First Merchants Corporation Announces Second Quarter 2023 Earnings Per Share

First Merchants Corporation (NASDAQ - FRME)

Second Quarter 2023 Highlights:

• Net income available to common stockholders was $60.4 million and diluted earnings per common share totaled $1.02, compared to $38.5 million and $.63 in the second quarter of 2022, and $63.6 million and $1.07 in the first quarter of 2023.
• Adjusted net income¹ was $60.4 million and adjusted diluted earnings per share¹ totaled $1.02, compared to $60.0 million and $1.01 in the second quarter of 2022, and $63.6 million and $1.07 in the first quarter of 2023.
• Strong capital position with Common Equity Tier 1 Capital Ratio of 11.07 percent
• Total loans grew $46.7 million, or 1.5 percent annualized on a linked quarter basis, and $163.2 million, or 5.4 percent annualized when excluding non-relationship based commercial loan sales that occurred during the quarter of $116.6 million.
• Total deposits declined $122.1 million, or 3.3 percent annualized on a linked quarter basis
• Nonaccrual loans totaled $69.2 million compared to $46.6 million on a linked quarter basis
• The efficiency ratio totaled 52.21 percent for the quarter

MUNCIE, Ind., July 25, 2023 (GLOBE NEWSWIRE) -- Mark Hardwick, Chief Executive Officer, stated, “We are pleased to report our second quarter 2023 results. Performance remains healthy and strong and our teams continue to meet the demands of our communities and client base.”

Second Quarter Financial Results:

First Merchants Corporation (the “Corporation) has reported second quarter 2023 net income available to common stockholders of $60.4 million compared to $38.5 million during the same period in 2022. Diluted earnings per common share for the period totaled $1.02 per share compared to the second quarter of 2022 result of $.63 per share. Prior year results included acquisition costs related to the acquisition of Level One of $29.3 million resulting in a reduction of $.38 of diluted earnings per common share.

Total assets equaled $18.0 billion as of quarter-end and loans totaled $12.3 billion. During the past twelve months, total loans grew by $1.0 billion, or 9.2 percent and were offset by the non-relationship based commercial loan sale of $116.6 million and PPP loan forgiveness of $29.6 million. On a linked quarter basis, loans grew $163.2 million, or 5.4 percent, when excluding the loan sale that occurred during the quarter of $116.6 million.

Investments, totaling $3.9 billion, decreased $738.5 million, or 16.0 percent, during the last twelve months and decreased $165.9 million, or 16.4 percent annualized on a linked quarter basis. The decline during the quarter was primarily due to $101.0 million of bond sales.

Total deposits equaled $14.6 billion as of quarter-end and increased by $10.3 million over the past twelve months. Total deposits declined $122.1 million, or 3.3 percent annualized on a linked quarter basis. The loan to deposit ratio for the current quarter ended at 84.3 percent.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $221.1 million as of quarter-end, or 1.80 percent of total loans, a decrease of $5.1 million from prior year. Loan charge-offs, net of recoveries, for the quarter totaled $1.9 million. No provision expense was recorded during the quarter or during the last twelve months. Non-performing assets to total assets were 0.43 percent for the second quarter of 2023, an increase of 13 basis points compared to 0.30 percent in the second quarter of 2022.

Net-interest income, totaling $137.8 million for the quarter, declined $6.3 million, or 4.4 percent, compared to prior quarter and increased $9.2 million, or 7.1 percent compared to the second quarter of 2022. Stated net-interest margin on a tax equivalent basis, totaling 3.39 percent, declined by 19 basis points compared to the first quarter of 2023 but increased 11 basis points compared to the second quarter of 2022. Net-interest margin, excluding the impact of fair value accretion and PPP loans, totaled 3.34 percent, a decrease of 18 basis points compared to 3.52 percent for the first quarter of 2023 but an increase of 15 basis points from the second quarter of 2022. During the quarter, increased deposit costs and mix offset the increase in earning asset yields reducing net-interest margin.

Non-interest income, totaling $26.3 million for the quarter, increased $1.3 million or 5.3 percent compared to the first quarter of 2023 but decreased $2.0 million from the second quarter of 2022. The increase over first quarter of 2023 was driven primarily by higher gains on the sales of loans and BOLI death benefit gains.

Non-interest expense totaled $92.6 million for the quarter, a decline of $1.1 million from the first quarter of 2023. The decrease was from lower salaries and employee benefits, partially offset by increases in FDIC assessments and other real estate owned and foreclosure expense.

The Corporation’s total risk-based capital ratio equaled 13.48 percent, common equity tier 1 capital ratio equaled 11.07 percent, and the tangible common equity ratio totaled 7.99 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 second quarter earnings conference call and web cast at 11:30 a.m. (ET) on Tuesday, July 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/BIc7becea7282048a2b5559e10b25ca4af)

In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/athyqu7i) during the time of the call. A replay of the webcast will be available until July 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.