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First Merchants Corporation Announces Fourth Quarter 2020 Earnings Per Share
Source: Nasdaq GlobeNewswire / 28 Jan 2021 08:00:03 America/New_York
MUNCIE, Ind., Jan. 28, 2021 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported fourth quarter 2020 net income of $45.1 million compared to $47.8 million during the same period in 2019. Earnings per share for the period totaled $.83 per share compared to fourth quarter 2019 result of $.87 per share. Net income for the year ended December 31, 2020 totaled $148.6 million, compared to $164.5 million during the same period in 2019. Year-to-date earnings per share totaled $2.74 compared to $3.19 in 2019.
Total assets equaled $14.1 billion as of year-end and loans totaled $9.2 billion. The Corporation’s loan portfolio increased by $789 million, or 9.2 percent, during 2020. Paycheck Protection Program (“PPP”) loans accounted for $667 million of the year’s loan growth. Investments increased $551 million, or 21.2 percent, during the year and now total $3.1 billion. Total deposits equaled $11.4 billion as of year-end and increased by $1.5 billion, or 15.5 percent, during 2020.
Mark Hardwick, Chief Executive Officer, stated, “We are proud of our 2020 results given the significant headwinds of the past year. The global pandemic quickly turned 2020 into a year filled with economic, political, medical and logistical challenges. However, our employees demonstrated courage and a can-do attitude for the benefit of all stakeholders. We guided over 5,200 customers through the Paycheck Protection Program while maintaining branch and back-office operations with as many as 1,000 employees working remotely. We grew loans by 9.2 percent, deposits by 15.5 percent, processed over 2,700 loan modifications and donated an additional $1 million to COVID relief efforts in our communities. Despite providing $58.7 million to the allowance for loan losses and managing through 40 basis points of margin compression we still delivered $149 million of net income to shareholders.” Hardwick also added, “Executive management expects 2021 to be a year of increasing momentum as the vaccine helps reopen our lobbies and allows us to repopulate our offices while growing our customer base.”
At the beginning of 2020, the Corporation chose to defer the adoption of the current expected credit loss (“CECL”) model. The passing of the 2021 Consolidated Appropriations Act in December of 2020 prompted the SEC to allow for the adoption of CECL on January 1, 2021 with a Day 1 measurement date of January 1, 2021. As such, the allowance for loan losses was calculated under the incurred loss method in the fourth quarter. The Corporation’s provision expense totaled $4.5 million for the fourth quarter and $58.7 million for the year ended December 31, 2020. Net charge-offs totaled $0.6 million for the quarter and $8.3 million for the year. The allowance for loan losses totaled $130.6 million at year end, which increased $3.9 million in the fourth quarter. Allowance for loan losses is 1.41 percent of total loans and 1.52 percent excluding PPP loans from total loans. The Corporation also has $23 million in remaining fair value marks.
Net-interest income totaled $382.1 million for the year, an increase of $25.5 million, or 7.1 percent, in the face of a net-interest margin decline of 40 basis points to 3.29 percent. Yield on earning assets declined by 94 basis points totaling 3.84 percent and the cost of supporting liabilities decreased by 54 basis points and totaled 0.55 percent. Fair value accretion contributed one basis point less in margin as it accounted for 12 basis points in 2019 and 11 basis points in 2020. Yield on earning assets for the fourth quarter totaled 3.72 percent with cost of supporting liabilities totaling 0.34 percent resulting in a margin of 3.38 percent. PPP loans contributed 16 basis points to margin during the fourth quarter as unamortized SBA fees were recognized upon loan forgiveness.
Non-interest income totaled $109.9 million for the year, a $23.2 million, or 26.8 percent increase from 2019. Customer specific line items accounted for $15.3 million of increase in total non-interest income. Gains on sales of mortgage loans increased $10.4 million over 2019 and hit a record high of $18.3 million for 2020 which offset the headwinds of lower service charges on deposits and the impact of the Durbin Amendment adoption on card payment fees. Fiduciary and wealth management fees also contributed to the increase with growth of $6.2 million over 2019.
