• First Merchants Corporation Announces Second Quarter 2022 Earnings per Share

    Source: Nasdaq GlobeNewswire / 26 Jul 2022 08:00:39   America/New_York

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

    Second Quarter 2022 Highlights:

    • Net income available to common stockholders was $38.5 million and diluted earnings per common share totaled $.63, compared to $55.6 million and $1.03 in the second quarter of 2021, and $48.6 million and $.91 in the first quarter of 2022.
    • Completed legal closing on the acquisition of Level One Bancorp, Inc. (“Level One”) on April 1, 2022.
    • Adjusted net income1 was $60.0 million and adjusted diluted earnings per share1 totaled $1.01, compared to $48.2 million and $.89 in the second quarter of 2021, and $47.3 million and $.88 in the first quarter of 2022.
    • Total loans grew $2.0 billion during the second quarter which included $1.6 billion from the acquisition of Level One. Excluding the forgiveness of $59.2 million in Paycheck Protection Program (“PPP”) loans, organic loan growth totaled $468.3 million or 20.1% annualized on a linked quarter basis.
    • Total deposits grew $1.7 billion during the second quarter which included $1.9 billion from the acquisition of Level One reflecting a decline in deposit balances of $265.9 million or 8.2% annualized on a linked quarter basis.
    • Nonaccrual loans totaled $46.0 million compared to $42.7 million on a linked quarter basis
    • Net interest income totaled $128.7 million, an increase of $26.4 million or 25.8% on a linked quarter basis

    Mark Hardwick, Chief Executive Officer, stated, “First Merchants is encouraged by second quarter annualized organic loan growth of 20 percent combined with core margin expansion of 22 basis points. The legal close of Level One was a key accomplishment of our second quarter improving our prospects for future growth.”

    Second Quarter Financial Results

    First Merchants Corporation (the “Corporation”) has reported second quarter 2022 net income available to common stockholders of $38.5 million compared to $55.6 million during the same period in 2021. Diluted earnings per common share for the period totaled $.63 per share compared to the second quarter of 2021 result of $1.03 per share. Current quarter results included acquisition costs of $29.3 million resulting in a reduction of $.38 of diluted earnings per common share. The acquisition costs primarily consist of employee retention bonuses and severance, contract termination charges, professional fees, and current expected credit losses (“CECL”) Day 1 provision expense.

    Total assets equaled $17.8 billion as of quarter-end and loans totaled $11.4 billion. Total loans increased $2.3 billion during the past twelve months. The acquisition of Level One contributed $1.6 billion of loans. Excluding acquired loans, the Corporation experienced organic loan growth of $1.1 billion, or 12.1 percent, during the past twelve months. This was offset by the forgiveness of PPP loans of $426.4 million. PPP loans accounted for $32.9 million of the period end loan portfolio balance. Investments increased $481.7 million, or 11.6 percent, during the last twelve months and now total $4.6 billion.

    Total deposits equaled $14.6 billion as of quarter-end and increased by $2.4 billion over the past twelve months. The acquisition of Level One contributed $1.9 billion in deposits resulting in $436.7 million or 3.6% in organic deposit growth. The balance sheet growth mix resulted in an increase in the loan to deposit ratio of 3.4% over the past twelve months with the current quarter ratio ending at 78.3 percent.

    The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $226.3 million as of quarter-end, or 1.98 percent of total loans, an increase of $30.3 million over prior quarter due to the acquisition of Level One. The ACL increased $16.6 million for CECL Day 1 purchased credit deteriorated (PCD) loans and provision expense of $14.0 million was recorded for CECL Day 1 non-PCD loans. Additionally, provision expense of $2.8 million was recorded for CECL Day 1 unfunded commitments, which increased other liabilities. Net loan charge-offs for the quarter totaled $0.3 million. No provision expense was recorded during the quarter or during the last twelve months other than CECL Day 1 expense. Non-performing assets to total assets were 0.30% for the second quarter of 2022, a decrease of nine basis points compared to 0.39% in the second quarter of 2021.

