First Merchants Corporation Announces Third Quarter 2023

MUNCIE, Ind., Oct. 26, 2023 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)

Third Quarter 2023 Highlights:

Net income available to common stockholders was $55.9 million and diluted earnings per common share totaled $0.94, compared to $63.3 million and $1.08 in the third quarter of 2022, and $60.4 million and $1.02 in the second quarter of 2023.
Strong capital position with Common Equity Tier 1 Capital Ratio of 11.26 percent.
Total loans grew $4.9 million, or 0.2 percent annualized on a linked quarter basis, and $743.6 million, or 6.4 percent during the last twelve months when excluding the impact of non-relationship based commercial loan sales that occurred during the prior quarter of $116.6 million.
Total deposits increased $65.4 million, or 1.8 percent annualized on a linked quarter basis, and $211.8 million, or 1.5 percent during the last twelve months.
Nonaccrual loans totaled $53.1 million compared to $69.2 million on a linked quarter basis.
The efficiency ratio totaled 53.91 percent for the quarter.

Mark Hardwick, Chief Executive Officer, stated, “First Merchants continued to deliver top quartile operating returns while tactically managing the inflationary interest rate environment. Our teams are focused on meeting the demands of our customer base while planning for continued 2024 growth and performance.”

Third Quarter Financial Results:

First Merchants Corporation (the “Corporation”) has reported third quarter 2023 net income available to common stockholders of $55.9 million compared to $63.3 million during the same period in 2022. Diluted earnings per common share for the period totaled $0.94 per share compared to the third quarter of 2022 result of $1.08 per share.

Total assets equaled $18.0 billion as of quarter-end and loans totaled $12.3 billion. During the past twelve months, total loans grew by $743.6 million, or 6.4 percent and were offset by the non-relationship based commercial loan sale of $116.6 million. On a linked quarter basis, loans grew $4.9 million, or 0.2 percent.

Investments, totaling $3.7 billion, decreased $581.0 million, or 13.5 percent, during the last twelve months and decreased $177.8 million, or 18.3 percent annualized on a linked quarter basis. The decline during the quarter was due to $33.2 million of bond sales, $38.2 million of security paydowns and maturities, and the remainder was due to a decline in valuation of available for sale securities.

Total deposits equaled $14.6 billion as of quarter-end and increased by $211.8 million, or 1.5 percent, over the past twelve months. Total deposits increased $65.4 million, or 1.8 percent annualized on a linked quarter basis. During the quarter, commercial and consumer deposits increased $327.8 million which was offset by a reduction in brokered deposits of $133.6 million and municipal deposits of $128.8 million due to seasonality. The loan to deposit ratio declined slightly to 84.0 percent at period end from 84.3 percent in the prior quarter.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $205.8 million as of quarter-end, or 1.67 percent of total loans, a decrease of $15.4 million from prior quarter. Loan charge-offs, net of recoveries, for the quarter totaled $20.4 million primarily due to the charge-off of a previously reported nonaccrual loan to a syndicated specialty finance company resulting from an apparent fraud that impacted our borrower's ability to repay. Net charge-offs were offset with provision expense for loans recorded during the quarter of $5.0 million. Reserves for unfunded commitments were reduced by $3.0 million during the quarter and now total $20.3 million. Net provision expense for the quarter totaled $2.0 million. Nonperforming assets to total assets were 0.33 percent for the third quarter of 2023, a decrease of 10 basis points compared to 0.43 percent in the prior quarter.

Net interest income, totaling $133.4 million for the quarter, declined $4.5 million, or 3.2 percent, compared to prior quarter and decreased $6.9 million, or 4.9 percent, compared to the third quarter of 2022. Stated net interest margin on a tax equivalent basis totaling 3.29 percent, declined by 10 basis points compared to the second quarter of 2023 and decreased 26 basis points compared to the third 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 $27.8 million for the quarter, increased $1.5 million, or 5.8 percent, compared to the second quarter of 2023 but decreased $1.8 million from the third quarter of 2022. The increase over second quarter of 2023 was driven primarily by higher gains on the sales of loans.

