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First Merchants Corporation Announces Record Third Quarter 2016 Results

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October 25, 2016 10:42 AM EDT

MUNCIE, Ind.--(BUSINESS WIRE)-- First Merchants Corporation (NASDAQ - FRME) reported record third quarter 2016 net income of $21.1 million, compared to $17.1 million during the third quarter of 2015. Earnings per share for the period totaled a record $.51 per share, an increase of $.06 per share, or 13.3 percent, over the same period in 2015. Year-to-date net income totaled a record $58.8 million, compared to $51.2 million during the same period in 2015. Earnings per share for the nine months ended September 30, 2016 totaled a record $1.43 per share, an increase of $.08 per share or 5.9 percent, over same period in 2015.

Michael C. Rechin, President and Chief Executive Officer, stated, “First Merchants focused its 2016 plan on proving our progress after completing two acquisitions and several major organizational initiatives in 2015 and the first quarter of 2016. We are pleased to show two consecutive quarters of clean, high-performance results while demonstrating the strength of our core franchise by delivering organic growth, profitability and efficiency. Our results reflect a growing company with a 1.22 percent return on assets and a 55.12 percent efficiency ratio. As we focus on the road ahead, our healthy economic markets should allow for strong organic growth and continued high-performance.”

Total assets and total loans climbed to new heights reaching $7 billion and $5 billion, respectively, as of September 30, 2016, compared to $6.2 billion and $4.3 billion, as of September 30, 2015 representing increases of 13.5 and 15.1 percent, respectively. Total deposits equaled $5.4 billion as of quarter-end and tangible common equity increased to record levels totaling $647 million or $15.86 per share.

Net-interest income totaled a record $57.7 million for the quarter and reported net-interest margin increased by 9 basis points over the third quarter of 2015, totaling 3.94 percent. Yields on earning assets totaled 4.37 percent and the cost of supporting liabilities totaled .43 percent. When adjusted for fair value accretion, net-interest margin totaled 3.70 percent for the quarter, 1 basis point less than the third quarter of 2015.

Non-interest income totaled $16.9 million for the quarter, up $529,000 from the third quarter of 2015 total of $16.3 million. Non-interest expense totaled $44.1 million for the quarter, an increase of $1.1 million from the third quarter of 2015.

The Corporation’s provision expense totaled $1.9 million during the quarter to account for net charge-offs of $630,000 and loan growth of $182.4 million. Non-performing loans now total $38 million, the allowance for loan losses totaled $63.5 million and the remaining fair value marks totaled $37.9 million. The allowance is 1.28 percent of total loans and 1.50 percent of non-purchased loans.

As of September 30, 2016, the Corporation’s total risk-based capital ratio equaled 14.18 percent, the common equity tier 1 capital ratio equaled 11.05 percent, and the tangible common equity ratio totaled 9.48 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 2:30 p.m. (ET) on Tuesday, October 25, 2016.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's third quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until November 25, 2016. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529 or for International participants, dial +1 412-317-0088. The replay passcode is 10092820.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme161025.html during the time of the call. A replay of the web cast will be available until October 25, 2017.

During the call, Forward-Looking Statements about the relative business outlook may be made. These Forward-Looking Statements and all other statements made during the call that do not concern historical facts, are subject to risks and uncertainties that may materially affect actual results.

Specific Forward-Looking Statements include, but are not limited to, any indications regarding the Financial Services industry, the economy and future growth of the balance sheet or income statement.

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 is comprised of First Merchants Bank, which also operates as Lafayette Bank & Trust, and First Merchants Private Wealth Advisors which operates 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.