    Net-interest income totaling $128.7 million for the quarter, continued to grow with an increase of $26.4 million, or 25.8 percent, over prior quarter, and an increase of $24.4 million, or 23.4 percent compared to the second quarter of 2021. Stated net-interest margin on a tax equivalent basis, totaling 3.28 percent, increased by 25 basis points compared to the first quarter of 2022 and six basis points compared to the second quarter of 2021. Net-interest margin excluding the impact of fair value accretion and PPP loans totaled 3.19%, an increase of 22 basis points compared to 2.97% for the first quarter of 2022 and an increase of 19 basis points from the second quarter of 2021. During the quarter, net-interest margin expanded 35 basis points from growth in the loan portfolio and higher loan and investment portfolio yields offset by a 10 basis point increase in funding costs.

    Non-interest income, totaling $28.3 million for the quarter, increased $2.4 million or 9.2% compared to the first quarter of 2022. The increase was driven by higher services charges on deposits, gains on the sales of loans and derivative hedge fees. Non-interest income declined $2.6 million from the second quarter of 2021 due primarily to a decline on gains on the sale of loans driven by lower origination volume.

    Non-interest expense totaled $97.3 million for the quarter, an increase of $25.0 million from the first quarter of 2022, and an increase of $28.0 million over the second quarter of 2021. Acquisition costs totaling $12.5 million were incurred during the quarter of which $10.0 million were one-time charges, $3.0 million reflected in salaries and benefits and $7.0 million in professional and other outside services.

    The Corporation’s total risk-based capital ratio equaled 12.73 percent, common equity tier 1 capital ratio equaled 10.27 percent, and the tangible common equity ratio totaled 7.04 percent. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

    1 See “Non-GAAP Financial Information” for reconciliation

    CONFERENCE CALL

    First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 10:30 a.m. (ET) on Tuesday, July 26, 2022.

    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/BI36331b98cb7441deb05fe5de007c8125)

    In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/944s4zom) during the time of the call. A replay of the webcast will be available until July 26, 2023.

    Detailed financial results are reported on the attached pages.

    About First Merchants Corporation

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

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

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

    Forward-Looking Statements

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



    CONSOLIDATED BALANCE SHEETS   
    (Dollars In Thousands)June 30,
      2022   2021 
    ASSETS   
    Cash and due from banks$212,559  $167,596 
    Interest-bearing deposits 136,702   438,863 
    Investment securities, net of allowance for credit losses of $245,000 and $245,000 4,630,030   4,148,314 
    Loans held for sale 9,060   18,582 
    Loans 11,397,417   9,121,250 
    Less: Allowance for credit losses - loans (226,275)  (199,775)
    Net loans 11,171,142   8,921,475 
    Premises and equipment 117,757   103,822 
    Federal Home Loan Bank stock 38,111   28,736 
    Interest receivable 68,728   54,173 
    Goodwill and other intangibles 753,649   573,786 
    Cash surrender value of life insurance 323,013   294,462 
    Other real estate owned 6,521   601 
    Tax asset, deferred and receivable 114,965   36,924 
    Other assets 198,255   135,763 
    TOTAL ASSETS$17,780,492  $14,923,097 
    LIABILITIES   
    Deposits:   
    Noninterest-bearing$3,435,331  $2,479,853 
    Interest-bearing 11,135,538   9,723,547 
    Total Deposits 14,570,869   12,203,400 
    Borrowings:   
    Federal funds purchased 100,000   — 
    Securities sold under repurchase agreements 186,468   146,904 
    Federal Home Loan Bank advances 598,865   334,243 
    Subordinated debentures and other borrowings 151,299   118,498 
    Total Borrowings 1,036,632   599,645 
    Interest payable 2,978   2,929 
    Other liabilities 192,372   245,323 
    Total Liabilities 15,802,851   13,051,297 
    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   — 
    Common Stock, $.125 stated value:   
    Authorized -- 100,000,000 shares   
    Issued and outstanding - 59,059,866 and 53,972,386 shares 7,383   6,747 
    Additional paid-in capital 1,226,378   1,009,182 
    Retained earnings 917,311   795,666 
    Accumulated other comprehensive income (198,556)  60,080 
    Total Stockholders' Equity 1,977,641   1,871,800 
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$17,780,492  $14,923,097 



