First Merchants Corporation Announces Third Quarter 2024 Earnings per Share
MUNCIE, Ind., Oct. 24, 2024 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)
Third Quarter 2024 Highlights:
Net income available to common stockholders was $48.7 million and diluted earnings per common share totaled $0.84, compared to $55.9 million and $0.94 in the third quarter of 2023, and $39.5 million and $0.68 in the second quarter of 2024. Excluding the loss from repositioning of the available for sale securities portfolio, adjusted net income was $55.6 million or $0.95 per share for the third quarter of 2024.
Strong capital position with Common Equity Tier 1 Capital Ratio of 11.25% and Tangible Common Equity to Tangible Assets Ratio of 8.76%.
Net interest margin was 3.23% compared to 3.16% on a linked quarter basis.
Total loans grew $15.5 million, or 0.5% annualized, on a linked quarter basis, and $385.1 million, or 3.1% during the last twelve months.
Total deposits grew by $83.7 million, or 2.3% annualized, on a linked quarter basis after normalizing for $287.7 million of deposits reclassified to held for sale.
Nonperforming assets to total assets were 35 basis points compared to 36 basis points on a linked quarter basis.
The efficiency ratio totaled 53.76% for the quarter.
Announced sale of five Illinois branches and certain loans and deposits to Old Second National Bank on August 27, 2024.
"We are pleased with our third quarter results and the focused momentum that we are building," said Mark Hardwick, Chief Executive Officer. "The pending sale of five non-core Illinois branches, restructure of the securities portfolio, and successful completion of four major technology initiatives provides us with the opportunity to reprioritize our core markets and introduce innovative customer acquisition strategies."
Third Quarter Financial Results:
First Merchants Corporation (the "Corporation") has reported third quarter 2024 net income available to common stockholders of $48.7 million compared to $55.9 million during the same period in 2023. Diluted earnings per common share for the period totaled $0.84 compared to the third quarter of 2023 result of $0.94. Excluding the $9.1 million pre-tax loss from repositioning of the available for sale securities portfolio, adjusted net income was $55.6 million, or $0.95 diluted earnings per common share for the third quarter of 2024.
During the quarter, the Corporation signed a definitive agreement to sell five Illinois branches along with certain loans and deposits, representing an exit from suburban Chicago markets. Loans of $9.2 million, deposits of $287.7 million and fixed assets of $3.4 million have been moved to held for sale categories as of September 30, 2024. The transaction is expected to close in the fourth quarter of this year.
Total assets equaled $18.3 billion as of quarter-end and loans totaled $12.7 billion. During the past twelve months, total loans grew by $385.1 million, or 3.1%. On a linked quarter basis, loans grew $15.5 million, or 0.5%, with growth primarily in commercial & industrial loans.
Investments totaling $3.7 billion decreased $51.6 million, or 1.4%, during the last twelve months and decreased $90.9 million, or 9.7% annualized, on a linked quarter basis. The decline during the quarter was due to $158.9 million in sales of available for sale securities with a weighted average tax-equivalent yield of 2.85%, partially offset by an increase in the securities portfolio valuation.
Total deposits were $14.4 billion as of quarter-end and decreased by $281.5 million, or 1.9%, over the past twelve months. The decline was primarily due to $287.7 million of deposits being reclassified to held for sale. Excluding this impact, deposits increased by $6.2 million. On a linked quarter basis, deposits grew organically by $83.7 million or 2.3%. The loan to deposit ratio increased to 88.0% at period end from 86.8% in the prior quarter, primarily due to the reclassification of deposits to held for sale as previously described.
The Corporation's Allowance for Credit Losses, Loans (ACL) totaled $187.8 million as of quarter-end, or 1.48% of total loans, a decrease of $1.7 million from prior quarter. Loan charge-offs, net of recoveries totaled $6.7 million and provision for loans of $5.0 million was recorded during the quarter. Reserves for unfunded commitments totaled $19.5 million and remained unchanged from the prior quarter. Non-performing assets to total assets were 35 basis points for the third quarter of 2024, a decrease of one basis point compared to 36 basis points in the prior quarter.
Net interest income totaled $131.1 million for the quarter, an increase of $2.5 million, or 2.0%, compared to prior quarter and a decrease of $2.3 million, or 1.7%, compared to the third quarter of 2023. Fully-tax equivalent net interest margin was 3.23%, an increase of 7 basis points compared to the second quarter of 2024, and a decrease of 6 basis points compared to the third quarter of 2023. The increase in net interest margin compared to the second quarter was due to higher earning asset yields.
Non-interest income totaled $24.9 million for the quarter, a decrease of $6.5 million, or 20.6%, compared to the second quarter of 2024 and a decrease of $3.0 million, or 6.7% from the third quarter of 2023. The decrease from second quarter of 2024 was driven by realized losses on sales of available for sale securities associated with the repositioning of the bond portfolio, partially offset by increases in gains on sales of mortgage loans and earnings on cash surrender value of life insurance.
