MUNCIE, Ind., Jan. 25, 2024 (GLOBE NEWSWIRE) — First Merchants Corporation (NASDAQ – FRME)

Fourth Quarter 2023 Highlights:

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

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

Fourth Quarter Financial Results:

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

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

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

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

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

Net interest income, totaling $130.1 million for the quarter, declined $3.3 million, or 2.5 percent, compared to prior quarter and decreased $18.9 million, or 12.7 percent, compared to the fourth quarter of 2022. Stated net-interest margin on a tax equivalent basis totaling 3.16 percent, declined by 13 basis points compared to the third quarter of 2023 and decreased 56 basis points compared to the fourth quarter of 2022. During the quarter, increased deposit costs and a continued change in deposit mix offset the increase in earning asset yields reducing net-interest margin.

Noninterest income, totaling $26.4 million for the quarter, decreased $1.4 million, or 5.0 percent, compared to the third quarter of 2023 but increased $2.3 million from the fourth quarter of 2022. The decrease from third quarter of 2023 was driven by lower gains on the sales of loans, higher realized losses on the sales of securities, and a negative valuation adjustment related to CRA investments. These declines were somewhat offset by an increase in fiduciary and wealth management fees and gains on bank-owned life insurance.

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

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

CONFERENCE CALL

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

To access via phone, participants will need to register using the following link where they will be provided a phone number and access code: (https://register.vevent.com/register/BIed9b1a3a96754f9abe7b067d12fe2826)

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

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

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

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

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

Forward-Looking Statements

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

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	December 31,
		2023				2022
ASSETS
Cash and due from banks	$	112,649			$	122,594
Interest-bearing deposits		436,080				126,061
Investment securities, net of allowance for credit losses of $245,000 and $245,000		3,811,364				4,263,788
Loans held for sale		18,934				9,094
Loans		12,486,027				12,003,894
Less: Allowance for credit losses – loans		(204,934	)			(223,277	)
Net loans		12,281,093				11,780,617
Premises and equipment		133,896				117,118
Federal Home Loan Bank stock		41,769				38,525
Interest receivable		97,664				85,070
Goodwill and other intangibles		739,101				747,844
Cash surrender value of life insurance		306,301				308,311
Other real estate owned		4,831				6,431
Tax asset, deferred and receivable		99,883				111,222
Other assets		225,914				221,631
TOTAL ASSETS	$	18,309,479			$	17,938,306
LIABILITIES
Deposits:
Noninterest-bearing	$	2,500,062			$	3,173,417
Interest-bearing		12,321,391				11,209,328
Total Deposits		14,821,453				14,382,745
Borrowings:
Federal funds purchased		—				171,560
Securities sold under repurchase agreements		157,280				167,413
Federal Home Loan Bank advances		712,852				823,674
Subordinated debentures and other borrowings		158,644				151,298
Total Borrowings		1,028,776				1,313,945
Interest payable		18,912				7,530
Other liabilities		192,625				199,316
Total Liabilities		16,061,766				15,903,536
STOCKHOLDERS’ EQUITY
Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized — 600 cumulative shares
Issued and outstanding – 125 cumulative shares		125				125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized — 10,000 non-cumulative perpetual shares
Issued and outstanding – 10,000 non-cumulative perpetual shares		25,000				25,000
Common Stock, $.125 stated value:
Authorized — 100,000,000 shares
Issued and outstanding – 59,424,122 and 59,170,583 shares		7,428				7,396
Additional paid-in capital		1,236,506				1,228,626
Retained earnings		1,154,624				1,012,774
Accumulated other comprehensive income (loss)		(175,970	)			(239,151	)
Total Stockholders’ Equity		2,247,713				2,034,770
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,309,479			$	17,938,306

CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended								Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts)	December 31.								December 31.
		2023				2022				2023				2022
INTEREST INCOME
Loans receivable:
Taxable	$	197,523			$	156,102			$	747,837			$	470,468
Tax-exempt		8,197				6,930				31,954				25,124
Investment securities:
Taxable		8,644				9,417				35,207				38,354
Tax-exempt		13,821				17,033				58,117				67,381
Deposits with financial institutions		8,034				959				17,719				2,503
Federal Home Loan Bank stock		771				541				3,052				1,176
Total Interest Income		236,990				190,982				893,886				605,006
INTEREST EXPENSE
Deposits		96,655				33,516				306,092				62,939
Federal funds purchased		1				808				1,421				1,302
Securities sold under repurchase agreements		827				541				3,451				1,136
Federal Home Loan Bank advances		6,431				4,932				27,206				11,417
Subordinated debentures and other borrowings		3,013				2,229				10,316				8,009
Total Interest Expense		106,927				42,026				348,486				84,803
NET INTEREST INCOME		130,063				148,956				545,400				520,203
Provision for credit losses		1,500				—				3,500				16,755
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		128,563				148,956				541,900				503,448
NONINTEREST INCOME
Service charges on deposit accounts		7,690				7,097				30,837				28,371
Fiduciary and wealth management fees		8,187				7,501				30,840				29,688
Card payment fees		4,437				4,533				18,862				20,207
Net gains and fees on sales of loans		4,111				2,087				15,659				10,055
Derivative hedge fees		1,049				326				3,385				3,388
Other customer fees		237				362				1,880				1,935
Earnings on cash surrender value of life insurance		3,202				1,515				8,347				11,174
Net realized gains (losses) on sales of available for sale securities		(2,317	)			57				(6,930	)			1,194
Other income (loss)		(152	)			672				2,722				1,929
Total Noninterest Income		26,444				24,150				105,602				107,941
NONINTEREST EXPENSES
Salaries and employee benefits		60,967				52,331				228,745				206,893
Net occupancy		9,089				6,638				29,859				26,211
Equipment		6,108				6,148				24,113				23,945
Marketing		2,647				3,157				7,427				7,708
Outside data processing fees		5,875				5,611				25,165				21,682
Printing and office supplies		402				390				1,552				1,588
Intangible asset amortization		2,182				2,303				8,743				8,275
FDIC assessments		7,557				2,295				14,674				10,235
Other real estate owned and foreclosure expenses		1,743				197				3,318				823
Professional and other outside services		3,981				3,961				16,172				21,642
Other expenses		7,552				6,668				28,502				26,713
Total Noninterest Expenses		108,103				89,699				388,270				355,715
INCOME BEFORE INCOME TAX		46,904				83,407				259,232				255,674
Income tax expense		4,425				12,647				35,446				33,585
NET INCOME		42,479				70,760				223,786				222,089
Preferred stock dividends		469				468				1,875				1,406
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	42,010			$	70,292			$	221,911			$	220,683
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.71			$	1.20			$	3.74			$	3.83
Diluted Net Income Available to Common Stockholders	$	0.71			$	1.19			$	3.73			$	3.81
Cash Dividends Paid to Common Stockholders	$	0.34			$	0.32			$	1.34			$	1.25
Average Diluted Common Shares Outstanding (in thousands)		59,556				59,384				59,489				57,950

FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
		2023				2022				2023				2022
NET CHARGE-OFFS (RECOVERIES)	$	3,148			$	3,425			$	25,643			$	2,674
AVERAGE BALANCES:
Total Assets	$	18,397,200			$	17,834,468			$	18,186,507			$	17,220,002
Total Loans		12,396,451				11,818,911				12,297,974				10,943,051
Total Earning Assets		17,222,714				16,702,944				16,991,787				15,985,691
Total Deposits		15,000,580				14,564,853				14,721,498				14,198,243
Total Stockholders’ Equity		2,130,993				1,958,041				2,127,262				1,972,445
FINANCIAL RATIOS:
Return on Average Assets		0.92	%			1.59	%			1.23	%			1.29	%
Return on Average Stockholders’ Equity		7.89				14.36				10.43				11.19
Return on Tangible Common Stockholders’ Equity		12.75				24.21				16.76				18.12
Average Earning Assets to Average Assets		93.62				93.66				93.43				92.83
Allowance for Credit Losses – Loans as % of Total Loans		1.64				1.86				1.64				1.86
Net Charge-offs as % of Average Loans (Annualized)		0.10				0.12				0.21				0.02
Average Stockholders’ Equity to Average Assets		11.58				10.98				11.70				11.45
Tax Equivalent Yield on Average Earning Assets		5.64				4.73				5.40				3.94
Interest Expense/Average Earning Assets		2.48				1.01				2.05				0.53
Net Interest Margin (FTE) on Average Earning Assets		3.16				3.72				3.35				3.41
Efficiency Ratio		63.26				48.60				55.17				53.20
Tangible Common Book Value Per Share	$	25.06			$	21.45			$	25.06			$	21.45