    CONSOLIDATED STATEMENTS OF INCOMEThree Months Ended Six Months Ended
    (Dollars In Thousands, Except Per Share Amounts)June 30, June 30,
      2022   2021   2022   2021 
    INTEREST INCOME       
    Loans receivable:       
    Taxable$106,787  $87,002  $185,862  $172,107 
    Tax-exempt 5,990   5,545   11,694   10,884 
    Investment securities:       
    Taxable 10,372   7,440   18,882   14,135 
    Tax-exempt 17,212   13,071   33,087   25,456 
    Deposits with financial institutions 610   129   840   243 
    Federal Home Loan Bank stock 175   88   321   266 
    Total Interest Income 141,146   113,275   250,686   223,091 
    INTEREST EXPENSE       
    Deposits 8,485   5,823   12,779   12,023 
    Federal funds purchased 76   2   76   4 
    Securities sold under repurchase agreements 134   75   223   162 
    Federal Home Loan Bank advances 1,774   1,452   2,992   2,894 
    Subordinated debentures and other borrowings 2,016   1,659   3,675   3,316 
    Total Interest Expense 12,485   9,011   19,745   18,399 
    NET INTEREST INCOME 128,661   104,264   230,941   204,692 
    Provision for credit losses - loans 16,755   —   16,755   — 
    NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 111,906   104,264   214,186   204,692 
    OTHER INCOME       
    Service charges on deposit accounts 7,690   5,596   14,109   10,860 
    Fiduciary and wealth management fees 7,634   7,510   14,966   13,932 
    Card payment fees 5,175   4,159   10,898   8,526 
    Net gains and fees on sales of loans 3,226   8,325   5,425   12,311 
    Derivative hedge fees 1,444   943   2,362   1,260 
    Other customer fees 662   368   1,072   736 
    Earnings on cash surrender value of life insurance 1,308   1,205   3,004   2,541 
    Net realized gains on sales of available for sale securities 90   1,761   656   3,560 
    Other income 1,048   1,017   1,682   1,249 
    Total Other Income 28,277   30,884   54,174   54,975 
    OTHER EXPENSES       
    Salaries and employee benefits 56,041   42,438   98,560   81,249 
    Net occupancy 6,648   5,615   12,835   12,106 
    Equipment 6,720   4,848   11,800   9,878 
    Marketing 1,414   1,122   2,150   2,246 
    Outside data processing fees 4,881   4,698   9,244   8,942 
    Printing and office supplies 381   313   726   596 
    Intangible asset amortization 2,303   1,464   3,669   2,821 
    FDIC assessments 2,924   1,461   5,116   2,829 
    Other real estate owned and foreclosure expenses (266)  178   298   912 
    Professional and other outside services 10,267   2,976   13,220   5,519 
    Other expenses 6,000   4,182   12,020   8,295 
    Total Other Expenses 97,313   69,295   169,638   135,393 
    INCOME BEFORE INCOME TAX 42,870   65,853   98,722   124,274 
    Income tax expense 3,879   10,294   11,145   19,246 
    NET INCOME 38,991   55,559   87,577   105,028 
    Preferred stock dividends 469   —   469   — 
    NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$38,522  $55,559  $87,108  $105,028 
    Per Share Data:       
    Basic Net Income Available to Common Stockholders$0.64  $1.03  $1.55  $1.95 
    Diluted Net Income Available to Common Stockholders$0.63  $1.03  $1.54  $1.94 
    Cash Dividends Paid to Common Stockholders$0.32  $0.29  $0.61  $0.55 
    Average Diluted Common Shares Outstanding (in thousands) 59,308   54,184   56,516   54,159 



    FINANCIAL HIGHLIGHTS       
    (Dollars in thousands)Three Months Ended Six Months Ended
     June 30, June 30,
      2022   2021   2022   2021 
    NET CHARGE-OFFS (RECOVERIES)$263  $1,307  $(324) $4,928 
            
    AVERAGE BALANCES:       
    Total Assets$17,778,221  $14,758,597  $16,627,804  $14,503,087 
    Total Loans 11,175,188   9,282,524   10,220,860   9,259,600 
    Total Earning Assets 16,435,747   13,558,956   15,355,265   13,292,617 
    Total Deposits 14,809,528   12,125,153   13,819,111   11,848,075 
    Total Stockholders' Equity 2,021,123   1,846,037   1,956,532   1,843,250 
            
