MUNCIE, Ind., Jan. 28, 2021 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported fourth quarter 2020 net income of $45.1 million compared to $47.8 million during the same period in 2019. Earnings per share for the period totaled $.83 per share compared to fourth quarter 2019 result of $.87 per share. Net income for the year ended December 31, 2020 totaled $148.6 million, compared to $164.5 million during the same period in 2019. Year-to-date earnings per share totaled $2.74 compared to $3.19 in 2019.

Total assets equaled $14.1 billion as of year-end and loans totaled $9.2 billion. The Corporation’s loan portfolio increased by $789 million, or 9.2 percent, during 2020. Paycheck Protection Program (“PPP”) loans accounted for $667 million of the year’s loan growth. Investments increased $551 million, or 21.2 percent, during the year and now total $3.1 billion. Total deposits equaled $11.4 billion as of year-end and increased by $1.5 billion, or 15.5 percent, during 2020.

Mark Hardwick, Chief Executive Officer, stated, “We are proud of our 2020 results given the significant headwinds of the past year. The global pandemic quickly turned 2020 into a year filled with economic, political, medical and logistical challenges. However, our employees demonstrated courage and a can-do attitude for the benefit of all stakeholders. We guided over 5,200 customers through the Paycheck Protection Program while maintaining branch and back-office operations with as many as 1,000 employees working remotely. We grew loans by 9.2 percent, deposits by 15.5 percent, processed over 2,700 loan modifications and donated an additional $1 million to COVID relief efforts in our communities. Despite providing $58.7 million to the allowance for loan losses and managing through 40 basis points of margin compression we still delivered $149 million of net income to shareholders.” Hardwick also added, “Executive management expects 2021 to be a year of increasing momentum as the vaccine helps reopen our lobbies and allows us to repopulate our offices while growing our customer base.”

At the beginning of 2020, the Corporation chose to defer the adoption of the current expected credit loss (“CECL”) model. The passing of the 2021 Consolidated Appropriations Act in December of 2020 prompted the SEC to allow for the adoption of CECL on January 1, 2021 with a Day 1 measurement date of January 1, 2021. As such, the allowance for loan losses was calculated under the incurred loss method in the fourth quarter. The Corporation’s provision expense totaled $4.5 million for the fourth quarter and $58.7 million for the year ended December 31, 2020. Net charge-offs totaled $0.6 million for the quarter and $8.3 million for the year. The allowance for loan losses totaled $130.6 million at year end, which increased $3.9 million in the fourth quarter. Allowance for loan losses is 1.41 percent of total loans and 1.52 percent excluding PPP loans from total loans. The Corporation also has $23 million in remaining fair value marks.

Net-interest income totaled $382.1 million for the year, an increase of $25.5 million, or 7.1 percent, in the face of a net-interest margin decline of 40 basis points to 3.29 percent. Yield on earning assets declined by 94 basis points totaling 3.84 percent and the cost of supporting liabilities decreased by 54 basis points and totaled 0.55 percent. Fair value accretion contributed one basis point less in margin as it accounted for 12 basis points in 2019 and 11 basis points in 2020. Yield on earning assets for the fourth quarter totaled 3.72 percent with cost of supporting liabilities totaling 0.34 percent resulting in a margin of 3.38 percent. PPP loans contributed 16 basis points to margin during the fourth quarter as unamortized SBA fees were recognized upon loan forgiveness.

Non-interest income totaled $109.9 million for the year, a $23.2 million, or 26.8 percent increase from 2019. Customer specific line items accounted for $15.3 million of increase in total non-interest income. Gains on sales of mortgage loans increased $10.4 million over 2019 and hit a record high of $18.3 million for 2020 which offset the headwinds of lower service charges on deposits and the impact of the Durbin Amendment adoption on card payment fees. Fiduciary and wealth management fees also contributed to the increase with growth of $6.2 million over 2019.

Non-interest expense totaled $263.4 million for the year ended 2020, a $16.6 million increase from 2019. The fourth quarter of 2020 includes charges of $4.5 million related to the announcement of the consolidation of 17 banking centers. Additionally, FDIC expense increased $5.1 million year over year due to the use of FDIC credits in 2019. Merger related expenses of $13.7 million were also included in the 2019 totals.