NONPERFORMING ASSETS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
		2023				2023				2023				2023				2022
Nonaccrual Loans	$	53,580			$	53,102			$	69,240			$	46,576			$	42,324
Troubled Debt Restructures (TDR)		—				—				—				—				224
Nonperforming Loans (NPL)		53,580				53,102				69,240				46,576				42,548
Other Real Estate Owned and Repossessions		4,831				6,480				7,685				7,777				6,431
Nonperforming Assets (NPA)		58,411				59,582				76,925				54,353				48,979
90+ Days Delinquent		172				89				428				7,032				1,737
NPAs & 90 Day Delinquent	$	58,583			$	59,671			$	77,353			$	61,385			$	50,716
Allowance for Credit Losses – Loans	$	204,934			$	205,782			$	221,147			$	223,052			$	223,277
Quarterly Net Charge-offs		3,148				20,365				1,905				225				2,674
NPAs / Actual Assets %		0.32	%			0.33	%			0.43	%			0.30	%			0.27	%
NPAs & 90 Day / Actual Assets %		0.32	%			0.33	%			0.43	%			0.34	%			0.28	%
NPAs / Actual Loans and OREO %		0.47	%			0.48	%			0.63	%			0.44	%			0.41	%
Allowance for Credit Losses – Loans / Actual Loans (%)		1.64	%			1.67	%			1.80	%			1.82	%			1.86	%
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)		0.10	%			0.66	%			0.06	%			0.01	%			0.12	%

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
		2023				2023				2023				2023				2022
ASSETS
Cash and due from banks	$	112,649			$	125,173			$	108,975			$	125,818			$	122,594
Interest-bearing deposits		436,080				348,639				219,480				352,695				126,061
Investment securities, net of allowance for credit losses		3,811,364				3,713,724				3,891,491				4,057,389				4,263,788
Loans held for sale		18,934				30,972				27,297				9,408				9,094
Loans		12,486,027				12,271,422				12,270,233				12,241,461				12,003,894
Less: Allowance for credit losses – loans		(204,934	)			(205,782	)			(221,147	)			(223,052	)			(223,277	)
Net loans		12,281,093				12,065,640				12,049,086				12,018,409				11,780,617
Premises and equipment		133,896				132,441				114,402				115,857				117,118
Federal Home Loan Bank stock		41,769				41,797				41,842				41,878				38,525
Interest receivable		97,664				90,011				89,784				85,515				85,070
Goodwill and other intangibles		739,101				741,283				743,465				745,647				747,844
Cash surrender value of life insurance		306,301				306,106				307,020				309,090				308,311
Other real estate owned		4,831				6,480				7,685				7,777				6,431
Tax asset, deferred and receivable		99,883				135,521				113,724				103,070				111,222
Other assets		225,914				258,861				254,161				206,355				221,631
TOTAL ASSETS	$	18,309,479			$	17,996,648			$	17,968,412			$	18,178,908			$	17,938,306
LIABILITIES
Deposits:
Noninterest-bearing	$	2,500,062			$	2,554,984			$	2,636,017			$	2,964,355			$	3,173,417
Interest-bearing		12,321,391				12,091,592				11,945,138				11,738,932				11,209,328
Total Deposits		14,821,453				14,646,576				14,581,155				14,703,287				14,382,745
Borrowings:
Federal funds purchased		—				—				—				20				171,560
Securities sold under repurchase agreements		157,280				152,537				152,472				179,067				167,413
Federal Home Loan Bank advances		712,852				713,384				723,480				823,577				823,674
Subordinated debentures and other borrowings		158,644				158,665				151,325				151,312				151,298
Total Borrowings		1,028,776				1,024,586				1,027,277				1,153,976				1,313,945
Interest payable		18,912				16,473				13,595				11,979				7,530
Other liabilities		192,625				216,369				200,820				187,218				199,316
Total Liabilities		16,061,766				15,904,004				15,822,847				16,056,460				15,903,536
STOCKHOLDERS’ EQUITY
Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized — 600 cumulative shares
Issued and outstanding – 125 cumulative shares		125				125				125				125				125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized — 10,000 non-cumulative perpetual shares
Issued and outstanding – 10,000 non-cumulative perpetual shares		25,000				25,000				25,000				25,000				25,000
Common Stock, $.125 stated value:
Authorized — 100,000,000 shares
Issued and outstanding		7,428				7,425				7,412				7,407				7,396
Additional paid-in capital		1,236,506				1,234,402				1,233,593				1,231,532				1,228,626
Retained earnings		1,154,624				1,132,962				1,097,399				1,057,298				1,012,774
Accumulated other comprehensive loss		(175,970	)			(307,270	)			(217,964	)			(198,914	)			(239,151	)
Total Stockholders’ Equity		2,247,713				2,092,644				2,145,565				2,122,448				2,034,770
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,309,479			$	17,996,648			$	17,968,412			$	18,178,908			$	17,938,306

CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	December 31,				September 30,				June 30,				March 31,				December 31,
		2023				2023				2023				2023				2022
INTEREST INCOME
Loans receivable:
Taxable	$	197,523			$	191,705			$	186,256			$	172,353			$	156,102
Tax-exempt		8,197				8,288				7,760				7,709				6,930
Investment securities:
Taxable		8,644				8,590				8,886				9,087				9,417
Tax-exempt		13,821				13,947				14,279				16,070				17,033
Deposits with financial institutions		8,034				5,884				3,164				637				959
Federal Home Loan Bank stock		771				719				1,020				542				541
Total Interest Income		236,990				229,133				221,365				206,398				190,982
INTEREST EXPENSE
Deposits		96,655				85,551				73,201				50,685				33,516
Federal funds purchased		1				—				123				1,297				808
Securities sold under repurchase agreements		827				797				979				848				541
Federal Home Loan Bank advances		6,431				6,896				6,815				7,064				4,932
Subordinated debentures and other borrowings		3,013				2,506				2,412				2,385				2,229
Total Interest Expense		106,927				95,750				83,530				62,279				42,026
NET INTEREST INCOME		130,063				133,383				137,835				144,119				148,956
Provision for credit losses		1,500				2,000				—				—				—
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		128,563				131,383				137,835				144,119				148,956
NONINTEREST INCOME
Service charges on deposit accounts		7,690				7,975				7,813				7,359				7,097
Fiduciary and wealth management fees		8,187				7,394				7,397				7,862				7,501
Card payment fees		4,437				4,716				4,537				5,172				4,533
Net gains and fees on sales of loans		4,111				5,517				3,632				2,399				2,087
Derivative hedge fees		1,049				516				672				1,148				326
Other customer fees		237				384				742				517				362
Earnings on cash surrender value of life insurance		3,202				1,761				2,096				1,288				1,515
Net realized gains (losses) on sales of available for sale securities		(2,317	)			(1,650	)			(1,392	)			(1,571	)			57
Other income (loss)		(152	)			1,229				822				823				672
Total Noninterest Income		26,444				27,842				26,319				24,997				24,150
NONINTEREST EXPENSES
Salaries and employee benefits		60,967				55,566				54,753				57,459				52,331
Net occupancy		9,089				6,837				6,674				7,259				6,638
Equipment		6,108				5,698				6,181				6,126				6,148
Marketing		2,647				2,369				1,102				1,309				3,157
Outside data processing fees		5,875				6,573				6,604				6,113				5,611
Printing and office supplies		402				333				434				383				390
Intangible asset amortization		2,182				2,182				2,182				2,197				2,303
FDIC assessments		7,557				2,981				2,740				1,396				2,295
Other real estate owned and foreclosure expenses		1,743				677				916				(18	)			197
Professional and other outside services		3,981				3,833				4,660				3,698				3,961
Other expenses		7,552				6,805				6,347				7,798				6,668
Total Noninterest Expenses		108,103				93,854				92,593				93,720				89,699
INCOME BEFORE INCOME TAX		46,904				65,371				71,561				75,396				83,407
Income tax expense		4,425				9,005				10,699				11,317				12,647
NET INCOME		42,479				56,366				60,862				64,079				70,760
Preferred stock dividends		469				468				469				469				468
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	42,010			$	55,898			$	60,393			$	63,610			$	70,292
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.71			$	0.95			$	1.02			$	1.07			$	1.20
Diluted Net Income Available to Common Stockholders	$	0.71			$	0.94			$	1.02			$	1.07			$	1.19
Cash Dividends Paid to Common Stockholders	$	0.34			$	0.34			$	0.34			$	0.32			$	0.32
Average Diluted Common Shares Outstanding (in thousands)		59,556				59,503				59,448				59,441				59,384
FINANCIAL RATIOS:
Return on Average Assets		0.92	%			1.24	%			1.34	%			1.42	%			1.59	%
Return on Average Stockholders’ Equity		7.89				10.38				11.29				12.21				14.36
Return on Tangible Common Stockholders’ Equity		12.75				16.54				18.04				19.82				24.21
Average Earning Assets to Average Assets		93.62				93.36				93.38				93.35				93.66
Allowance for Credit Losses – Loans as % of Total Loans		1.64				1.67				1.80				1.82				1.86
Net Charge-offs as % of Average Loans (Annualized)		0.10				0.66				0.06				0.01				0.12
Average Stockholders’ Equity to Average Assets		11.58				11.87				11.78				11.56				10.98
Tax Equivalent Yield on Average Earning Assets		5.64				5.55				5.36				5.06				4.73
Interest Expense/Average Earning Assets		2.48				2.26				1.97				1.48				1.01
Net Interest Margin (FTE) on Average Earning Assets		3.16				3.29				3.39				3.58				3.72
Efficiency Ratio		63.26				53.91				52.21				51.72				48.60
Tangible Common Book Value Per Share	$	25.06			$	22.43			$	23.34			$	22.93			$	21.45

