First Merchants Corporation Announces Record 2nd Quarter 2017 Results

First Merchants CorporationFirst Merchants Corporation. Photo by: Mike Rhodes

Muncie, IN—First Merchants Corporation (NASDAQ – FRME) reported record second quarter 2017 net income of $24.1 million, compared to $20 million during the second quarter of 2016. Earnings per share for the period totaled a record $.57 per share, an increase of $.08 per share, or 16.3 percent, over the same period in 2016. Year-to-date net income totaled a record $47.3 million, compared to $37.7 million during the same period in 2016. Earnings per share for the six months ended June 30, 2017 totaled a record $1.13 per share, an increase of $.21 per share, or 22.8 percent, over the same period in 2016.

Michael C. Rechin, President and Chief Executive Officer, stated, “First Merchants produced record earnings for the second quarter of 2017. Integrated within our second quarter financial statements was the addition of The Arlington Bank on May 19th to include $232 million of total loans, $253 million of deposits and $2.5 million of one-time acquisition expenses. We are also pleased to have completed the closing of our acquisition of Independent Alliance Banks, Inc. on July 14th.” Rechin added, “Our momentum in organic growth and franchise expansion through acquisitions is very fulfilling. The quarter was very productive, including margin expansion, efficiency gains and leadership team additions. Our focus for the remainder of the year includes successful execution of our two upcoming integrations and welcoming new First Merchants’ clients to the same level of excellent service that our client base has come to expect.”

Total assets reached $7.8 billion as of quarter-end and loans totaled a record $5.6 billion, compared to $6.9 billion and $4.8 billion, as of June 30, 2016, representing increases of 13 and 17.2 percent, respectively. Total deposits reached record levels as well, totaling $6 billion as of June 30, 2017, representing an 11.3 percent increase. Of the increase in total loans and total deposits, The Arlington Bank acquisition represented 4.8 and 4.7 percent, respectively. Tangible common equity also increased to $732 million, or $16.97 per share, compared to $633 million or $15.53 per share as of June 30, 2016.

Net-interest income totaled a record $63.1 million for the quarter and reported net-interest margin increased by 9 basis points over the second quarter of 2016, totaling 3.95 percent. Yields on earning assets totaled 4.44 percent and the cost of supporting liabilities totaled .49 percent. When adjusted for fair value accretion, net-interest margin totaled 3.81 percent for the quarter, an increase of 16 basis points over the second quarter of 2016 and 9 basis points over the first quarter of 2017.

Non-interest income totaled $18.4 million for the quarter, up $2 million from the second quarter of 2016 total of $16.4 million. Earnings on the cash surrender value of life insurance accounted for $1.7 million of the increase.

Non-interest expense totaled $47.3 million for the quarter, an increase of $2.5 million from the second quarter of 2016. The increase was fully attributable to one-time merger related expenses.

The Corporation’s provision expense totaled $2.9 million compared to $790,000 during the same period in 2016. The increase in provision expense provided allowance coverage for organic loan growth. The allowance for loan losses now totals $70.5 million as of June 30, 2017, up from $62.2 million as of June 30, 2016. Non-accrual loans totaled $27.3 million as of quarter- end, down from $33.6 million a year ago. The allowance is 1.25 percent of total loans and 1.45 percent of non-purchased loans.

As of June 30, 2017, the Corporation’s total risk-based capital ratio equaled 14.01 percent, common equity tier 1 capital ratio equaled 11.11 percent, and the tangible common equity ratio totaled 9.68 percent.

 

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation is comprised of First Merchants Bank, which also operates as Lafayette Bank & Trust, The Arlington Bank and iAB Financial Bank and First Merchants Private Wealth Advisors which operates 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