  6,163  6,160  6,155  6,145 
Additional paid-in capital840,052  837,996  836,549  834,894  834,870 
Retained earnings583,336  552,551  522,362  493,624  465,231 
Accumulated other comprehensive loss(21,422) (35,409) (24,868) (21,725) (2,908)
Total Stockholders' Equity1,408,260  1,361,426  1,340,328  1,313,073  1,303,463 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$9,884,716  $9,787,282  $9,734,715  $9,472,796  $9,367,478 


CONSOLIDATED STATEMENTS OF INCOME         
(Dollars In Thousands, Except Per Share Amounts)December 31, September 30, June 30, March 31, December 31,
 2018 2018 2018 2018 2017
INTEREST INCOME         
Loans receivable:         
Taxable$91,092  $88,479  $84,663  $78,267  $76,470 
Tax-exempt3,873  3,761  3,632  3,596  3,018 
Investment securities:         
Taxable5,553  5,514  5,434  5,096  4,477 
Tax-exempt6,644  6,493  6,246  6,126  5,830 
Deposits with financial institutions1,207  270  633  131  294 
Federal Home Loan Bank stock284  283  263  404  259 
Total Interest Income108,653  104,800  100,871  93,620  90,348 
INTEREST EXPENSE         
Deposits16,690  13,685  12,165  9,002  7,835 
Federal funds purchased48  229  61  380  55 
Securities sold under repurchase agreements243  174  172  173  146 
Federal Home Loan Bank advances1,691  2,137  1,845  2,159  1,577 
Subordinated debentures and term loans2,097  2,089  2,057  1,990  1,970 
Total Interest Expense20,769  18,314  16,300  13,704  11,583 
NET INTEREST INCOME87,884  86,486  84,571  79,916  78,765 
Provision for loan losses1,664  1,400  1,663  2,500  1,800 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES86,220  85,086  82,908  77,416  76,965 
OTHER INCOME         
Service charges on deposit accounts5,516  5,619  5,038  4,777  5,066 
Fiduciary and wealth management fees3,842  3,673  3,595  3,796  4,126 
Other customer fees4,904  5,038  4,917  5,036  4,565 
Earnings on cash surrender value of life insurance1,074  961  1,007  1,176  1,133 
Net gains and fees on sales of loans1,767  1,841  1,600  1,821  2,355 
Net realized gains on sales of available for sale securities253  1,285  1,122  1,609  1,134 
Other income1,824  1,110  912  1,346  682 
Total Other Income19,180  19,527  18,191  19,561  19,061 
OTHER EXPENSES         
Salaries and employee benefits34,350  32,936  32,192  32,226  33,760 
Net occupancy4,737  4,586  4,348  4,670  4,424 
Equipment3,627  3,483  3,556  3,668  3,898 
Marketing1,107  1,216  1,474  884  1,361 
Outside data processing fees3,367  3,422  3,462  2,964  3,378 
Printing and office supplies433  334  324  334  378 
Intangible asset amortization1,625  1,650  1,718  1,726  2,055 
FDIC assessments634  856  711  719  711 
Other real estate owned and foreclosure expenses251  455  362  402  311 
Professional and other outside services3,002  1,844  1,789  1,541  1,914 
Other expenses4,605  4,240  3,568  4,553  4,243 
Total Other Expenses57,738  55,022  53,504  53,687  56,433 
INCOME BEFORE INCOME TAX47,662  49,591  47,595  43,290  39,593 
Income tax expense5,949  8,478  7,961  6,611  15,210 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$41,713  $41,113  $39,634  $36,679  $24,383 
          
Per Share Data:         
Basic Net Income Available to Common Stockholders$0.85  $0.83  $0.80  $0.75  $0.49 
Diluted Net Income Available to Common Stockholders$0.85  $0.83  $0.80  $0.74  $0.49 
Cash Dividends Paid$0.22  $0.22  $0.22  $0.18  $0.18 
Average Diluted Shares Outstanding (in thousands)49,511  49,492  49,451  49,428  49,379 
FINANCIAL RATIOS:         
Return on Average Assets1.68% 1.69% 1.63% 1.57% 1.06%
Return on Average Stockholders' Equity12.10  12.10  11.94  11.21  7.53 
Return on Average Common Stockholders' Equity12.10  12.10  11.95  11.21  7.53 
Average Earning Assets to Average Assets90.41  90.30  90.14  89.78  88.73 
Allowance for Loan Losses as % of Total Loans1.11  1.11  1.09  1.11  1.11 
Net Charge-offs as % of Average Loans (Annualized)(0.03) 0.03  0.03  0.07  0.01 
Average Stockholders' Equity to Average Assets13.90  13.93  13.69  13.96  14.11 
Tax Equivalent Yield on Average Earning Assets4.97  4.88  4.74  4.57  4.67 
Interest Expense/Average Earning Assets0.93  0.83  0.75  0.65  0.57 
Net Interest Margin (FTE) on Average Earning Assets4.04  4.05  3.99  3.92  4.10 
Efficiency Ratio50.97  49.25  49.32  51.33  53.29 
Tangible Common Book Value Per Share$19.12  $18.16  $17.71  $17.14  $16.96 


