• First Merchants Corporation Announces Third Quarter 2024 Earnings per Share

    Source: Nasdaq GlobeNewswire / 24 Oct 2024 08:00:40   America/New_York

    MUNCIE, Ind., Oct. 24, 2024 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)

    Third Quarter 2024 Highlights:

    • Net income available to common stockholders was $48.7 million and diluted earnings per common share totaled $0.84, compared to $55.9 million and $0.94 in the third quarter of 2023, and $39.5 million and $0.68 in the second quarter of 2024.   Excluding the loss from repositioning of the available for sale securities portfolio, adjusted net income was $55.6 million or $0.95 per share for the third quarter of 2024.
    • Strong capital position with Common Equity Tier 1 Capital Ratio of 11.25% and Tangible Common Equity to Tangible Assets Ratio of 8.76%.
    • Net interest margin was 3.23% compared to 3.16% on a linked quarter basis.
    • Total loans grew $15.5 million, or 0.5% annualized, on a linked quarter basis, and $385.1 million, or 3.1% during the last twelve months.
    • Total deposits grew by $83.7 million, or 2.3% annualized, on a linked quarter basis after normalizing for $287.7 million of deposits reclassified to held for sale.
    • Nonperforming assets to total assets were 35 basis points compared to 36 basis points on a linked quarter basis.
    • The efficiency ratio totaled 53.76% for the quarter.
    • Announced sale of five Illinois branches and certain loans and deposits to Old Second National Bank on August 27, 2024.

    “We are pleased with our third quarter results and the focused momentum that we are building,” said Mark Hardwick, Chief Executive Officer. "The pending sale of five non-core Illinois branches, restructure of the securities portfolio, and successful completion of four major technology initiatives provides us with the opportunity to reprioritize our core markets and introduce innovative customer acquisition strategies.”

    Third Quarter Financial Results:

    First Merchants Corporation (the “Corporation”) has reported third quarter 2024 net income available to common stockholders of $48.7 million compared to $55.9 million during the same period in 2023. Diluted earnings per common share for the period totaled $0.84 compared to the third quarter of 2023 result of $0.94. Excluding the $9.1 million pre-tax loss from repositioning of the available for sale securities portfolio, adjusted net income was $55.6 million, or $0.95 diluted earnings per common share for the third quarter of 2024.

    During the quarter, the Corporation signed a definitive agreement to sell five Illinois branches along with certain loans and deposits, representing an exit from suburban Chicago markets. Loans of $9.2 million, deposits of $287.7 million and fixed assets of $3.4 million have been moved to held for sale categories as of September 30, 2024. The transaction is expected to close in the fourth quarter of this year.

    Total assets equaled $18.3 billion as of quarter-end and loans totaled $12.7 billion. During the past twelve months, total loans grew by $385.1 million, or 3.1%. On a linked quarter basis, loans grew $15.5 million, or 0.5%, with growth primarily in commercial & industrial loans.

    Investments totaling $3.7 billion decreased $51.6 million, or 1.4%, during the last twelve months and decreased $90.9 million, or 9.7% annualized, on a linked quarter basis. The decline during the quarter was due to $158.9 million in sales of available for sale securities with a weighted average tax-equivalent yield of 2.85%, partially offset by an increase in the securities portfolio valuation.

    Total deposits were $14.4 billion as of quarter-end and decreased by $281.5 million, or 1.9%, over the past twelve months. The decline was primarily due to $287.7 million of deposits being reclassified to held for sale. Excluding this impact, deposits increased by $6.2 million. On a linked quarter basis, deposits grew organically by $83.7 million or 2.3%. The loan to deposit ratio increased to 88.0% at period end from 86.8% in the prior quarter, primarily due to the reclassification of deposits to held for sale as previously described.

    The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $187.8 million as of quarter-end, or 1.48% of total loans, a decrease of $1.7 million from prior quarter. Loan charge-offs, net of recoveries totaled $6.7 million and provision for loans of $5.0 million was recorded during the quarter. Reserves for unfunded commitments totaled $19.5 million and remained unchanged from the prior quarter. Non-performing assets to total assets were 35 basis points for the third quarter of 2024, a decrease of one basis point compared to 36 basis points in the prior quarter.

    Net interest income totaled $131.1 million for the quarter, an increase of $2.5 million, or 2.0%, compared to prior quarter and a decrease of $2.3 million, or 1.7%, compared to the third quarter of 2023. Fully-tax equivalent net interest margin was 3.23%, an increase of 7 basis points compared to the second quarter of 2024, and a decrease of 6 basis points compared to the third quarter of 2023. The increase in net interest margin compared to the second quarter was due to higher earning asset yields.

