First Merchants Corporation Announces Third Quarter 2022 Earnings Per Share

Rhea-AI Summary

First Merchants Corporation (NASDAQ - FRME) reported a strong third quarter in 2022 with a net income of $63.3 million and diluted earnings per share of $1.08, up from $52.8 million and $0.98 in Q3 2021. Adjusted net income rose to $65.6 million, marking a significant increase year-over-year. Total loans grew by $290.6 million (10.2% annualized), while deposits decreased by $136 million (3.7%). The net interest income was $140.3 million, reflecting a 9% quarter-over-quarter increase. The company's strong capital ratios were maintained despite challenges from high inflation.

Positive

• Net income increased to $63.3 million, up 19% from Q3 2021.
• Diluted earnings per share rose to $1.08, a 10% increase year-over-year.
• Adjusted net income reached $65.6 million, up 41% from the previous year.
• Total loans grew by $290.6 million or 10.2% annualized.
• Net interest income increased by $11.6 million or 9% from the previous quarter.

Negative

• Total deposits declined by $136 million or 3.7% annualized.
• Integration costs and severance expenses of $4.0 million were incurred.

MUNCIE, Ind., Oct. 25, 2022 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)

Third Quarter 2022 Highlights:

• Net income available to common stockholders was $63.3 million and diluted earnings per common share totaled $1.08, compared to $52.8 million and $.98 in the third quarter of 2021, and $38.5 million and $.63 in the second quarter of 2022.
• Completed system integration for the acquisition of Level One Bancorp, Inc. (“Level One”) during the quarter.
• Adjusted net income available to common stockholders¹ for the third quarter was $65.6 million and adjusted diluted earnings per common share¹ totaled $1.12, compared to $46.6 million and $.87 in the third quarter of 2021, and $60.0 million and $1.01 in the second quarter of 2022.
• Total loans grew $290.6 million, or 10.2% annualized on a linked quarter basis, excluding the forgiveness of $21.7 million in Paycheck Protection Program (“PPP”) loans.
• Total deposits declined $136.0 million, or 3.7% annualized on a linked quarter basis.
• Nonaccrual loans totaled $43.5 million compared to $46.0 million on a linked quarter basis
• Net interest income totaled $140.3 million, an increase of $11.6 million, or 9.0% on a linked quarter basis
  

Mark Hardwick, Chief Executive Officer, stated, “Despite high inflation and volatility in both the bond and stock markets, our performance continues to be steady and strong. Margins are expanding, loan growth continues, and asset quality metrics remain at historical lows. We believe our balance sheet mix, allowance coverage and capital levels are well positioned for an uncertain economic environment.”

Third Quarter Financial Results

First Merchants Corporation (the “Corporation) has reported third quarter 2022 net income available to common stockholders of $63.3 million compared to $52.8 million during the same period in 2021. Diluted earnings per common share for the period totaled $1.08 per share compared to the third quarter of 2021 result of $.98 per share. Current quarter results included integration costs from the acquisition of Level One and severance expense totaling $4.0 million.

Total assets equaled $17.7 billion as of quarter-end and loans totaled $11.7 billion. Total loans increased $2.6 billion during the past twelve months. The acquisition of Level One contributed $1.6 billion of loans. Excluding acquired loans, the Corporation experienced organic loan growth of $1.2 billion, or 13.8 percent, during the past twelve months. This was offset by the forgiveness of PPP loans of $230.3 million. PPP loans accounted for $11.2 million of the period end loan portfolio balance. Investments decreased $150.7 million, or 3.4 percent, during the last twelve months and now total $4.3 billion.

Total deposits equaled $14.4 billion as of quarter-end and increased by $2.1 billion over the past twelve months. The acquisition of Level One contributed $1.9 billion in deposits resulting in $155.3 million or 1.3% in organic deposit growth. The balance sheet growth mix resulted in an increase in the loan to deposit ratio of 7.6% over the past twelve months with the current quarter ratio ending at 80.9 percent.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $226.7 million as of quarter-end, or 1.94 percent of total loans, an increase of $26.7 million over prior year due to the acquisition of Level One. Net loan recoveries for the quarter totaled $0.4 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 0.28% for the third quarter of 2022, a decrease of seven basis points compared to 0.35% in the third quarter of 2021.