LOANS         
(Dollars In Thousands)December 31, September 30, June 30, March 31, December 31,
 2018 2018 2018 2018 2017
Commercial and industrial loans$1,726,664  $1,655,569  $1,657,591  $1,554,169  $1,493,493 
Agricultural production financing and other loans to farmers92,404  88,504  89,093  98,315  121,757 
Real estate loans:         
Construction545,729  668,608  714,866  590,093  612,219 
Commercial and farmland2,832,102  2,699,629  2,652,782  2,713,994  2,562,691 
Residential966,421  965,893  965,720  948,644  962,765 
Home equity528,157  517,303  518,699  510,545  514,021 
Individuals' loans for household and other personal expenditures99,788  98,709  92,809  88,235  86,935 
Lease financing receivables, net of unearned income1,600  1,830  1,945  2,193  2,527 
Other commercial loans431,602  392,026  387,554  395,508  394,791 
Loans7,224,467  7,088,071  7,081,059  6,901,696  6,751,199 
Allowance for loan losses(80,552) (78,406) (77,543) (76,420) (75,032)
NET LOANS$7,143,915  $7,009,665  $7,003,516  $6,825,276  $6,676,167 


DEPOSITS         
(Dollars In Thousands)December 31, September 30, June 30, March 31, December 31,
 2018 2018 2018 2018 2017
Demand deposits$3,985,178  $3,870,816  $3,933,233  $3,740,395  $3,746,654 
Savings deposits2,282,701  2,212,675  2,099,771  2,109,071  1,994,366 
Certificates and other time deposits of $100,000 or more593,592  602,002  555,910  552,643  468,895 
Other certificates and time deposits646,682  625,341  602,239  584,377  581,894 
Brokered deposits246,440  322,318  312,662  341,149  380,721 
TOTAL DEPOSITS$7,754,593  $7,633,152  $7,503,815  $7,327,635  $7,172,530 


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)           
 For the Three Months Ended
 December 31, 2018 December 31, 2017
 Average
Balance
 Interest
Income /
Expense
 Average
Rate
 Average
Balance
 Interest
Income /
Expense
 Average
Rate
Assets:           
Interest-bearing time deposits$210,121  $1,207  2.30% $87,172  $294  1.35%
Federal Home Loan Bank stock24,588  284  4.62  23,825  259  4.35 
Investment Securities: (1)           
Taxable843,514  5,553  2.63  755,341  4,477  2.37 
Tax-Exempt (2)790,657  8,410  4.25  698,600  8,969  5.14 
Total Investment Securities1,634,171  13,963  3.42  1,453,941  13,446  3.70 
Loans held for sale15,142  177  4.68  13,657  216  6.33 
Loans: (3)           
Commercial5,224,202  73,416  5.62  4,806,978  60,015  4.99 
Real Estate Mortgage739,325  8,375  4.53  737,668  8,320  4.51 
Installment649,717  9,124  5.62  617,591  7,919  5.13 
Tax-Exempt (2)474,166  4,903  4.14  399,161  4,643  4.65 
Total Loans7,102,552  95,995  5.41  6,575,055  81,113  4.93 
Total Earning Assets8,971,432  111,449  4.97  8,139,993  95,112  4.67 
Net unrealized gain (loss) on securities available for sale(24,206)     4,131     
Allowance for loan losses(78,926)     (73,675)    
Cash and cash equivalents140,065      182,970     
Premises and equipment93,589      102,605     
Other assets821,047      818,213     
Total Assets$9,923,001      $9,174,237     
Liabilities:           
Interest-bearing deposits:           
Interest-bearing deposits$2,563,703  $5,565  0.87% $1,970,916  $2,185  0.44%
Money market deposits1,157,022  2,450  0.85  1,071,037  1,101  0.41 
Savings deposits1,134,559  2,016  0.71  922,052  214  0.09 
Certificates and other time deposits1,542,222  6,659  1.73  1,458,365  4,335  1.19 
Total Interest-bearing Deposits6,397,506  16,690  1.04  5,422,370  7,835  0.58 
Borrowings611,255  4,079  2.67  678,242  3,748  2.21 
Total Interest-bearing Liabilities7,008,761  20,769  1.19  6,100,612  11,583  0.76 
Noninterest-bearing deposits1,478,492      1,720,005     
Other liabilities56,295      58,810     
Total Liabilities8,543,548      7,879,427     
Stockholders' Equity1,379,453      1,294,810     
Total Liabilities and Stockholders' Equity$9,923,001  20,769    $9,174,237  11,583   
Net Interest Income (FTE)  $90,680      $83,529   
Net Interest Spread (FTE) (4)    3.78%     3.91%
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    4.97%     4.67%
Interest Expense / Average Earning Assets    0.93%     0.57%
Net Interest Margin (FTE) (5)    4.04%     4.10%
            