    FINANCIAL RATIOS:       
    Return on Average Assets 0.88%  1.51%  1.05%  1.45%
    Return on Average Stockholders' Equity 7.62   12.04   8.90   11.40 
    Return on Average Common Stockholders' Equity 7.72   12.04   8.96   11.40 
    Average Earning Assets to Average Assets 92.45   91.87   92.35   91.65 
    Allowance for Credit Losses - Loans as % of Total Loans 1.98   2.19   1.98   2.19 
    Net Charge-offs as % of Average Loans (Annualized) 0.01   0.06   (0.01)  0.11 
    Average Stockholders' Equity to Average Assets 11.37   12.51   11.77   12.71 
    Tax Equivalent Yield on Average Earning Assets 3.58   3.49   3.42   3.51 
    Interest Expense/Average Earning Assets 0.30   0.27   0.26   0.28 
    Net Interest Margin (FTE) on Average Earning Assets 3.28   3.22   3.16   3.23 
    Efficiency Ratio 58.45   48.91   55.90   49.54 
    Tangible Common Book Value Per Share$20.45  $24.15  $20.45  $24.15 



    NON-PERFORMING ASSETS         
    (Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
      2022   2022   2021   2021   2021 
    Non-Accrual Loans$45,970  $42,698  $43,062  $51,502  $57,556 
    Renegotiated Loans 233   141   329   439   629 
    Non-Performing Loans (NPL) 46,203   42,839   43,391   51,941   58,185 
    Other Real Estate Owned and Repossessions 6,521   6,271   558   698   601 
    Non-Performing Assets (NPA) 52,724   49,110   43,949   52,639   58,786 
    90+ Days Delinquent 592   2,085   963   157   183 
    NPAs & 90 Day Delinquent$53,316  $51,195  $44,912  $52,796  $58,969 
              
    Allowance for Credit Losses - Loans$226,275  $195,984  $195,397  $199,972  $199,775 
    Quarterly Net Charge-offs (Recoveries) 263   (587)  4,575   (197)  1,307 
    NPAs / Actual Assets % 0.30%  0.32%  0.28%  0.35%  0.39%
    NPAs & 90 Day / Actual Assets % 0.30%  0.33%  0.29%  0.35%  0.40%
    NPAs / Actual Loans and OREO % 0.46%  0.52%  0.47%  0.58%  0.64%
    Allowance for Credit Losses - Loans / Actual Loans (%) 1.98%  2.09%  2.11%  2.21%  2.19%
    Net Charge-offs as % of Average Loans (Annualized) 0.01%  (0.03)%  0.20%  (0.01)%  0.06%



    CONSOLIDATED BALANCE SHEETS         
    (Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
      2022   2022   2021   2021   2021 
    ASSETS         
    Cash and due from banks$212,559  $148,277  $167,146  $169,261  $167,596 
    Interest-bearing deposits 136,702   395,262   474,154   369,447   438,863 
    Investment securities, net of allowance for credit losses 4,630,030   4,489,263   4,524,353   4,445,516   4,148,314 
    Loans held for sale 9,060   3,938   11,187   5,990   18,582 
    Loans 11,397,417   9,356,241   9,241,861   9,041,576   9,121,250 
    Less: Allowance for credit losses - loans (226,275)  (195,984)  (195,397)  (199,972)  (199,775)
    Net loans 11,171,142   9,160,257   9,046,464   8,841,604   8,921,475 
    Premises and equipment 117,757   105,883   105,655   104,814   103,822 
    Federal Home Loan Bank stock 38,111   26,422   28,736   28,736   28,736 
    Interest receivable 68,728   56,081   57,187   53,079   54,173 
    Goodwill and other intangibles 753,649   569,494   570,860   572,323   573,786 
    Cash surrender value of life insurance 323,013   291,881   291,041   291,825   294,462 
    Other real estate owned 6,521   6,271   558   698   601 
    Tax asset, deferred and receivable 114,965   73,422   35,641   39,504   36,924 
    Other assets 198,255   138,807   140,167   137,928   135,763 
    TOTAL ASSETS$17,780,492  $15,465,258  $15,453,149  $15,060,725  $14,923,097 
    LIABILITIES         
    Deposits:         
    Noninterest-bearing$3,435,331  $2,745,235  $2,709,646  $2,554,323  $2,479,853 
    Interest-bearing 11,135,538   10,160,718   10,022,931   9,794,366   9,723,547 
    Total Deposits 14,570,869   12,905,953   12,732,577   12,348,689   12,203,400 
    Borrowings:         
    Federal funds purchased 100,000   —   —   —   — 
    Securities sold under repurchase agreements 186,468   169,697   181,577   183,589   146,904 
    Federal Home Loan Bank advances 598,865   308,960   334,055   334,149   334,243 
    Subordinated debentures and other borrowings 151,299   118,677   118,618   118,558   118,498 
    Total Borrowings 1,036,632   597,334   634,250   636,296   599,645 
    Interest payable 2,978   3,589   2,762   3,736   2,929 
    Other liabilities 192,372   150,749   170,989   203,914   245,323 
    Total Liabilities 15,802,851   13,657,625   13,540,578   13,192,635   13,051,297 
    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   —   —   —   — 
    Common Stock, $.125 stated value:         
    Authorized -- 100,000,000 shares         
    Issued and outstanding 7,383   6,678   6,676   6,689   6,747 
    Additional paid-in capital 1,226,378   987,404   985,818   988,659   1,009,182 
    Retained earnings 917,311   897,818   864,839   832,728   795,666 
    Accumulated other comprehensive income (198,556)  (84,392)  55,113   39,889   60,080 
    Total Stockholders' Equity 1,977,641   1,807,633   1,912,571   1,868,090   1,871,800 
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$17,780,492  $15,465,258  $15,453,149  $15,060,725  $14,923,097 
              