Net-interest income totaling $140.3 million for the quarter, continued to grow with an increase of $11.6 million, or 9 percent, over prior quarter, and an increase of $35.6 million, or 34 percent compared to the third quarter of 2021. Stated net-interest margin on a tax equivalent basis, totaling 3.55 percent, increased by 27 basis points compared to the second quarter of 2022 and 35 basis points compared to the third quarter of 2021. Net-interest margin excluding the impact of fair value accretion and PPP loans totaled 3.47%, an increase of 28 basis points compared to 3.19% for the second quarter of 2022 and an increase of 48 basis points from the third quarter of 2021. During the quarter, the yield on earning assets expanded 53 basis points from higher loan and investment portfolio yields as well as organic loan growth, offset by a 26 basis point increase in funding costs.

Non-interest income, totaling $29.6 million for the quarter, increased $1.3 million or 4.7% compared to the second quarter of 2022. The increase was driven by higher earnings on cash surrender value of life insurance offset by lower customer related fees and other income. Non-interest income increased $1.1 million from the third quarter of 2021 also due to higher earnings on cash surrender value of life insurance offset by lower gains on the sale of securities and other income. The decline in other income was due to a write-down of an equity investment of $1.9 million.

Non-interest expense totaled $96.4 million for the quarter, a decrease of $0.9 million from the second quarter of 2022, and an increase of $25.0 million over the third quarter of 2021. Integration costs and severance expense totaling $4.0 million were incurred during the quarter.

The Corporation’s total risk-based capital ratio equaled 12.84 percent, common equity tier 1 capital ratio equaled 10.40 percent, and the tangible common equity ratio totaled 6.66 percent. These ratios continue to reflect the Corporation’s strong capital position.

¹ See “Non-GAAP Financial Information” for reconciliation

CONFERENCE CALL

First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 10:30 a.m. (ET) on Tuesday, October 25, 2022.

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/BI33d38f63624949c49527aaa096d2e146)

In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/988gy9uu) during the time of the call. A replay of the webcast will be available until October 25, 2023.

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)	September 30,
	2022				2021
ASSETS
Cash and due from banks	$	119,532			$	169,261
Interest-bearing deposits		179,593				369,447
Investment securities, net of allowance for credit losses of $245,000 and $245,000		4,294,768				4,445,516
Loans held for sale		25,394				5,990
Loans		11,650,002				9,041,576
Less: Allowance for credit losses - loans		(226,702	)			(199,972	)
Net loans		11,423,300				8,841,604
Premises and equipment		116,306				104,814
Federal Home Loan Bank stock		38,056				28,736
Interest receivable		71,605				53,079
Goodwill and other intangibles		750,713				572,323
Cash surrender value of life insurance		306,932				291,825
Other real estate owned		6,454				698
Tax asset, deferred and receivable		142,110				39,504
Other assets		244,222				137,928
TOTAL ASSETS	$	17,718,985			$	15,060,725
LIABILITIES
Deposits:
Noninterest-bearing	$	3,356,651			$	2,554,323
Interest-bearing		11,078,174				9,794,366
Total Deposits		14,434,825				12,348,689
Borrowings:
Federal funds purchased		185,000				—
Securities sold under repurchase agreements		194,482				183,589
Federal Home Loan Bank advances		643,769				334,149
Subordinated debentures and other borrowings		151,301				118,558
Total Borrowings		1,174,552				636,296
Interest payable		4,971				3,736
Other liabilities		197,971				203,914
Total Liabilities		15,812,319				13,192,635
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 - 59,145,414 and 53,510,745 shares		7,393				6,689
Additional paid-in capital		1,226,695				988,659
Retained earnings		961,542				832,728
Accumulated other comprehensive income (loss)		(314,089	)			39,889
Total Stockholders' Equity		1,906,666				1,868,090
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,718,985			$	15,060,725

CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended								Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts)	September 30,								September 30,
	2022				2021				2022			2021
INTEREST INCOME
Loans receivable:
Taxable	$	128,504			$	85,319			$	314,366		$	257,426
Tax-exempt		6,500				5,591				18,194			16,475
Investment securities:
Taxable		10,055				7,788				28,937			21,923
Tax-exempt		17,261				14,464				50,348			39,920
Deposits with financial institutions		704				218				1,544			461
Federal Home Loan Bank stock		314				168				635			434
Total Interest Income		163,338				113,548				414,024			336,639
INTEREST EXPENSE
Deposits		16,644				5,707				29,423			17,730
Federal funds purchased		418				—				494			4
Securities sold under repurchase agreements		372				77				595			239
Federal Home Loan Bank advances		3,493				1,389				6,485			4,283
Subordinated debentures and other borrowings		2,105				1,660				5,780			4,976
Total Interest Expense		23,032				8,833				42,777			27,232
NET INTEREST INCOME		140,306				104,715				371,247			309,407
Provision for credit losses - loans		—				—				16,755			—
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		140,306				104,715				354,492			309,407
NON-INTEREST INCOME
Service charges on deposit accounts		7,165				6,249				21,274			17,109
Fiduciary and wealth management fees		7,221				7,352				22,187			21,284
Card payment fees		4,776				4,156				15,674			12,682
Net gains and fees on sales of loans		2,543				3,955				7,968			16,266
Derivative hedge fees		700				1,028				3,062			2,288
Other customer fees		501				393				1,573			1,129
Earnings on cash surrender value of life insurance		6,655				2,468				9,659			5,009
Net realized gains on sales of available for sale securities		481				1,756				1,137			5,316
Other income (loss)		(425	)			1,144				1,257			2,393
Total Non-Interest Income		29,617				28,501				83,791			83,476
NON-INTEREST EXPENSES
Salaries and employee benefits		56,002				43,314				154,562			124,563
Net occupancy		6,738				5,576				19,573			17,682
Equipment		5,997				4,529				17,797			14,407
Marketing		2,401				1,676				4,551			3,922
Outside data processing fees		6,827				4,794				16,071			13,736
Printing and office supplies		472				265				1,198			861
Intangible asset amortization		2,303				1,463				5,972			4,284
FDIC assessments		2,824				1,552				7,940			4,381
Other real estate owned and foreclosure expenses		328				(91	)			626			821
Professional and other outside services		4,461				2,767				17,681			8,286
Other expenses		8,025				5,539				20,045			13,834
Total Non-Interest Expenses		96,378				71,384				266,016			206,777
INCOME BEFORE INCOME TAX		73,545				61,832				172,267			186,106
Income tax expense		9,793				9,062				20,938			28,308
NET INCOME		63,752				52,770				151,329			157,798
Preferred stock dividends		469				—				938			—
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	63,283			$	52,770			$	150,391		$	157,798
Per Share Data:
Basic Net Income Available to Common Stockholders	$	1.08			$	0.98			$	2.63		$	2.93
Diluted Net Income Available to Common Stockholders	$	1.08			$	0.98			$	2.62		$	2.92
Cash Dividends Paid to Common Stockholders	$	0.32			$	0.29			$	0.93		$	0.84
Average Diluted Common Shares Outstanding (in thousands)		59,339				53,960				57,468			54,093

FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2022				2021				2022				2021
NET CHARGE-OFFS (RECOVERIES)	$	(427	)		$	(197	)		$	(751	)		$	4,731
AVERAGE BALANCES:
Total Assets	$	17,770,623			$	15,006,087			$	17,012,930			$	14,672,596
Total Loans		11,488,203				9,089,648				10,647,950				9,202,327
Total Earning Assets		16,508,914				13,741,196				15,744,040				13,419,310
Total Deposits		14,577,532				12,350,336				14,074,696				12,017,335
Total Stockholders' Equity		2,018,156				1,889,037				1,977,299				1,858,680
FINANCIAL RATIOS:
Return on Average Assets		1.43	%			1.41	%			1.19	%			1.43	%
Return on Average Stockholders' Equity		12.54				11.17				10.14				11.32
Return on Average Common Stockholders' Equity		12.70				11.17				10.23				11.32
Average Earning Assets to Average Assets		92.90				91.57				92.54				91.46
Allowance for Credit Losses - Loans as % of Total Loans		1.94				2.21				1.94				2.21
Net Charge-offs as % of Average Loans (Annualized)		(0.01	)			(0.01	)			(0.01	)			0.07
Average Stockholders' Equity to Average Assets		11.36				12.59				11.62				12.67
Tax Equivalent Yield on Average Earning Assets		4.11				3.46				3.66				3.49
Interest Expense/Average Earning Assets		0.56				0.26				0.36				0.27
Net Interest Margin (FTE) on Average Earning Assets		3.55				3.20				3.30				3.22
Efficiency Ratio		53.34				51.18				54.95				50.10
Tangible Common Book Value Per Share	$	19.26			$	24.31			$	19.26			$	24.31