   
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands) September 30,
2016 2015
ASSETS
Cash and cash equivalents $ 99,602 $ 84,677
Interest-bearing time deposits 33,803 27,111
Investment securities 1,300,428 1,208,793
Loans held for sale 1,482 1,943
Loans 4,973,844 4,321,715
Less: Allowance for loan losses (63,456 ) (62,861 )
Net loans 4,910,388 4,258,854
Premises and equipment 95,540 83,457
Federal Reserve and Federal Home Loan Bank stock 18,044 34,498
Interest receivable 23,652 22,048
Core deposit intangibles and goodwill 259,844 219,503
Cash surrender value of life insurance 201,856 171,530
Other real estate owned 10,242 14,809
Tax asset, deferred and receivable 31,779 38,339
Other assets 35,692   24,235  
TOTAL ASSETS $ 7,022,352   $ 6,189,797  
LIABILITIES
Deposits:
Noninterest-bearing $ 1,307,886 $ 1,110,905
Interest-bearing 4,136,354   3,703,684  
Total Deposits 5,444,240 4,814,589
Borrowings:
Federal funds purchased 58,358 52,896
Securities sold under repurchase agreements 138,671 153,822
Federal Home Loan Bank advances 297,022 237,856
Subordinated debentures and term loans 128,288   121,936  
Total Borrowings 622,339 566,510
Interest payable 3,733 3,710
Other liabilities 51,175   38,004  
Total Liabilities 6,121,487 5,422,813
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 -- 50,000,000 shares
Issued and outstanding - 40,799,025 and 37,873,921 shares 5,100 4,734
Additional paid-in capital 506,848 433,577
Retained earnings 384,868 332,162
Accumulated other comprehensive income (loss) 3,924   (3,614 )
Total Stockholders' Equity 900,865   766,984  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,022,352   $ 6,189,797  
 
   
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts) September 30, September 30,
2016   2015 2016   2015
INTEREST INCOME
Loans receivable:
Taxable $ 53,819 $ 46,037 $ 156,407 $ 134,908
Tax-exempt 1,649 1,190 4,429 2,174
Investment securities:
Taxable 3,992 4,374 12,522 13,522
Tax-exempt 4,668 4,412 13,760 12,478
Deposits with financial institutions 55 25 283 93
Federal Reserve and Federal Home Loan Bank stock 193   500   906   1,509
Total Interest Income 64,376   56,538   188,307   164,684
INTEREST EXPENSE
Deposits 3,926 3,715 12,028 10,917
Federal funds purchased 27 27 62 69
Securities sold under repurchase agreements 91 96 283 264
Federal Home Loan Bank advances 853 711 2,467 2,108
Subordinated debentures and term loans 1,797   1,666   5,368   4,996
Total Interest Expense 6,694   6,215   20,208   18,354
NET INTEREST INCOME 57,682 50,323 168,099 146,330
Provision for loan losses 1,900     3,240   417
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 55,782   50,323   164,859   145,913
OTHER INCOME
Service charges on deposit accounts 4,667 4,445 13,228 12,083
Fiduciary activities 2,448 2,242 7,318 7,058
Other customer fees 4,777 4,156 14,531 12,425
Commission income 4 4,147
Earnings on cash surrender value of life insurance 614 710 3,387 2,097
Net gains and fees on sales of loans 1,989 1,905 5,166 5,175
Net realized gains on sales of available for sale securities 839 1,115 2,542 2,047
Gain on sale of insurance subsidiary 8,265
Other income 1,527   1,755   2,911   2,540
Total Other Income 16,861   16,332   49,083   55,837
OTHER EXPENSES
Salaries and employee benefits 26,651 25,137 79,558 76,112
Net occupancy 4,348 3,726 12,429 11,019
Equipment 2,947 2,698 9,428 8,104
Marketing 630 847 2,218 2,578
Outside data processing fees 2,382 1,992 6,476 5,477
Printing and office supplies 314 343 1,047 1,010
Core deposit amortization 978 693 2,933 2,143
FDIC assessments 534 958 2,486 2,716
Other real estate owned and foreclosure expenses 637 1,675 2,303 2,917
Professional and other outside services 1,242 1,686 4,882 6,311
Other expenses 3,452   3,276   11,665   10,909
Total Other Expenses 44,115   43,031   135,425   129,296
INCOME BEFORE INCOME TAX 28,528 23,624 78,517 72,454
Income tax expense 7,469   6,557   19,759   21,247
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 21,059   $ 17,067   $ 58,758   $ 51,207
Per Share Data:
Basic Net Income Available to Common Stockholders $ 0.51 $ 0.46 $ 1.44 $ 1.36
Diluted Net Income Available to Common Stockholders $ 0.51 $ 0.45 $ 1.43 $ 1.35
Cash Dividends Paid $ 0.14 $ 0.11 $ 0.39 $ 0.30
Average Diluted Shares Outstanding (in thousands) 41,026 38,118 40,970 38,054
 