    CONSOLIDATED STATEMENTS OF INCOME         
    (Dollars In Thousands, Except Per Share Amounts)June 30, March 31, December 31, September 30, June 30,
      2022   2022   2021   2021   2021 
    INTEREST INCOME         
    Loans receivable:         
    Taxable$106,787  $79,075  $80,583  $85,319  $87,002 
    Tax-exempt 5,990   5,704   5,635   5,591   5,545 
    Investment securities:         
    Taxable 10,372   8,510   8,028   7,788   7,440 
    Tax-exempt 17,212   15,875   15,411   14,464   13,071 
    Deposits with financial institutions 610   230   173   218   129 
    Federal Home Loan Bank stock 175   146   163   168   88 
    Total Interest Income 141,146   109,540   109,993   113,548   113,275 
    INTEREST EXPENSE         
    Deposits 8,485   4,294   5,589   5,707   5,823 
    Federal funds purchased 76   —   1   —   2 
    Securities sold under repurchase agreements 134   89   75   77   75 
    Federal Home Loan Bank advances 1,774   1,218   1,389   1,389   1,452 
    Subordinated debentures and other borrowings 2,016   1,659   1,666   1,660   1,659 
    Total Interest Expense 12,485   7,260   8,720   8,833   9,011 
    NET INTEREST INCOME 128,661   102,280   101,273   104,715   104,264 
    Provision for credit losses - loans 16,755   —   —   —   — 
    NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 111,906   102,280   101,273   104,715   104,264 
    OTHER INCOME         
    Service charges on deposit accounts 7,690   6,419   6,462   6,249   5,596 
    Fiduciary and wealth management fees 7,634   7,332   7,078   7,352   7,510 
    Card payment fees 5,175   5,723   3,937   4,156   4,159 
    Net gains and fees on sales of loans 3,226   2,199   3,423   3,955   8,325 
    Derivative hedge fees 1,444   918   1,562   1,028   943 
    Other customer fees 662   410   361   393   368 
    Earnings on cash surrender value of life insurance 1,308   1,696   2,051   2,468   1,205 
    Net realized gains on sales of available for sale securities 90   566   358   1,756   1,761 
    Other income 1,048   634   615   1,144   1,017 
    Total Other Income 28,277   25,897   25,847   28,501   30,884 
    OTHER EXPENSES         
    Salaries and employee benefits 56,041   42,519   42,432   43,314   42,438 
    Net occupancy 6,648   6,187   5,644   5,576   5,615 
    Equipment 6,720   5,080   4,994   4,529   4,848 
    Marketing 1,414   736   1,840   1,676   1,122 
    Outside data processing fees 4,881   4,363   4,581   4,794   4,698 
    Printing and office supplies 381   345   356   265   313 
    Intangible asset amortization 2,303   1,366   1,463   1,463   1,464 
    FDIC assessments 2,924   2,192   1,862   1,552   1,461 
    Other real estate owned and foreclosure expenses (266)  564   171   (91)  178 
    Professional and other outside services 10,267   2,953   3,627   2,767   2,976 
    Other expenses 6,000   6,020   5,466   5,539   4,182 
    Total Other Expenses 97,313   72,325   72,436   71,384   69,295 
    INCOME BEFORE INCOME TAX 42,870   55,852   54,684   61,832   65,853 
    Income tax expense 3,879   7,266   6,951   9,062   10,294 
    NET INCOME 38,991   48,586   47,733   52,770   55,559 
    Preferred stock dividends 469   —   —   —   — 
    NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$38,522  $48,586  $47,733  $52,770  $55,559 
    Per Share Data:         
    Basic Net Income Available to Common Stockholders$0.64  $0.91  $0.89  $0.98  $1.03 
    Diluted Net Income Available to Common Stockholders$0.63  $0.91  $0.89  $0.98  $1.03 
    Cash Dividends Paid to Common Stockholders$0.32  $0.29  $0.29  $0.29  $0.29 
    Average Diluted Common Shares Outstanding (in thousands) 59,308   53,616   53,660   53,960   54,184 
    FINANCIAL RATIOS:         
    Return on Average Assets 0.88%  1.26%  1.25%  1.41%  1.51%
    Return on Average Stockholders' Equity 7.62   10.28   10.10   11.17   12.04 
    Return on Average Common Stockholders' Equity 7.72   10.28   10.10   11.17   12.04 
    Average Earning Assets to Average Assets 92.45   92.23   91.86   91.57   91.87 
    Allowance for Credit Losses - Loans as % of Total Loans 1.98   2.09   2.11   2.21   2.19 
    Net Charge-offs (Recoveries) as % of Average Loans (Annualized) 0.01   (0.03)  0.20   (0.01)  0.06 
    Average Stockholders' Equity to Average Assets 11.37   12.23   12.36   12.59   12.51 
    Tax Equivalent Yield on Average Earning Assets 3.58   3.23   3.29   3.46   3.49 
    Interest Expense/Average Earning Assets 0.30   0.20   0.25   0.26   0.27 
    Net Interest Margin (FTE) on Average Earning Assets 3.28   3.03   3.04   3.20   3.22 
    Efficiency Ratio 58.45   52.79   53.49   51.18   48.91 
    Tangible Common Book Value Per Share$20.45  $23.26  $25.21  $24.31  $24.15 