NON-PERFORMING ASSETS
(Dollars In Thousands)	September 30,				June 30,				March 31,				December 31,				September 30,
	2022				2022				2022				2021				2021
Non-Accrual Loans	$	43,508			$	45,970			$	42,698			$	43,062			$	51,502
Renegotiated Loans		195				233				141				329				439
Non-Performing Loans (NPL)		43,703				46,203				42,839				43,391				51,941
Other Real Estate Owned and Repossessions		6,454				6,521				6,271				558				698
Non-Performing Assets (NPA)		50,157				52,724				49,110				43,949				52,639
90+ Days Delinquent		764				592				2,085				963				157
NPAs & 90 Day Delinquent	$	50,921			$	53,316			$	51,195			$	44,912			$	52,796
Allowance for Credit Losses - Loans	$	226,702			$	226,275			$	195,984			$	195,397			$	199,972
Quarterly Net Charge-offs (Recoveries)		(427	)			263				(587	)			4,575				(197	)
NPAs / Actual Assets %		0.28	%			0.30	%			0.32	%			0.28	%			0.35	%
NPAs & 90 Day / Actual Assets %		0.29	%			0.30	%			0.33	%			0.29	%			0.35	%
NPAs / Actual Loans and OREO %		0.43	%			0.46	%			0.52	%			0.47	%			0.58	%
Allowance for Credit Losses - Loans / Actual Loans (%)		1.94	%			1.98	%			2.09	%			2.11	%			2.21	%
Net Charge-offs as % of Average Loans (Annualized)		(0.01	)%			0.01	%			(0.03	)%			0.20	%			(0.01	)%

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	September 30,				June 30,				March 31,				December 31,				September 30,
	2022				2022				2022				2021				2021
ASSETS
Cash and due from banks	$	119,532			$	212,559			$	148,277			$	167,146			$	169,261
Interest-bearing deposits		179,593				136,702				395,262				474,154				369,447
Investment securities, net of allowance for credit losses		4,294,768				4,630,030				4,489,263				4,524,353				4,445,516
Loans held for sale		25,394				9,060				3,938				11,187				5,990
Loans		11,650,002				11,397,417				9,356,241				9,241,861				9,041,576
Less: Allowance for credit losses - loans		(226,702	)			(226,275	)			(195,984	)			(195,397	)			(199,972	)
Net loans		11,423,300				11,171,142				9,160,257				9,046,464				8,841,604
Premises and equipment		116,306				117,757				105,883				105,655				104,814
Federal Home Loan Bank stock		38,056				38,111				26,422				28,736				28,736
Interest receivable		71,605				68,728				56,081				57,187				53,079
Goodwill and other intangibles		750,713				753,649				569,494				570,860				572,323
Cash surrender value of life insurance		306,932				323,013				291,881				291,041				291,825
Other real estate owned		6,454				6,521				6,271				558				698
Tax asset, deferred and receivable		142,110				114,965				73,422				35,641				39,504
Other assets		244,222				198,255				138,807				140,167				137,928
TOTAL ASSETS	$	17,718,985			$	17,780,492			$	15,465,258			$	15,453,149			$	15,060,725
LIABILITIES
Deposits:
Noninterest-bearing	$	3,356,651			$	3,435,331			$	2,745,235			$	2,709,646			$	2,554,323
Interest-bearing		11,078,174				11,135,538				10,160,718				10,022,931				9,794,366
Total Deposits		14,434,825				14,570,869				12,905,953				12,732,577				12,348,689
Borrowings:
Federal funds purchased		185,000				100,000				—				—				—
Securities sold under repurchase agreements		194,482				186,468				169,697				181,577				183,589
Federal Home Loan Bank advances		643,769				598,865				308,960				334,055				334,149
Subordinated debentures and other borrowings		151,301				151,299				118,677				118,618				118,558
Total Borrowings		1,174,552				1,036,632				597,334				634,250				636,296
Interest payable		4,971				2,978				3,589				2,762				3,736
Other liabilities		197,971				192,372				150,749				170,989				203,914
Total Liabilities		15,812,319				15,802,851				13,657,625				13,540,578				13,192,635
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				—				—				—
Common Stock, $.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding		7,393				7,383				6,678				6,676				6,689
Additional paid-in capital		1,226,695				1,226,378				987,404				985,818				988,659
Retained earnings		961,542				917,311				897,818				864,839				832,728
Accumulated other comprehensive income (loss)		(314,089	)			(198,556	)			(84,392	)			55,113				39,889
Total Stockholders' Equity		1,906,666				1,977,641				1,807,633				1,912,571				1,868,090
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,718,985			$	17,780,492			$	15,465,258			$	15,453,149			$	15,060,725

CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	September 30,				June 30,				March 31,				December 31,				September 30,
	2022				2022				2022				2021				2021
INTEREST INCOME
Loans receivable:
Taxable	$	128,504			$	106,787			$	79,075			$	80,583			$	85,319
Tax-exempt		6,500				5,990				5,704				5,635				5,591
Investment securities:
Taxable		10,055				10,372				8,510				8,028				7,788
Tax-exempt		17,261				17,212				15,875				15,411				14,464
Deposits with financial institutions		704				610				230				173				218
Federal Home Loan Bank stock		314				175				146				163				168
Total Interest Income		163,338				141,146				109,540				109,993				113,548
INTEREST EXPENSE
Deposits		16,644				8,485				4,294				5,589				5,707
Federal funds purchased		418				76				—				1				—
Securities sold under repurchase agreements		372				134				89				75				77
Federal Home Loan Bank advances		3,493				1,774				1,218				1,389				1,389
Subordinated debentures and other borrowings		2,105				2,016				1,659				1,666				1,660
Total Interest Expense		23,032				12,485				7,260				8,720				8,833
NET INTEREST INCOME		140,306				128,661				102,280				101,273				104,715
Provision for credit losses - loans		—				16,755				—				—				—
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		140,306				111,906				102,280				101,273				104,715
NON-INTEREST INCOME
Service charges on deposit accounts		7,165				7,690				6,419				6,462				6,249
Fiduciary and wealth management fees		7,221				7,634				7,332				7,078				7,352
Card payment fees		4,776				5,175				5,723				3,937				4,156
Net gains and fees on sales of loans		2,543				3,226				2,199				3,423				3,955
Derivative hedge fees		700				1,444				918				1,562				1,028
Other customer fees		501				662				410				361				393
Earnings on cash surrender value of life insurance		6,655				1,308				1,696				2,051				2,468
Net realized gains on sales of available for sale securities		481				90				566				358				1,756
Other income (loss)		(425	)			1,048				634				615				1,144
Total Non-Interest Income		29,617				28,277				25,897				25,847				28,501
NON-INTEREST EXPENSES
Salaries and employee benefits		56,002				56,041				42,519				42,432				43,314
Net occupancy		6,738				6,648				6,187				5,644				5,576
Equipment		5,997				6,720				5,080				4,994				4,529
Marketing		2,401				1,414				736				1,840				1,676
Outside data processing fees		6,827				4,881				4,363				4,581				4,794
Printing and office supplies		472				381				345				356				265
Intangible asset amortization		2,303				2,303				1,366				1,463				1,463
FDIC assessments		2,824				2,924				2,192				1,862				1,552
Other real estate owned and foreclosure expenses		328				(266	)			564				171				(91	)
Professional and other outside services		4,461				10,267				2,953				3,627				2,767
Other expenses		8,025				6,000				6,020				5,466				5,539
Total Non-Interest Expenses		96,378				97,313				72,325				72,436				71,384
INCOME BEFORE INCOME TAX		73,545				42,870				55,852				54,684				61,832
Income tax expense		9,793				3,879				7,266				6,951				9,062
NET INCOME		63,752				38,991				48,586				47,733				52,770
Preferred stock dividends		469				469				—				—				—
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	63,283			$	38,522			$	48,586			$	47,733			$	52,770
Per Share Data:
Basic Net Income Available to Common Stockholders	$	1.08			$	0.64			$	0.91			$	0.89			$	0.98
Diluted Net Income Available to Common Stockholders	$	1.08			$	0.63			$	0.91			$	0.89			$	0.98
Cash Dividends Paid to Common Stockholders	$	0.32			$	0.32			$	0.29			$	0.29			$	0.29
Average Diluted Common Shares Outstanding (in thousands)		59,339				59,308				53,616				53,660				53,960
FINANCIAL RATIOS:
Return on Average Assets		1.43	%			0.88	%			1.26	%			1.25	%			1.41	%
Return on Average Stockholders' Equity		12.54				7.62				10.28				10.10				11.17
Return on Average Common Stockholders' Equity		12.70				7.72				10.28				10.10				11.17
Average Earning Assets to Average Assets		92.90				92.45				92.23				91.86				91.57
Allowance for Credit Losses - Loans as % of Total Loans		1.94				1.98				2.09				2.11				2.21
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)		(0.01	)			0.01				(0.03	)			0.20				(0.01	)
Average Stockholders' Equity to Average Assets		11.36				11.37				12.23				12.36				12.59
Tax Equivalent Yield on Average Earning Assets		4.11				3.58				3.23				3.29				3.46
Interest Expense/Average Earning Assets		0.56				0.30				0.20				0.25				0.26
Net Interest Margin (FTE) on Average Earning Assets		3.55				3.28				3.03				3.04				3.20
Efficiency Ratio		53.34				58.45				52.79				53.49				51.18
Tangible Common Book Value Per Share	$	19.26			$	20.45			$	23.26			$	25.21			$	24.31