       
FINANCIAL HIGHLIGHTS
(Dollars in thousands) Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
NET CHARGE OFF'S $ 630 $ (311 ) $ 2,237 $ 1,520
 
AVERAGE BALANCES:
Total Assets $ 6,907,303 $ 6,153,949 $ 6,836,412 $ 6,013,053
Total Loans 4,836,923 4,273,475 4,748,846 4,121,949
Total Earning Assets 6,198,206 5,538,202 6,116,952 5,392,975
Total Deposits 5,428,453 4,824,683 5,388,775 4,743,106
Total Stockholders' Equity 896,934 759,144 878,302 746,702
 
FINANCIAL RATIOS:
Return on Average Assets 1.22 % 1.11 % 1.15 % 1.14 %
Return on Average Stockholders' Equity 9.39 8.99 8.92 9.14
Return on Average Common Stockholders' Equity 9.39 8.99 8.92 9.15
Average Earning Assets to Average Assets 89.73 89.99 89.48 89.69
Allowance for Loan Losses as % of Total Loans 1.28 1.45 1.28 1.45
Net Charge Off's as % of Average Loans (Annualized) 0.05 (0.03 ) 0.06 0.05
Average Stockholders' Equity to Average Assets 12.99 12.34 12.85 12.42
Tax Equivalent Yield on Earning Assets 4.37 4.30 4.32 4.27
Cost of Supporting Liabilities 0.43 0.45 0.44 0.45
Net Interest Margin (FTE) on Earning Assets 3.94 3.85 3.88 3.82
Tangible Common Book Value Per Share $ 15.86 $ 14.59 $ 15.86 $ 14.59
 
         
NON-PERFORMING ASSETS
(Dollars In Thousands) September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Non-Accrual Loans $ 34,105 $ 33,565 $ 36,719 $ 31,389 $ 32,597
Renegotiated Loans 3,940   4,299   1,015   1,923   3,823  
Non-Performing Loans (NPL) 38,045 37,864 37,734 33,312 36,420
Other Real Estate Owned 10,242   13,219   15,626   17,257   14,809  
Non-Performing Assets (NPA) 48,287 51,083 53,360 50,569 51,229
90+ Days Delinquent 1,625   362   963   907   1,947  
NPAs & 90 Day Delinquent $ 49,912   $ 51,445   $ 54,323   $ 51,476   $ 53,176  
 
Loan Loss Reserve $ 63,456 $ 62,186 $ 62,086 $ 62,453 $ 62,861
Quarterly Net Charge-off's 630 690 917 408 (311 )
NPAs / Actual Assets % 0.69 % 0.74 % 0.78 % 0.75 % 0.83 %
NPAs & 90 Day / Actual Assets % 0.71 % 0.74 % 0.80 % 0.76 % 0.86 %
NPAs / Actual Loans and OREO % 0.97 % 1.06 % 1.13 % 1.07 % 1.18 %
Loan Loss Reserves / Actual Loans (%) 1.28 % 1.29 % 1.32 % 1.33 % 1.45 %
Net Charge Off's as % of Average Loans (Annualized) 0.05 % 0.06 % 0.08 % 0.04 % (0.03 )%
 