    Non-interest income totaled $24.9 million for the quarter, a decrease of $6.5 million, or 20.6%, compared to the second quarter of 2024 and a decrease of $3.0 million, or 6.7% from the third quarter of 2023. The decrease from second quarter of 2024 was driven by realized losses on sales of available for sale securities associated with the repositioning of the bond portfolio, partially offset by increases in gains on sales of mortgage loans and earnings on cash surrender value of life insurance.

    Non-interest expense totaled $94.6 million for the quarter, an increase of $3.2 million from the second quarter of 2024 and an increase of $0.8 million from the third quarter of 2023. The increase from the linked quarter was from higher salaries and employee benefits primarily driven by higher incentives.

    The Corporation’s total risk-based capital ratio equaled 13.18%, common equity tier 1 capital ratio equaled 11.25%, and the tangible common equity ratio totaled 8.76%. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

    CONFERENCE CALL

    First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 11:30 a.m. (ET) on Thursday, October 24, 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/BI34430e309ed545808c7c8195f36e86b6)

    To view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/6grv3upw) during the time of the call. A replay of the webcast will be available until October 24, 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 about 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)September 30,
      2024   2023 
    ASSETS   
    Cash and due from banks$84,719  $125,173 
    Interest-bearing deposits 359,126   348,639 
    Investment securities, net of allowance for credit losses of $245,000 and $245,000 3,662,145   3,713,724 
    Loans held for sale 40,652   30,972 
    Loans 12,646,808   12,271,422 
    Less: Allowance for credit losses - loans (187,828)  (205,782)
    Net loans 12,458,980   12,065,640 
    Premises and equipment 129,582   132,441 
    Federal Home Loan Bank stock 41,716   41,797 
    Interest receivable 92,055   90,011 
    Goodwill and other intangibles 733,601   741,283 
    Cash surrender value of life insurance 304,613   306,106 
    Other real estate owned 5,247   6,480 
    Tax asset, deferred and receivable 86,732   135,521 
    Other assets 348,384   340,476 
    TOTAL ASSETS$18,347,552  $18,078,263 
    LIABILITIES   
    Deposits:   
    Noninterest-bearing$2,334,197  $2,554,984 
    Interest-bearing 12,030,903   12,091,592 
    Total Deposits 14,365,100   14,646,576 
    Borrowings:   
    Federal funds purchased 30,000   — 
    Securities sold under repurchase agreements 124,894   152,537 
    Federal Home Loan Bank advances 832,629   713,384 
    Subordinated debentures and other borrowings 93,562   158,665 
    Total Borrowings 1,081,085   1,024,586 
    Deposits and other liabilities held for sale 288,476   — 
    Interest payable 18,089   16,473 
    Other liabilities 292,429   297,984 
    Total Liabilities 16,045,179   15,985,619 
    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 - 58,117,115 and 59,398,022 shares 7,265   7,425 
    Additional paid-in capital 1,192,683   1,234,402 
    Retained earnings 1,229,125   1,132,962 
    Accumulated other comprehensive loss (151,825)  (307,270)
    Total Stockholders' Equity 2,302,373   2,092,644 
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$18,347,552  $18,078,263 
            
            