LOANS
(Dollars In Thousands)	September 30,				June 30,				March 31,				December 31,				September 30,
	2022				2022				2022				2021				2021
Commercial and industrial loans	$	3,330,529			$	3,297,477			$	2,826,660			$	2,714,565			$	2,573,615
Agricultural land, production and other loans to farmers		221,954				214,904				209,077				246,442				240,686
Real estate loans:
Construction		828,923				745,983				552,975				523,066				521,889
Commercial real estate, non-owner occupied		2,299,272				2,423,185				2,073,197				2,135,459				2,150,387
Commercial real estate, owner occupied		1,268,567				1,264,563				974,521				986,720				952,441
Residential		1,990,668				1,813,297				1,226,695				1,159,127				1,154,373
Home equity		621,619				586,108				512,641				523,754				531,307
Individuals' loans for household and other personal expenditures		173,225				157,264				147,593				146,092				135,093
Public finance and other commercial loans		915,245				894,636				832,882				806,636				781,785
Loans		11,650,002				11,397,417				9,356,241				9,241,861				9,041,576
Allowance for credit losses - loans		(226,702	)			(226,275	)			(195,984	)			(195,397	)			(199,972	)
NET LOANS	$	11,423,300			$	11,171,142			$	9,160,257			$	9,046,464			$	8,841,604

DEPOSITS
(Dollars In Thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
	2022			2022			2022			2021			2021
Demand deposits	$	8,534,950		$	8,785,889		$	7,806,033		$	7,704,190		$	7,317,399
Savings deposits		5,054,490			4,875,880			4,444,417			4,334,802			4,301,483
Certificates and other time deposits of $100,000 or more		443,588			436,942			252,033			273,379			283,396
Other certificates and time deposits		381,365			446,973			380,293			389,752			404,010
Brokered deposits		20,432			25,185			23,177			30,454			42,401
TOTAL DEPOSITS	$	14,434,825		$	14,570,869		$	12,905,953		$	12,732,577		$	12,348,689

