First Merchants Corporation Announces Second Quarter 2021 Earnings Per Share

MUNCIE, Ind., July 26, 2021 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported second quarter 2021 net income of $55.6 million compared to $33 million during the same period in 2020. Earnings per share for the period totaled $1.03 per share compared to the second quarter of 2020 result of $.62 per share. Year-to-date net income totaled $105 million compared to $67.3 million during the six months ended June 30, 2020. Year-to-date earnings per share totaled $1.94 compared to $1.24 during the same period in 2020.

Total assets equaled $14.9 billion as of the quarter-ended June 30, 2021 and loans totaled $9.1 billion. The Corporation experienced organic loan growth of $289.6 million, or 3.4 percent during the last twelve months, offset by the forgiveness of Paycheck Protection Program (“PPP”) loans which accounted for a decline of $466.9 million. As a result, the loan portfolio decreased by $177.3 million, or 1.9 percent, during that period. Organic loan growth, on an annualized basis, was 6.7 percent in the second quarter 2021. Investments increased $1.4 billion, or 48.7 percent, during the last twelve months and now total $4.1 billion. Total deposits equaled $12.2 billion as of quarter-end and increased by $1.2 billion, or 11.3 percent, from the same period in 2020.
  
The Corporation’s Allowance for Credit Losses – Loans totaled $199.8 million as of quarter-end, or 2.19% of total loans. Net charge-offs for the quarter totaled $1.3 million and no provision expense was recorded. Provision expense taken during the three and six months ended June 30, 2020 of $21.9 million and $41.6 million, respectively, reflected our view of increased credit risk related to the COVID-19 pandemic. Non-accrual loans as of quarter-end totaled $57.6 million.

Mark Hardwick, Chief Executive Officer, stated, “Our management team is pleased with our record setting second quarter net income. It’s very satisfying to achieve great financial results while serving our clients and communities. Our healthy levels of loan growth, earning asset growth, credit quality, capital levels and efficiency will lead us into the future. I am proud of our teammates for staying focused on our goals and continuously finding ways to win for our stakeholders.”

Net-interest income for the quarter totaled $104.3 million, an increase of $11.2 million from the second quarter of 2020, or 12.1 percent. Net interest margin, on a tax equivalent basis, totaling 3.22 percent, increased by 3 basis points compared to the second quarter of 2020. Yields on earning assets for the second quarter totaled 3.49 percent and cost of supporting liabilities totaled 27 basis points. Fair value accretion contributed less to margin as it accounted for 7 basis points in the second quarter of 2021, compared to 12 basis points in the second quarter of 2020. PPP loans contributed 15 basis points to margin during the second quarter of 2021, but subtracted 6 basis points from margin in the same quarter of 2020.

Non-interest income totaled $30.9 million for the quarter, a $4.4 million increase over the second quarter of 2020. Gains from the sale of mortgage loans were exceptionally strong and enhanced by a large portfolio mortgage loan sale contributing a gain of $2.9 million during the quarter. Fiduciary and wealth management fees increased $1.9 million over the second quarter of 2020, which was offset by a decline in card payment fees due to the adoption of the Durbin Amendment. Non-interest expense totaled $69.3 million for the quarter compared to $60 million in the second quarter of 2020 and $66.1 million in the first quarter of 2021. Total expenses in the second quarter of 2020 were unusually low and reflected a $2.3 million deferral of salary expense related to PPP loan originations, a $1.1 million reduction in bonus accruals and a $1.6 million decrease in processing fees related to termination of a debit card rewards program. Total expenses increased on a linked quarter basis primarily due to increased salaries and incentives.

The loan to deposit ratio now totals 74.9 percent and loan to asset ratio totals 61.3 percent. As of June 30, 2021, the Corporation’s total risk-based capital ratio equaled 14.23 percent, the common equity tier 1 capital ratio equaled 11.94 percent, and the tangible common equity ratio totaled 9.04 percent. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

CONFERENCE CALL

First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 2:30 p.m. (ET) on Monday, July 26, 2021.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's second quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until August 26, 2021. 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 10157361.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme210726.html during the time of the call. A replay of the web cast will be available until July 26, 2022.