         
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands) September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
ASSETS
Cash and cash equivalents $ 99,602 $ 120,471 $ 85,738 $ 102,170 $ 84,677
Interest-bearing time deposits 33,803 62,533 77,453 32,315 27,111
Investment securities 1,300,428 1,297,801 1,270,777 1,276,999 1,208,793
Loans held for sale 1,482 18,854 3,628 9,894 1,943
Loans 4,973,844 4,791,429 4,709,907 4,693,822 4,321,715
Less: Allowance for loan losses (63,456 ) (62,186 ) (62,086 ) (62,453 ) (62,861 )
Net loans 4,910,388 4,729,243 4,647,821 4,631,369 4,258,854
Premises and equipment 95,540 95,170 96,494 97,648 83,457
Federal Reserve and Federal Home Loan Bank stock 18,044 18,096 37,553 37,633 34,498
Interest receivable 23,652 23,351 22,836 24,415 22,048
Core deposit intangibles and goodwill 259,844 260,821 261,799 259,764 219,503
Cash surrender value of life insurance 201,856 201,417 200,549 200,539 171,530
Other real estate owned 10,242 13,219 15,626 17,257 14,809
Tax asset, deferred and receivable 31,779 32,547 47,982 46,977 38,339
Other assets 35,692   32,895   30,283   24,023   24,235  
TOTAL ASSETS $ 7,022,352   $ 6,906,418   $ 6,798,539   $ 6,761,003   $ 6,189,797  
LIABILITIES
Deposits:
Noninterest-bearing $ 1,307,886 $ 1,253,747 $ 1,282,462 $ 1,266,027 $ 1,110,905
Interest-bearing 4,136,354   4,153,807   4,028,608   4,023,620   3,703,684  
Total Deposits 5,444,240 5,407,554 5,311,070 5,289,647 4,814,589
Borrowings:
Federal funds purchased 58,358 20,000 602 49,721 52,896
Securities sold under repurchase agreements 138,671 140,777 150,134 155,325 153,822
Federal Home Loan Bank advances 297,022 268,579 263,588 235,652 237,856
Subordinated debentures and term loans 128,288   127,678   127,523   127,846   121,936  
Total Borrowings 622,339 557,034 541,847 568,544 566,510
Interest payable 3,733 3,051 3,910 3,092 3,710
Other liabilities 51,175   51,229   74,449   49,211   38,004  
Total Liabilities 6,121,487 6,018,868 5,931,276 5,910,494 5,422,813
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 -- 50,000,000 shares
Issued and outstanding 5,100 5,097 5,094 5,083 4,734
Additional paid-in capital 506,848 505,725 504,661 504,530 433,577
Retained earnings 384,868 369,568 355,317 342,133 332,162
Accumulated other comprehensive income (loss) 3,924   7,035   2,066   (1,362 ) (3,614 )
Total Stockholders' Equity 900,865   887,550   867,263   850,509   766,984  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,022,352   $ 6,906,418   $ 6,798,539   $ 6,761,003   $ 6,189,797  
 