        
    CONSOLIDATED STATEMENTS OF INCOMEThree Months Ended Nine Months Ended
    (Dollars In Thousands, Except Per Share Amounts)September 30, September 30,
      2024   2023   2024   2023 
    INTEREST INCOME       
    Loans receivable:       
    Taxable$206,680  $191,705  $606,116  $550,314 
    Tax-exempt 8,622   8,288   25,242   23,757 
    Investment securities:       
    Taxable 9,263   8,590   27,062   26,563 
    Tax-exempt 13,509   13,947   40,733   44,296 
    Deposits with financial institutions 2,154   5,884   11,642   9,685 
    Federal Home Loan Bank stock 855   719   2,569   2,281 
    Total Interest Income 241,083   229,133   713,364   656,896 
    INTEREST EXPENSE       
    Deposits 98,856   85,551   296,292   209,437 
    Federal funds purchased 329   —   455   1,420 
    Securities sold under repurchase agreements 700   797   2,377   2,624 
    Federal Home Loan Bank advances 8,544   6,896   21,715   20,775 
    Subordinated debentures and other borrowings 1,544   2,506   5,781   7,303 
    Total Interest Expense 109,973   95,750   326,620   241,559 
    NET INTEREST INCOME 131,110   133,383   386,744   415,337 
    Provision for credit losses 5,000   2,000   31,500   2,000 
    NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 126,110   131,383   355,244   413,337 
    NONINTEREST INCOME       
    Service charges on deposit accounts 8,361   7,975   24,482   23,147 
    Fiduciary and wealth management fees 8,525   7,394   25,550   22,653 
    Card payment fees 5,121   4,716   14,360   14,425 
    Net gains and fees on sales of loans 6,764   5,517   15,159   11,548 
    Derivative hedge fees 736   516   1,488   2,336 
    Other customer fees 344   384   1,231   1,643 
    Earnings on cash surrender value of life insurance 2,755   1,761   6,276   5,145 
    Net realized losses on sales of available for sale securities (9,114)  (1,650)  (9,165)  (4,613)
    Other income 1,374   1,229   3,457   2,874 
    Total Noninterest Income 24,866   27,842   82,838   79,158 
    NONINTEREST EXPENSES       
    Salaries and employee benefits 55,223   55,566   165,730   167,778 
    Net occupancy 6,994   6,837   21,052   20,770 
    Equipment 6,949   5,698   19,774   18,005 
    Marketing 1,836   2,369   4,807   4,780 
    Outside data processing fees 7,150   6,573   21,111   19,290 
    Printing and office supplies 378   333   1,085   1,150 
    Intangible asset amortization 1,772   2,182   5,500   6,561 
    FDIC assessments 3,720   2,981   11,285   7,117 
    Other real estate owned and foreclosure expenses 942   677   1,849   1,575 
    Professional and other outside services 3,035   3,833   10,809   12,191 
    Other expenses 6,630   6,805   19,975   20,950 
    Total Noninterest Expenses 94,629   93,854   282,977   280,167 
    INCOME BEFORE INCOME TAX 56,347   65,371   155,105   212,328 
    Income tax expense 7,160   9,005   18,052   31,021 
    NET INCOME 49,187   56,366   137,053   181,307 
    Preferred stock dividends 468   468   1,406   1,406 
    NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$48,719  $55,898  $135,647  $179,901 
    Per Share Data:       
    Basic Net Income Available to Common Stockholders$0.84  $0.95  $2.32  $3.04 
    Diluted Net Income Available to Common Stockholders$0.84  $0.94  $2.31  $3.03 
    Cash Dividends Paid to Common Stockholders$0.35  $0.34  $1.04  $1.00 
    Average Diluted Common Shares Outstanding (in thousands) 58,289   59,503   58,629   59,465 
                    
                    


     
    FINANCIAL HIGHLIGHTS
    (Dollars in thousands)Three Months Ended Nine Months Ended
     September 30, September 30,
      2024   2023   2024   2023 
    NET CHARGE-OFFS$6,709  $20,365  $48,606  $22,495 
            
    AVERAGE BALANCES:       
    Total Assets$18,360,580  $18,152,239  $18,374,370  $18,115,504 
    Total Loans 12,680,166   12,287,632   12,592,907   12,264,787 
    Total Earning Assets 16,990,358   16,947,669   17,042,540   16,913,965 
    Total Deposits 14,702,454   14,735,592   14,826,056   14,627,448 
    Total Stockholders' Equity 2,251,547   2,154,232   2,232,419   2,126,005 
            
    FINANCIAL RATIOS:       
    Return on Average Assets 1.07%  1.24%  0.99%  1.33%
    Return on Average Stockholders' Equity 8.66   10.38   8.10   11.28 
    Return on Tangible Common Stockholders' Equity 13.39   16.54   12.64   18.10 
    Average Earning Assets to Average Assets 92.54   93.36   92.75   93.37 
    Allowance for Credit Losses - Loans as % of Total Loans 1.48   1.67   1.48   1.67 
    Net Charge-offs as % of Average Loans (Annualized) 0.21   0.66   0.51   0.24 
    Average Stockholders' Equity to Average Assets 12.26   11.87   12.15   11.74 
    Tax Equivalent Yield on Average Earning Assets 5.82   5.55   5.72   5.32 
    Interest Expense/Average Earning Assets 2.59   2.26   2.56   1.90 
    Net Interest Margin (FTE) on Average Earning Assets 3.23   3.29   3.16   3.42 
    Efficiency Ratio 53.76   53.91   55.54   52.60 
    Tangible Common Book Value Per Share$26.64  $22.43  $26.64  $22.43 
                    
                    


     
    NONPERFORMING ASSETS
    (Dollars In Thousands)September 30, June 30, March 31, December 31, September 30,
      2024   2024   2024   2023   2023 
    Nonaccrual Loans$59,088  $61,906  $62,478  $53,580  $53,102 
    Other Real Estate Owned and Repossessions 5,247   4,824   4,886   4,831   6,480 
    Nonperforming Assets (NPA) 64,335   66,730   67,364   58,411   59,582 
    90+ Days Delinquent 14,105   1,686   2,838   172   89 
    NPAs & 90 Day Delinquent$78,440  $68,416  $70,202  $58,583  $59,671 
              
