First Merchants Corporation Announces First Quarter 2023 Earnings Per Share

Rhea-AI Summary

First Merchants Corporation (NASDAQ - FRME) announced its first quarter 2023 results, reporting a net income of $63.6 million and diluted earnings per share of $1.07, compared to $48.6 million and $0.91 in Q1 2022. The bank experienced significant loan growth, with total loans increasing by $2.9 billion year-over-year, bolstered by the acquisition of Level One. Deposits also rose by $1.8 billion over the same period, although organic deposit growth declined by $133.5 million. The bank's Common Equity Tier 1 Capital Ratio stood at 10.82%, indicating strong capital health. Despite a 3.3% decline in net-interest income from the previous quarter, it surged 40.9% year-over-year. The efficiency ratio was reported at 51.72%, reflecting effective cost management amidst industry challenges.

Positive

• Net income increased by $15 million year-over-year.
• Diluted earnings per share rose to $1.07.
• Total loans grew significantly by $2.9 billion year-over-year.
• Strong liquidity with a Common Equity Tier 1 Capital Ratio of 10.82%.

Negative

• Net-interest income declined by 3.3% compared to the prior quarter.
• Organic deposit decline of $133.5 million or 1.0%.

MUNCIE, Ind., April 25, 2023 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)

First Quarter 2023 Highlights:

• Net income available to common stockholders was $63.6 million for the first quarter and diluted earnings per common share totaled $1.07, compared to $48.6 million and $.91 in the first quarter of 2022, and $70.3 million and $1.19 in the fourth quarter of 2022.
• Adjusted net income available to common stockholders¹ for the first quarter was $63.6 million and adjusted diluted earnings per common share¹ totaled $1.07, compared to $47.3 million and $.88 in the first quarter of 2022, and $70.5 million and $1.19 in the fourth quarter of 2022.
• Strong liquidity and capital with Common Equity Tier 1 Capital Ratio of 10.82%.
• Deposit growth of $320.5 million, or 8.9% annualized on a linked quarter basis.
• Total loans grew $237.9 million, or 7.9% annualized on a linked quarter basis.
• Non-accrual loans totaled $46.6 million compared to $42.3 million on a linked quarter basis.
• The efficiency ratio totaled 51.72% for the quarter.

Mark Hardwick, Chief Executive Officer, stated, “Given the disruption in the banking industry, we are pleased to share a quarter-end balance sheet that reflects a very safe and sound institution with continued growth. Loans, Deposits, on-hand liquidity and capital all improved over year-end. We prioritized enhancing our liquidity position during the quarter while also meeting the demands of the customer base. Our team of bankers have been true brand ambassadors during the quarter by showing poise and confidence throughout the communities we serve. We remain focused on delivering our plan for the year.”

First Quarter Financial Results:

First Merchants Corporation (the “Corporation) has reported first quarter 2023 net income available to common stockholders of $63.6 million compared to $48.6 million during the same period in 2022. Earnings per share for the period totaled $1.07 per share compared to the first quarter of 2022 result of $.91 per share.

Total assets equaled $18.2 billion as of quarter-end and loans totaled $12.3 billion. Total loans increased $2.9 billion during the past twelve months. The acquisition of Level One contributed $1.6 billion of loans. Excluding acquired loans and PPP forgiveness, the Corporation experienced organic loan growth of $1.3 billion, or 14.4 percent, during the past twelve months. This was offset by the forgiveness of PPP loans of $88.5 million. Total loans grew organically $237.9 or 7.9% annualized on a linked quarter basis.

Investments, totaling $4.1 billion, decreased $431.9 million, or 9.6 percent, during the last twelve months and decreased $206.4 million or 19.4% annualized on a linked quarter basis.

Total deposits equaled $14.7 billion as of quarter-end and increased by $1.8 billion over the past twelve months. The acquisition of Level One contributed $1.9 billion in deposits resulting in an organic deposit decline of $133.5 million or 1.0%. Total deposits grew $320.5 million or 8.9% annualized on a linked quarter basis. The loan to deposit ratio for the current quarter ended at 83.3 percent.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $223.1 million as of quarter-end, or 1.82 percent of total loans, an increase of $27.1 million over prior year due to the acquisition of Level One. Loan charge offs, net of recoveries, for the quarter totaled $0.2 million. No provision expense was recorded during the quarter or during the last twelve months other than CECL Day 1 expense of $16.8 million due to the acquisition of Level One. Non-performing assets to total assets were 0.30% for the first quarter of 2023, a decrease of two basis points compared to 0.32% in the first quarter of 2022.