Non-interest expense totaled $263.4 million for the year ended 2020, a $16.6 million increase from 2019. The fourth quarter of 2020 includes charges of $4.5 million related to the announcement of the consolidation of 17 banking centers. Additionally, FDIC expense increased $5.1 million year over year due to the use of FDIC credits in 2019. Merger related expenses of $13.7 million were also included in the 2019 totals.
The Corporation’s loan to deposit ratio now totals 81 percent and loan to asset ratio totals 66 percent. Additionally, the Corporation’s total risk-based capital ratio equaled 14.36 percent, common equity tier 1 capital ratio equaled 12.02 percent, and the tangible common equity ratio totaled 9.65 percent. Excluding PPP loans, the tangible common equity ratio totaled 9.99 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 28, 2021.
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 February 28, 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 10150572.
In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme210128.html during the time of the call. A replay of the web cast will be available until January 28, 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) December 31, 2020 2019 ASSETS Cash and cash equivalents $ 192,896 $ 177,201 Interest-bearing deposits 392,305 118,263 Investment securities 3,146,787 2,596,063 Loans held for sale 3,966 9,037 Loans 9,243,174 8,459,310 Less: Allowance for loan losses (130,648 ) (80,284 ) Net loans 9,112,526 8,379,026 Premises and equipment 111,062 113,055 Federal Home Loan Bank stock 28,736 28,736 Interest receivable 53,948 48,901 Goodwill and other intangibles 572,893 578,880 Cash surrender value of life insurance 292,745 288,206 Other real estate owned 940 7,527 Tax asset, deferred and receivable 12,340 12,165 Other assets 146,066 100,194 TOTAL ASSETS $ 14,067,210 $ 12,457,254 LIABILITIES Deposits: Noninterest-bearing $ 2,298,138 $ 1,736,396 Interest-bearing 9,063,472 8,103,560 Total Deposits 11,361,610 9,839,956 Borrowings: Federal funds purchased — 55,000 Securities sold under repurchase agreements 177,102 187,946 Federal Home Loan Bank advances 389,430 351,072 Subordinated debentures and other borrowings 118,380 138,685 Total Borrowings 684,912 732,703 Interest payable 3,287 6,754 Other liabilities 141,756 91,404 Total Liabilities 12,191,565 10,670,817 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 - 53,922,359 and 55,368,482 shares 6,740 6,921 Additional paid-in capital 1,005,366 1,054,997 Retained earnings 788,578 696,520 Accumulated other comprehensive income 74,836 27,874 Total Stockholders' Equity 1,875,645 1,786,437 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,067,210 $ 12,457,254 CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Twelve Months Ended (Dollars In Thousands, Except Per Share Amounts) December 31, December 31, 2020 2019 2020 2019 INTEREST INCOME Loans receivable: Taxable $ 90,138 $ 102,617 $ 358,264 $ 382,772 Tax-exempt 5,414 4,671 21,483 17,568 Investment securities: Taxable 5,263 7,993 24,440 27,815 Tax-exempt 12,056 8,995 42,341 31,655 Deposits with financial institutions 139 1,203 938 4,225 Federal Home Loan Bank stock 214 342 1,042 1,370 Total Interest Income 113,224 125,821 448,508 465,405 INTEREST EXPENSE Deposits 7,509 24,074 51,740 91,585 Federal funds purchased 2 26 120 251 Securities sold under repurchase agreements 77 367 604 1,424 Federal Home