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)June 30,
 2021 2020
ASSETS   
Cash and cash equivalents$167,596  $229,759 
Interest-bearing deposits438,863  380,021 
Investment securities, net of allowance for credit losses of $245,000 and $04,148,314  2,789,379 
Loans held for sale18,582  901 
Loans9,121,250  9,298,541 
Less: Allowance for credit losses - loans(199,775) (121,119)
Net loans8,921,475  9,177,422 
Premises and equipment103,822  112,548 
Federal Home Loan Bank stock28,736  28,736 
Interest receivable54,173  57,063 
Goodwill and other intangibles573,786  575,855 
Cash surrender value of life insurance294,462  290,715 
Other real estate owned601  7,367 
Tax asset, deferred and receivable36,924  13,126 
Other assets135,763  156,486 
TOTAL ASSETS$14,923,097  $13,819,378 
LIABILITIES   
Deposits:   
Noninterest-bearing$2,479,853  $2,260,351 
Interest-bearing9,723,547  8,705,637 
Total Deposits12,203,400  10,965,988 
Borrowings:   
Securities sold under repurchase agreements146,904  181,150 
Federal Home Loan Bank advances334,243  400,817 
Subordinated debentures and other borrowings118,498  285,197 
Total Borrowings599,645  867,164 
Interest payable2,929  5,587 
Other liabilities245,323  171,544 
Total Liabilities13,051,297  12,010,283 
STOCKHOLDERS' EQUITY   
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:   
Authorized -- 600 shares   
Issued and outstanding - 125 shares125  125 
Common Stock, $.125 stated value:   
Authorized -- 100,000,000 shares   
Issued and outstanding - 53,972,386 and 53,795,500 shares6,747  6,724 
Additional paid-in capital1,009,182  1,002,962 
Retained earnings795,666  735,439 
Accumulated other comprehensive income60,080  63,845 
Total Stockholders' Equity1,871,800  1,809,095 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$14,923,097  $13,819,378 


CONSOLIDATED STATEMENTS OF INCOMEThree Months Ended Six Months Ended
(Dollars In Thousands, Except Per Share Amounts)June 30, June 30,
 2021 2020 2021 2020
INTEREST INCOME       
Loans receivable:       
Taxable$87,002   $87,312   $172,107   $183,964  
Tax-exempt5,545   5,359   10,884   10,674  
Investment securities:       
Taxable7,440   6,147   14,135   13,778  
Tax-exempt13,071   10,019   25,456   19,354  
Deposits with financial institutions129   134   243   709  
Federal Home Loan Bank stock88   281   266   580  
Total Interest Income113,275   109,252   223,091   229,059  
INTEREST EXPENSE       
Deposits5,823   12,707   12,023   34,455  
Federal funds purchased      113  
Securities sold under repurchase agreements75   92   162   444  
Federal Home Loan Bank advances1,452   1,794   2,894   3,568  
Subordinated debentures and other borrowings1,659   1,639   3,316   3,584  
Total Interest Expense9,011   16,234   18,399   42,164  
NET INTEREST INCOME104,264   93,018   204,692   186,895  
Provision for credit losses - loans—   21,895   —   41,647  
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES104,264   71,123   204,692   145,248  
OTHER INCOME       
Service charges on deposit accounts5,596   4,312   10,860   10,282  
Fiduciary and wealth management fees7,510   5,601   13,932   11,586  
Card payment fees4,159   6,097   8,526   12,004  
Net gains and fees on sales of loans8,325   3,674   12,311   7,037  
Derivative hedge fees943   1,042   1,260   2,981  
Other customer fees368   333   736   731  
Earnings on cash surrender value of life insurance1,205   1,326   2,541   2,686  
Net realized gains on sales of available for sale securities1,761   3,068   3,560   7,680  
Other income1,017   1,028   1,249   1,293  
Total Other Income30,884   26,481   54,975   56,280  
OTHER EXPENSES       
Salaries and employee benefits42,438   35,698   81,249   74,941  
Net occupancy5,615   5,447   12,106   11,248  
Equipment4,848   4,489   9,878   8,833  
Marketing1,122   2,092   2,246   3,535  
Outside data processing fees4,698   2,618   8,942   6,817  
Printing and office supplies313   279   596   666  
Intangible asset amortization1,464   1,511   2,821   3,025  
FDIC assessments1,461   1,472   2,829   2,995  
Other real estate owned and foreclosure expenses178   684   912   1,189  
Professional and other outside services2,976   1,553   5,519   3,811  
Other expenses4,182   4,146   8,295   9,100  
Total Other Expenses69,295   59,989   135,393   126,160  
INCOME BEFORE INCOME TAX65,853   37,615   124,274   75,368  
Income tax expense10,294   4,623   19,246   8,113  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$55,559   $32,992   $105,028   $67,255  
Per Share Data:       
Basic Net Income Available to Common Stockholders$1.03   $0.62   $1.95   $1.24  
Diluted Net Income Available to Common Stockholders$1.03   $0.62   $1.94   $1.24  
Cash Dividends Paid$0.29   $0.26   $0.55   $0.52  
Average Diluted Shares Outstanding (in thousands)54,184   53,943   54,159   54,430  