Net-interest income, totaling $144.1 million for the quarter, declined $4.9 million, or 3.3 percent, compared to prior quarter and increased $41.8 million, or 40.9 percent compared to the first quarter of 2022. Stated net-interest margin on a tax equivalent basis, totaling 3.58 percent, declined by 14 basis points compared to the fourth quarter of 2022 and increased 55 basis points compared to the first quarter of 2022. Net-interest margin excluding the impact of fair value accretion and PPP loans totaled 3.52%, a decrease of 13 basis points compared to 3.65% for the fourth quarter of 2022 and an increase of 55 basis points from the first quarter of 2022. During the quarter, increased deposit costs and mix offset the increase in earning asset yields causing a reduction of margin of eight basis points. The lower day count in the quarter caused a decline of five basis points.

Non-interest income, totaling $25.0 million for the quarter, increased $0.9 million compared to the fourth quarter of 2022 and decreased $0.9 million from the first quarter of 2022. The increase over the fourth quarter of 2022 was driven primarily by higher card payment fees, derivative hedge fees, offset by losses on the sale of available for sale securities.

Non-interest expense totaled $93.7 million for the quarter, an increase of $4.0 million from the fourth quarter of 2022. The increase was primarily due to higher salaries, incentives and employee benefits offset by lower marketing expenses and FDIC assessments. A one-time FDIC assessment credit of approximately $2.0 million was recorded lowering overall FDIC assessment cost for the quarter. Additionally, gains on the sales of properties were recorded in the fourth quarter and reflected in Other Expenses that did not recur in the current quarter, causing a negative quarter-over quarter variance.

The Corporation’s total risk-based capital ratio equaled 13.23 percent, common equity tier 1 capital ratio equaled 10.82 percent, and the tangible common equity ratio totaled 7.75 percent. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

¹ See “Non-GAAP Financial Information” for reconciliation

CONFERENCE CALL

First Merchants Corporation will conduct a first quarter earnings conference call and web cast at 10:30 a.m. (ET) on Tuesday, April 25, 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/BI257d3b7683714a4382f8765266a99667)

In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/trq9ekv4) during the time of the call. A replay of the webcast will be available until April 25, 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.

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)	March 31,
		2023				2022
ASSETS
Cash and due from banks	$	125,818			$	148,277
Interest-bearing deposits		352,695				395,262
Investment securities, net of allowance for credit losses of $245,000 and $245,000		4,057,389				4,489,263
Loans held for sale		9,408				3,938
Loans		12,241,461				9,356,241
Less: Allowance for credit losses - loans		(223,052	)			(195,984	)
Net loans		12,018,409				9,160,257
Premises and equipment		115,857				105,883
Federal Home Loan Bank stock		41,878				26,422
Interest receivable		85,515				56,081
Goodwill and other intangibles		745,647				569,494
Cash surrender value of life insurance		309,090				291,881
Other real estate owned		7,777				6,271
Tax asset, deferred and receivable		103,070				73,422
Other assets		206,355				138,807
TOTAL ASSETS	$	18,178,908			$	15,465,258
LIABILITIES
Deposits:
Noninterest-bearing	$	2,964,355			$	2,745,235
Interest-bearing		11,738,932				10,160,718
Total Deposits		14,703,287				12,905,953
Borrowings:
Federal funds purchased		20				—
Securities sold under repurchase agreements		179,067				169,697
Federal Home Loan Bank advances		823,577				308,960
Subordinated debentures and other borrowings		151,312				118,677
Total Borrowings		1,153,976				597,334
Interest payable		11,979				3,589
Other liabilities		187,218				150,749
Total Liabilities		16,056,460				13,657,625
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				—
Common Stock, $.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding - 59,257,051 and 53,424,823 shares		7,407				6,678
Additional paid-in capital		1,231,532				987,404
Retained earnings		1,057,298				897,818
Accumulated other comprehensive loss		(198,914	)			(84,392	)
Total Stockholders' Equity		2,122,448				1,807,633
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,178,908			$	15,465,258

CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended
(Dollars In Thousands, Except Per Share Amounts)	March 31,
		2023				2022
INTEREST INCOME
Loans receivable:
Taxable	$	172,353			$	79,075
Tax-exempt		7,709				5,704
Investment securities:
Taxable		9,087				8,510
Tax-exempt		16,070				15,875
Deposits with financial institutions		637				230
Federal Home Loan Bank stock		542				146
Total Interest Income		206,398				109,540
INTEREST EXPENSE
Deposits		50,685				4,294
Federal funds purchased		1,297				—
Securities sold under repurchase agreements		848				89
Federal Home Loan Bank advances		7,064				1,218
Subordinated debentures and other borrowings		2,385				1,659
Total Interest Expense		62,279				7,260
NET INTEREST INCOME		144,119				102,280
Provision for credit losses - loans		—				—
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		144,119				102,280
NON-INTEREST INCOME
Service charges on deposit accounts		7,359				6,419
Fiduciary and wealth management fees		7,862				7,332
Card payment fees		5,172				5,723
Net gains and fees on sales of loans		2,399				2,199
Derivative hedge fees		1,148				918
Other customer fees		517				410
Earnings on cash surrender value of life insurance		1,288				1,696
Net realized gains (losses) on sales of available for sale securities		(1,571	)			566
Other income		823				634
Total Non-Interest Income		24,997				25,897
NON-INTEREST EXPENSES
Salaries and employee benefits		57,459				42,519
Net occupancy		7,259				6,187
Equipment		6,126				5,080
Marketing		1,309				736
Outside data processing fees		6,113				4,363
Printing and office supplies		383				345
Intangible asset amortization		2,197				1,366
FDIC assessments		1,396				2,192
Other real estate owned and foreclosure expenses		(18	)			564
Professional and other outside services		3,698				2,953
Other expenses		7,798				6,020
Total Non-Interest Expenses		93,720				72,325
INCOME BEFORE INCOME TAX		75,396				55,852
Income tax expense		11,317				7,266
NET INCOME		64,079				48,586
Preferred stock dividends		469				—
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	63,610			$	48,586
Per Share Data:
Basic Net Income Available to Common Stockholders	$	1.07			$	0.91
Diluted Net Income Available to Common Stockholders	$	1.07			$	0.91
Cash Dividends Paid to Common Stockholders	$	0.32			$	0.29
Average Diluted Common Shares Outstanding (in thousands)		59,441				53,616

FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended
	March 31,
		2023				2022
NET CHARGE-OFFS (RECOVERIES)	$	225			$	(587	)
AVERAGE BALANCES:
Total Assets	$	18,022,195			$	15,464,605
Total Loans		12,135,384				9,255,928
Total Earning Assets		16,824,407				14,262,777
Total Deposits		14,423,409				12,817,690
Total Stockholders' Equity		2,083,125				1,891,223
FINANCIAL RATIOS:
Return on Average Assets		1.42	%			1.26	%
Return on Average Stockholders' Equity		12.21				10.28
Return on Tangible Common Stockholders' Equity		19.82				14.99
Average Earning Assets to Average Assets		93.35				92.23
Allowance for Credit Losses - Loans as % of Total Loans		1.82				2.09
Net Charge-offs as % of Average Loans (Annualized)		0.01				(0.03	)
Average Stockholders' Equity to Average Assets		11.56				12.23
Tax Equivalent Yield on Average Earning Assets		5.06				3.23
Interest Expense/Average Earning Assets		1.48				0.20
Net Interest Margin (FTE) on Average Earning Assets		3.58				3.03
Efficiency Ratio		51.72				52.79
Tangible Common Book Value Per Share	$	22.93			$	23.26