Noninterest expense totaled $93.9 million for the quarter, an increase of $1.3 million from the second quarter of 2023. The increase was from higher marketing costs and salaries and employee benefits, partially offset by a decline in professional and other outside service fees.

The Corporation’s total risk-based capital ratio equaled 13.66 percent, common equity tier 1 capital ratio equaled 11.26 percent, and the tangible common equity ratio totaled 7.69 percent. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

CONFERENCE CALL

First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 11:30 a.m. (ET) on Thursday, October 26, 2023.

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/BIf859606184ad4e98a66ef43d61469d2c)

In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/t8uajbb8) during the time of the call. A replay of the webcast will be available until October 26, 2024.

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.

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

SOURCE: First Merchants Corporation, Muncie, Indiana

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)	September 30,
		2023			2022
ASSETS
Cash and due from banks	$	125,173		$	119,532
Interest-bearing deposits		348,639			179,593
Investment securities, net of allowance for credit losses of $245,000 and $245,000		3,713,724			4,294,768
Loans held for sale		30,972			25,394
Loans		12,271,422			11,650,002
Less: Allowance for credit losses - loans		(205,782	)		(226,702	)
Net loans		12,065,640			11,423,300
Premises and equipment		132,441			116,306
Federal Home Loan Bank stock		41,797			38,056
Interest receivable		90,011			71,605
Goodwill and other intangibles		741,283			750,713
Cash surrender value of life insurance		306,106			306,932
Other real estate owned		6,480			6,454
Tax asset, deferred and receivable		135,521			142,110
Other assets		258,861			244,222
TOTAL ASSETS	$	17,996,648		$	17,718,985
LIABILITIES
Deposits:
Noninterest-bearing	$	2,554,984		$	3,356,651
Interest-bearing		12,091,592			11,078,174
Total Deposits		14,646,576			14,434,825
Borrowings:
Federal funds purchased		—			185,000
Securities sold under repurchase agreements		152,537			194,482
Federal Home Loan Bank advances		713,384			643,769
Subordinated debentures and other borrowings		158,665			151,301
Total Borrowings		1,024,586			1,174,552
Interest payable		16,473			4,971
Other liabilities		216,369			197,971
Total Liabilities		15,904,004			15,812,319
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 - 59,398,022 and 59,145,414 shares		7,425			7,393
Additional paid-in capital		1,234,402			1,226,695
Retained earnings		1,132,962			961,542
Accumulated other comprehensive loss		(307,270	)		(314,089	)
Total Stockholders' Equity		2,092,644			1,906,666
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,996,648		$	17,718,985

CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended						Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts)	September 30,						September 30,
		2023			2022			2023			2022
INTEREST INCOME
Loans receivable:
Taxable	$	191,705		$	128,504		$	550,314		$	314,366
Tax-exempt		8,288			6,500			23,757			18,194
Investment securities:
Taxable		8,590			10,055			26,563			28,937
Tax-exempt		13,947			17,261			44,296			50,348
Deposits with financial institutions		5,884			704			9,685			1,544
Federal Home Loan Bank stock		719			314			2,281			635
Total Interest Income		229,133			163,338			656,896			414,024
INTEREST EXPENSE
Deposits		85,551			16,644			209,437			29,423
Federal funds purchased		—			418			1,420			494
Securities sold under repurchase agreements		797			372			2,624			595
Federal Home Loan Bank advances		6,896			3,493			20,775			6,485
Subordinated debentures and other borrowings		2,506			2,105			7,303			5,780
Total Interest Expense		95,750			23,032			241,559			42,777
NET INTEREST INCOME		133,383			140,306			415,337			371,247
Provision for credit losses		2,000			—			2,000			16,755
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		131,383			140,306			413,337			354,492
NONINTEREST INCOME
Service charges on deposit accounts		7,975			7,165			23,147			21,274
Fiduciary and wealth management fees		7,394			7,221			22,653			22,187
Card payment fees		4,716			4,776			14,425			15,674
Net gains and fees on sales of loans		5,517			2,543			11,548			7,968
Derivative hedge fees		516			700			2,336			3,062
Other customer fees		384			501			1,643			1,573
Earnings on cash surrender value of life insurance		1,761			6,655			5,145			9,659
Net realized gains (losses) on sales of available for sale securities		(1,650	)		481			(4,613	)		1,137
Other income (loss)		1,229			(425	)		2,874			1,257
Total Noninterest Income		27,842			29,617			79,158			83,791
NONINTEREST EXPENSES
Salaries and employee benefits		55,566			56,002			167,778			154,562
Net occupancy		6,837			6,738			20,770			19,573
Equipment		5,698			5,997			18,005			17,797
Marketing		2,369			2,401			4,780			4,551
Outside data processing fees		6,573			6,827			19,290			16,071
Printing and office supplies		333			472			1,150			1,198
Intangible asset amortization		2,182			2,303			6,561			5,972
FDIC assessments		2,981			2,824			7,117			7,940
Other real estate owned and foreclosure expenses		677			328			1,575			626
Professional and other outside services		3,833			4,461			12,191			17,681
Other expenses		6,805			8,025			20,950			20,045
Total Noninterest Expenses		93,854			96,378			280,167			266,016
INCOME BEFORE INCOME TAX		65,371			73,545			212,328			172,267
Income tax expense		9,005			9,793			31,021			20,938
NET INCOME		56,366			63,752			181,307			151,329
Preferred stock dividends		468			469			1,406			938
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	55,898		$	63,283		$	179,901		$	150,391
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.95		$	1.08		$	3.04		$	2.63
Diluted Net Income Available to Common Stockholders	$	0.94		$	1.08		$	3.03		$	2.62
Cash Dividends Paid to Common Stockholders	$	0.34		$	0.32		$	1.00		$	0.93
Average Diluted Common Shares Outstanding (in thousands)		59,503			59,339			59,465			57,468

FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended						Nine Months Ended
	September 30,						September 30,
		2023			2022			2023			2022
NET CHARGE-OFFS (RECOVERIES)	$	20,365		$	(427	)	$	22,495		$	(751	)

AVERAGE BALANCES:
Total Assets	$	18,152,239		$	17,770,623		$	18,115,504		$	17,012,930
Total Loans		12,287,632			11,488,203			12,264,787			10,647,950
Total Earning Assets		16,947,669			16,508,914			16,913,965			15,744,040
Total Deposits		14,735,592			14,577,532			14,627,448			14,074,696
Total Stockholders' Equity		2,154,232			2,018,156			2,126,005			1,977,299

FINANCIAL RATIOS:
Return on Average Assets		1.24	%		1.43	%		1.33	%		1.19	%
Return on Average Stockholders' Equity		10.38			12.54			11.28			10.14
Return on Tangible Common Stockholders' Equity		16.54			20.85			18.10			16.22
Average Earning Assets to Average Assets		93.36			92.90			93.37			92.54
Allowance for Credit Losses - Loans as % of Total Loans		1.67			1.94			1.67			1.94
Net Charge-offs as % of Average Loans (Annualized)		0.66			(0.01	)		0.24			(0.01	)
Average Stockholders' Equity to Average Assets		11.87			11.36			11.74			11.62
Tax Equivalent Yield on Average Earning Assets		5.55			4.11			5.32			3.66
Interest Expense/Average Earning Assets		2.26			0.56			1.90			0.36
Net Interest Margin (FTE) on Average Earning Assets		3.29			3.55			3.42			3.30
Efficiency Ratio		53.91			53.34			52.60			54.95
Tangible Common Book Value Per Share	$	22.43		$	19.26		$	22.43		$	19.26

NONPERFORMING ASSETS
(Dollars In Thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
		2023			2023			2023			2022			2022
Nonaccrual Loans	$	53,102		$	69,240		$	46,576		$	42,324		$	43,508
Troubled Debt Restructures (TDR)		—			—			—			224			195
Nonperforming Loans (NPL)		53,102			69,240			46,576			42,548			43,703
Other Real Estate Owned and Repossessions		6,480			7,685			7,777			6,431			6,454
Nonperforming Assets (NPA)		59,582			76,925			54,353			48,979			50,157
90+ Days Delinquent		89			428			7,032			1,737			764
NPAs & 90 Day Delinquent	$	59,671		$	77,353		$	61,385		$	50,716		$	50,921

