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 deposits | 36,963 | 35,027 | |||||
Investment securities | 1,632,582 | 1,560,602 | |||||
Loans held for sale | 4,778 | 7,216 | |||||
Loans | 7,224,467 | 6,751,199 | |||||
Less: Allowance for loan losses | (80,552 | ) | (75,032 | ) | |||
Net loans | 7,143,915 | 6,676,167 | |||||
Premises and equipment | 93,420 | 95,852 | |||||
Federal Home Loan Bank stock | 24,588 | 23,825 | |||||
Interest receivable | 40,881 | 37,130 | |||||
Goodwill and other intangibles | 469,784 | 476,503 | |||||
Cash surrender value of life insurance | 224,939 | 223,557 | |||||
Other real estate owned | 2,179 | 10,373 | |||||
Tax asset, deferred and receivable | 23,668 | 23,983 | |||||
Other assets | 47,772 | 42,338 | |||||
TOTAL ASSETS | $ | 9,884,716 | $ | 9,367,478 | |||
LIABILITIES | |||||||
Deposits: | |||||||
Noninterest-bearing | $ | 1,447,907 | $ | 1,761,553 | |||
Interest-bearing | 6,306,686 | 5,410,977 | |||||
Total Deposits | 7,754,593 | 7,172,530 | |||||
Borrowings: | |||||||
Federal funds purchased | 104,000 | 144,038 | |||||
Securities sold under repurchase agreements | 113,512 | 136,623 | |||||
Federal Home Loan Bank advances | 314,986 | 414,377 | |||||
Subordinated debentures and term loans | 138,463 | 139,349 | |||||
Total Borrowings | 670,961 | 834,387 | |||||
Interest payable | 5,607 | 4,390 | |||||
Other liabilities | 45,295 | 52,708 | |||||
Total Liabilities | 8,476,456 | 8,064,015 | |||||
STOCKHOLDERS’ EQUITY | |||||||
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value: | |||||||
Authorized — 600 shares | |||||||
Issued and outstanding – 125 shares | 125 | 125 | |||||
Common Stock, $.125 stated value: | |||||||
Authorized — 100,000,000 shares | |||||||
Issued and outstanding – 49,349,800 and 49,158,238 shares | 6,169 | 6,145 | |||||
Additional paid-in capital | 840,052 | 834,870 | |||||
Retained earnings | 583,336 | 465,231 | |||||
Accumulated other comprehensive loss | (21,422 | ) | (2,908 | ) | |||
Total Stockholders’ Equity | 1,408,260 | 1,303,463 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 9,884,716 | $ | 9,367,478 |
CONSOLIDATED STATEMENTS OF INCOME | Three 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-exempt | 3,873 | 3,018 | 14,862 | 10,694 | |||||||||||
Investment securities: | |||||||||||||||
Taxable | 5,553 | 4,477 | 21,597 | 17,489 | |||||||||||
Tax-exempt | 6,644 | 5,830 | 25,509 | 21,379 | |||||||||||
Deposits with financial institutions | 1,207 | 294 | 2,241 | 736 | |||||||||||
Federal Home Loan Bank stock | 284 | 259 | 1,234 | 894 | |||||||||||
Total Interest Income | 108,653 | 90,348 | 407,944 | 314,896 | |||||||||||
INTEREST EXPENSE | |||||||||||||||
Deposits | 16,690 | 7,835 | 51,542 | 23,806 | |||||||||||
Federal funds purchased | 48 | 55 | 718 | 561 | |||||||||||
Securities sold under repurchase agreements | 243 | 146 | 762 | 477 | |||||||||||
Federal Home Loan Bank advances | 1,691 | 1,577 | 7,832 | 5,196 | |||||||||||
Subordinated debentures and term loans | 2,097 | 1,970 | 8,233 | 7,572 | |||||||||||
Total Interest Expense | 20,769 | 11,583 | 69,087 | 37,612 | |||||||||||