LOANS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
		2023				2023				2023				2023				2022
Commercial and industrial loans	$	3,670,948			$	3,490,953			$	3,531,395			$	3,502,204			$	3,437,126
Agricultural land, production and other loans to farmers		263,414				233,838				230,003				219,598				241,793
Real estate loans:
Construction		957,545				1,022,261				949,918				960,979				835,582
Commercial real estate, non-owner occupied		2,400,839				2,360,596				2,379,819				2,375,410				2,407,475
Commercial real estate, owner occupied		1,162,083				1,153,707				1,179,739				1,244,117				1,246,528
Residential		2,288,921				2,257,385				2,248,473				2,185,943				2,096,655
Home equity		617,571				609,352				614,366				621,354				630,632
Individuals’ loans for household and other personal expenditures		168,388				176,523				172,896				172,389				175,211
Public finance and other commercial loans		956,318				966,807				963,624				959,467				932,892
Loans		12,486,027				12,271,422				12,270,233				12,241,461				12,003,894
Allowance for credit losses – loans		(204,934	)			(205,782	)			(221,147	)			(223,052	)			(223,277	)
NET LOANS	$	12,281,093			$	12,065,640			$	12,049,086			$	12,018,409			$	11,780,617

DEPOSITS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
		2023				2023				2023				2023				2022
Demand deposits	$	7,965,862			$	7,952,040			$	8,045,455			$	8,422,387			$	8,448,797
Savings deposits		4,516,433				4,572,162				4,530,255				4,499,487				4,657,140
Certificates and other time deposits of $100,000 or more		1,408,985				1,280,607				1,160,303				1,040,379				742,539
Other certificates and time deposits		849,906				761,196				680,965				574,886				468,712
Brokered certificates of deposits		80,267				80,571				164,177				166,148				65,557
TOTAL DEPOSITS	$	14,821,453			$	14,646,576			$	14,581,155			$	14,703,287			$	14,382,745