Loan Bank advances 1,656 1,776 6,973 7,176 Subordinated debentures and other borrowings 1,669 1,994 6,944 8,309 Total Interest Expense 10,913 28,237 66,381 108,745 NET INTEREST INCOME 102,311 97,584 382,127 356,660 Provision for loan losses 4,482 500 58,673 2,800 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 97,829 97,084 323,454 353,860 OTHER INCOME Service charges on deposit accounts 5,508 6,312 20,999 22,951 Fiduciary and wealth management fees 6,251 5,384 23,747 17,562 Card payment fees 3,502 5,430 19,502 20,243 Net gains and fees on sales of loans 5,393 2,633 18,271 7,891 Derivative hedge fees 2,281 1,405 6,977 5,357 Other customer fees 394 434 1,497 1,664 Earnings on cash surrender value of life insurance 1,283 1,458 5,140 4,537 Net realized gains on sales of available for sale securities 2,398 1,039 11,895 4,415 Other income 473 150 1,898 2,068 Total Other Income 27,483 24,245 109,926 86,688 OTHER EXPENSES Salaries and employee benefits 41,809 39,358 155,937 144,037 Net occupancy 9,653 5,311 26,756 19,584 Equipment 5,555 4,429 19,344 16,218 Marketing 1,763 1,492 6,609 6,650 Outside data processing fees 3,839 4,428 14,432 16,476 Printing and office supplies 307 484 1,304 1,445 Intangible asset amortization 1,476 1,590 5,987 5,994 FDIC assessments 1,560 — 5,804 717 Other real estate owned and foreclosure expenses (1,576 ) 66 330 2,428 Professional and other outside services 2,836 2,899 8,901 15,410 Other expenses 5,314 5,144 18,001 17,804 Total Other Expenses 72,536 65,201 263,405 246,763 INCOME BEFORE INCOME TAX 52,776 56,128 169,975 193,785 Income tax expense 7,641 8,298 21,375 29,325 NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 45,135 $ 47,830 $ 148,600 $ 164,460 Per Share Data: Basic Net Income Available to Common Stockholders $ 0.83 $ 0.87 $ 2.75 $ 3.20 Diluted Net Income Available to Common Stockholders $ 0.83 $ 0.87 $ 2.74 $ 3.19 Cash Dividends Paid $ 0.26 $ 0.26 $ 1.04 $ 1.00 Average Diluted Shares Outstanding (in thousands) 54,050 55,520 54,220 51,561 FINANCIAL HIGHLIGHTS (Dollars in thousands) Three Months Ended Twelve Months Ended December 31, December 31, 2020 2019 2020 2019 NET CHARGE-OFFS $ 560 $ 787 $ 8,309 $ 3,068 AVERAGE BALANCES: Total Assets $ 13,968,047 $ 12,479,039 $ 13,466,269 $ 11,091,320 Total Loans 9,240,304 8,358,683 9,051,155 7,690,190 Total Earning Assets 12,663,803 11,194,954 12,123,317 10,015,771 Total Deposits 11,283,040 9,926,794 10,728,106 8,782,634 Total Stockholders' Equity 1,856,896 1,768,848 1,825,135 1,569,615 FINANCIAL RATIOS: Return on Average Assets 1.29 % 1.53 % 1.10 % 1.48 % Return on Average Stockholders' Equity 9.72 10.82 8.14 10.48 Return on Average Common Stockholders' Equity 9.72 10.82 8.14 10.48 Average Earning Assets to Average Assets 90.66 89.71 90.03 90.30 Allowance for Loan Losses as % of Total Loans 1.41 0.95 1.41 0.95 Net Charge-offs as % of Average Loans (Annualized) 0.02 0.04 0.09 0.04 Average Stockholders' Equity to Average Assets 13.29 14.17 13.55 14.15 Tax Equivalent Yield on Average Earning Assets 3.72 4.63 3.84 4.78 Interest Expense/Average Earning Assets 0.34 1.01 0.55 1.09 Net Interest Margin (FTE) on Average Earning Assets 3.38 3.62 3.29 3.69 Efficiency Ratio 55.01 51.07 51.71 52.73 Tangible Common Book Value Per Share $ 24.27 $ 21.94 $ 24.27 $ 21.94 NON-PERFORMING ASSETS (Dollars In Thousands) December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019 Non-Accrual Loans $ 61,471 $ 56,739 $ 50,102 $ 15,649 $ 15,949 Renegotiated Loans 3,240 2,677 1,086 665 841 Non-Performing Loans (NPL) 64,711 59,416 51,188 16,314 16,790 Other Real Estate Owned and Repossessions 940 6,984 7,409 8,017 7,527 Non-Performing Assets (NPA) 65,651 66,400 58,597 24,331 24,317 90+ Days Delinquent 746 1,330 4,981 312 69 NPAs & 90 Day Delinquent $ 66,397 $ 67,730 $ 63,578 $ 24,643 $ 24,386 Allowance for Loan Losses $ 130,648 $ 126,726 $ 121,119 $ 99,454 $ 80,284 Quarterly Net Charge-offs 560 6,937 230 582 787 NPAs / Actual Assets % 0.47 % 0.48 % 0.42 % 0.19 % 0.20 % NPAs & 90 Day / Actual Assets % 0.47 % 0.49 % 0.46 % 0.19 % 0.20 % NPAs / Actual Loans and OREO % 0.71 % 0.72 % 0.63 % 0.28 % 0.29 % Allowance for Loan Losses / Actual Loans (%) 1.41 % 1.37 % 1.30 % 1.15 % 0.95 % Net Charge-offs as % of Average Loans (Annualized) 0.02 % 0.30 % 0.01 % 0.03 % 0.04 % CONSOLIDATED BALANCE SHEETS (Dollars In Thousands) December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019 ASSETS Cash and cash equivalents $ 192,896 $ 164,632 $ 229,759 $ 127,731 $ 177,201 Interest-bearing deposits 392,305 273,936 380,021 132,944 118,263 Investment securities 3,146,787 2,933,286 2,789,379 2,697,954 2,596,063 Loans held for sale 3,966 3,183 901 5,039 9,037 Loans 9,243,174 9,243,833 9,298,541 8,606,849 8,459,310 Less: Allowance for loan losses (130,648 ) (126,726 ) (121,119 ) (99,454 ) (80,284 ) Net loans 9,112,526 9,117,107 9,177,422 8,507,395 8,379,026 Premises and equipment 111,062 112,959 112,548 114,045 113,055 Federal Home Loan Bank stock 28,736 28,736 28,736 28,736 28,736 Interest receivable 53,948 52,992 57,063 47,489 48,901 Goodwill and other intangibles 572,893 574,369 575,855 577,366 578,880 Cash surrender value of life insurance 292,745 291,543 290,715 289,574 288,206 Other real estate owned 940 6,942 7,367 7,972 7,527 Tax asset, deferred and receivable 12,340 21,762 13,126 9,497 12,165 Other assets 146,066 155,903 156,486 147,776 100,194 TOTAL ASSETS $ 14,067,210 $ 13,737,350 $ 13,819,378 $ 12,693,518 $ 12,457,254 LIABILITIES Deposits: Noninterest-bearing $ 2,298,138 $ 2,187,607 $ 2,260,351 $ 1,688,205 $ 1,736,396 Interest-bearing 9,063,472 8,718,546 8,705,637 8,182,279 8,103,560 Total Deposits 11,361,610 10,906,153 10,965,988 9,870,484 9,839,956 Borrowings: Federal funds purchased — 80,000 — 47,000 55,000 Securities sold under repurchase agreements 177,102 187,732 181,150 183,317 187,946 Federal Home Loan Bank advances 389,430 399,522 400,817 480,995 351,072 Subordinated debentures and other borrowings 118,380 118,320 285,197 128,741 138,685 Total Borrowings 684,912 785,574 867,164 840,053 732,703 Interest payable 3,287 5,038 5,587 7,746 6,754 Other liabilities 141,756 206,929 171,544 197,275 91,404 Total Liabilities 12,191,565 11,903,694 12,010,283 10,915,558 10,670,817 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 6,740 6,736 6,724 6,719 6,921 Additional paid-in capital 1,005,366 1,003,777 1,002,962 1,000,942 1,054,997 Retained earnings 788,578 757,550 735,439 716,518 696,520 Accumulated other comprehensive income 74,836 65,468 63,845 53,656 27,874 Total Stockholders' Equity 1,875,645 1,833,656 1,809,095 1,777,960 1,786,437 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,067,210 $ 13,737,350 $ 13,819,378 $ 12,693,518 $ 12,457,254 CONSOLIDATED STATEMENTS OF INCOME (Dollars In Thousands, Except Per Share Amounts) December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019 