NET INTEREST INCOME | 87,884 | 78,765 | 338,857 | 277,284 | |||||||||||
Provision for loan losses | 1,664 | 1,800 | 7,227 | 9,143 | |||||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 86,220 | 76,965 | 331,630 | 268,141 | |||||||||||
OTHER INCOME | |||||||||||||||
Service charges on deposit accounts | 5,516 | 5,066 | 20,950 | 18,722 | |||||||||||
Fiduciary and wealth management fees | 3,842 | 4,126 | 14,906 | 14,682 | |||||||||||
Other customer fees | 4,904 | 4,565 | 19,895 | 17,863 | |||||||||||
Earnings on cash surrender value of life insurance | 1,074 | 1,133 | 4,218 | 6,577 | |||||||||||
Net gains and fees on sales of loans | 1,767 | 2,355 | 7,029 | 7,564 | |||||||||||
Net realized gains on sales of available for sale securities | 253 | 1,134 | 4,269 | 2,631 | |||||||||||
Other income | 1,824 | 682 | 5,192 | 2,970 | |||||||||||
Total Other Income | 19,180 | 19,061 | 76,459 | 71,009 | |||||||||||
OTHER EXPENSES | |||||||||||||||
Salaries and employee benefits | 34,350 | 33,760 | 131,704 | 119,812 | |||||||||||
Net occupancy | 4,737 | 4,424 | 18,341 | 16,976 | |||||||||||
Equipment | 3,627 | 3,898 | 14,334 | 13,090 | |||||||||||
Marketing | 1,107 | 1,361 | 4,681 | 3,739 | |||||||||||
Outside data processing fees | 3,367 | 3,378 | 13,215 | 12,242 | |||||||||||
Printing and office supplies | 433 | 378 | 1,425 | 1,283 | |||||||||||
Intangible asset amortization | 1,625 | 2,055 | 6,719 | 5,647 | |||||||||||
FDIC assessments | 634 | 711 | 2,920 | 2,564 | |||||||||||
Other real estate owned and foreclosure expenses | 251 | 311 | 1,470 | 1,903 | |||||||||||
Professional and other outside services | 3,002 | 1,914 | 8,176 | 12,757 | |||||||||||
Other expenses | 4,605 | 4,243 | 16,966 | 15,543 | |||||||||||
Total Other Expenses | 57,738 | 56,433 | 219,951 | 205,556 | |||||||||||
INCOME BEFORE INCOME TAX | 47,662 | 39,593 | 188,138 | 133,594 | |||||||||||
Income tax expense | 5,949 | 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 Loans | 7,102,552 | 6,575,055 | 6,997,771 | 5,881,284 | |||||||||||
Total Earning Assets | 8,971,432 | 8,139,993 | 8,736,367 | 7,335,702 | |||||||||||
Total Deposits | 7,875,998 | 7,142,375 | 7,569,482 | 6,368,751 | |||||||||||
Total Stockholders’ Equity | 1,379,453 | 1,294,810 | 1,343,861 | 1,110,524 | |||||||||||
FINANCIAL RATIOS: | |||||||||||||||
Return on Average Assets | 1.68 | % | 1.06 | % | 1.64 | % | 1.17 | % | |||||||
Return on Average Stockholders’ Equity | 12.10 | 7.53 | 11.84 | 8.65 | |||||||||||
Return on Average Common Stockholders’ Equity | 12.10 | 7.53 | 11.84 | 8.65 | |||||||||||
Average Earning Assets to Average Assets | 90.41 | 88.73 | 90.17 | 89.50 | |||||||||||
Allowance for Loan Losses as % of Total Loans | 1.11 | 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 Assets | 13.90 | 14.11 | 13.87 | 13.55 | |||||||||||
Tax Equivalent Yield on Average Earning Assets | 4.97 | 4.67 | 4.79 | 4.53 | |||||||||||
Interest Expense/Average Earning Assets | 0.93 | 0.57 | 0.79 | 0.51 | |||||||||||
Net Interest Margin (FTE) on Average Earning Assets | 4.04 | 4.10 | 4.00 | 4.02 | |||||||||||