FINANCIAL HIGHLIGHTS       
(Dollars in thousands)Three Months Ended Six Months Ended
 June 30, June 30,
 2021 2020 2021 2020
NET CHARGE-OFFS$1,307   $230   $4,928   $812  
        
AVERAGE BALANCES:       
Total Assets$14,758,597   $13,655,322   $14,503,087   $13,114,280  
Total Loans9,282,524   9,180,610   9,259,600   8,853,591  
Total Earning Assets13,558,956   12,187,442   13,292,617   11,739,936  
Total Deposits12,125,153   10,789,909   11,848,075   10,338,091  
Total Stockholders' Equity1,846,037   1,795,509   1,843,250   1,805,963  
        
FINANCIAL RATIOS:       
Return on Average Assets1.51 % 0.97 % 1.45 % 1.03 %
Return on Average Stockholders' Equity12.04   7.35   11.40   7.45  
Return on Average Common Stockholders' Equity12.04   7.35   11.40   7.45  
Average Earning Assets to Average Assets91.87   89.25   91.65   89.52  
Allowance for Credit Losses - Loans as % of Total Loans2.19   1.30   2.19   1.30  
Net Charge-offs as % of Average Loans (Annualized)0.06   0.01   0.11   0.02  
Average Stockholders' Equity to Average Assets12.51   13.15   12.71   13.77  
Tax Equivalent Yield on Average Earning Assets3.49   3.72   3.51   4.04  
Interest Expense/Average Earning Assets0.27   0.53   0.28   0.72  
Net Interest Margin (FTE) on Average Earning Assets3.22   3.19   3.23   3.32  
Efficiency Ratio48.91   47.95   49.54   50.09  
Tangible Common Book Value Per Share$24.15   $23.04   $24.15   $23.04  


NON-PERFORMING ASSETS         
(Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
 2021 2021 2020 2020 2020
Non-Accrual Loans$57,556   $57,923   $61,471   $56,739   $50,102  
Renegotiated Loans629   655   3,240   2,677   1,086  
Non-Performing Loans (NPL)58,185   58,578   64,711   59,416   51,188  
Other Real Estate Owned and Repossessions601   604   940   6,984   7,409  
Non-Performing Assets (NPA)58,786   59,182   65,651   66,400   58,597  
90+ Days Delinquent183   1,093   746   1,330   4,981  
NPAs & 90 Day Delinquent$58,969   $60,275   $66,397   $67,730   $63,578  
          
Allowance for Credit Losses - Loans$199,775   $201,082   $130,648   $126,726   $121,119  
Quarterly Net Charge-offs1,307   3,621   560   6,937   230  
NPAs / Actual Assets %0.39 % 0.40 % 0.47 % 0.48 % 0.42 %
NPAs & 90 Day / Actual Assets %0.40 % 0.41 % 0.47 % 0.49 % 0.46 %
NPAs / Actual Loans and OREO %0.64 % 0.63 % 0.71 % 0.72 % 0.63 %
Allowance for Credit Losses - Loans / Actual Loans (%)2.19 % 2.16 % 1.41 % 1.37 % 1.30 %
Net Charge-offs as % of Average Loans (Annualized)0.06 % 0.16 % 0.02 % 0.30 % 0.01 %