    Allowance for Credit Losses - Loans$187,828  $189,537  $204,681  $204,934  $205,782 
    Quarterly Net Charge-offs 6,709   39,644   2,253   3,148   20,365 
    NPAs / Actual Assets % 0.35%  0.36%  0.37%  0.32%  0.33%
    NPAs & 90 Day / Actual Assets % 0.43%  0.37%  0.38%  0.32%  0.33%
    NPAs / Actual Loans and OREO % 0.51%  0.53%  0.54%  0.47%  0.48%
    Allowance for Credit Losses - Loans / Actual Loans (%) 1.48%  1.50%  1.64%  1.64%  1.67%
    Net Charge-offs as % of Average Loans (Annualized) 0.21%  1.26%  0.07%  0.10%  0.66%
                        
                        


     
    CONSOLIDATED BALANCE SHEETS
    (Dollars In Thousands)September 30, June 30, March 31, December 31, September 30,
      2024   2024   2024   2023   2023 
    ASSETS         
    Cash and due from banks$84,719  $105,372  $100,514  $112,649  $125,173 
    Interest-bearing deposits 359,126   168,528   410,497   436,080   348,639 
    Investment securities, net of allowance for credit losses 3,662,145   3,753,088   3,783,574   3,811,364   3,713,724 
    Loans held for sale 40,652   32,292   15,118   18,934   30,972 
    Loans 12,646,808   12,639,650   12,465,582   12,486,027   12,271,422 
    Less: Allowance for credit losses - loans (187,828)  (189,537)  (204,681)  (204,934)  (205,782)
    Net loans 12,458,980   12,450,113   12,260,901   12,281,093   12,065,640 
    Premises and equipment 129,582   133,245   132,706   133,896   132,441 
    Federal Home Loan Bank stock 41,716   41,738   41,758   41,769   41,797 
    Interest receivable 92,055   97,546   92,550   97,664   90,011 
    Goodwill and other intangibles 733,601   735,373   737,144   739,101   741,283 
    Cash surrender value of life insurance 304,613   306,379   306,028   306,301   306,106 
    Other real estate owned 5,247   4,824   4,886   4,831   6,480 
    Tax asset, deferred and receivable 86,732   107,080   101,121   99,883   135,521 
    Other assets 348,384   367,845   331,006   322,322   340,476 
    TOTAL ASSETS$18,347,552  $18,303,423  $18,317,803  $18,405,887  $18,078,263 
    LIABILITIES         
    Deposits:         
    Noninterest-bearing$2,334,197  $2,303,313  $2,338,364  $2,500,062  $2,554,984 
    Interest-bearing 12,030,903   12,265,757   12,546,220   12,321,391   12,091,592 
    Total Deposits 14,365,100   14,569,070   14,884,584   14,821,453   14,646,576 
    Borrowings:         
    Federal funds purchased 30,000   147,229   —   —   — 
    Securities sold under repurchase agreements 124,894   100,451   130,264   157,280   152,537 
    Federal Home Loan Bank advances 832,629   832,703   612,778   712,852   713,384 
    Subordinated debentures and other borrowings 93,562   93,589   118,612   158,644   158,665 
    Total Borrowings 1,081,085   1,173,972   861,654   1,028,776   1,024,586 
    Deposits and other liabilities held for sale 288,476   —   —   —   — 
    Interest payable 18,089   18,554   19,262   18,912   16,473 
    Other liabilities 292,429   329,302   327,500   289,033   297,984 
    Total Liabilities 16,045,179   16,090,898   16,093,000   16,158,174   15,985,619 
    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 7,265   7,256   7,321   7,428   7,425 
    Additional paid-in capital 1,192,683   1,191,193   1,208,447   1,236,506   1,234,402 
    Retained earnings 1,229,125   1,200,930   1,181,939   1,154,624   1,132,962 
    Accumulated other comprehensive loss (151,825)  (211,979)  (198,029)  (175,970)  (307,270)
    Total Stockholders' Equity 2,302,373   2,212,525   2,224,803   2,247,713   2,092,644 
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$18,347,552  $18,303,423  $18,317,803  $18,405,887  $18,078,263 
              
              