INTEREST INCOME Loans receivable: Taxable $ 90,138 $ 84,162 $ 87,312 $ 96,652 $ 102,617 Tax-exempt 5,414 5,395 5,359 5,315 4,671 Investment securities: Taxable 5,263 5,399 6,147 7,631 7,993 Tax-exempt 12,056 10,931 10,019 9,335 8,995 Deposits with financial institutions 139 90 134 575 1,203 Federal Home Loan Bank stock 214 248 281 299 342 Total Interest Income 113,224 106,225 109,252 119,807 125,821 INTEREST EXPENSE Deposits 7,509 9,776 12,707 21,748 24,074 Federal funds purchased 2 5 2 111 26 Securities sold under repurchase agreements 77 83 92 352 367 Federal Home Loan Bank advances 1,656 1,749 1,794 1,774 1,776 Subordinated debentures and other borrowings 1,669 1,691 1,639 1,945 1,994 Total Interest Expense 10,913 13,304 16,234 25,930 28,237 NET INTEREST INCOME 102,311 92,921 93,018 93,877 97,584 Provision for loan losses 4,482 12,544 21,895 19,752 500 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 97,829 80,377 71,123 74,125 97,084 OTHER INCOME Service charges on deposit accounts 5,508 5,209 4,312 5,970 6,312 Fiduciary and wealth management fees 6,251 5,910 5,601 5,985 5,384 Card payment fees 3,502 3,996 6,097 5,907 5,430 Net gains and fees on sales of loans 5,393 5,841 3,674 3,363 2,633 Derivative hedge fees 2,281 1,715 1,042 1,939 1,405 Other customer fees 394 372 333 398 434 Earnings on cash surrender value of life insurance 1,283 1,171 1,326 1,360 1,458 Net realized gains on sales of available for sale securities 2,398 1,817 3,068 4,612 1,039 Other income 473 132 1,028 265 150 Total Other Income 27,483 26,163 26,481 29,799 24,245 OTHER EXPENSES Salaries and employee benefits 41,809 39,187 35,698 39,243 39,358 Net occupancy 9,653 5,855 5,447 5,801 5,311 Equipment 5,555 4,956 4,489 4,344 4,429 Marketing 1,763 1,311 2,092 1,443 1,492 Outside data processing fees 3,839 3,776 2,618 4,199 4,428 Printing and office supplies 307 331 279 387 484 Intangible asset amortization 1,476 1,486 1,511 1,514 1,590 FDIC assessments 1,560 1,249 1,472 1,523 — Other real estate owned and foreclosure expenses (1,576 ) 717 684 505 66 Professional and other outside services 2,836 2,254 1,553 2,258 2,899 Other expenses 5,314 3,587 4,146 4,954 5,144 Total Other Expenses 72,536 64,709 59,989 66,171 65,201 INCOME BEFORE INCOME TAX 52,776 41,831 37,615 37,753 56,128 Income tax expense 7,641 5,621 4,623 3,490 8,298 NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 45,135 $ 36,210 $ 32,992 $ 34,263 $ 47,830 Per Share Data: Basic Net Income Available to Common Stockholders $ 0.83 $ 0.67 $ 0.62 $ 0.63 $ 0.87 Diluted Net Income Available to Common Stockholders $ 0.83 $ 0.67 $ 0.62 $ 0.62 $ 0.87 Cash Dividends Paid $ 0.26 $ 0.26 $ 0.26 $ 0.26 $ 0.26 Average Diluted Shares Outstanding (in thousands) 54,050 53,971 53,943 54,918 55,520 FINANCIAL RATIOS: Return on Average Assets 1.29 % 1.06 % 0.97 % 1.09 % 1.53 % Return on Average Stockholders' Equity 9.72 7.91 7.35 7.55 10.82 Return on Average Common Stockholders' Equity 9.72 7.91 7.35 7.55 10.82 Average Earning Assets to Average Assets 90.66 90.34 89.25 89.81 89.71 Allowance for Loan Losses as % of Total Loans 1.41 1.37 1.30 1.15 0.95 Net Charge-offs as % of Average Loans (Annualized) 0.02 0.30 0.01 0.03 0.04 Average Stockholders' Equity to Average Assets 13.29 13.41 13.15 14.45 14.17 Tax Equivalent Yield on Average Earning Assets 3.72 3.58 3.72 4.38 4.63 Interest Expense/Average Earning Assets 0.34 