Allowance for Credit Losses - Loans	$	205,782		$	221,147		$	223,052		$	223,277		$	226,702
Quarterly Net Charge-offs (Recoveries)		20,365			1,905			225			2,674			(427	)
NPAs / Actual Assets %		0.33	%		0.43	%		0.30	%		0.27	%		0.28	%
NPAs & 90 Day / Actual Assets %		0.33	%		0.43	%		0.34	%		0.28	%		0.29	%
NPAs / Actual Loans and OREO %		0.48	%		0.63	%		0.44	%		0.41	%		0.43	%
Allowance for Credit Losses - Loans / Actual Loans (%)		1.67	%		1.80	%		1.82	%		1.86	%		1.94	%
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)		0.66	%		0.06	%		0.01	%		0.12	%		(0.01)	%

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
		2023			2023			2023			2022			2022
ASSETS
Cash and due from banks	$	125,173		$	108,975		$	125,818		$	122,594		$	119,532
Interest-bearing deposits		348,639			219,480			352,695			126,061			179,593
Investment securities, net of allowance for credit losses		3,713,724			3,891,491			4,057,389			4,263,788			4,294,768
Loans held for sale		30,972			27,297			9,408			9,094			25,394
Loans		12,271,422			12,270,233			12,241,461			12,003,894			11,650,002
Less: Allowance for credit losses - loans		(205,782	)		(221,147	)		(223,052	)		(223,277	)		(226,702	)
Net loans		12,065,640			12,049,086			12,018,409			11,780,617			11,423,300
Premises and equipment		132,441			114,402			115,857			117,118			116,306
Federal Home Loan Bank stock		41,797			41,842			41,878			38,525			38,056
Interest receivable		90,011			89,784			85,515			85,070			71,605
Goodwill and other intangibles		741,283			743,465			745,647			747,844			750,713
Cash surrender value of life insurance		306,106			307,020			309,090			308,311			306,932
Other real estate owned		6,480			7,685			7,777			6,431			6,454
Tax asset, deferred and receivable		135,521			113,724			103,070			111,222			142,110
Other assets		258,861			254,161			206,355			221,631			244,222
TOTAL ASSETS	$	17,996,648		$	17,968,412		$	18,178,908		$	17,938,306		$	17,718,985
LIABILITIES
Deposits:
Noninterest-bearing	$	2,554,984		$	2,636,017		$	2,964,355		$	3,173,417		$	3,356,651
Interest-bearing		12,091,592			11,945,138			11,738,932			11,209,328			11,078,174
Total Deposits		14,646,576			14,581,155			14,703,287			14,382,745			14,434,825
Borrowings:
Federal funds purchased		—			—			20			171,560			185,000
Securities sold under repurchase agreements		152,537			152,472			179,067			167,413			194,482
Federal Home Loan Bank advances		713,384			723,480			823,577			823,674			643,769
Subordinated debentures and other borrowings		158,665			151,325			151,312			151,298			151,301
Total Borrowings		1,024,586			1,027,277			1,153,976			1,313,945			1,174,552
Interest payable		16,473			13,595			11,979			7,530			4,971
Other liabilities		216,369			200,820			187,218			199,316			197,971
Total Liabilities		15,904,004			15,822,847			16,056,460			15,903,536			15,812,319
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		7,425			7,412			7,407			7,396			7,393
Additional paid-in capital		1,234,402			1,233,593			1,231,532			1,228,626			1,226,695
Retained earnings		1,132,962			1,097,399			1,057,298			1,012,774			961,542
Accumulated other comprehensive loss		(307,270	)		(217,964	)		(198,914	)		(239,151	)		(314,089	)
Total Stockholders' Equity		2,092,644			2,145,565			2,122,448			2,034,770			1,906,666
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,996,648		$	17,968,412		$	18,178,908		$	17,938,306		$	17,718,985

CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	September 30,			June 30,			March 31,			December 31,			September 30,
		2023			2023			2023			2022			2022
INTEREST INCOME
Loans receivable:
Taxable	$	191,705		$	186,256		$	172,353		$	156,102		$	128,504
Tax-exempt		8,288			7,760			7,709			6,930			6,500
Investment securities:
Taxable		8,590			8,886			9,087			9,417			10,055
Tax-exempt		13,947			14,279			16,070			17,033			17,261
Deposits with financial institutions		5,884			3,164			637			959			704
Federal Home Loan Bank stock		719			1,020			542			541			314
Total Interest Income		229,133			221,365			206,398			190,982			163,338
INTEREST EXPENSE
Deposits		85,551			73,201			50,685			33,516			16,644
Federal funds purchased		—			123			1,297			808			418
Securities sold under repurchase agreements		797			979			848			541			372
Federal Home Loan Bank advances		6,896			6,815			7,064			4,932			3,493
Subordinated debentures and other borrowings		2,506			2,412			2,385			2,229			2,105
Total Interest Expense		95,750			83,530			62,279			42,026			23,032
NET INTEREST INCOME		133,383			137,835			144,119			148,956			140,306
Provision for credit losses		2,000			—			—			—			—
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		131,383			137,835			144,119			148,956			140,306
NONINTEREST INCOME
Service charges on deposit accounts		7,975			7,813			7,359			7,097			7,165
Fiduciary and wealth management fees		7,394			7,397			7,862			7,501			7,221
Card payment fees		4,716			4,537			5,172			4,533			4,776
Net gains and fees on sales of loans		5,517			3,632			2,399			2,087			2,543
Derivative hedge fees		516			672			1,148			326			700
Other customer fees		384			742			517			362			501
Earnings on cash surrender value of life insurance		1,761			2,096			1,288			1,515			6,655
Net realized gains (losses) on sales of available for sale securities		(1,650	)		(1,392	)		(1,571	)		57			481
Other income (loss)		1,229			822			823			672			(425	)
Total Noninterest Income		27,842			26,319			24,997			24,150			29,617
NONINTEREST EXPENSES
Salaries and employee benefits		55,566			54,753			57,459			52,331			56,002
Net occupancy		6,837			6,674			7,259			6,638			6,738
Equipment		5,698			6,181			6,126			6,148			5,997
Marketing		2,369			1,102			1,309			3,157			2,401
Outside data processing fees		6,573			6,604			6,113			5,611			6,827
Printing and office supplies		333			434			383			390			472
Intangible asset amortization		2,182			2,182			2,197			2,303			2,303
FDIC assessments		2,981			2,740			1,396			2,295			2,824
Other real estate owned and foreclosure expenses		677			916			(18	)		197			328
Professional and other outside services		3,833			4,660			3,698			3,961			4,461
Other expenses		6,805			6,347			7,798			6,668			8,025
Total Noninterest Expenses		93,854			92,593			93,720			89,699			96,378
INCOME BEFORE INCOME TAX		65,371			71,561			75,396			83,407			73,545
Income tax expense		9,005			10,699			11,317			12,647			9,793
NET INCOME		56,366			60,862			64,079			70,760			63,752
Preferred stock dividends		468			469			469			468			469
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	55,898		$	60,393		$	63,610		$	70,292		$	63,283
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.95		$	1.02		$	1.07		$	1.20		$	1.08
Diluted Net Income Available to Common Stockholders	$	0.94		$	1.02		$	1.07		$	1.19		$	1.08
Cash Dividends Paid to Common Stockholders	$	0.34		$	0.34		$	0.32		$	0.32		$	0.32
Average Diluted Common Shares Outstanding (in thousands)		59,503			59,448			59,441			59,384			59,339
FINANCIAL RATIOS:
Return on Average Assets		1.24	%		1.34	%		1.42	%		1.59	%		1.43	%
Return on Average Stockholders' Equity		10.38			11.29			12.21			14.36			12.54
Return on Tangible Common Stockholders' Equity		16.54			18.04			19.82			24.21			20.85
Average Earning Assets to Average Assets		93.36			93.38			93.35			93.66			92.90
Allowance for Credit Losses - Loans as % of Total Loans		1.67			1.80			1.82			1.86			1.94
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)		0.66			0.06			0.01			0.12			(0.01	)
Average Stockholders' Equity to Average Assets		11.87			11.78			11.56			10.98			11.36
Tax Equivalent Yield on Average Earning Assets		5.55			5.36			5.06			4.73			4.11
Interest Expense/Average Earning Assets		2.26			1.97			1.48			1.01			0.56
Net Interest Margin (FTE) on Average Earning Assets		3.29			3.39			3.58			3.72			3.55
Efficiency Ratio		53.91			52.21			51.72			48.60			53.34
Tangible Common Book Value Per Share	$	22.43		$	23.34		$	22.93		$	21.45		$	19.26