         
CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts) September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
INTEREST INCOME
Loans receivable:
Taxable $ 53,819 $ 52,099 $ 50,489 $ 45,897 $ 46,037
Tax-exempt 1,649 1,465 1,315 1,285 1,190
Investment securities:
Taxable 3,992 4,202 4,328 4,363 4,374
Tax-exempt 4,668 4,583 4,509 4,444 4,412
Deposits with financial institutions 55 122 106 67 25
Federal Reserve and Federal Home Loan Bank stock 193   233   480   458   500  
Total Interest Income 64,376   62,704   61,227   56,514   56,538  
INTEREST EXPENSE
Deposits 3,926 4,039 4,063 3,938 3,715
Federal funds purchased 27 7 28 5 27
Securities sold under repurchase agreements 91 92 100 104 96
Federal Home Loan Bank advances 853 818 796 728 711
Subordinated debentures and term loans 1,797   1,786   1,785   1,665   1,666  
Total Interest Expense 6,694   6,742   6,772   6,440   6,215  
NET INTEREST INCOME 57,682 55,962 54,455 50,074 50,323
Provision for loan losses 1,900   790   550      
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 55,782   55,172   53,905   50,074   50,323  
OTHER INCOME
Service charges on deposit accounts 4,667 4,416 4,145 4,118 4,445
Fiduciary activities 2,448 2,376 2,494 2,138 2,242
Other customer fees 4,777 4,695 5,059 4,534 4,156
Commission income 4
Earnings on cash surrender value of life insurance 614 1,297 1,476 822 710
Net gains and fees on sales of loans 1,989 1,717 1,460 1,308 1,905
Net realized gains on sales of available for sale securities 839 706 997 623 1,115
Other income 1,527   1,178   206   488   1,755  
Total Other Income 16,861   16,385   15,837   14,031   16,332  
OTHER EXPENSES
Salaries and employee benefits 26,651 25,570 27,337 25,796 25,137
Net occupancy 4,348 4,059 4,022 3,649 3,726
Equipment 2,947 3,243 3,238 2,683 2,698
Marketing 630 851 737 915 847
Outside data processing fees 2,382 2,025 2,069 1,632 1,992
Printing and office supplies 314 369 364 343 343
Core deposit amortization 978 977 978 692 693
FDIC assessments 534 1,002 950 939 958
Other real estate owned and foreclosure expenses 637 915 751 1,040 1,675
Professional and other outside services 1,242 1,478 2,162 3,544 1,686
Other expenses 3,452   4,346   3,867   4,277   3,276  
Total Other Expenses 44,115   44,835   46,475   45,510   43,031  
INCOME BEFORE INCOME TAX 28,528 26,722 23,267 18,595 23,624
Income tax expense 7,469   6,716   5,574   4,418   6,557  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 21,059   $ 20,006   $ 17,693   $ 14,177   $ 17,067  
 
Per Share Data:
Basic Net Income Available to Common Stockholders $ 0.51 $ 0.50 $ 0.43 $ 0.37 $ 0.46
Diluted Net Income Available to Common Stockholders $ 0.51 $ 0.49 $ 0.43 $ 0.37 $ 0.45
Cash Dividends Paid $ 0.14 $ 0.14 $ 0.11 $ 0.11 $ 0.11
Average Diluted Shares Outstanding (in thousands) 41,026 40,969 40,917 38,191 38,118
FINANCIAL RATIOS:
Return on Average Assets 1.22 % 1.17 % 1.05 % 0.90 % 1.11 %
Return on Average Stockholders' Equity 9.39 9.13 8.21 7.32 8.99
Return on Average Common Stockholders' Equity 9.39 9.14 8.21 7.32 8.99
Average Earning Assets to Average Assets 89.73 89.41 89.28 90.11 89.99
Allowance for Loan Losses as % of Total Loans 1.28 1.29 1.32 1.33 1.45
Net Charge Off's as % of Average Loans (Annualized) 0.05 0.06 0.08 0.04 (0.03 )
Average Stockholders' Equity to Average Assets 12.99 12.78 12.78 12.29 12.34
Tax Equivalent Yield on Earning Assets 4.37 4.30 4.28 4.20 4.30
Cost of Supporting Liabilities 0.43 0.44 0.45 0.45 0.45
Net Interest Margin (FTE) on Earning Assets 3.94 3.86 3.83 3.75 3.85
Tangible Common Book Value Per Share $ 15.86 $ 15.53 $ 15.02 $ 14.68 $ 14.59
 