The Corporation’s loan to deposit ratio now totals 81 percent and loan to asset ratio totals 66 percent. Additionally, the Corporation’s total risk-based capital ratio equaled 14.36 percent, common equity tier 1 capital ratio equaled 12.02 percent, and the tangible common equity ratio totaled 9.65 percent. Excluding PPP loans, the tangible common equity ratio totaled 9.99 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, January 28, 2021.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's fourth quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until February 28, 2021. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529, Canada participants should dial 855-669-9658, or for International participants, dial +1 412-317-0088. The replay access code is 10150572.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme210128.html during the time of the call. A replay of the web cast will be available until January 28, 2022.

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)	December 31,
	2020				2019
ASSETS
Cash and cash equivalents	$	192,896			$	177,201
Interest-bearing deposits	392,305				118,263
Investment securities	3,146,787				2,596,063
Loans held for sale	3,966				9,037
Loans	9,243,174				8,459,310
Less: Allowance for loan losses	(130,648		)		(80,284		)
Net loans	9,112,526				8,379,026
Premises and equipment	111,062				113,055
Federal Home Loan Bank stock	28,736				28,736
Interest receivable	53,948				48,901
Goodwill and other intangibles	572,893				578,880
Cash surrender value of life insurance	292,745				288,206
Other real estate owned	940				7,527
Tax asset, deferred and receivable	12,340				12,165
Other assets	146,066				100,194
TOTAL ASSETS	$	14,067,210			$	12,457,254
LIABILITIES
Deposits:
Noninterest-bearing	$	2,298,138			$	1,736,396
Interest-bearing	9,063,472				8,103,560
Total Deposits	11,361,610				9,839,956
Borrowings:
Federal funds purchased	—				55,000
Securities sold under repurchase agreements	177,102				187,946
Federal Home Loan Bank advances	389,430				351,072
Subordinated debentures and other borrowings	118,380				138,685
Total Borrowings	684,912				732,703
Interest payable	3,287				6,754
Other liabilities	141,756				91,404
Total Liabilities	12,191,565				10,670,817
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding - 125 shares	125				125
Common Stock, $.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding - 53,922,359 and 55,368,482 shares	6,740				6,921
Additional paid-in capital	1,005,366				1,054,997
Retained earnings	788,578				696,520
Accumulated other comprehensive income	74,836				27,874
Total Stockholders' Equity	1,875,645				1,786,437
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	14,067,210			$	12,457,254

CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended								Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts)	December 31,								December 31,
	2020				2019				2020			2019
INTEREST INCOME
Loans receivable:
Taxable	$	90,138			$	102,617			$	358,264		$	382,772
Tax-exempt	5,414				4,671				21,483			17,568
Investment securities:
Taxable	5,263				7,993				24,440			27,815
Tax-exempt	12,056				8,995				42,341			31,655
Deposits with financial institutions	139				1,203				938			4,225
Federal Home Loan Bank stock	214				342				1,042			1,370
Total Interest Income	113,224				125,821				448,508			465,405
INTEREST EXPENSE
Deposits	7,509				24,074				51,740			91,585
Federal funds purchased	2				26				120			251
Securities sold under repurchase agreements	77				367				604			1,424
Federal Home Loan Bank advances	1,656				1,776				6,973			7,176
Subordinated debentures and other borrowings	1,669				1,994				6,944			8,309
Total Interest Expense	10,913				28,237				66,381			108,745
NET INTEREST INCOME	102,311				97,584				382,127			356,660
Provision for loan losses	4,482				500				58,673			2,800
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	97,829				97,084				323,454			353,860
OTHER INCOME
Service charges on deposit accounts	5,508				6,312				20,999			22,951
Fiduciary and wealth management fees	6,251				5,384				23,747			17,562
Card payment fees	3,502				5,430				19,502			20,243
Net gains and fees on sales of loans	5,393				2,633				18,271			7,891
Derivative hedge fees	2,281				1,405				6,977			5,357
Other customer fees	394				434				1,497			1,664
Earnings on cash surrender value of life insurance	1,283				1,458				5,140			4,537
Net realized gains on sales of available for sale securities	2,398				1,039				11,895			4,415
Other income	473				150				1,898			2,068
Total Other Income	27,483				24,245				109,926			86,688
OTHER EXPENSES
Salaries and employee benefits	41,809				39,358				155,937			144,037
Net occupancy	9,653				5,311				26,756			19,584
Equipment	5,555				4,429				19,344			16,218
Marketing	1,763				1,492				6,609			6,650
Outside data processing fees	3,839				4,428				14,432			16,476
Printing and office supplies	307				484				1,304			1,445
Intangible asset amortization	1,476				1,590				5,987			5,994
FDIC assessments	1,560				—				5,804			717
Other real estate owned and foreclosure expenses	(1,576		)		66				330			2,428
Professional and other outside services	2,836				2,899				8,901			15,410
Other expenses	5,314				5,144				18,001			17,804
Total Other Expenses	72,536				65,201				263,405			246,763
INCOME BEFORE INCOME TAX	52,776				56,128				169,975			193,785
Income tax expense	7,641				8,298				21,375			29,325
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	45,135			$	47,830			$	148,600		$	164,460
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.83			$	0.87			$	2.75		$	3.20
Diluted Net Income Available to Common Stockholders	$	0.83			$	0.87			$	2.74		$	3.19
Cash Dividends Paid	$	0.26			$	0.26			$	1.04		$	1.00
Average Diluted Shares Outstanding (in thousands)	54,050				55,520				54,220			51,561

FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2020				2019				2020				2019
NET CHARGE-OFFS	$	560			$	787			$	8,309			$	3,068
AVERAGE BALANCES:
Total Assets	$	13,968,047			$	12,479,039			$	13,466,269			$	11,091,320
Total Loans	9,240,304				8,358,683				9,051,155				7,690,190
Total Earning Assets	12,663,803				11,194,954				12,123,317				10,015,771
Total Deposits	11,283,040				9,926,794				10,728,106				8,782,634
Total Stockholders' Equity	1,856,896				1,768,848				1,825,135				1,569,615
FINANCIAL RATIOS:
Return on Average Assets	1.29		%		1.53		%		1.10		%		1.48		%
Return on Average Stockholders' Equity	9.72				10.82				8.14				10.48
Return on Average Common Stockholders' Equity	9.72				10.82				8.14				10.48
Average Earning Assets to Average Assets	90.66				89.71				90.03				90.30
Allowance for Loan Losses as % of Total Loans	1.41				0.95				1.41				0.95
Net Charge-offs as % of Average Loans (Annualized)	0.02				0.04				0.09				0.04
Average Stockholders' Equity to Average Assets	13.29				14.17				13.55				14.15
Tax Equivalent Yield on Average Earning Assets	3.72				4.63				3.84				4.78
Interest Expense/Average Earning Assets	0.34				1.01				0.55				1.09
Net Interest Margin (FTE) on Average Earning Assets	3.38				3.62				3.29				3.69
Efficiency Ratio	55.01				51.07				51.71				52.73
Tangible Common Book Value Per Share	$	24.27			$	21.94			$	24.27			$	21.94

NON-PERFORMING ASSETS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
	2020				2020				2020				2020				2019
Non-Accrual Loans	$	61,471			$	56,739			$	50,102			$	15,649			$	15,949
Renegotiated Loans	3,240				2,677				1,086				665				841
Non-Performing Loans (NPL)	64,711				59,416				51,188				16,314				16,790
Other Real Estate Owned and Repossessions	940				6,984				7,409				8,017				7,527
Non-Performing Assets (NPA)	65,651				66,400				58,597				24,331				24,317
90+ Days Delinquent	746				1,330				4,981				312				69
NPAs & 90 Day Delinquent	$	66,397			$	67,730			$	63,578			$	24,643			$	24,386
Allowance for Loan Losses	$	130,648			$	126,726			$	121,119			$	99,454			$	80,284
Quarterly Net Charge-offs	560				6,937				230				582				787
NPAs / Actual Assets %	0.47		%		0.48		%		0.42		%		0.19		%		0.20		%
NPAs & 90 Day / Actual Assets %	0.47		%		0.49		%		0.46		%		0.19		%		0.20		%
NPAs / Actual Loans and OREO %	0.71		%		0.72		%		0.63		%		0.28		%		0.29		%
Allowance for Loan Losses / Actual Loans (%)	1.41		%		1.37		%		1.30		%		1.15		%		0.95		%
Net Charge-offs as % of Average Loans (Annualized)	0.02		%		0.30		%		0.01		%		0.03		%		0.04		%