Efficiency Ratio | 50.97 | 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 Loans | 1,103 | 968 | 544 | 579 | 1,013 | ||||||||||||||
Non-Performing Loans (NPL) | 27,251 | 21,389 | 20,687 | 28,076 | 29,737 | ||||||||||||||
Other Real Estate Owned | 2,179 | 8,859 | 9,071 | 9,698 | 10,373 | ||||||||||||||
Non-Performing Assets (NPA) | 29,430 | 30,248 | 29,758 | 37,774 | 40,110 | ||||||||||||||
90+ Days Delinquent | 1,855 | 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 deposits | 36,963 | 66,763 | 36,599 | 24,233 | 35,027 | ||||||||||||||
Investment securities | 1,632,582 | 1,625,251 | 1,619,683 | 1,543,820 | 1,560,602 | ||||||||||||||
Loans held for sale | 4,778 | 3,022 | 2,046 | 4,469 | 7,216 | ||||||||||||||
Loans | 7,224,467 | 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 loans | 7,143,915 | 7,009,665 | 7,003,516 | 6,825,276 | 6,676,167 | ||||||||||||||
Premises and equipment | 93,420 | 93,728 | 94,397 | 94,741 | 95,852 | ||||||||||||||
Federal Home Loan Bank stock | 24,588 | 24,588 | 24,588 | 24,588 | 23,825 | ||||||||||||||
Interest receivable | 40,881 | 38,531 | 38,530 | 35,223 | 37,130 | ||||||||||||||
Goodwill and other intangibles | 469,784 | 471,409 | 473,059 | 474,777 | 476,503 | ||||||||||||||
Cash surrender value of life insurance | 224,939 | 223,865 | 222,905 | 221,949 | 223,557 | ||||||||||||||
Other real estate owned | 2,179 | 8,859 | 9,071 | 9,698 | 10,373 | ||||||||||||||
Tax asset, deferred and receivable | 23,668 | 25,933 | 24,619 | 24,177 | 23,983 | ||||||||||||||
Other assets | 47,772 | 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-bearing | 6,306,686 | 6,168,962 | 5,932,621 | 5,628,677 | 5,410,977 | ||||||||||||||
Total Deposits | 7,754,593 | 7,633,152 | 7,503,815 | 7,327,635 | 7,172,530 | ||||||||||||||
Borrowings: | |||||||||||||||||||
Federal funds purchased | 104,000 | 90,000 | 109,000 | 50,000 | 144,038 | ||||||||||||||
Securities sold under repurchase agreements | 113,512 | 118,824 | 122,513 | 138,910 | 136,623 | ||||||||||||||
Federal Home Loan Bank advances | 314,986 | 385,458 | 469,261 | 449,419 | 414,377 | ||||||||||||||
Subordinated debentures and term loans | 138,463 | 138,408 | 138,352 | 138,297 | 139,349 | ||||||||||||||
Total Borrowings | 670,961 | 732,690 | 839,126 | 776,626 | 834,387 | ||||||||||||||
Interest payable | 5,607 | 5,920 | 4,807 | 5,376 | 4,390 | ||||||||||||||
Other liabilities | 45,295 | 54,094 | 46,639 | 50,086 | 52,708 | ||||||||||||||
Total Liabilities | 8,476,456 | 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 outstanding | 125 | 125 | 125 | 125 | 125 | ||||||||||||||
Common Stock, $.125 stated value: | |||||||||||||||||||
Authorized — 100,000,000 shares | |||||||||||||||||||
Issued and outstanding | 6,169 | 6,163 | 6,160 | 6,155 | 6,145 | ||||||||||||||
Additional paid-in capital | 840,052 | 837,996 | 836,549 | 834,894 | 834,870 | ||||||||||||||
Retained earnings | 583,336 | 552,551 | 522,362 | 493,624 | 465,231 | ||||||||||||||
Accumulated other comprehensive loss | (21,422 | ) | (35,409 | ) | (24,868 | ) | (21,725 | ) | (2,908 | ) | |||||||||