0.43 0.53 0.92 1.01 Net Interest Margin (FTE) on Average Earning Assets 3.38 3.15 3.19 3.46 3.62 Efficiency Ratio 55.01 51.40 47.95 52.17 51.07 Tangible Common Book Value Per Share $ 24.27 $ 23.48 $ 23.04 $ 22.46 $ 21.94 LOANS (Dollars In Thousands) December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019 Commercial and industrial loans $ 2,776,699 $ 2,875,331 $ 2,898,329 $ 2,199,226 $ 2,109,879 Agricultural land, production and other loans to farmers 281,884 301,192 316,815 315,950 334,172 Real estate loans: Construction 484,723 622,084 640,560 643,674 787,568 Commercial real estate, non-owner occupied 2,220,949 2,098,589 2,097,767 2,118,148 1,902,692 Commercial real estate, owner occupied 958,501 931,815 919,254 921,491 909,695 Residential 1,234,741 1,146,406 1,145,187 1,121,556 1,143,217 Home equity 508,259 527,458 532,314 570,398 588,984 Individuals' loans for household and other personal expenditures 129,479 125,411 123,611 129,765 135,989 Public finance and other commercial loans 647,939 615,547 624,704 586,641 547,114 Loans 9,243,174 9,243,833 9,298,541 8,606,849 8,459,310 Allowance for loan losses (130,648 ) (126,726 ) (121,119 ) (99,454 ) (80,284 ) NET LOANS $ 9,112,526 $ 9,117,107 $ 9,177,422 $ 8,507,395 $ 8,379,026 DEPOSITS (Dollars In Thousands) December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019 Demand deposits $ 6,821,152 $ 6,279,554 $ 6,288,360 $ 5,293,200 $ 5,250,568 Savings deposits 3,661,713 3,518,286 3,278,156 2,962,821 2,896,177 Certificates and other time deposits of $100,000 or more 346,194 467,610 607,474 694,062 736,843 Other certificates and time deposits 459,168 542,919 669,119 717,723 741,759 Brokered deposits 73,383 97,784 122,879 202,678 214,609 TOTAL DEPOSITS $ 11,361,610 $ 10,906,153 $ 10,965,988 $ 9,870,484 $ 9,839,956 CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS (Dollars in Thousands) For the Three Months Ended December 31, 2020 December 31, 2019 Average Balance Interest
Income /
ExpenseAverage
RateAverage Balance Interest
Income /
ExpenseAverage
RateAssets: Interest-bearing deposits $ 437,766 $ 139 0.13 % $ 291,616 $ 1,203 1.65 % Federal Home Loan Bank stock 28,736 214 2.98 28,736 342 4.76 Investment Securities: (1) Taxable 1,222,916 5,263 1.72 1,339,068 7,993 2.39 Tax-Exempt (2) 1,734,081 15,261 3.52 1,176,851 11,386 3.87 Total Investment Securities 2,956,997 20,524 2.78 2,515,919 19,379 3.08 Loans held for sale 19,103 200 4.19 23,712 267 4.50 Loans: (3) Commercial 6,925,491 73,530 4.25 6,111,179 81,374 5.33 Real Estate Mortgage 911,042 9,482 4.16 916,247 11,256 4.91 Installment 698,619 6,925 3.96 747,166 9,720 5.20 Tax-Exempt (2) 686,049 6,854 4.00 560,379 5,913 4.22 Total Loans 9,240,304 96,991 4.20 8,358,683 108,530 5.19 Total Earning Assets 12,663,803 117,868 3.72 % 11,194,954 129,454 4.63 % Net unrealized gain (loss) on securities available for sale 62,666 31,979 Allowance for loan losses (130,317 ) (80,491 ) Cash and cash equivalents 169,358 179,582 Premises and equipment 114,013 113,333 Other assets 1,088,524 1,039,682 Total Assets $ 13,968,047 $ 12,479,039 Liabilities: Interest-bearing deposits: Interest-bearing deposits $ 4,393,991 $ 3,888 0.35 % $ 3,513,297 $ 9,077 1.03 % Money market deposits 2,051,985 1,164 0.23 1,529,156 4,054 1.06 Savings deposits 1,613,886 634 0.16 1,406,548 2,149 0.61 Certificates and other time deposits 961,187 1,823 0.76 1,736,058 8,794 2.03 Total Interest-bearing