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	September 30, 2022									September 30, 2021
	Average Balance			Interest  Income / Expense			Average Rate			Average Balance			Interest  Income / Expense			Average Rate
Assets:
Interest-bearing deposits	$	190,434		$	704		1.48	%		$	539,377		$	218		0.16	%
Federal Home Loan Bank stock		38,089			314		3.30				28,736			168		2.34
Investment Securities: (1)
Taxable		2,091,608			10,055		1.92				1,843,026			7,788		1.69
Tax-Exempt (2)		2,700,580			21,849		3.24				2,240,409			18,309		3.27
Total Investment Securities		4,792,188			31,904		2.66				4,083,435			26,097		2.56
Loans held for sale		20,039			266		5.74				17,426			158		3.63
Loans: (3)
Commercial		8,177,895			103,227		5.05				6,745,303			70,442		4.18
Real Estate Mortgage		1,666,173			14,701		3.53				886,469			8,142		3.67
Installment		813,112			10,310		5.07				690,093			6,576		3.81
Tax-Exempt (2)		810,984			8,228		4.06				750,357			7,078		3.77
Total Loans		11,488,203			136,732		4.76				9,089,648			92,396		4.07
Total Earning Assets		16,508,914			169,654		4.11	%			13,741,196			118,879		3.46	%
Total Non-Earning Assets		1,261,709									1,264,891
Total Assets	$	17,770,623								$	15,006,087
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	5,184,087		$	8,723		0.67	%		$	4,799,624		$	3,606		0.30	%
Money market deposits		3,096,423			5,390		0.70				2,459,205			764		0.12
Savings deposits		1,978,596			1,538		0.31				1,788,281			486		0.11
Certificates and other time deposits		857,033			993		0.46				758,565			851		0.45
Total Interest-bearing Deposits		11,116,139			16,644		0.60				9,805,675			5,707		0.23
Borrowings		1,013,893			6,388		2.52				619,768			3,126		2.02
Total Interest-bearing Liabilities		12,130,032			23,032		0.76				10,425,443			8,833		0.34
Noninterest-bearing deposits		3,461,393									2,544,661
Other liabilities		161,042									146,946
Total Liabilities		15,752,467									13,117,050
Stockholders' Equity		2,018,156									1,889,037
Total Liabilities and Stockholders' Equity	$	17,770,623			23,032					$	15,006,087			8,833
Net Interest Income (FTE)				$	146,622								$	110,046
Net Interest Spread (FTE) (4)							3.35	%								3.12	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets							4.11	%								3.46	%
Interest Expense / Average Earning Assets							0.56	%								0.26	%
Net Interest Margin (FTE) (5)							3.55	%								3.20	%
(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 2022 and 2021. These totals equal $6,316 and $5,331 for the three months ended September 30, 2022 and 2021, 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, 2022									September 30, 2021
	Average Balance			Interest  Income / Expense			Average Rate			Average Balance			Interest  Income / Expense			Average Rate
Assets:
Interest-bearing deposits	$	333,818		$	1,544		0.62	%		$	509,153		$	461		0.12	%
Federal Home Loan Bank stock		34,742			635		2.44				28,736			434		2.01
Investment Securities: (1)
Taxable		2,079,983			28,937		1.85				1,689,697			21,923		1.73
Tax-Exempt (2)		2,647,547			63,732		3.21				1,989,397			50,532		3.39
Total Investment Securities		4,727,530			92,669		2.61				3,679,094			72,455		2.63
Loans held for sale		19,020			622		4.36				19,360			551		3.79
Loans: (3)
Commercial		7,731,591			253,770		4.38				6,857,968			210,502		4.09
Real Estate Mortgage		1,350,969			35,199		3.47				924,652			26,917		3.88
Installment		765,960			24,775		4.31				674,696			19,456		3.84
Tax-Exempt (2)		780,410			23,030		3.93				725,651			20,854		3.83
Total Loans		10,647,950			337,396		4.22				9,202,327			278,280		4.03
Total Earning Assets		15,744,040			432,244		3.66	%			13,419,310			351,630		3.49	%
Total Non-Earning Assets		1,268,890									1,253,286