CONSOLIDATED BALANCE SHEETS         
(Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
 2021 2021 2020 2020 2020
ASSETS         
Cash and cash equivalents$167,596  $187,901  $192,896  $164,632  $229,759 
Interest-bearing deposits438,863  392,806  392,305  273,936  380,021 
Investment securities, net of allowance for credit losses4,148,314  3,700,857  3,146,787  2,933,286  2,789,379 
Loans held for sale18,582  4,430  3,966  3,183  901 
Loans9,121,250  9,318,228  9,243,174  9,243,833  9,298,541 
Less: Allowance for credit losses - loans(199,775) (201,082) (130,648) (126,726) (121,119)
Net loans8,921,475  9,117,146  9,112,526  9,117,107  9,177,422 
Premises and equipment103,822  109,432  111,062  112,959  112,548 
Federal Home Loan Bank stock28,736  28,736  28,736  28,736  28,736 
Interest receivable54,173  54,662  53,948  52,992  57,063 
Goodwill and other intangibles573,786  571,536  572,893  574,369  575,855 
Cash surrender value of life insurance294,462  293,766  292,745  291,543  290,715 
Other real estate owned601  604  940  6,942  7,367 
Tax asset, deferred and receivable36,924  40,163  12,340  21,762  13,126 
Other assets135,763  127,027  146,066  155,903  156,486 
TOTAL ASSETS$14,923,097  $14,629,066  $14,067,210  $13,737,350  $13,819,378 
LIABILITIES         
Deposits:         
Noninterest-bearing$2,479,853  $2,494,891  $2,298,138  $2,187,607  $2,260,351 
Interest-bearing9,723,547  9,456,889  9,063,472  8,718,546  8,705,637 
Total Deposits12,203,400  11,951,780  11,361,610  10,906,153  10,965,988 
Borrowings:         
Federal funds purchased      80,000   
Securities sold under repurchase agreements146,904  185,721  177,102  187,732  181,150 
Federal Home Loan Bank advances334,243  359,337  389,430  399,522  400,817 
Subordinated debentures and other borrowings118,498  118,439  118,380  118,320  285,197 
Total Borrowings599,645  663,497  684,912  785,574  867,164 
Interest payable2,929  4,020  3,287  5,038  5,587 
Other liabilities245,323  203,913  141,756  206,929  171,544 
Total Liabilities13,051,297  12,823,210  12,191,565  11,903,694  12,010,283 
STOCKHOLDERS' EQUITY         
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:         
Authorized -- 600 shares         
Issued and outstanding125  125  125  125  125 
Common Stock, $.125 stated value:         
Authorized -- 100,000,000 shares         
Issued and outstanding6,747  6,744  6,740  6,736  6,724 
Additional paid-in capital1,009,182  1,007,300  1,005,366  1,003,777  1,002,962 
Retained earnings795,666  755,877  788,578  757,550  735,439 
Accumulated other comprehensive income60,080  35,810  74,836  65,468  63,845 
Total Stockholders' Equity1,871,800  1,805,856  1,875,645  1,833,656  1,809,095 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$14,923,097  $14,629,066  $14,067,210  $13,737,350  $13,819,378 
          