NON-PERFORMING ASSETS
(Dollars In Thousands)	March 31,				December 31,				September 30,				June 30,				March 31,
		2023				2022				2022				2022				2022
Non-Accrual Loans	$	46,576			$	42,324			$	43,508			$	45,970			$	42,698
Troubled Debt Restructures (TDR)		—				224				195				233				141
Non-Performing Loans (NPL)		46,576				42,548				43,703				46,203				42,839
Other Real Estate Owned and Repossessions		7,777				6,431				6,454				6,521				6,271
Non-Performing Assets (NPA)		54,353				48,979				50,157				52,724				49,110
90+ Days Delinquent		7,032				1,737				764				592				2,085
NPAs & 90 Day Delinquent	$	61,385			$	50,716			$	50,921			$	53,316			$	51,195
Allowance for Credit Losses - Loans	$	223,052			$	223,277			$	226,702			$	226,275			$	195,984
Quarterly Net Charge-offs (Recoveries)		225				2,674				(427	)			263				(587	)
NPAs / Actual Assets %		0.30	%			0.27	%			0.28	%			0.30	%			0.32	%
NPAs & 90 Day / Actual Assets %		0.34	%			0.28	%			0.29	%			0.30	%			0.33	%
NPAs / Actual Loans and OREO %		0.44	%			0.41	%			0.43	%			0.46	%			0.52	%
Allowance for Credit Losses - Loans / Actual Loans (%)		1.82	%			1.86	%			1.94	%			1.98	%			2.09	%
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)		0.01	%			0.12	%			(0.01	)%			0.01	%			(0.03	)%

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	March 31,				December 31,				September 30,				June 30,				March 31,
		2023				2022				2022				2022				2022
ASSETS
Cash and due from banks	$	125,818			$	122,594			$	119,532			$	212,559			$	148,277
Interest-bearing deposits		352,695				126,061				179,593				136,702				395,262
Investment securities, net of allowance for credit losses		4,057,389				4,263,788				4,294,768				4,630,030				4,489,263
Loans held for sale		9,408				9,094				25,394				9,060				3,938
Loans		12,241,461				12,003,894				11,650,002				11,397,417				9,356,241
Less: Allowance for credit losses - loans		(223,052	)			(223,277	)			(226,702	)			(226,275	)			(195,984	)
Net loans		12,018,409				11,780,617				11,423,300				11,171,142				9,160,257
Premises and equipment		115,857				117,118				116,306				117,757				105,883
Federal Home Loan Bank stock		41,878				38,525				38,056				38,111				26,422
Interest receivable		85,515				85,070				71,605				68,728				56,081
Goodwill and other intangibles		745,647				747,844				750,713				753,649				569,494
Cash surrender value of life insurance		309,090				308,311				306,932				323,013				291,881
Other real estate owned		7,777				6,431				6,454				6,521				6,271
Tax asset, deferred and receivable		103,070				111,222				142,110				114,965				73,422
Other assets		206,355				221,631				244,222				198,255				138,807
TOTAL ASSETS	$	18,178,908			$	17,938,306			$	17,718,985			$	17,780,492			$	15,465,258
LIABILITIES
Deposits:
Noninterest-bearing	$	2,964,355			$	3,173,417			$	3,356,651			$	3,435,331			$	2,745,235
Interest-bearing		11,738,932				11,209,328				11,078,174				11,135,538				10,160,718
Total Deposits		14,703,287				14,382,745				14,434,825				14,570,869				12,905,953
Borrowings:
Federal funds purchased		20				171,560				185,000				100,000				—
Securities sold under repurchase agreements		179,067				167,413				194,482				186,468				169,697
Federal Home Loan Bank advances		823,577				823,674				643,769				598,865				308,960
Subordinated debentures and other borrowings		151,312				151,298				151,301				151,299				118,677
Total Borrowings		1,153,976				1,313,945				1,174,552				1,036,632				597,334
Interest payable		11,979				7,530				4,971				2,978				3,589
Other liabilities		187,218				199,316				197,971				192,372				150,749
Total Liabilities		16,056,460				15,903,536				15,812,319				15,802,851				13,657,625
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				—
Common Stock, $.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding		7,407				7,396				7,393				7,383				6,678
Additional paid-in capital		1,231,532				1,228,626				1,226,695				1,226,378				987,404
Retained earnings		1,057,298				1,012,774				961,542				917,311				897,818
Accumulated other comprehensive loss		(198,914	)			(239,151	)			(314,089	)			(198,556	)			(84,392	)
Total Stockholders' Equity		2,122,448				2,034,770				1,906,666				1,977,641				1,807,633
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,178,908			$	17,938,306			$	17,718,985			$	17,780,492			$	15,465,258

CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	March				December 31,				September 30,				June 30,				March 31,
		2023				2022				2022				2022				2022
INTEREST INCOME
Loans receivable:
Taxable	$	172,353			$	156,102			$	128,504			$	106,787			$	79,075
Tax-exempt		7,709				6,930				6,500				5,990				5,704
Investment securities:
Taxable		9,087				9,417				10,055				10,372				8,510
Tax-exempt		16,070				17,033				17,261				17,212				15,875
Deposits with financial institutions		637				959				704				610				230
Federal Home Loan Bank stock		542				541				314				175				146
Total Interest Income		206,398				190,982				163,338				141,146				109,540
INTEREST EXPENSE
Deposits		50,685				33,516				16,644				8,485				4,294
Federal funds purchased		1,297				808				418				76				—
Securities sold under repurchase agreements		848				541				372				134				89
Federal Home Loan Bank advances		7,064				4,932				3,493				1,774				1,218
Subordinated debentures and other borrowings		2,385				2,229				2,105				2,016				1,659
Total Interest Expense		62,279				42,026				23,032				12,485				7,260
NET INTEREST INCOME		144,119				148,956				140,306				128,661				102,280
Provision for credit losses - loans		—				—				—				16,755				—
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		144,119				148,956				140,306				111,906				102,280
NON-INTEREST INCOME
Service charges on deposit accounts		7,359				7,097				7,165				7,690				6,419
Fiduciary and wealth management fees		7,862				7,501				7,221				7,634				7,332
Card payment fees		5,172				4,533				4,776				5,175				5,723
Net gains and fees on sales of loans		2,399				2,087				2,543				3,226				2,199
Derivative hedge fees		1,148				326				700				1,444				918
Other customer fees		517				362				501				662				410
Earnings on cash surrender value of life insurance		1,288				1,515				6,655				1,308				1,696
Net realized gains (losses) on sales of available for sale securities		(1,571	)			57				481				90				566
Other income (loss)		823				672				(425	)			1,048				634
Total Non-Interest Income		24,997				24,150				29,617				28,277				25,897
NON-INTEREST EXPENSES
Salaries and employee benefits		57,459				52,331				56,002				56,041				42,519
Net occupancy		7,259				6,638				6,738				6,648				6,187
Equipment		6,126				6,148				5,997				6,720				5,080
Marketing		1,309				3,157				2,401				1,414				736
Outside data processing fees		6,113				5,611				6,827				4,881				4,363
Printing and office supplies		383				390				472				381				345
Intangible asset amortization		2,197				2,303				2,303				2,303				1,366
FDIC assessments		1,396				2,295				2,824				2,924				2,192
Other real estate owned and foreclosure expenses		(18	)			197				328				(266	)			564
Professional and other outside services		3,698				3,961				4,461				10,267				2,953
Other expenses		7,798				6,668				8,025				6,000				6,020
Total Non-Interest Expenses		93,720				89,699				96,378				97,313				72,325
INCOME BEFORE INCOME TAX		75,396				83,407				73,545				42,870				55,852
Income tax expense		11,317				12,647				9,793				3,879				7,266
NET INCOME		64,079				70,760				63,752				38,991				48,586
Preferred stock dividends		469				468				469				469				—
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	63,610			$	70,292			$	63,283			$	38,522			$	48,586
Per Share Data:
Basic Net Income Available to Common Stockholders	$	1.07			$	1.20			$	1.08			$	0.64			$	0.91
Diluted Net Income Available to Common Stockholders	$	1.07			$	1.19			$	1.08			$	0.63			$	0.91
Cash Dividends Paid to Common Stockholders	$	0.32			$	0.32			$	0.32			$	0.32			$	0.29
Average Diluted Common Shares Outstanding (in thousands)		59,441				59,384				59,339				59,308				53,616
FINANCIAL RATIOS:
Return on Average Assets		1.42	%			1.59	%			1.43	%			0.88	%			1.26	%
Return on Average Stockholders' Equity		12.21				14.36				12.54				7.62				10.28
Return on Tangible Common Stockholders' Equity		19.82				24.21				20.85				12.91				14.99
Average Earning Assets to Average Assets		93.35				93.66				92.90				92.45				92.23
Allowance for Credit Losses - Loans as % of Total Loans		1.82				1.86				1.94				1.98				2.09
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)		0.01				0.12				(0.01	)			0.01				(0.03	)
Average Stockholders' Equity to Average Assets		11.56				10.98				11.36				11.37				12.23
Tax Equivalent Yield on Average Earning Assets		5.06				4.73				4.11				3.58				3.23
Interest Expense/Average Earning Assets		1.48				1.01				0.56				0.30				0.20
Net Interest Margin (FTE) on Average Earning Assets		3.58				3.72				3.55				3.28				3.03
Efficiency Ratio		51.72				48.60				53.34				58.45				52.79
Tangible Common Book Value Per Share	$	22.93			$	21.45			$	19.26			$	20.45			$	23.26