Total Assets	$	17,012,930								$	14,672,596
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	5,195,249		$	15,699		0.40	%		$	4,721,267		$	10,875		0.31	%
Money market deposits		2,880,603			8,392		0.39				2,295,589			2,395		0.14
Savings deposits		1,937,761			2,895		0.20				1,730,149			1,424		0.11
Certificates and other time deposits		828,158			2,437		0.39				809,721			3,036		0.50
Total Interest-bearing Deposits		10,841,771			29,423		0.36				9,556,726			17,730		0.25
Borrowings		817,894			13,354		2.18				646,326			9,502		1.96
Total Interest-bearing Liabilities		11,659,665			42,777		0.49				10,203,052			27,232		0.36
Noninterest-bearing deposits		3,232,925									2,460,609
Other liabilities		143,041									150,255
Total Liabilities		15,035,631									12,813,916
Stockholders' Equity		1,977,299									1,858,680
Total Liabilities and Stockholders' Equity	$	17,012,930			42,777					$	14,672,596			27,232
Net Interest Income (FTE)				$	389,467								$	324,398
Net Interest Spread (FTE) (4)							3.17	%								3.13	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets							3.66	%								3.49	%
Interest Expense / Average Earning Assets							0.36	%								0.27	%
Net Interest Margin (FTE) (5)							3.30	%								3.22	%
(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 2022 and 2021. These totals equal $18,220 and $14,991 for the nine months ended September 30, 2022 and 2021, 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,
	2022				2022				2022				2021				2021				2022				2021
Net Income Available to Common Stockholders - GAAP	$	63,283			$	38,522			$	48,586			$	47,733			$	52,770			$	150,391			$	157,798
Adjustments:
PPP loan income		(323	)			(891	)			(1,884	)			(3,721	)			(8,211	)			(3,098	)			(27,179	)
Acquisition-related expenses		3,417				12,549				152				—				—				16,118				—
Acquisition-related provision expense		—				16,755				—				—				—				16,755				—
Tax on adjustment		(759	)			(6,967	)			425				912				2,013				(7,301	)			6,664
Adjusted Net Income Available to Common Stockholders - Non-GAAP	$	65,618			$	59,968			$	47,279			$	44,924			$	46,572			$	172,865			$	137,283
Average Diluted Common Shares Outstanding (in thousands)		59,339				59,308				53,616				53,660				53,960				57,468				54,093
Diluted Earnings Per Common Share - GAAP	$	1.08			$	0.63			$	0.91			$	0.89			$	0.98			$	2.62			$	2.92
Adjustments:
PPP loan income		—				(0.01	)			(0.04	)			(0.07	)			(0.15	)			(0.05	)			(0.50	)
Acquisition-related expenses		0.05				0.22				—				—				—				0.27				—
Acquisition-related provision expense		—				0.30				—				—				—				0.30				—
Tax on adjustment		(0.01	)			-0.13				0.01				0.02				0.04				(0.13	)			0.12
Adjusted Diluted Earnings Per Common Share - Non-GAAP	$	1.12			$	1.01			$	0.88			$	0.84			$	0.87			$	3.01			$	2.54

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

FAQ

What were the earnings for First Merchants Corporation in Q3 2022?

First Merchants Corporation reported a net income of $63.3 million and diluted earnings per share of $1.08 in Q3 2022.

How did total loans perform for First Merchants Corporation in Q3 2022?

Total loans increased by $290.6 million, or 10.2% annualized, in Q3 2022.

What challenges did First Merchants Corporation face in Q3 2022?

Total deposits declined by $136 million, or 3.7% annualized, alongside integration and severance costs of $4.0 million.

What was the net interest income for First Merchants Corporation in Q3 2022?

Net interest income for Q3 2022 totaled $140.3 million, a 9% increase from the previous quarter.

When will the earnings conference call for First Merchants Corporation take place?

The earnings conference call for Q3 2022 is scheduled for October 25, 2022, at 10:30 a.m. ET.