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	December 31, 2023												December 31, 2022
	Average Balance				Interest  Income / Expense				Average Rate				Average Balance				Interest  Income / Expense				Average Rate
ASSETS
Interest-bearing deposits	$	700,705			$	8,034				4.59	%		$	187,204			$	959				2.05	%
Federal Home Loan Bank stock		41,792				771				7.38				38,066				541				5.68
Investment Securities: (1)
Taxable		1,801,533				8,644				1.92				1,987,161				9,417				1.90
Tax-exempt (2)		2,282,233				17,495				3.07				2,671,602				21,561				3.23
Total Investment Securities		4,083,766				26,139				2.56				4,658,763				30,978				2.66
Loans held for sale		16,355				246				6.02				4,732				71				6.00
Loans: (3)
Commercial		8,533,233				159,190				7.46				8,309,561				126,850				6.11
Real estate mortgage		2,118,060				21,829				4.12				1,827,749				16,654				3.64
Installment		820,728				16,258				7.92				843,562				12,527				5.94
Tax-exempt (2)		908,075				10,376				4.57				833,307				8,772				4.21
Total Loans		12,396,451				207,899				6.71				11,818,911				164,874				5.58
Total Earning Assets		17,222,714				242,843				5.64	%			16,702,944				197,352				4.73	%
Total Non-Earning Assets		1,174,486												1,131,524
TOTAL ASSETS	$	18,397,200											$	17,834,468
LIABILITIES
Interest-Bearing Deposits:
Interest-bearing deposits	$	5,504,725			$	40,996				2.98	%		$	5,238,422			$	16,810				1.28	%
Money market deposits		3,096,085				27,909				3.61				3,018,644				10,778				1.43
Savings deposits		1,587,758				3,913				0.99				1,895,551				2,125				0.45
Certificates and other time deposits		2,225,528				23,837				4.28				1,038,502				3,803				1.46
Total Interest-Bearing Deposits		12,414,096				96,655				3.11				11,191,119				33,516				1.20
Borrowings		1,013,856				10,272				4.05				1,097,586				8,510				3.10
Total Interest-Bearing Liabilities		13,427,952				106,927				3.19				12,288,705				42,026				1.37
Noninterest-bearing deposits		2,586,484												3,373,734
Other liabilities		251,771												213,988
Total Liabilities		16,266,207												15,876,427
STOCKHOLDERS’ EQUITY		2,130,993												1,958,041
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,397,200				106,927							$	17,834,468				42,026
Net Interest Income (FTE)					$	135,916											$	155,326
Net Interest Spread (FTE) (4)										2.45	%											3.36	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets										5.64	%											4.73	%
Interest Expense / Average Earning Assets										2.48	%											1.01	%
Net Interest Margin (FTE) (5)										3.16	%											3.72	%
(1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed using a 30/360 day basis.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2023 and 2022. These totals equal $5,853 and $6.370 for the three months ended December 31, 2023 and 2022, respectively.
(3) Non accruing loans have been included in the average balances.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Twelve Months Ended
	December 31, 2023												December 31, 2022
	Average Balance				Interest  Income / Expense				Average Rate				Average Balance				Interest  Income / Expense				Average Rate
Assets:
Interest-bearing deposits	$	431,581			$	17,719				4.11	%		$	296,863			$	2,503				0.84	%
Federal Home Loan Bank stock		41,319				3,052				7.39				35,580				1,176				3.31
Investment Securities: (1)
Taxable		1,854,438				35,207				1.90				2,056,586				38,354				1.86
Tax-exempt (2)		2,366,475				73,566				3.11				2,653,611				85,292				3.21
Total Investment Securities		4,220,913				108,773				2.58				4,710,197				123,646				2.63
Loans held for sale		21,766				1,292				5.94				14,715				692				4.70
Loans: (3)
Commercial		8,519,706				603,611				7.08				7,877,271				380,621				4.83
Real estate mortgage		2,035,488				82,183				4.04				1,471,802				51,853				3.52
Installment		830,006				60,751				7.32				785,520				37,302				4.75
Tax-exempt (2)		891,008				40,448				4.54				793,743				31,803				4.01
Total Loans		12,297,974				788,285				6.41				10,943,051				502,271				4.59
Total Earning Assets		16,991,787				917,829				5.40	%			15,985,691				629,596				3.94	%
Total Non-Earning Assets		1,194,720												1,234,311
Total Assets	$	18,186,507											$	17,220,002
Liabilities:
Interest-Bearing deposits:
Interest-bearing deposits	$	5,435,733			$	138,012				2.54	%		$	5,206,131			$	32,511				0.62	%
Money market deposits		2,884,271				83,777				2.90				2,915,397				19,170				0.66
Savings deposits		1,694,230				14,606				0.86				1,927,122				5,019				0.26
Certificates and other time deposits		1,923,268				69,697				3.62				881,176				6,239				0.71
Total Interest-Bearing Deposits		11,937,502				306,092				2.56				10,929,826				62,939				0.58
Borrowings		1,111,472				42,394				3.81				888,392				21,864				2.46
Total Interest-Bearing Liabilities		13,048,974				348,486				2.67				11,818,218				84,803				0.72
Noninterest-bearing deposits		2,783,996												3,268,417
Other liabilities		226,275												160,922
Total Liabilities		16,059,245												15,247,557
Stockholders’ Equity		2,127,262												1,972,445
Total Liabilities and Stockholders’ Equity	$	18,186,507				348,486							$	17,220,002				84,803
Net Interest Income (FTE)					$	569,343											$	544,793
Net Interest Spread (FTE) (4)										2.73	%											3.22	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets										5.40	%											3.94	%
Interest Expense / Average Earning Assets										2.05	%											0.53	%
Net Interest Margin (FTE) (5)										3.35	%											3.41	%
(1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed using a 30/360 day basis.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2023 and 2022. These totals equal $23,943 and $24,590 for the years ended December 31, 2023 and 2022, respectively.
(3) Non accruing loans have been included in the average balances.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