     
    CONSOLIDATED STATEMENTS OF INCOME
    (Dollars In Thousands, Except Per Share Amounts)September 30, June 30, March 31, December 31, September 30,
      2024   2024   2024   2023   2023 
    INTEREST INCOME         
    Loans receivable:         
    Taxable$206,680  $201,413  $198,023  $197,523  $191,705 
    Tax-exempt 8,622   8,430   8,190   8,197   8,288 
    Investment securities:         
    Taxable 9,263   9,051   8,748   8,644   8,590 
    Tax-exempt 13,509   13,613   13,611   13,821   13,947 
    Deposits with financial institutions 2,154   2,995   6,493   8,034   5,884 
    Federal Home Loan Bank stock 855   879   835   771   719 
    Total Interest Income 241,083   236,381   235,900   236,990   229,133 
    INTEREST EXPENSE         
    Deposits 98,856   99,151   98,285   96,655   85,551 
    Federal funds purchased 329   126   —   1   — 
    Securities sold under repurchase agreements 700   645   1,032   827   797 
    Federal Home Loan Bank advances 8,544   6,398   6,773   6,431   6,896 
    Subordinated debentures and other borrowings 1,544   1,490   2,747   3,013   2,506 
    Total Interest Expense 109,973   107,810   108,837   106,927   95,750 
    NET INTEREST INCOME 131,110   128,571   127,063   130,063   133,383 
    Provision for credit losses 5,000   24,500   2,000   1,500   2,000 
    NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 126,110   104,071   125,063   128,563   131,383 
    NONINTEREST INCOME         
    Service charges on deposit accounts 8,361   8,214   7,907   7,690   7,975 
    Fiduciary and wealth management fees 8,525   8,825   8,200   8,187   7,394 
    Card payment fees 5,121   4,739   4,500   4,437   4,716 
    Net gains and fees on sales of loans 6,764   5,141   3,254   4,111   5,517 
    Derivative hedge fees 736   489   263   1,049   516 
    Other customer fees 344   460   427   237   384 
    Earnings on cash surrender value of life insurance 2,755   1,929   1,592   3,202   1,761 
    Net realized losses on sales of available for sale securities (9,114)  (49)  (2)  (2,317)  (1,650)
    Other income (loss) 1,374   1,586   497   (152)  1,229 
    Total Noninterest Income 24,866   31,334   26,638   26,444   27,842 
    NONINTEREST EXPENSES         
    Salaries and employee benefits 55,223   52,214   58,293   60,967   55,566 
    Net occupancy 6,994   6,746   7,312   9,089   6,837 
    Equipment 6,949   6,599   6,226   6,108   5,698 
    Marketing 1,836   1,773   1,198   2,647   2,369 
    Outside data processing fees 7,150   7,072   6,889   5,875   6,573 
    Printing and office supplies 378   354   353   402   333 
    Intangible asset amortization 1,772   1,771   1,957   2,182   2,182 
    FDIC assessments 3,720   3,278   4,287   7,557   2,981 
    Other real estate owned and foreclosure expenses 942   373   534   1,743   677 
    Professional and other outside services 3,035   3,822   3,952   3,981   3,833 
    Other expenses 6,630   7,411   5,934   7,552   6,805 
    Total Noninterest Expenses 94,629   91,413   96,935   108,103   93,854 
    INCOME BEFORE INCOME TAX 56,347   43,992   54,766   46,904   65,371 
    Income tax expense 7,160   4,067   6,825   4,425   9,005 
    NET INCOME 49,187   39,925   47,941   42,479   56,366 
    Preferred stock dividends 468   469   469   469   468 
    NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$48,719  $39,456  $47,472  $42,010  $55,898 
    Per Share Data:         
    Basic Net Income Available to Common Stockholders$0.84  $0.68  $0.80  $0.71  $0.95 
    Diluted Net Income Available to Common Stockholders$0.84  $0.68  $0.80  $0.71  $0.94 
    Cash Dividends Paid to Common Stockholders$0.35  $0.35  $0.34  $0.34  $0.34 
    Average Diluted Common Shares Outstanding (in thousands) 58,289   58,328   59,273   59,556   59,503 
    FINANCIAL RATIOS:         
    Return on Average Assets 1.07%  0.87%  1.04%  0.92%  1.24%
    Return on Average Stockholders' Equity 8.66   7.16   8.47   7.89   10.38 
    Return on Tangible Common Stockholders' Equity 13.39   11.29   13.21   12.75   16.54 
    Average Earning Assets to Average Assets 92.54   92.81   92.91   93.62   93.36 
    Allowance for Credit Losses - Loans as % of Total Loans 1.48   1.50   1.64   1.64   1.67 
    Net Charge-offs as % of Average Loans (Annualized) 0.21   1.26   0.07   0.10   0.66 
    Average Stockholders' Equity to Average Assets 12.26   12.02   12.17   11.58   11.87 
    Tax Equivalent Yield on Average Earning Assets 5.82   5.69   5.65   5.64   5.55 
    Interest Expense/Average Earning Assets 2.59   2.53   2.55   2.48   2.26 
    Net Interest Margin (FTE) on Average Earning Assets 3.23   3.16   3.10   3.16   3.29 
    Efficiency Ratio 53.76   53.84   59.21   63.26   53.91 
    Tangible Common Book Value Per Share$26.64  $25.10  $25.07  $25.06  $22.43 
                        