         
LOANS
(Dollars In Thousands) September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Commercial and industrial loans $ 1,146,538 $ 1,084,890 $ 1,060,559 $ 1,057,075 $ 999,195
Agricultural production financing and other loans to farmers 93,169 95,131 92,137 97,711 91,354
Real estate loans:
Construction 368,241 352,980 391,621 366,704 298,250
Commercial and farmland 1,941,739 1,869,703 1,806,395 1,802,921 1,695,703
Residential 739,855 758,870 769,592 786,105 677,767
Home Equity 398,837 374,159 353,946 348,613 318,949
Individuals' loans for household and other personal expenditures 76,497 75,205 73,622 74,717 71,893
Lease financing receivables, net of unearned income 380 388 461 588 614
Other commercial loans 208,588   180,103   161,574   159,388   167,990  
Loans 4,973,844 4,791,429 4,709,907 4,693,822 4,321,715
Allowance for loan losses (63,456 ) (62,186 ) (62,086 ) (62,453 ) (62,861 )
NET LOANS $ 4,910,388   $ 4,729,243   $ 4,647,821   $ 4,631,369   $ 4,258,854  
 
DEPOSITS
(Dollars In Thousands) September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Demand deposits $ 2,745,028 $ 2,717,500 $ 2,590,603 $ 2,576,283 $ 2,244,848
Savings deposits 1,545,372 1,551,210 1,549,304 1,518,722 1,460,244
Certificates and other time deposits of $100,000 or more 296,838 301,695 304,559 323,698 286,988
Other certificates and time deposits 498,203 517,720 536,120 556,476 499,286
Brokered deposits 358,799   319,429   330,484   314,468   323,223  
TOTAL DEPOSITS $ 5,444,240   $ 5,407,554   $ 5,311,070   $ 5,289,647   $ 4,814,589  
 
           
NET INTEREST INCOME
(Dollars in Thousands) For the Three Months Ended
September 30, 2016 September 30, 2015

AverageBalance

InterestIncome /Expense

AverageRate

AverageBalance

InterestIncome /Expense

AverageRate

Assets:
Interest-bearing time deposits $ 54,120 $ 55 0.40 % $ 34,343 $ 25 0.29 %
Federal Reserve and Federal Home Loan Bank stock 18,095 193 4.24 34,627 500 5.78
Investment Securities: (1)
Taxable 729,223 3,992 2.18 692,583 4,374 2.53
Tax-Exempt (2) 559,845   7,182   5.10 503,174   6,787   5.40
Total Investment Securities 1,289,068   11,174   3.45 1,195,757   11,161   3.73
Loans held for sale 742 73 39.14 2,163 125 23.12
Loans: (3)
Commercial 3,556,187 41,653 4.66 3,247,336 36,582 4.51
Real Estate Mortgage 567,015 6,521 4.58 447,733 4,803 4.29
Installment 493,807 5,572 4.49 403,399 4,526 4.49
Tax-Exempt (2) 219,172   2,537   4.60 172,844   1,832   4.24
Total Loans 4,836,923   56,356   4.64 4,273,475   47,868   4.48
Total Earning Assets 6,198,206 67,778   4.37 5,538,202 59,554   4.30
Net unrealized gain on securities available for sale 11,738 10,379
Allowance for loan losses (62,453 ) (62,521 )
Cash and cash equivalents 102,023 93,542
Premises and equipment 95,541 84,880
Other assets 562,248   489,467  
Total Assets $ 6,907,303   $ 6,153,949  
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 1,454,992 $ 669 0.18 % $ 1,112,161 $ 359 0.13 %
Money market deposits 793,173 384 0.19 837,963 448 0.21
Savings deposits 754,401 171 0.09 628,020 155 0.10
Certificates and other time deposits 1,128,595   2,702   0.95 1,122,964   2,753   0.98
Total Interest-bearing Deposits 4,131,161 3,926 0.38 3,701,108 3,715 0.40
Borrowings 521,125   2,768   2.11 523,814   2,500   1.91
Total Interest-bearing Liabilities 4,652,286 6,694 0.57 4,224,922 6,215 0.59
Noninterest-bearing deposits 1,297,292 1,123,575
Other liabilities 60,791   46,308  
Total Liabilities 6,010,369 5,394,805
Stockholders' Equity 896,934     759,144    
Total Liabilities and Stockholders' Equity $ 6,907,303   6,694   0.43 $ 6,153,949   6,215   0.45
Net Interest Income $ 61,084   $ 53,339  
Net Interest Margin 3.94 % 3.85 %
 