CONSOLIDATED STATEMENTS OF INCOME         
(Dollars In Thousands, Except Per Share Amounts)June 30 March 31, December 31, September 30, June 30,
 2021 2021 2020 2020 2020
INTEREST INCOME         
Loans receivable:         
Taxable$87,002  $85,105  $90,138  $84,162  $87,312 
Tax-exempt5,545  5,339  5,414  5,395  5,359 
Investment securities:         
Taxable7,440  6,695  5,263  5,399  6,147 
Tax-exempt13,071  12,385  12,056  10,931  10,019 
Deposits with financial institutions129  114  139  90  134 
Federal Home Loan Bank stock88  178  214  248  281 
Total Interest Income113,275  109,816  113,224  106,225  109,252 
INTEREST EXPENSE         
Deposits5,823  6,200  7,509  9,776  12,707 
Federal funds purchased2  2  2  5  2 
Securities sold under repurchase agreements75  87  77  83  92 
Federal Home Loan Bank advances1,452  1,442  1,656  1,749  1,794 
Subordinated debentures and other borrowings1,659  1,657  1,669  1,691  1,639 
Total Interest Expense9,011  9,388  10,913  13,304  16,234 
NET INTEREST INCOME104,264  100,428  102,311  92,921  93,018 
Provision for credit losses - loans    4,482  12,544  21,895 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES104,264  100,428  97,829  80,377  71,123 
OTHER INCOME         
Service charges on deposit accounts5,596  5,264  5,508  5,209  4,312 
Fiduciary and wealth management fees7,510  6,422  6,251  5,910  5,601 
Card payment fees4,159  4,367  3,502  3,996  6,097 
Net gains and fees on sales of loans8,325  3,986  5,393  5,841  3,674 
Derivative hedge fees943  317  2,281  1,715  1,042 
Other customer fees368  368  394  372  333 
Earnings on cash surrender value of life insurance1,205  1,336  1,283  1,171  1,326 
Net realized gains on sales of available for sale securities1,761  1,799  2,398  1,817  3,068 
Other income1,017  232  473  132  1,028 
Total Other Income30,884  24,091  27,483  26,163  26,481 
OTHER EXPENSES         
Salaries and employee benefits42,438  38,811  41,809  39,187  35,698 
Net occupancy5,615  6,491  9,653  5,855  5,447 
Equipment4,848  5,030  5,555  4,956  4,489 
Marketing1,122  1,124  1,763  1,311  2,092 
Outside data processing fees4,698  4,244  3,839  3,776  2,618 
Printing and office supplies313  283  307  331  279 
Intangible asset amortization1,464  1,357  1,476  1,486  1,511 
FDIC assessments1,461  1,368  1,560  1,249  1,472 
Other real estate owned and foreclosure expenses178  734  (1,576) 717  684 
Professional and other outside services2,976  2,543  2,836  2,254  1,553 
Other expenses4,182  4,113  5,314  3,587  4,146 
Total Other Expenses69,295  66,098  72,536  64,709  59,989 
INCOME BEFORE INCOME TAX65,853  58,421  52,776  41,831  37,615 
Income tax expense10,294  8,952  7,641  5,621  4,623 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$55,559  $49,469  $45,135  $36,210  $32,992 
          
Per Share Data:         
Basic Net Income Available to Common Stockholders$1.03  $0.92  $0.83  $0.67  $0.62 
Diluted Net Income Available to Common Stockholders$1.03  $0.91  $0.83  $0.67  $0.62 
Cash Dividends Paid$0.29  $0.26  $0.26  $0.26  $0.26 
Average Diluted Shares Outstanding (in thousands)54,184  54,134  54,050  53,971  53,943 
FINANCIAL RATIOS:         
Return on Average Assets1.51% 1.39% 1.29% 1.06% 0.97%
Return on Average Stockholders' Equity12.04  10.75  9.72  7.91  7.35 
Return on Average Common Stockholders' Equity12.04  10.75  9.72  7.91  7.35 
Average Earning Assets to Average Assets91.87  91.43  90.66  90.34  89.25 
Allowance for Credit Losses - Loans as % of Total Loans2.19  2.16  1.41  1.37  1.30 
Net Charge-offs as % of Average Loans (Annualized)0.06  0.16  0.02  0.30  0.01 
Average Stockholders' Equity to Average Assets12.51  12.92  13.29  13.41  13.15 
Tax Equivalent Yield on Average Earning Assets3.49  3.52  3.72  3.58  3.72 
Interest Expense/Average Earning Assets0.27  0.29  0.34  0.43  0.53 
Net Interest Margin (FTE) on Average Earning Assets3.22  3.23  3.38  3.15  3.19 
Efficiency Ratio48.91  50.23  55.01  51.40  47.95 
Tangible Common Book Value Per Share$24.15  $22.98  $24.27  $23.48  $23.04 