LOANS
(Dollars In Thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
		2023			2023			2023			2022			2022
Commercial and industrial loans	$	3,490,953		$	3,531,395		$	3,502,204		$	3,437,126		$	3,330,529
Agricultural land, production and other loans to farmers		233,838			230,003			219,598			241,793			221,954
Real estate loans:
Construction		1,022,261			949,918			960,979			835,582			828,923
Commercial real estate, non-owner occupied		2,360,596			2,379,819			2,375,410			2,407,475			2,299,272
Commercial real estate, owner occupied		1,153,707			1,179,739			1,244,117			1,246,528			1,268,567
Residential		2,257,385			2,248,473			2,185,943			2,096,655			1,990,668
Home equity		609,352			614,366			621,354			630,632			621,619
Individuals' loans for household and other personal expenditures		176,523			172,896			172,389			175,211			173,225
Public finance and other commercial loans		966,807			963,624			959,467			932,892			915,245
Loans		12,271,422			12,270,233			12,241,461			12,003,894			11,650,002
Allowance for credit losses - loans		(205,782	)		(221,147	)		(223,052	)		(223,277	)		(226,702	)
NET LOANS	$	12,065,640		$	12,049,086		$	12,018,409		$	11,780,617		$	11,423,300

DEPOSITS
(Dollars In Thousands)	September 30,		June 30,		March 31,		December 31,		September 30,
		2023		2023		2023		2022		2022
Demand deposits	$	7,952,040	$	8,045,455	$	8,422,387	$	8,448,797	$	8,534,950
Savings deposits		4,572,162		4,530,255		4,499,487		4,657,140		5,054,490
Certificates and other time deposits of $100,000 or more		1,280,607		1,160,303		1,040,379		742,539		443,588
Other certificates and time deposits		761,196		680,965		574,886		468,712		381,365
Brokered certificates of deposits		80,571		164,177		166,148		65,557		20,432
TOTAL DEPOSITS	$	14,646,576	$	14,581,155	$	14,703,287	$	14,382,745	$	14,434,825