Deposits 9,021,049 7,509 0.33 8,185,059 24,074 1.18 Borrowings 683,068 3,404 1.99 669,756 4,163 2.49 Total Interest-bearing Liabilities 9,704,117 10,913 0.45 8,854,815 28,237 1.28 Noninterest-bearing deposits 2,261,991 1,741,735 Other liabilities 145,043 113,641 Total Liabilities 12,111,151 10,710,191 Stockholders' Equity 1,856,896 1,768,848 Total Liabilities and Stockholders' Equity $ 13,968,047 10,913 $ 12,479,039 28,237 Net Interest Income (FTE) $ 106,955 $ 101,217 Net Interest Spread (FTE) (4) 3.27 % 3.35 % Net Interest Margin (FTE): Interest Income (FTE) / Average Earning Assets 3.72 % 4.63 % Interest Expense / Average Earning Assets 0.34 % 1.01 % Net Interest Margin (FTE) (5) 3.38 % 3.62 % (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 2020 and 2019. These totals equal $4,644 and $3,633 for the three months ended December 31, 2020 and 2019, 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, 2020 December 31, 2019 Average Balance Interest
Income /
ExpenseAverage
RateAverage Balance Interest
Income /
ExpenseAverage
RateAssets: Federal Funds Sold Interest-bearing deposits $ 319,686 $ 938 0.29 % $ 211,683 $ 4,225 2.00 % Federal Home Loan Bank stock 28,736 1,042 3.63 25,645 1,370 5.34 Investment Securities: (1) Taxable 1,282,827 24,440 1.91 1,101,247 27,815 2.53 Tax-Exempt (2) 1,440,913 53,596 3.72 987,006 40,070 4.06 Total Investment Securities 2,723,740 78,036 2.87 2,088,253 67,885 3.25 Loans held for sale 18,559 781 4.21 18,402 780 4.24 Loans: (3) Commercial 6,755,215 286,773 4.25 5,631,146 306,139 5.44 Real Estate Mortgage 889,083 40,002 4.50 811,188 37,782 4.66 Installment 718,815 30,708 4.27 701,459 38,071 5.43 Tax-Exempt (2) 669,483 27,194 4.06 527,995 22,238 4.21 Total Loans 9,051,155 385,458 4.26 7,690,190 405,010 5.27 Total Earning Assets 12,123,317 465,474 3.84 % 10,015,771 478,490 4.78 % Net unrealized gain on securities available for sale 59,639 17,676 Allowance for loan losses (110,963 ) (81,000 ) Cash and cash equivalents 200,366 142,857 Premises and equipment 113,642 99,343 Other assets 1,080,268 896,673 Total Assets $ 13,466,269 $ 11,091,320 Liabilities: Interest-bearing deposits: Interest-bearing deposits $ 4,009,566 $ 20,239 0.50 % $ 3,070,861 $ 33,921 1.10 % Money market deposits 1,769,478 7,810 0.44 1,300,064 14,111 1.09 Savings deposits 1,534,069 3,641 0.24 1,242,468 9,464 0.76 Certificates and other time deposits 1,346,967 20,050 1.49 1,673,292 34,089 2.04 Total Interest-bearing Deposits 8,660,080 51,740 0.60 7,286,685 91,585 1.26 Borrowings 768,238 14,641 1.91 644,729 17,160 2.66 Total Interest-bearing Liabilities 9,428,318 66,381 0.70 7,931,414 108,745 1.37 Noninterest-bearing deposits 2,068,026 1,495,949 Other liabilities 144,790 94,342 Total Liabilities 11,641,134 9,521,705 Stockholders' Equity 1,825,135 1,569,615 Total Liabilities and Stockholders' Equity $ 13,466,269 66,381 $ 11,091,320 108,745 Net Interest Income (FTE) $ 399,093 $ 369,745 Net Interest Spread (FTE) (4) 3.14 % 3.41 % Net Interest Margin (FTE): Interest Income (FTE) / Average Earning Assets 3.84 % 4.78 % Interest Expense / Average Earning Assets 0.55 % 1.09 % Net Interest Margin (FTE) (5) 3.29 % 3.69 % (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 2020 and 2019. These totals equal $16,966 and $13,085 for the twelve months ended December 31, 2020 and 2019, 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.comSOURCE: First Merchants Corporation