LOANS
(Dollars In Thousands)	March 31,				December 31,				September 30,				June 30,				March 31,
		2023				2022				2022				2022				2022
Commercial and industrial loans	$	3,502,204			$	3,437,126			$	3,330,529			$	3,297,477			$	2,826,660
Agricultural land, production and other loans to farmers		219,598				241,793				221,954				214,904				209,077
Real estate loans:
Construction		960,979				835,582				828,923				745,983				552,975
Commercial real estate, non-owner occupied		2,375,410				2,407,475				2,299,272				2,423,185				2,073,197
Commercial real estate, owner occupied		1,244,117				1,246,528				1,268,567				1,264,563				974,521
Residential		2,185,943				2,096,655				1,990,668				1,813,297				1,226,695
Home equity		621,354				630,632				621,619				586,108				512,641
Individuals' loans for household and other personal expenditures		172,389				175,211				173,225				157,264				147,593
Public finance and other commercial loans		959,467				932,892				915,245				894,636				832,882
Loans		12,241,461				12,003,894				11,650,002				11,397,417				9,356,241
Allowance for credit losses - loans		(223,052	)			(223,277	)			(226,702	)			(226,275	)			(195,984	)
NET LOANS	$	12,018,409			$	11,780,617			$	11,423,300			$	11,171,142			$	9,160,257

DEPOSITS
(Dollars In Thousands)	March 31,			December 31,			September 30,			June 30,			March 31,
		2023			2022			2022			2022			2022
Demand deposits	$	8,422,387		$	8,448,797		$	8,534,950		$	8,785,889		$	7,806,033
Savings deposits		4,499,487			4,657,140			5,054,490			4,875,880			4,444,417
Certificates and other time deposits of $100,000 or more		1,040,379			742,539			443,588			436,942			252,033
Other certificates and time deposits		574,886			468,712			381,365			446,973			380,293
Brokered certificates of deposits		166,148			65,557			20,432			25,185			23,177
TOTAL DEPOSITS	$	14,703,287		$	14,382,745		$	14,434,825		$	14,570,869		$	12,905,953