Total Stockholders’ Equity | 1,408,260 | 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-exempt | 3,873 | 3,761 | 3,632 | 3,596 | 3,018 | ||||||||||||||
Investment securities: | |||||||||||||||||||
Taxable | 5,553 | 5,514 | 5,434 | 5,096 | 4,477 | ||||||||||||||
Tax-exempt | 6,644 | 6,493 | 6,246 | 6,126 | 5,830 | ||||||||||||||
Deposits with financial institutions | 1,207 | 270 | 633 | 131 | 294 | ||||||||||||||
Federal Home Loan Bank stock | 284 | 283 | 263 | 404 | 259 | ||||||||||||||
Total Interest Income | 108,653 | 104,800 | 100,871 | 93,620 | 90,348 | ||||||||||||||
INTEREST EXPENSE | |||||||||||||||||||
Deposits | 16,690 | 13,685 | 12,165 | 9,002 | 7,835 | ||||||||||||||
Federal funds purchased | 48 | 229 | 61 | 380 | 55 | ||||||||||||||
Securities sold under repurchase agreements | 243 | 174 | 172 | 173 | 146 | ||||||||||||||
Federal Home Loan Bank advances | 1,691 | 2,137 | 1,845 | 2,159 | 1,577 | ||||||||||||||
Subordinated debentures and term loans | 2,097 | 2,089 | 2,057 | 1,990 | 1,970 | ||||||||||||||
Total Interest Expense | 20,769 | 18,314 | 16,300 | 13,704 | 11,583 | ||||||||||||||
NET INTEREST INCOME | 87,884 | 86,486 | 84,571 | 79,916 | 78,765 | ||||||||||||||
Provision for loan losses | 1,664 | 1,400 | 1,663 | 2,500 | 1,800 | ||||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 86,220 | 85,086 | 82,908 | 77,416 | 76,965 | ||||||||||||||
OTHER INCOME | |||||||||||||||||||
Service charges on deposit accounts | 5,516 | 5,619 | 5,038 | 4,777 | 5,066 | ||||||||||||||
Fiduciary and wealth management fees | 3,842 | 3,673 | 3,595 | 3,796 | 4,126 | ||||||||||||||
Other customer fees | 4,904 | 5,038 | 4,917 | 5,036 | 4,565 | ||||||||||||||
Earnings on cash surrender value of life insurance | 1,074 | 961 | 1,007 | 1,176 | 1,133 | ||||||||||||||
Net gains and fees on sales of loans | 1,767 | 1,841 | 1,600 | 1,821 | 2,355 | ||||||||||||||
Net realized gains on sales of available for sale securities | 253 | 1,285 | 1,122 | 1,609 | 1,134 | ||||||||||||||
Other income | 1,824 | 1,110 | 912 | 1,346 | 682 | ||||||||||||||
Total Other Income | 19,180 | 19,527 | 18,191 | 19,561 | 19,061 | ||||||||||||||
OTHER EXPENSES | |||||||||||||||||||
Salaries and employee benefits | 34,350 | 32,936 | 32,192 | 32,226 | 33,760 | ||||||||||||||
Net occupancy | 4,737 | 4,586 | 4,348 | 4,670 | 4,424 | ||||||||||||||
Equipment | 3,627 | 3,483 | 3,556 | 3,668 | 3,898 | ||||||||||||||
Marketing | 1,107 | 1,216 | 1,474 | 884 | 1,361 | ||||||||||||||
Outside data processing fees | 3,367 | 3,422 | 3,462 | 2,964 | 3,378 | ||||||||||||||
Printing and office supplies | 433 | 334 | 324 | 334 | 378 | ||||||||||||||
Intangible asset amortization | 1,625 | 1,650 | 1,718 | 1,726 | 2,055 | ||||||||||||||
FDIC assessments | 634 | 856 | 711 | 719 | 711 | ||||||||||||||
Other real estate owned and foreclosure expenses | 251 | 455 | 362 | 402 | 311 | ||||||||||||||
Professional and other outside services | 3,002 | 1,844 | 1,789 | 1,541 | 1,914 | ||||||||||||||
Other expenses | 4,605 | 4,240 | 3,568 | 4,553 | 4,243 | ||||||||||||||