                        


     
    LOANS
    (Dollars In Thousands)September 30, June 30, March 31, December 31, September 30,
      2024   2024   2024   2023   2023 
    Commercial and industrial loans$4,041,217  $3,949,817  $3,722,365  $3,670,948  $3,490,953 
    Agricultural land, production and other loans to farmers 238,743   239,926   234,431   263,414   233,838 
    Real estate loans:         
    Construction 814,704   823,267   941,726   957,545   1,022,261 
    Commercial real estate, non-owner occupied 2,251,351   2,323,533   2,368,360   2,400,839   2,360,596 
    Commercial real estate, owner occupied 1,152,751   1,174,195   1,137,894   1,162,083   1,153,707 
    Residential 2,366,943   2,370,905   2,316,490   2,288,921   2,257,385 
    Home equity 641,188   631,104   618,258   617,571   609,352 
    Individuals' loans for household and other personal expenditures 158,480   162,089   161,459   168,388   176,523 
    Public finance and other commercial loans 981,431   964,814   964,599   956,318   966,807 
    Loans 12,646,808   12,639,650   12,465,582   12,486,027   12,271,422 
    Allowance for credit losses - loans (187,828)  (189,537)  (204,681)  (204,934)  (205,782)
    NET LOANS$12,458,980  $12,450,113  $12,260,901  $12,281,093  $12,065,640 
                        
                        


     
    DEPOSITS
    (Dollars In Thousands)September 30, June 30, March 31, December 31, September 30,
      2024  2024  2024  2023  2023
    Demand deposits$7,678,510 $7,757,679 $7,771,976 $7,965,862 $7,952,040
    Savings deposits 4,302,236  4,339,161  4,679,593  4,516,433  4,572,162
    Certificates and other time deposits of $100,000 or more 1,277,833  1,415,131  1,451,443  1,408,985  1,280,607
    Other certificates and time deposits 802,949  889,949  901,280  849,906  761,196
    Brokered certificates of deposits1 303,572  167,150  80,292  80,267  80,571
    TOTAL DEPOSITS2$14,365,100 $14,569,070 $14,884,584 $14,821,453 $14,646,576

    1 - Total brokered deposits of $838.3 million, which includes brokered CD's of $303.6 million at September 30, 2024.
    2 - Total deposits at September 30, 2024 excludes $287.7 million of deposits reclassified to Deposits and other liabilities held for sale related to the pending Illinois branch sale.

     
    CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
    (Dollars in Thousands)           
     For the Three Months Ended
     September 30, 2024 September 30, 2023
     Average Balance Interest
     Income /
    Expense    		 Average
    Rate    		 Average Balance Interest
     Income /
    Expense    		 Average
    Rate
    ASSETS           
    Interest-bearing deposits$252,113 $2,154 3.42% $502,967 $5,884 4.68%
    Federal Home Loan Bank stock 41,730  855 8.20   41,826  719 6.88 
    Investment Securities: (1)           
    Taxable 1,789,526  9,263 2.07   1,817,219  8,590 1.89 
    Tax-exempt (2) 2,226,823  17,100 3.07   2,298,025  17,655 3.07 
    Total Investment Securities 4,016,349  26,363 2.63   4,115,244  26,245 2.55 
    Loans held for sale 31,991  483 6.04   24,227  386 6.37 
    Loans: (3)           
    Commercial 8,699,733  164,922 7.58   8,456,527  153,993 7.28 
    Real estate mortgage 2,183,095  24,333 4.46   2,079,067  21,618 4.16 
    Installment 832,222  16,942 8.14   827,318  15,708 7.59 
    Tax-exempt (2) 933,125  10,914 4.68   900,493  10,491 4.66 
    Total Loans 12,680,166  217,594 6.86   12,287,632  202,196 6.58 
    Total Earning Assets 16,990,358  246,966 5.82%  16,947,669  235,044 5.55%
    Total Non-Earning Assets 1,370,222      1,204,570    
    TOTAL ASSETS$18,360,580     $18,152,239    
    LIABILITIES           
    Interest-Bearing Deposits:           
    Interest-bearing deposits$5,455,298 $40,450 2.97% $5,425,829 $37,780 2.79%
    Money market deposits 2,974,188  25,950 3.49   2,923,798  23,607 3.23 
    Savings deposits 1,425,047  4,208 1.18   1,641,338  3,844 0.94 
    Certificates and other time deposits 2,499,655  28,248 4.52   2,106,910  20,320 3.86 
    Total Interest-Bearing Deposits 12,354,188  98,856 3.20   12,097,875  85,551 2.83 
    Borrowings 1,071,440  11,117 4.15   1,032,180  10,199 3.95 
    Total Interest-Bearing Liabilities 13,425,628  109,973 3.28   13,130,055  95,750 2.92 
    Noninterest-bearing deposits 2,348,266      2,637,717    
    Other liabilities 335,139      230,235    
    Total Liabilities 16,109,033      15,998,007    
    STOCKHOLDERS' EQUITY 2,251,547      2,154,232    
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$18,360,580  109,973   $18,152,239  95,750  
    Net Interest Income (FTE)  $136,993     $139,294  
    Net Interest Spread (FTE) (4)    2.54%     2.63%
                