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	March 31, 2023									March 31, 2022
	Average Balance			Interest Income / Expense			Average Rate			Average Balance			Interest Income / Expense			Average Rate
ASSETS
Interest-bearing deposits	$	172,814		$	637		1.47	%		$	484,626		$	230		0.19	%
Federal Home Loan Bank stock		39,759			542		5.45				27,914			146		2.09
Investment securities:(1)
Taxable		1,924,079			9,087		1.89				1,957,675			8,510		1.74
Tax-exempt(2)		2,552,371			20,342		3.19				2,536,634			20,095		3.17
Total Investment Securities		4,476,450			29,429		2.63				4,494,309			28,605		2.55
Loans held for sale		23,538			360		6.12				4,352			40		3.68
Loans:(3)
Commercial		8,483,879			139,661		6.58				6,868,438			64,679		3.77
Real estate mortgage		1,914,640			18,391		3.84				924,268			7,840		3.39
Installment		840,450			13,941		6.64				711,038			6,516		3.67
Tax-exempt(2)		872,877			9,758		4.47				747,832			7,220		3.86
Total Loans		12,135,384			182,111		6.00				9,255,928			86,295		3.73
Total Earning Assets		16,824,407			212,719		5.06	%			14,262,777			115,276		3.23	%
Total Non-Earning Assets		1,197,788									1,201,828
TOTAL ASSETS	$	18,022,195								$	15,464,605
LIABILITIES
Interest-bearing deposits:
Interest-bearing deposits	$	5,263,601		$	24,662		1.87	%		$	5,027,466		$	2,408		0.19	%
Money market deposits		2,746,047			13,577		1.98				2,514,429			872		0.14
Savings deposits		1,826,209			2,965		0.65				1,867,411			441		0.09
Certificates and other time deposits		1,466,275			9,481		2.59				676,661			573		0.34
Total Interest-Bearing Deposits		11,302,132			50,685		1.79				10,085,967			4,294		0.17
Borrowings:		1,293,309			11,594		3.59				616,572			2,966		1.92
Total Interest-Bearing Liabilities		12,595,441			62,279		1.98				10,702,539			7,260		0.27
Noninterest-bearing deposits		3,121,277									2,731,723
Other liabilities		222,352									139,120
Total Liabilities		15,939,070									13,573,382
STOCKHOLDERS' EQUITY		2,083,125									1,891,223
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,022,195			62,279					$	15,464,605			7,260
Net Interest Income (FTE)				$	150,440								$	108,016
Net Interest Spread (FTE)(4)							3.08	%								2.96	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets							5.06	%								3.23	%
Interest Expense / Average Earning Assets							1.48	%								0.20	%
Net Interest Margin (FTE)(5)							3.58	%								3.03	%
(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 $6,321 and $5,736 for the three months ended March 31, 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
	March 31,				December 31,				September 30,				June 30,				March 31,
		2023				2022				2022				2022				2022
Net Income Available to Common Stockholders - GAAP	$	63,610			$	70,292			$	63,283			$	38,522			$	48,586
Adjustments:
PPP loan income		(25	)			(109	)			(323	)			(891	)			(1,884	)
Acquisition-related expenses		—				413				3,417				12,549				152
Acquisition-related provision expense		—				—				—				16,755				—
Tax on adjustment		6				(75	)			(759	)			(6,967	)			425
Adjusted Net Income Available to Common Stockholders - Non-GAAP	$	63,591			$	70,521			$	65,618			$	59,968			$	47,279
Average Diluted Common Shares Outstanding (in thousands)		59,441				59,384				59,339				59,308				53,616
Diluted Earnings Per Common Share - GAAP	$	1.07			$	1.19			$	1.08			$	0.63			$	0.91
Adjustments:
PPP loan income		—				(0.01	)			—				(0.01	)			(0.04	)
Acquisition-related expenses		—				0.01				0.05				0.22				—
Acquisition-related provision expense		—				—				—				0.30				—
Tax on adjustment		—				—				(0.01	)			(0.13	)			0.01
Adjusted Diluted Earnings Per Common Share - Non-GAAP	$	1.07			$	1.19			$	1.12			$	1.01			$	0.88

RETURN ON TANGIBLE COMMON EQUITY
(Dollars In Thousands)	Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
		2023				2022				2022				2022				2022
Total Average Stockholders' Equity (GAAP)	$	2,083,125			$	1,958,041			$	2,018,156			$	2,021,123			$	1,891,223
Less: Average Preferred Stock		(25,125	)			(25,125	)			(25,125	)			(25,125	)			(125	)
Less: Average Intangible Assets, Net of Tax		(739,190	)			(741,632	)			(744,069	)			(745,614	)			(565,476	)
Average Tangible Common Equity, Net of Tax (Non-GAAP)	$	1,318,810			$	1,191,284			$	1,248,962			$	1,250,384			$	1,325,622
Net Income Available to Common Stockholders (GAAP)	$	63,610			$	70,292			$	63,283			$	38,521			$	48,586
Plus: Intangible Asset Amortization, Net of Tax		1,734				1,819				1,819				1,820				1,079
Tangible Net Income (Non-GAAP)	$	65,344			$	72,111			$	65,102			$	40,341			$	49,665
Return on Tangible Common Equity (Non-GAAP)		19.82	%			24.21	%			20.85	%			12.91	%			14.99	%

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

FAQ

What were First Merchants Corporation's earnings results for Q1 2023?

First Merchants Corporation reported a net income of $63.6 million and diluted earnings per share of $1.07 for Q1 2023.

How did First Merchants Corporation perform in terms of loan growth?

Total loans increased by $2.9 billion year-over-year, with organic loan growth of $1.3 billion, or 14.4%.

What is the Common Equity Tier 1 Capital Ratio for First Merchants Corporation?

The Common Equity Tier 1 Capital Ratio for First Merchants Corporation was 10.82%.

What changes occurred in First Merchants Corporation's deposit levels?

Total deposits grew by $320.5 million, or 8.9% annualized, but there was an organic deposit decline of $133.5 million.

When will First Merchants Corporation hold its earnings conference call?

First Merchants Corporation will conduct its first quarter earnings conference call on April 25, 2023, at 10:30 a.m. ET.