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 / Expense | Average Rate | Average Balance | Interest Income / Expense | Average Rate | ||||||||||||||||
| Assets: | |||||||||||||||||||||
| 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 / Expense | Average Rate | Average Balance | Interest Income / Expense | Average Rate | ||||||||||||||||
| Assets: | |||||||||||||||||||||
| 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.com
SOURCE: First Merchants Corporation