Total Other Expenses | 57,738 | 55,022 | 53,504 | 53,687 | 56,433 | ||||||||||||||
INCOME BEFORE INCOME TAX | 47,662 | 49,591 | 47,595 | 43,290 | 39,593 | ||||||||||||||
Income tax expense | 5,949 | 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 Assets | 1.68 | % | 1.69 | % | 1.63 | % | 1.57 | % | 1.06 | % | |||||||||
Return on Average Stockholders’ Equity | 12.10 | 12.10 | 11.94 | 11.21 | 7.53 | ||||||||||||||
Return on Average Common Stockholders’ Equity | 12.10 | 12.10 | 11.95 | 11.21 | 7.53 | ||||||||||||||
Average Earning Assets to Average Assets | 90.41 | 90.30 | 90.14 | 89.78 | 88.73 | ||||||||||||||
Allowance for Loan Losses as % of Total 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 | |||||||||||||
Average Stockholders’ Equity to Average Assets | 13.90 | 13.93 | 13.69 | 13.96 | 14.11 | ||||||||||||||
Tax Equivalent Yield on Average Earning Assets | 4.97 | 4.88 | 4.74 | 4.57 | 4.67 | ||||||||||||||
Interest Expense/Average Earning Assets | 0.93 | 0.83 | 0.75 | 0.65 | 0.57 | ||||||||||||||
Net Interest Margin (FTE) on Average Earning Assets | 4.04 | 4.05 | 3.99 | 3.92 | 4.10 | ||||||||||||||
Efficiency Ratio | 50.97 | 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 farmers | 92,404 | 88,504 | 89,093 | 98,315 | 121,757 | ||||||||||||||
Real estate loans: | |||||||||||||||||||
Construction | 545,729 | 668,608 | 714,866 | 590,093 | 612,219 | ||||||||||||||
Commercial and farmland | 2,832,102 | 2,699,629 | 2,652,782 | 2,713,994 | 2,562,691 | ||||||||||||||
Residential | 966,421 | 965,893 | 965,720 | 948,644 | 962,765 | ||||||||||||||
Home equity | 528,157 | 517,303 | 518,699 | 510,545 | 514,021 | ||||||||||||||
Individuals’ loans for household and other personal expenditures | 99,788 | 98,709 | 92,809 | 88,235 | 86,935 | ||||||||||||||
Lease financing receivables, net of unearned income | 1,600 | 1,830 | 1,945 | 2,193 | 2,527 | ||||||||||||||
Other commercial loans | 431,602 | 392,026 | 387,554 | 395,508 | 394,791 | ||||||||||||||
Loans | 7,224,467 | 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 deposits | 2,282,701 | 2,212,675 | 2,099,771 | 2,109,071 | 1,994,366 | ||||||||||||||
Certificates and other time deposits of $100,000 or more | 593,592 | 602,002 | 555,910 | 552,643 | 468,895 | ||||||||||||||
Other certificates and time deposits | 646,682 | 625,341 | 602,239 | 584,377 | 581,894 | ||||||||||||||
Brokered deposits | 246,440 | 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 stock | 24,588 | 284 | 4.62 | 23,825 | 259 | 4.35 | |||||||||||||||
Investment Securities: (1) | |||||||||||||||||||||
Taxable | 843,514 | 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 Securities | 1,634,171 | 13,963 | 3.42 | 1,453,941 | 13,446 | 3.70 | |||||||||||||||
Loans held for sale | 15,142 | 177 | 4.68 | 13,657 | 216 | 6.33 | |||||||||||||||
Loans: (3) | |||||||||||||||||||||
Commercial | 5,224,202 | 73,416 | 5.62 | 4,806,978 | 60,015 | 4.99 | |||||||||||||||
Real Estate Mortgage | 739,325 | 8,375 | 4.53 | 737,668 | 8,320 | 4.51 | |||||||||||||||