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	September 30, 2023						September 30, 2022
	Average Balance		Interest Income / Expense		Average Rate		Average Balance		Interest Income / Expense		Average Rate
ASSETS
Interest-bearing deposits	$	502,967	$	5,884	4.68	%	$	190,434	$	704	1.48	%
Federal Home Loan Bank stock		41,826		719	6.88			38,089		314	3.30
Investment Securities: ⁽¹⁾
Taxable		1,817,219		8,590	1.89			2,091,608		10,055	1.92
Tax-exempt ⁽²⁾		2,298,025		17,655	3.07			2,700,580		21,849	3.24
Total Investment Securities		4,115,244		26,245	2.55			4,792,188		31,904	2.66
Loans held for sale		24,227		386	6.37			20,039		266	5.74
Loans: ⁽³⁾
Commercial		8,456,527		153,993	7.28			8,177,895		103,227	5.05
Real estate mortgage		2,079,067		21,618	4.16			1,666,173		14,701	3.53
Installment		827,318		15,708	7.59			813,112		10,310	5.07
Tax-exempt ⁽²⁾		900,493		10,491	4.66			810,984		8,228	4.06
Total Loans		12,287,632		202,196	6.58			11,488,203		136,732	4.76
Total Earning Assets		16,947,669		235,044	5.55	%		16,508,914		169,654	4.11	%
Total Non-Earning Assets		1,204,570						1,261,709
TOTAL ASSETS	$	18,152,239					$	17,770,623
LIABILITIES
Interest-Bearing Deposits:
Interest-bearing deposits	$	5,425,829	$	37,780	2.79	%	$	5,184,087	$	8,723	0.67	%
Money market deposits		2,923,798		23,607	3.23			3,096,423		5,390	0.70
Savings deposits		1,641,338		3,844	0.94			1,978,596		1,538	0.31
Certificates and other time deposits		2,106,910		20,320	3.86			857,033		993	0.46
Total Interest-Bearing Deposits		12,097,875		85,551	2.83			11,116,139		16,644	0.60
Borrowings		1,032,180		10,199	3.95			1,013,893		6,388	2.52
Total Interest-Bearing Liabilities		13,130,055		95,750	2.92			12,130,032		23,032	0.76
Noninterest-bearing deposits		2,637,717						3,461,393
Other liabilities		230,235						161,042
Total Liabilities		15,998,007						15,752,467
STOCKHOLDERS' EQUITY		2,154,232						2,018,156
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,152,239		95,750			$	17,770,623		23,032
Net Interest Income (FTE)			$	139,294					$	146,622
Net Interest Spread (FTE) ⁽⁴⁾					2.63	%					3.35	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.55	%					4.11	%
Interest Expense / Average Earning Assets					2.26	%					0.56	%
Net Interest Margin (FTE) ⁽⁵⁾					3.29	%					3.55	%

⁽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 $5,911 and $6.316 for the three months ended September 30, 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 Nine Months Ended
	September 30, 2023						September 30, 2022
	Average Balance		Interest Income / Expense		Average Rate		Average Balance		Interest Income / Expense		Average Rate
Assets:
Interest-bearing deposits	$	340,887	$	9,685	3.79	%	$	333,818	$	1,544	0.62	%
Federal Home Loan Bank stock		41,160		2,281	7.39			34,742		635	2.44
Investment Securities: ⁽¹⁾
Taxable		1,872,267		26,563	1.89			2,079,983		28,937	1.85
Tax-exempt ⁽²⁾		2,394,864		56,071	3.12			2,647,547		63,732	3.21
Total Investment Securities		4,267,131		82,634	2.58			4,727,530		92,669	2.61
Loans held for sale		22,398		1,046	6.23			19,020		622	4.36
Loans: ⁽³⁾
Commercial		8,515,148		444,422	6.96			7,731,591		253,770	4.38
Real estate mortgage		2,008,852		60,354	4.01			1,350,969		35,199	3.47
Installment		833,133		44,492	7.12			765,960		24,775	4.31
Tax-exempt ⁽²⁾		885,256		30,072	4.53			780,410		23,030	3.93
Total Loans		12,264,787		580,386	6.31			10,647,950		337,396	4.22
Total Earning Assets		16,913,965		674,986	5.32	%		15,744,040		432,244	3.66	%
Total Non-Earning Assets		1,201,539						1,268,890
Total Assets	$	18,115,504					$	17,012,930
Liabilities:
Interest-Bearing deposits:
Interest-bearing deposits	$	5,412,482	$	97,016	2.39	%	$	5,195,249	$	15,699	0.40	%
Money market deposits		2,812,891		55,868	2.65			2,880,603		8,392	0.39
Savings deposits		1,730,110		10,693	0.82			1,937,761		2,895	0.20
Certificates and other time deposits		1,821,408		45,860	3.36			828,158		2,437	0.39
Total Interest-Bearing Deposits		11,776,891		209,437	2.37			10,841,771		29,423	0.36
Borrowings		1,144,368		32,122	3.74			817,894		13,354	2.18
Total Interest-Bearing Liabilities		12,921,259		241,559	2.49			11,659,665		42,777	0.49
Noninterest-bearing deposits		2,850,557						3,232,925
Other liabilities		217,683						143,041
Total Liabilities		15,989,499						15,035,631
Stockholders' Equity		2,126,005						1,977,299
Total Liabilities and Stockholders' Equity	$	18,115,504		241,559			$	17,012,930		42,777
Net Interest Income (FTE)			$	433,427					$	389,467
Net Interest Spread (FTE) ⁽⁴⁾					2.83	%					3.17	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.32	%					3.66	%
Interest Expense / Average Earning Assets					1.90	%					0.36	%
Net Interest Margin (FTE) ⁽⁵⁾					3.42	%					3.30	%