(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 and 35 percent for 2018 and 2017, respectively. These totals equal $2,796 and $4,764 for the three months ended December 31, 2018 and 2017, 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, 2018 December 31, 2017
 Average
Balance
 Interest
Income /
Expense
 Average
Rate
 Average
Balance
 Interest
Income /
Expense
 Average
Rate
Assets:           
Interest-bearing time deposits$110,232  $2,241  2.03% $75,417  $736  0.98%
Federal Home Loan Bank stock24,538  1,234  5.03  20,921  894  4.27 
Investment Securities: (1)           
Taxable841,203  21,597  2.57  726,004  17,489  2.41 
Tax-Exempt (2)762,623  32,290  4.23  632,076  32,891  5.20 
Total Investment Securities1,603,826  53,887  3.36  1,358,080  50,380  3.71 
Loans held for sale11,425  540  4.73  7,707  462  5.99 
Loans: (3)           
Commercial5,143,576  274,302  5.33  4,267,651  204,771  4.80 
Real Estate Mortgage733,709  33,549  4.57  679,284  30,267  4.46 
Installment640,310  34,110  5.33  573,100  28,204  4.92 
Tax-Exempt (2)468,751  18,813  4.01  353,542  16,452  4.65 
Total Loans6,997,771  361,314  5.16  5,881,284  280,156  4.76 
Total Earning Assets8,736,367  418,676  4.79  7,335,702  332,166  4.53 
Net unrealized gain on securities available for sale(14,790)     4,360     
Allowance for loan losses(77,444)     (70,380)    
Cash and cash equivalents131,925      142,503     
Premises and equipment94,567      97,446     
Other assets818,432      686,598     
Total Assets$9,689,057      $8,196,229     
Liabilities:           
Interest-bearing deposits:           
Interest-bearing deposits$2,319,081  $17,577  0.76% $1,730,272  $5,817  0.34%
Money market deposits1,097,762  6,721  0.61  938,959  2,788  0.30 
Savings deposits1,065,031  5,230  0.49  844,825  734  0.09 
Certificates and other time deposits1,514,271  22,014  1.45  1,339,866  14,467  1.08 
Total Interest-bearing Deposits5,996,145  51,542  0.86  4,853,922  23,806  0.49 
Borrowings718,061  17,545  2.44  664,045  13,806  2.08 
Total Interest-bearing Liabilities6,714,206  69,087  1.03  5,517,967  37,612  0.68 
Noninterest-bearing deposits1,573,337      1,514,829     
Other liabilities57,653      52,909     
Total Liabilities8,345,196      7,085,705     
Stockholders' Equity1,343,861      1,110,524     
Total Liabilities and Stockholders' Equity$9,689,057  69,087    $8,196,229  37,612   
Net Interest Income (FTE)  $349,589      $294,554   
Net Interest Spread (FTE) (4)    3.76%     3.85%
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    4.79%     4.53%
Interest Expense / Average Earning Assets    0.79%     0.51%
Net Interest Margin (FTE) (5)    4.00%     4.02%
            
(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 and 35 percent for 2018 and 2017, respectively. These totals equal $10,732 and $17,270 for the twelve months ended December 31, 2018 and 2017, 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

SOURCE: First Merchants Corporation

FMC Logo with trademark.jpg

Source: First Merchants Corporation


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