Non-interest expense totaled $94.6 million for the quarter, an increase of $3.2 million from the second quarter of 2024 and an increase of $0.8 million from the third quarter of 2023. The increase from the linked quarter was from higher salaries and employee benefits primarily driven by higher incentives.
The Corporation's total risk-based capital ratio equaled 13.18%, common equity tier 1 capital ratio equaled 11.25%, and the tangible common equity ratio totaled 8.76%. These ratios continue to reflect the Corporation's strong liquidity and capital positions.
CONFERENCE CALL
First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 11:30 a.m. (ET) on Thursday, October 24, 2024.
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/BI34430e309ed545808c7c8195f36e86b6)
To view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/6grv3upw) during the time of the call. A replay of the webcast will be available until October 24, 2025.
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 about 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)
September 30,
2024
2023
ASSETS
Cash and due from banks
$
84,719
$
125,173
Interest-bearing deposits
359,126
348,639
Investment securities, net of allowance for credit losses of $245,000 and $245,000
3,662,145
3,713,724
Loans held for sale
40,652
30,972
Loans
12,646,808
12,271,422
Less: Allowance for credit losses - loans
(187,828
)
(205,782
)
Net loans
12,458,980
12,065,640
Premises and equipment
129,582
132,441
Federal Home Loan Bank stock
41,716
41,797
Interest receivable
92,055
90,011
Goodwill and other intangibles
733,601
741,283
Cash surrender value of life insurance
304,613
306,106
Other real estate owned
5,247
6,480
Tax asset, deferred and receivable
86,732
135,521
Other assets
348,384
340,476
TOTAL ASSETS
$
18,347,552
$
18,078,263
LIABILITIES
Deposits:
Noninterest-bearing
$
2,334,197
$
2,554,984
Interest-bearing
12,030,903
12,091,592
Total Deposits
14,365,100
14,646,576
Borrowings:
Federal funds purchased
30,000
—
Securities sold under repurchase agreements
124,894
152,537
Federal Home Loan Bank advances
832,629
713,384
Subordinated debentures and other borrowings
93,562
158,665
Total Borrowings
1,081,085
1,024,586
Deposits and other liabilities held for sale
288,476
—
Interest payable
18,089
16,473
Other liabilities
292,429
297,984
Total Liabilities
16,045,179
15,985,619
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
25,000
Common Stock, $.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding - 58,117,115 and 59,398,022 shares
7,265
7,425
Additional paid-in capital
1,192,683
1,234,402
Retained earnings
1,229,125
1,132,962
Accumulated other comprehensive loss
(151,825
)
(307,270
)
Total Stockholders' Equity
2,302,373
2,092,644
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
18,347,552
$
18,078,263
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts)
September 30,
September 30,
2024
2023
2024
2023
INTEREST INCOME
Loans receivable:
Taxable
$
206,680
$
191,705
$
606,116
$
550,314
Tax-exempt
8,622
8,288
25,242
23,757
Investment securities:
Taxable
9,263
8,590
27,062
26,563
Tax-exempt
13,509
13,947
40,733
44,296
Deposits with financial institutions
2,154
5,884
11,642
9,685
Federal Home Loan Bank stock
855
719
2,569
2,281
Total Interest Income
241,083
229,133
713,364
656,896
INTEREST EXPENSE
Deposits
98,856
85,551
296,292
209,437
Federal funds purchased
329
—
455
1,420
Securities sold under repurchase agreements
700
797
2,377
2,624
Federal Home Loan Bank advances
8,544
6,896
21,715
20,775
Subordinated debentures and other borrowings
1,544
2,506
5,781
7,303
Total Interest Expense
109,973
95,750
326,620
241,559
NET INTEREST INCOME
131,110
133,383
386,744
415,337
Provision for credit losses
5,000
2,000
31,500
2,000
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
126,110
131,383
355,244
413,337
NONINTEREST INCOME
Service charges on deposit accounts
8,361
7,975
24,482
23,147
Fiduciary and wealth management fees
8,525
7,394
25,550
22,653
Card payment fees
5,121