Installment | 649,717 | 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 Loans | 7,102,552 | 95,995 | 5.41 | 6,575,055 | 81,113 | 4.93 | |||||||||||||||
Total Earning Assets | 8,971,432 | 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 equivalents | 140,065 | 182,970 | |||||||||||||||||||
Premises and equipment | 93,589 | 102,605 | |||||||||||||||||||
Other assets | 821,047 | 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 deposits | 1,157,022 | 2,450 | 0.85 | 1,071,037 | 1,101 | 0.41 | |||||||||||||||
Savings deposits | 1,134,559 | 2,016 | 0.71 | 922,052 | 214 | 0.09 | |||||||||||||||
Certificates and other time deposits | 1,542,222 | 6,659 | 1.73 | 1,458,365 | 4,335 | 1.19 | |||||||||||||||
Total Interest-bearing Deposits | 6,397,506 | 16,690 | 1.04 | 5,422,370 | 7,835 | 0.58 | |||||||||||||||
Borrowings | 611,255 | 4,079 | 2.67 | 678,242 | 3,748 | 2.21 | |||||||||||||||
Total Interest-bearing Liabilities | 7,008,761 | 20,769 | 1.19 | 6,100,612 | 11,583 | 0.76 | |||||||||||||||
Noninterest-bearing deposits | 1,478,492 | 1,720,005 | |||||||||||||||||||
Other liabilities | 56,295 | 58,810 | |||||||||||||||||||
Total Liabilities | 8,543,548 | 7,879,427 | |||||||||||||||||||
Stockholders’ Equity | 1,379,453 | 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 stock | 24,538 | 1,234 | 5.03 | 20,921 | 894 | 4.27 | |||||||||||||||
Investment Securities: (1) | |||||||||||||||||||||
Taxable | 841,203 | 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 Securities | 1,603,826 | 53,887 | 3.36 | 1,358,080 | 50,380 | 3.71 | |||||||||||||||
Loans held for sale | 11,425 | 540 | 4.73 | 7,707 | 462 | 5.99 | |||||||||||||||
Loans: (3) | |||||||||||||||||||||
Commercial | 5,143,576 | 274,302 | 5.33 | 4,267,651 | 204,771 | 4.80 | |||||||||||||||
Real Estate Mortgage | 733,709 | 33,549 | 4.57 | 679,284 | 30,267 | 4.46 | |||||||||||||||
Installment | 640,310 | 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 Loans | 6,997,771 | 361,314 | 5.16 | 5,881,284 | 280,156 | 4.76 | |||||||||||||||
Total Earning Assets | 8,736,367 | 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 equivalents | 131,925 | 142,503 | |||||||||||||||||||
Premises and equipment | 94,567 | 97,446 | |||||||||||||||||||
Other assets | 818,432 | 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 deposits | 1,097,762 | 6,721 | 0.61 | 938,959 | 2,788 | 0.30 | |||||||||||||||
Savings deposits | 1,065,031 | 5,230 | 0.49 | 844,825 | 734 | 0.09 | |||||||||||||||
Certificates and other time deposits | 1,514,271 | 22,014 | 1.45 | 1,339,866 | 14,467 | 1.08 | |||||||||||||||
Total Interest-bearing Deposits | 5,996,145 | 51,542 | 0.86 | 4,853,922 | 23,806 | 0.49 | |||||||||||||||
Borrowings | 718,061 | 17,545 | 2.44 | 664,045 | 13,806 | 2.08 | |||||||||||||||
Total Interest-bearing Liabilities | 6,714,206 | 69,087 | 1.03 | 5,517,967 | 37,612 | 0.68 | |||||||||||||||
Noninterest-bearing deposits | 1,573,337 | 1,514,829 | |||||||||||||||||||
Other liabilities | 57,653 | 52,909 | |||||||||||||||||||
Total Liabilities | 8,345,196 | 7,085,705 | |||||||||||||||||||
Stockholders’ Equity | 1,343,861 | 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