    Net Interest Margin (FTE):           
    Interest Income (FTE) / Average Earning Assets    5.82%     5.55%
    Interest Expense / Average Earning Assets    2.59%     2.26%
    Net Interest Margin (FTE) (5)    3.23%     3.29%
                
    (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 2024 and 2023. These totals equal $5,883 and $5,911 for the three months ended September 30, 2024 and 2023, 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 Nine Months Ended
     September 30, 2024 September 30, 2023
     Average Balance Interest
     Income /
    Expense    		 Average
    Rate    		 Average Balance Interest
     Income /
    Expense    		 Average
    Rate
    ASSETS           
    Interest-bearing deposits$383,007 $11,642 4.05% $340,887 $9,685 3.79%
    Federal Home Loan Bank stock 41,748  2,569 8.20   41,160  2,281 7.39 
    Investment Securities: (1)           
    Taxable 1,787,119  27,062 2.02   1,872,267  26,563 1.89 
    Tax-exempt (2) 2,237,759  51,561 3.07   2,394,864  56,071 3.12 
    Total Investment Securities 4,024,878  78,623 2.60   4,267,131  82,634 2.58 
    Loans held for sale 27,735  1,242 5.97   22,398  1,046 6.23 
    Loans: (3)           
    Commercial 8,659,088  484,979 7.47   8,515,148  444,422 6.96 
    Real estate mortgage 2,159,738  70,489 4.35   2,008,852  60,354 4.01 
    Installment 825,060  49,406 7.98   833,133  44,492 7.12 
    Tax-exempt (2) 921,286  31,952 4.62   885,256  30,072 4.53 
    Total Loans 12,592,907  638,068 6.76   12,264,787  580,386 6.31 
    Total Earning Assets 17,042,540  730,902 5.72%  16,913,965  674,986 5.32%
    Total Non-Earning Assets 1,331,830      1,201,539    
    TOTAL ASSETS$18,374,370     $18,115,504    
    LIABILITIES           
    Interest-Bearing deposits:           
    Interest-bearing deposits$5,487,106 $120,935 2.94% $5,412,482 $97,016 2.39%
    Money market deposits 3,018,526  80,563 3.56   2,812,891  55,868 2.65 
    Savings deposits 1,497,620  11,485 1.02   1,730,110  10,693 0.82 
    Certificates and other time deposits 2,447,684  83,309 4.54   1,821,408  45,860 3.36 
    Total Interest-Bearing Deposits 12,450,936  296,292 3.17   11,776,891  209,437 2.37 
    Borrowings 990,022  30,328 4.08   1,144,368  32,122 3.74 
    Total Interest-Bearing Liabilities 13,440,958  326,620 3.24   12,921,259  241,559 2.49 
    Noninterest-bearing deposits 2,375,120      2,850,557    
    Other liabilities 325,873      217,683    
    Total Liabilities 16,141,951      15,989,499    
    STOCKHOLDERS' EQUITY 2,232,419      2,126,005    
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$18,374,370  326,620   $18,115,504  241,559  
    Net Interest Income (FTE)  $404,282     $433,427  
    Net Interest Spread (FTE) (4)    2.48%     2.83%
                
    Net Interest Margin (FTE):           
    Interest Income (FTE) / Average Earning Assets    5.72%     5.32%
    Interest Expense / Average Earning Assets    2.56%     1.90%
    Net Interest Margin (FTE) (5)    3.16%     3.42%
                