4,716
14,360
14,425
Net gains and fees on sales of loans
6,764
5,517
15,159
11,548
Derivative hedge fees
736
516
1,488
2,336
Other customer fees
344
384
1,231
1,643
Earnings on cash surrender value of life insurance
2,755
1,761
6,276
5,145
Net realized losses on sales of available for sale securities
(9,114
)
(1,650
)
(9,165
)
(4,613
)
Other income
1,374
1,229
3,457
2,874
Total Noninterest Income
24,866
27,842
82,838
79,158
NONINTEREST EXPENSES
Salaries and employee benefits
55,223
55,566
165,730
167,778
Net occupancy
6,994
6,837
21,052
20,770
Equipment
6,949
5,698
19,774
18,005
Marketing
1,836
2,369
4,807
4,780
Outside data processing fees
7,150
6,573
21,111
19,290
Printing and office supplies
378
333
1,085
1,150
Intangible asset amortization
1,772
2,182
5,500
6,561
FDIC assessments
3,720
2,981
11,285
7,117
Other real estate owned and foreclosure expenses
942
677
1,849
1,575
Professional and other outside services
3,035
3,833
10,809
12,191
Other expenses
6,630
6,805
19,975
20,950
Total Noninterest Expenses
94,629
93,854
282,977
280,167
INCOME BEFORE INCOME TAX
56,347
65,371
155,105
212,328
Income tax expense
7,160
9,005
18,052
31,021
NET INCOME
49,187
56,366
137,053
181,307
Preferred stock dividends
468
468
1,406
1,406
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
48,719
$
55,898
$
135,647
$
179,901
Per Share Data:
Basic Net Income Available to Common Stockholders
$
0.84
$
0.95
$
2.32
$
3.04
Diluted Net Income Available to Common Stockholders
$
0.84
$
0.94
$
2.31
$
3.03
Cash Dividends Paid to Common Stockholders
$
0.35
$
0.34
$
1.04
$
1.00
Average Diluted Common Shares Outstanding (in thousands)
58,289
59,503
58,629
59,465
FINANCIAL HIGHLIGHTS
(Dollars in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
NET CHARGE-OFFS
$
6,709
$
20,365
$
48,606
$
22,495
AVERAGE BALANCES:
Total Assets
$
18,360,580
$
18,152,239
$
18,374,370
$
18,115,504
Total Loans
12,680,166
12,287,632
12,592,907
12,264,787
Total Earning Assets
16,990,358
16,947,669
17,042,540
16,913,965
Total Deposits
14,702,454
14,735,592
14,826,056
14,627,448
Total Stockholders' Equity
2,251,547
2,154,232
2,232,419
2,126,005
FINANCIAL RATIOS:
Return on Average Assets
1.07
%
1.24
%
0.99
%
1.33
%
Return on Average Stockholders' Equity
8.66
10.38
8.10
11.28
Return on Tangible Common Stockholders' Equity
13.39
16.54
12.64
18.10
Average Earning Assets to Average Assets
92.54
93.36
92.75
93.37
Allowance for Credit Losses - Loans as % of Total Loans
1.48
1.67
1.48
1.67
Net Charge-offs as % of Average Loans (Annualized)
0.21
0.66
0.51
0.24
Average Stockholders' Equity to Average Assets
12.26
11.87
12.15
11.74
Tax Equivalent Yield on Average Earning Assets
5.82
5.55
5.72
5.32
Interest Expense/Average Earning Assets
2.59
2.26
2.56
1.90
Net Interest Margin (FTE) on Average Earning Assets
3.23
3.29
3.16
3.42
Efficiency Ratio
53.76
53.91
55.54
52.60
Tangible Common Book Value Per Share
$
26.64
$
22.43
$
26.64
$
22.43
NONPERFORMING ASSETS
(Dollars In Thousands)
September 30,
June 30,
March 31,
December 31,
September 30,
2024
2024
2024
2023
2023
Nonaccrual Loans
$
59,088
$
61,906
$
62,478
$
53,580
$
53,102
Other Real Estate Owned and Repossessions
5,247
4,824
4,886
4,831
6,480
Nonperforming Assets (NPA)
64,335
66,730
67,364
58,411
59,582
90+ Days Delinquent
14,105
1,686
2,838
172
89
NPAs & 90 Day Delinquent
$
78,440
$
68,416
$
70,202
$
58,583
$
59,671
Allowance for Credit Losses - Loans
$
187,828
$
189,537
$
204,681
$
204,934
$
205,782
Quarterly Net Charge-offs
6,709
39,644
2,253
3,148
20,365
NPAs / Actual Assets %
0.35
%
0.36
%
0.37
%
0.32
%
0.33
%
NPAs & 90 Day / Actual Assets %
0.43
%
0.37
%
0.38
%
0.32
%
0.33
%
NPAs / Actual Loans and OREO %
0.51
%
0.53
%
0.54
%
0.47
%
0.48
%
Allowance for Credit Losses - Loans / Actual Loans (%)
1.48
%
1.50
%
1.64
%
1.64
%
1.67
%
Net Charge-offs as % of Average Loans (Annualized)
0.21
%
1.26
%
0.07
%
0.10
%
0.66
%
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
September 30,
June 30,
March 31,
December 31,
September 30,
2024
2024