(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 utilizing 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 35 percent for 2016 and 2015. These totals equal $3,402 and $3,016 for the three months ended September 30, 2016 and 2015, respectively.

(3) Non accruing loans have been included in the average balances.

           
NET INTEREST INCOME
(Dollars in Thousands) For the Nine Months Ended
September 30, 2016 September 30, 2015

AverageBalance

Interest Income / Expense

AverageRate

AverageBalance

Interest Income / Expense

AverageRate

Assets:
Interest-bearing time deposits $ 76,440 $ 283 0.49 % $ 50,327 $ 93 0.25 %
Federal Reserve and Federal Home Loan Bank stock 26,359 906 4.59 38,367 1,509 5.24
Investment Securities: (1)
Taxable 725,311 12,522 2.31 708,328 13,522 2.55
Tax-Exempt (2) 539,996   21,169   5.24 474,004   19,197   5.40
Total Investment Securities 1,265,307   33,691   3.56 1,182,332   32,719   3.69
Loans held for sale 3,541 291 10.98 4,364 380 11.61
Loans: (3)
Commercial 3,502,715 121,017 4.62 3,161,385 106,412 4.49
Real Estate Mortgage 570,330 19,032 4.46 454,288 14,614 4.29
Installment 473,645 16,067 4.53 397,981 13,502 4.52
Tax-Exempt (2) 198,615   6,814   4.58 103,931   3,344   4.29
Total Loans 4,748,846   163,221   4.59 4,121,949   138,252   4.47
Total Earning Assets 6,116,952 198,101   4.32 % 5,392,975 172,573   4.27 %
Net unrealized gain on securities available for sale 10,892 12,463
Allowance for loan losses (62,633 ) (62,940 )
Cash and cash equivalents 102,767 96,671
Premises and equipment 96,284 82,342
Other assets 572,150   491,542  
Total Assets $ 6,836,412   $ 6,013,053  
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 1,395,036 $ 1,850 0.18 % $ 1,077,463 $ 894 0.11 %
Money market deposits 835,968 1,377 0.22 838,552 1,305 0.21
Savings deposits 720,375 455 0.08 604,436 481 0.11
Certificates and other time deposits 1,157,992   8,346   0.96 1,132,497   8,237   0.97
Total Interest-bearing Deposits 4,109,371 12,028 0.39 3,652,948 10,917 0.40
Borrowings 506,077   8,180   2.16 478,030   7,437   2.07
Total Interest-bearing Liabilities 4,615,448 20,208   0.58 4,130,978 18,354 0.59
Noninterest-bearing deposits 1,279,404 1,090,158
Other liabilities 63,258   45,215  
Total Liabilities 5,958,110 5,266,351
Stockholders' Equity 878,302     746,702    
Total Liabilities and Stockholders' Equity $ 6,836,412   20,208   0.44 $ 6,013,053   18,354   0.45
Net Interest Income $ 177,893   $ 154,219  
Net Interest Margin 3.88 % 3.82 %
 

(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 utilizing 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 35 percent for 2016 and 2015. These totals equal $9,794 and $7,889 for the nine months ended September 30, 2016 and 2015, respectively.

(3) Non accruing loans have been included in the average balances.

First Merchants Corporation
David L. Ortega, 765-378-8937
First Vice President/Director of Investor Relations
http://www.firstmerchants.com

Source: First Merchants Corporation


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