LOANS         
(Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
 2021 2021 2020 2020 2020
Commercial and industrial loans$2,671,076  $2,876,212  $2,776,699  $2,875,331  $2,898,329 
Agricultural land, production and other loans to farmers235,020  245,631  281,884  301,192  316,815 
Real estate loans:         
Construction491,200  541,224  484,723  622,084  640,560 
Commercial real estate, non-owner occupied2,263,497  2,178,832  2,220,949  2,098,589  2,097,767 
Commercial real estate, owner occupied953,501  950,038  958,501  931,815  919,254 
Residential1,127,442  1,239,925  1,234,741  1,146,406  1,145,187 
Home equity489,997  482,229  508,259  527,458  532,314 
Individuals' loans for household and other personal expenditures130,819  126,387  129,479  125,411  123,611 
Public finance and other commercial loans758,698  677,750  647,939  615,547  624,704 
Loans9,121,250  9,318,228  9,243,174  9,243,833  9,298,541 
Allowance for credit losses - loans(199,775) (201,082) (130,648) (126,726) (121,119)
NET LOANS$8,921,475  $9,117,146  $9,112,526  $9,117,107  $9,177,422 


DEPOSITS         
(Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
 2021 2021 2020 2020 2020
Demand deposits$7,261,603  $7,245,850  $6,821,152  $6,279,554  $6,288,360 
Savings deposits4,157,552  3,857,624  3,661,713  3,518,286  3,278,156 
Certificates and other time deposits of $100,000 or more304,394  332,745  346,194  467,610  607,474 
Other certificates and time deposits423,922  449,655  459,168  542,919  669,119 
Brokered deposits55,929  65,906  73,383  97,784  122,879 
TOTAL DEPOSITS$12,203,400  $11,951,780  $11,361,610  $10,906,153  $10,965,988 


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS      
(Dollars in Thousands)           
 For the Three Months Ended
 June 30, 2021 June 30, 2020
 Average Balance Interest
 Income /
Expense
 Average
Rate
 Average Balance Interest
 Income /
Expense
 Average
Rate
Assets:           
Interest-bearing deposits$545,752  $129  0.09% $378,489  $134  0.14%
Federal Home Loan Bank stock28,736  88  1.22  28,736  281  3.91 
Investment Securities: (1)           
Taxable1,732,367  7,440  1.72  1,282,080  6,147  1.92 
Tax-Exempt (2)1,969,577  16,546  3.36  1,317,527  12,682  3.85 
Total Investment Securities3,701,944  23,986  2.59  2,599,607  18,829  2.90 
Loans held for sale25,039  237  3.79  12,630  131  4.15 
Loans: (3)           
Commercial6,953,227  70,886  4.08  6,890,010  69,463  4.03 
Real Estate Mortgage912,662  9,488  4.16  887,257  10,122  4.56 
Installment659,515  6,391  3.88  724,165  7,596  4.20 
Tax-Exempt (2)732,081  7,019  3.84  666,548  6,784  4.07 
Total Loans9,282,524  94,021  4.05  9,180,610  94,096  4.10 
Total Earning Assets13,558,956  118,224  3.49% 12,187,442  113,340  3.72%
Net unrealized gain (loss) on securities available for sale44,250      56,807     
Allowance for credit losses(201,051)     (106,858)    
Cash and cash equivalents171,489      303,491     
Premises and equipment107,369      113,528     
Other assets1,077,584      1,100,912     
Total Assets$14,758,597      $13,655,322     
Liabilities:           
Interest-bearing deposits:           
Interest-bearing deposits$4,745,181  $3,560  0.30% $3,951,819  $4,186  0.42%
Money market deposits2,337,143  796  0.14  1,673,104  1,696  0.41 
Savings deposits1,740,233  462  0.11  1,521,312  596  0.16 
Certificates and other time deposits812,370  1,005  0.49  1,498,002  6,229  1.66 
Total Interest-bearing Deposits9,634,927  5,823  0.24  8,644,237  12,707  0.59 
Borrowings644,702  3,188  1.98  909,258  3,527  1.55 
Total Interest-bearing Liabilities10,279,629  9,011  0.35  9,553,495  16,234  0.68 
Noninterest-bearing deposits2,490,226      2,145,672     
Other liabilities142,705      160,646     
Total Liabilities12,912,560      11,859,813     
Stockholders' Equity1,846,037      1,795,509     
Total Liabilities and Stockholders' Equity$14,758,597  9,011    $13,655,322  16,234   
Net Interest Income (FTE)  $109,213      $97,106   
Net Interest Spread (FTE) (4)    3.14%     3.04%
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    3.49%     3.72%
Interest Expense / Average Earning Assets    0.27%     0.53%
Net Interest Margin (FTE) (5)    3.22%     3.19%
            