ADJUSTED NET INCOME AND DILUTED EARNINGS PER COMMON SHARE – NON-GAAP
(Dollars In Thousands, Except Per Share Amounts)	Three Months Ended																				Twelve Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
		2023				2023				2023				2023				2022				2023				2022
Net Income Available to Common Stockholders – GAAP	$	42,010			$	55,898			$	60,393			$	63,610			$	70,292			$	221,911			$	220,683
Adjustments:
PPP loan income		(7	)			(8	)			(9	)			(25	)			(109	)			(49	)			(3,207	)
Acquisition-related expenses		—				—				—				—				413				—				16,531
Acquisition-related provision expense		—				—				—				—				—				—				16,755
Non-core expenses1		12,682				—				—				—				—				12,682				—
Tax on adjustments		(3,088	)			2				2				6				(75	)			(3,078	)			(7,376	)
Adjusted Net Income Available to Common Stockholders – Non-GAAP	$	51,597			$	55,892			$	60,386			$	63,591			$	70,521			$	231,466			$	243,386
Average Diluted Common Shares Outstanding (in thousands)		59,556				59,503				59,448				59,441				59,384				59,489				57,590
Diluted Earnings Per Common Share – GAAP	$	0.71			$	0.94			$	1.02			$	1.07			$	1.19			$	3.73			$	3.81
Adjustments:
PPP loan income		—				—				—				—				(0.01	)			—				(0.06	)
Acquisition-related expenses		—				—				—				—				0.01				—				0.28
Acquisition-related provision expense		—				—				—				—				—				—				0.30
Non-core expenses1		0.21				—				—				—				—				0.21				—
Tax on adjustments		(0.05	)			—				—				—				—				(0.05	)			(0.13	)
Adjusted Diluted Earnings Per Common Share – Non-GAAP	$	0.87			$	0.94			$	1.02			$	1.07			$	1.19			$	3.89			$	4.20

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

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

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

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