⁽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 $18,090 and $18,220 for the nine months ended September 30, 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 EPS EXCLUDING PAYCHECK PROTECTION PROGRAM ("PPP") AND ACQUISITION-RELATED EXPENSES - NON-GAAP
(Dollars In Thousands, Except Per Share Amounts)	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
		2023			2023			2023			2022			2022			2023			2022
Net Income Available to Common Stockholders - GAAP	$	55,898		$	60,393		$	63,610		$	70,292		$	63,283		$	179,901		$	150,391
Adjustments:
PPP loan income		(8	)		(9	)		(25	)		(109	)		(323	)		(42	)		(3,098	)
Acquisition-related expenses		—			—			—			413			3,417			—			16,118
Acquisition-related provision expense		—			—			—			—			—			—			16,755
Tax on adjustment		2			2			6			(75	)		(759	)		10			(7,301	)
Adjusted Net Income Available to Common Stockholders - Non-GAAP	$	55,892		$	60,386		$	63,591		$	70,521		$	65,618		$	179,869		$	172,865

Average Diluted Common Shares Outstanding (in thousands)		59,503			59,448			59,441			59,384			59,339			59,465			57,468

Diluted Earnings Per Common Share - GAAP	$	0.94		$	1.02		$	1.07		$	1.19		$	1.08		$	3.03		$	2.62
Adjustments:
PPP loan income		—			—			—			(0.01	)		—			—			(0.05	)
Acquisition-related expenses		—			—			—			0.01			0.05			—			0.27
Acquisition-related provision expense		—			—			—			—			—			—			0.30
Tax on adjustment		—			—			—			—			(0.01	)		—			(0.13	)
Adjusted Diluted Earnings Per Common Share - Non-GAAP	$	0.94		$	1.02		$	1.07		$	1.19		$	1.12		$	3.03		$	3.01

RETURN ON TANGIBLE COMMON EQUITY - NON-GAAP
(Dollars In Thousands)	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
		2023			2023			2023			2022			2022			2023			2022
Total Average Stockholders' Equity (GAAP)	$	2,154,232		$	2,139,877		$	2,083,125		$	1,958,041		$	2,018,156		$	2,126,005		$	1,977,299
Less: Average Preferred Stock		(25,125	)		(25,125	)		(25,125	)		(25,125	)		(25,125	)		(25,125	)		(16,792	)
Less: Average Intangible Assets, Net of Tax		(735,787	)		(737,489	)		(739,190	)		(741,632	)		(744,069	)		(737,476	)		(685,707	)
Average Tangible Common Equity, Net of Tax (Non-GAAP)	$	1,393,320		$	1,377,263		$	1,318,810		$	1,191,284		$	1,248,962		$	1,363,404		$	1,274,800

Net Income Available to Common Stockholders (GAAP)	$	55,898		$	60,393		$	63,610		$	70,292		$	63,283		$	179,901		$	150,391
Plus: Intangible Asset Amortization, Net of Tax		1,724			1,724			1,734			1,819			1,819			5,182			4,718
Tangible Net Income (Non-GAAP)	$	57,622		$	62,117		$	65,344		$	72,111		$	65,102		$	185,083		$	155,109

Return on Tangible Common Equity (Non-GAAP)		16.54	%		18.04	%		19.82	%		24.21	%		20.85	%		18.10	%		16.22	%

First Merchants Corporation Announces Third Quarter 2023 Earnings Per Share