(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 2021 and 2020. These totals equal $4,949 and $4,088 for the three months ended June 30, 2021 and 2020, respectively.
(3) Non accruing loans have been included in the average balances.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS      
(Dollars in Thousands)           
 For the Six Months Ended
 June 30, 2021 June 30, 2020
 Average Balance Interest
 Income /
Expense
 Average
Rate
 Average Balance Interest
 Income /
Expense
 Average
Rate
Assets:           
Interest-bearing deposits$493,791  $243  0.10% $269,174  $709  0.53%
Federal Home Loan Bank stock28,736  266  1.85  28,736  580  4.04 
Investment Securities: (1)           
Taxable1,613,847  14,135  1.75  1,325,313  13,778  2.08 
Tax-Exempt (2)1,896,643  32,223  3.40  1,263,122  24,499  3.88 
Total Investment Securities3,510,490  46,358  2.64  2,588,435  38,277  2.96 
Loans held for sale20,572  393  3.82  14,924  324  4.34 
Loans: (3)           
Commercial6,915,234  140,060  4.05  6,562,673  146,415  4.46 
Real Estate Mortgage943,830  18,774  3.98  878,956  20,524  4.67 
Installment666,870  12,880  3.86  741,889  16,701  4.50 
Tax-Exempt (2)713,094  13,777  3.86  655,149  13,511  4.12 
Total Loans9,259,600  185,884  4.01  8,853,591  197,475  4.46 
Total Earning Assets13,292,617  232,751  3.51% 11,739,936  237,041  4.04%
Net unrealized gain on securities available for sale49,922      52,732     
Allowance for credit losses(202,693)     (94,009)    
Cash and cash equivalents168,647      231,624     
Premises and equipment109,170      113,670     
Other assets1,085,424      1,070,327     
Total Assets$14,503,087      $13,114,280     
Liabilities:           
Interest-bearing deposits:           
Interest-bearing deposits$4,681,439  $7,269  0.31% $3,770,530  $12,461  0.66%
Money market deposits2,212,425  1,631  0.15  1,604,474  5,479  0.68 
Savings deposits1,700,601  938  0.11  1,473,183  2,424  0.33 
Certificates and other time deposits835,722  2,185  0.52  1,582,322  14,091  1.78 
Total Interest-bearing Deposits9,430,187  12,023  0.25  8,430,509  34,455  0.82 
Borrowings659,826  6,376  1.93  828,721  7,709  1.86 
Total Interest-bearing Liabilities10,090,013  18,399  0.36  9,259,230  42,164  0.91 
Noninterest-bearing deposits2,417,888      1,907,582     
Other liabilities151,936      141,505     
Total Liabilities12,659,837      11,308,317     
Stockholders' Equity1,843,250      1,805,963     
Total Liabilities and Stockholders' Equity$14,503,087  18,399    $13,114,280  42,164   
Net Interest Income (FTE)  $214,352      $194,877   
Net Interest Spread (FTE) (4)    3.15%     3.13%
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    3.51%     4.04%
Interest Expense / Average Earning Assets    0.28%     0.72%
Net Interest Margin (FTE) (5)    3.23%     3.32%
            
(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 2021 and 2020. These totals equal $9,660 and $7,982 for the six months ended June 30, 2021 and 2020, 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


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