    LOANS         
    (Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
      2022   2022   2021   2021   2021 
    Commercial and industrial loans$3,297,477  $2,826,660  $2,714,565  $2,573,615  $2,671,076 
    Agricultural land, production and other loans to farmers 214,904   209,077   246,442   240,686   235,020 
    Real estate loans:         
    Construction 745,983   552,975   523,066   521,889   491,200 
    Commercial real estate, non-owner occupied 2,423,185   2,073,197   2,135,459   2,150,387   2,263,497 
    Commercial real estate, owner occupied 1,264,563   974,521   986,720   952,441   953,501 
    Residential 1,813,297   1,226,695   1,159,127   1,154,373   1,127,442 
    Home equity 586,108   512,641   523,754   531,307   489,997 
    Individuals' loans for household and other personal expenditures 157,264   147,593   146,092   135,093   130,819 
    Public finance and other commercial loans 894,636   832,882   806,636   781,785   758,698 
    Loans 11,397,417   9,356,241   9,241,861   9,041,576   9,121,250 
    Allowance for credit losses - loans (226,275)  (195,984)  (195,397)  (199,972)  (199,775)
    NET LOANS$11,171,142  $9,160,257  $9,046,464  $8,841,604  $8,921,475 


    DEPOSITS         
    (Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
      2022   2022   2021   2021   2021 
    Demand deposits$8,785,889  $7,806,033  $7,704,190  $7,317,399  $7,261,603 
    Savings deposits 4,875,880   4,444,417   4,334,802   4,301,483   4,157,552 
    Certificates and other time deposits of $100,000 or more 436,942   252,033   273,379   283,396   304,394 
    Other certificates and time deposits 446,973   380,293   389,752   404,010   423,922 
    Brokered deposits 25,185   23,177   30,454   42,401   55,929 
    TOTAL DEPOSITS$14,570,869  $12,905,953  $12,732,577  $12,348,689  $12,203,400 


    CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS      
    (Dollars in Thousands)           
     For the Three Months Ended
     June 30, 2022 June 30, 2021
     Average
    Balance    		 Interest
    Income /
    Expense    		 Average
    Rate    		 Average
    Balance    		 Interest
    Income /
    Expense    		 Average
    Rate
    Assets:           
    Interest-bearing deposits$329,626 $610 0.74% $545,752 $129 0.09%
    Federal Home Loan Bank stock 38,111  175 1.84   28,736  88 1.22 
    Investment Securities:(1)           
    Taxable 2,189,193  10,372 1.90   1,732,367  7,440 1.72 
    Tax-Exempt(2) 2,703,629  21,788 3.22   1,969,577  16,546 3.36 
    Total Investment Securities 4,892,822  32,160 2.63   3,701,944  23,986 2.59 
    Loans held for sale 28,491  315 4.42   25,039  237 3.79 
    Loans:(3)           
    Commercial 8,134,050  85,867 4.22   6,953,227  70,886 4.08 
    Real Estate Mortgage 1,458,317  12,657 3.47   912,662  9,488 4.16 
    Installment 772,610  7,948 4.11   659,515  6,391 3.88 
    Tax-Exempt(2) 781,720  7,582 3.88   732,081  7,019 3.84 
    Total Loans 11,175,188  114,369 4.09   9,282,524  94,021 4.05 
    Total Earning Assets 16,435,747  147,314 3.58%  13,558,956  118,224 3.49%
    Total Non-Earning Assets 1,342,474      1,199,641    
    Total Assets$17,778,221     $14,758,597    
    Liabilities:           
    Interest-bearing deposits:           
    Interest-bearing deposits$5,372,474 $4,569 0.34% $4,745,181 $3,560 0.30%
    Money market deposits 3,024,560  2,130 0.28   2,337,143  796 0.14 
    Savings deposits 1,966,054  916 0.19   1,740,233  462 0.11 
    Certificates and other time deposits 948,799  870 0.37   812,370  1,005 0.49 
    Total Interest-bearing Deposits 11,311,887  8,485 0.30   9,634,927  5,823 0.24 
    Borrowings 818,851  4,000 1.95   644,702  3,188 1.98 
    Total Interest-bearing Liabilities 12,130,738  12,485 0.41   10,279,629  9,011 0.35 
    Noninterest-bearing deposits 3,497,641      2,490,226    
    Other liabilities 128,719      142,705    
    Total Liabilities 15,757,098      12,912,560    
    Stockholders' Equity 2,021,123      1,846,037    
    Total Liabilities and Stockholders' Equity$17,778,221  12,485   $14,758,597  9,011  
    Net Interest Income (FTE)  $134,829     $109,213  
    Net Interest Spread (FTE)(4)    3.17%     3.14%
                
    Net Interest Margin (FTE):           
    Interest Income (FTE) / Average Earning Assets    3.58%     3.49%
    Interest Expense / Average Earning Assets    0.30%     0.27%
    Net Interest Margin (FTE)(5)    3.28%     3.22%
                
    (1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed using a 30/360 day basis.
    (2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2022 and 2021. These totals equal $6,168 and $4,949 for the three months ended June 30, 2022 and 2021, respectively.
    (3) Non accruing loans have been included in the average balances.
    (4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
    (5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.