    (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 2024 and 2023. These totals equal $17,538 and $18,090 for the nine months ended September 30, 2024 and 2023, 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 Nine Months Ended
     September 30, June 30, March 31, December 31, September 30, September 30, September 30,
      2024   2024   2024   2023   2023   2024   2023 
    Net Income Available to Common Stockholders - GAAP$48,719  $39,456  $47,472  $42,010  $55,898  $135,647  $179,901 
    Adjustments:             
    PPP loan income —   —   —   (7)  (8)  —   (42)
    Net realized losses on sales of available for sale securities 9,114   49   2   2,317   1,650   9,165   4,613 
    Non-core expenses1,2 —   —   3,481   12,682   —   3,481   — 
    Tax on adjustments (2,220)  (12)  (848)  (3,652)  (403)  (3,081)  (1,121)
    Adjusted Net Income Available to Common Stockholders - Non-GAAP$55,613  $39,493  $50,107  $53,350  $57,137  $145,212  $183,351 
                  
    Average Diluted Common Shares Outstanding (in thousands) 58,289   58,328   59,273   59,556   59,503   58,629   59,465 
                  
    Diluted Earnings Per Common Share - GAAP$0.84  $0.68  $0.80  $0.71  $0.94  $2.31  $3.03 
    Adjustments:             
    PPP loan income —   —   —   —   —   —   — 
    Net realized losses on sales of available for sale securities 0.15   —   —   0.04   0.03   0.16   0.07 
    Non-core expenses1,2 —   —   0.06   0.21   —   0.06   — 
    Tax on adjustments (0.04)  —   (0.01)  (0.06)  (0.01)  (0.05)  (0.02)
    Adjusted Diluted Earnings Per Common Share - Non-GAAP$0.95  $0.68  $0.85  $0.90  $0.96  $2.48  $3.08 

    1 - Non-core expenses in 4Q23 included $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.
    2 - Non-core expenses in 1Q24 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.

     
    NET INTEREST MARGIN ("NIM"), ADJUSTED
    (Dollars in Thousands, Except Per Share Amounts)        
     Three Months Ended Nine Months Ended
     September 30, June 30, March 31, December 31, September 30, September 30, September 30,
      2024   2024   2024   2023   2023   2024   2023 
    Net Interest Income (GAAP)$131,110  $128,571  $127,063  $130,063  $133,383  $386,744  $415,337 
    Fully Taxable Equivalent ("FTE") Adjustment 5,883   5,859   5,795   5,853   5,911   17,538   18,090 
    Net Interest Income (FTE) (non-GAAP)$136,993  $134,430  $132,858  $135,916  $139,294  $404,282  $433,427 
                  
    Average Earning Assets (GAAP)$16,990,358  $17,013,984  $17,123,851  $17,222,714  $16,947,669  $17,042,540  $16,913,965 
    Net Interest Margin (GAAP) 3.09%  3.02%  2.97%  3.02%  3.15%  3.03%  3.27%
    Net Interest Margin (FTE) (non-GAAP) 3.23%  3.16%  3.10%  3.16%  3.29%  3.16%  3.42%
                                
                                


     
    RETURN ON TANGIBLE COMMON EQUITY - NON-GAAP
    (Dollars In Thousands)Three Months Ended Nine Months Ended
     September 30, June 30, March 31, December 31, September 30, September 30, September 30,
      2024   2024   2024   2023   2023   2024   2023 
    Total Average Stockholders' Equity (GAAP)$2,251,547  $2,203,361  $2,242,139  $2,130,993  $2,154,232  $2,232,419  $2,126,005 
    Less: Average Preferred Stock (25,125)  (25,125)  (25,125)  (25,125)  (25,125)  (25,125)  (25,125)
    Less: Average Intangible Assets, Net of Tax (729,581)  (730,980)  (732,432)  (734,007)  (735,787)  (730,993)  (737,476)
    Average Tangible Common Equity, Net of Tax (Non-GAAP)$1,496,841  $1,447,256  $1,484,582  $1,371,861  $1,393,320  $1,476,301  $1,363,404 
                  
    Net Income Available to Common Stockholders (GAAP)$48,719  $39,456  $47,472  $42,010  $55,898  $135,647  $179,901 
    Plus: Intangible Asset Amortization, Net of Tax 1,399   1,399   1,546   1,724   1,724   4,345   5,182 
    Tangible Net Income (Non-GAAP)$50,118  $40,855  $49,018  $43,734  $57,622  $139,992  $185,083 
                  
    Return on Tangible Common Equity (Non-GAAP) 13.39%  11.29%  13.21%  12.75%  16.54%  12.64%  18.10%
                                
                                

    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, Muncie, Indiana


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