                
    CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS      
    (Dollars in Thousands)           
     For the Six Months Ended
     June 30, 2022 June 30, 2021
     Average
    Balance    		 Interest
    Income /
    Expense    		 Average
    Rate    		 Average
    Balance    		 Interest
    Income /
    Expense    		 Average
    Rate
    Assets:           
    Interest-bearing deposits$406,698 $840 0.41% $493,791 $243 0.10%
    Federal Home Loan Bank stock 33,040  321 1.94   28,736  266 1.85 
    Investment Securities:(1)           
    Taxable 2,074,074  18,882 1.82   1,613,847  14,135 1.75 
    Tax-Exempt(2) 2,620,593  41,882 3.20   1,896,643  32,223 3.40 
    Total Investment Securities 4,694,667  60,764 2.59   3,510,490  46,358 2.64 
    Loans held for sale 18,181  355 3.91   20,572  393 3.82 
    Loans:(3)           
    Commercial 7,504,740  150,545 4.01   6,915,234  140,060 4.05 
    Real Estate Mortgage 1,191,075  20,497 3.44   943,830  18,774 3.98 
    Installment 741,994  14,465 3.90   666,870  12,880 3.86 
    Tax-Exempt(2) 764,870  14,803 3.87   713,094  13,777 3.86 
    Total Loans 10,220,860  200,665 3.93   9,259,600  185,884 4.01 
    Total Earning Assets 15,355,265  262,590 3.42%  13,292,617  232,751 3.51%
    Total Non-Earning Assets 1,272,539      1,210,470    
    Total Assets$16,627,804     $14,503,087    
    Liabilities:           
    Interest-bearing deposits:           
    Interest-bearing deposits$5,200,923 $6,977 0.27% $4,681,439 $7,269 0.31%
    Money market deposits 2,770,904  3,002 0.22   2,212,425  1,631 0.15 
    Savings deposits 1,917,005  1,357 0.14   1,700,601  938 0.11 
    Certificates and other time deposits 813,482  1,443 0.35   835,722  2,185 0.52 
    Total Interest-bearing Deposits 10,702,314  12,779 0.24   9,430,187  12,023 0.25 
    Borrowings 718,270  6,966 1.94   659,826  6,376 1.93 
    Total Interest-bearing Liabilities 11,420,584  19,745 0.35   10,090,013  18,399 0.36 
    Noninterest-bearing deposits 3,116,797      2,417,888    
    Other liabilities 133,891      151,936    
    Total Liabilities 14,671,272      12,659,837    
    Stockholders' Equity 1,956,532      1,843,250    
    Total Liabilities and Stockholders' Equity$16,627,804  19,745   $14,503,087  18,399  
    Net Interest Income (FTE)  $242,845     $214,352  
    Net Interest Spread (FTE)(4)    3.07%     3.15%
                
    Net Interest Margin (FTE):           
    Interest Income (FTE) / Average Earning Assets    3.42%     3.51%
    Interest Expense / Average Earning Assets    0.26%     0.28%
    Net Interest Margin (FTE)(5)    3.16%     3.23%
                
    (1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed using a 30/360 day basis.
    (2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2022 and 2021. These totals equal $11,904 and $9,660 for the six months ended June 30, 2022 and 2021, respectively.
    (3) Non accruing loans have been included in the average balances.           
    (4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
    (5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.



    ADJUSTED EPS EXCLUDING PAYCHECK PROTECTION PROGRAM ("PPP") AND ACQUISITION-RELATED EXPENSES - NON-GAAP
    (Dollars In Thousands, Except Per Share Amounts)Three Months Ended Six Months Ended
     June 30, March 31, December 31, September 30, June 30, June 30, June 30,
      2022   2022   2021   2021   2021   2022   2021 
    Net Income Available to Common Shareholders - GAAP$38,522  $48,586  $47,733  $52,770  $55,559  $87,108  $105,028 
    Adjustments:             
    PPP loan income (891)  (1,884)  (3,721)  (8,211)  (9,725)  (2,775)  (18,968)
    Acquisition-related expenses 12,549   152   —   —   —   12,701   — 
    Acquisition-related provision expense 16,755   —   —   —   —   16,755   — 
    Tax on adjustment (6,967)  425   912   2,013   2,385   (6,542)  4,651 
    Adjusted Net Income Available to Common Stockholders - Non-GAAP$59,968  $47,279  $44,924  $46,572  $48,219  $107,247  $90,711 
                  
    Average Diluted Common Shares Outstanding (in thousands) 59,308   53,616   53,660   53,960   54,184   56,516   54,159 
                  
    Diluted Earnings Per Common Share - GAAP$0.63  $0.91  $0.89  $0.98  $1.03  $1.54  $1.94 
    Adjustments:             
    PPP loan income (0.01)  (0.04)  (0.07)  (0.15)  (0.18)  (0.05)  (0.35)
    Acquisition-related expenses 0.22   —   —   —   —   0.22   — 
    Acquisition-related provision expense 0.30   —   —   —   —   0.30   — 
    Tax on adjustment (0.13)  0.01   0.02   0.04   0.04   (0.12)  0.08 
    Adjusted Diluted Earnings Per Common Share - Non-GAAP$1.01  $0.88  $0.84  $0.87  $0.89  $1.89  $1.67 
                  


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

     


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