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
	2020				2020				2020				2020				2019
ASSETS
Cash and cash equivalents	$	192,896			$	164,632			$	229,759			$	127,731			$	177,201
Interest-bearing deposits	392,305				273,936				380,021				132,944				118,263
Investment securities	3,146,787				2,933,286				2,789,379				2,697,954				2,596,063
Loans held for sale	3,966				3,183				901				5,039				9,037
Loans	9,243,174				9,243,833				9,298,541				8,606,849				8,459,310
Less: Allowance for loan losses	(130,648		)		(126,726		)		(121,119		)		(99,454		)		(80,284		)
Net loans	9,112,526				9,117,107				9,177,422				8,507,395				8,379,026
Premises and equipment	111,062				112,959				112,548				114,045				113,055
Federal Home Loan Bank stock	28,736				28,736				28,736				28,736				28,736
Interest receivable	53,948				52,992				57,063				47,489				48,901
Goodwill and other intangibles	572,893				574,369				575,855				577,366				578,880
Cash surrender value of life insurance	292,745				291,543				290,715				289,574				288,206
Other real estate owned	940				6,942				7,367				7,972				7,527
Tax asset, deferred and receivable	12,340				21,762				13,126				9,497				12,165
Other assets	146,066				155,903				156,486				147,776				100,194
TOTAL ASSETS	$	14,067,210			$	13,737,350			$	13,819,378			$	12,693,518			$	12,457,254
LIABILITIES
Deposits:
Noninterest-bearing	$	2,298,138			$	2,187,607			$	2,260,351			$	1,688,205			$	1,736,396
Interest-bearing	9,063,472				8,718,546				8,705,637				8,182,279				8,103,560
Total Deposits	11,361,610				10,906,153				10,965,988				9,870,484				9,839,956
Borrowings:
Federal funds purchased	—				80,000				—				47,000				55,000
Securities sold under repurchase agreements	177,102				187,732				181,150				183,317				187,946
Federal Home Loan Bank advances	389,430				399,522				400,817				480,995				351,072
Subordinated debentures and other borrowings	118,380				118,320				285,197				128,741				138,685
Total Borrowings	684,912				785,574				867,164				840,053				732,703
Interest payable	3,287				5,038				5,587				7,746				6,754
Other liabilities	141,756				206,929				171,544				197,275				91,404
Total Liabilities	12,191,565				11,903,694				12,010,283				10,915,558				10,670,817
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding	125				125				125				125				125
Common Stock, $.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding	6,740				6,736				6,724				6,719				6,921
Additional paid-in capital	1,005,366				1,003,777				1,002,962				1,000,942				1,054,997
Retained earnings	788,578				757,550				735,439				716,518				696,520
Accumulated other comprehensive income	74,836				65,468				63,845				53,656				27,874
Total Stockholders' Equity	1,875,645				1,833,656				1,809,095				1,777,960				1,786,437
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	14,067,210			$	13,737,350			$	13,819,378			$	12,693,518			$	12,457,254

CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	December 31,				September 30,				June 30,				March 31,				December 31,
	2020				2020				2020				2020				2019
INTEREST INCOME
Loans receivable:
Taxable	$	90,138			$	84,162			$	87,312			$	96,652			$	102,617
Tax-exempt	5,414				5,395				5,359				5,315				4,671
Investment securities:
Taxable	5,263				5,399				6,147				7,631				7,993
Tax-exempt	12,056				10,931				10,019				9,335				8,995
Deposits with financial institutions	139				90				134				575				1,203
Federal Home Loan Bank stock	214				248				281				299				342
Total Interest Income	113,224				106,225				109,252				119,807				125,821
INTEREST EXPENSE
Deposits	7,509				9,776				12,707				21,748				24,074
Federal funds purchased	2				5				2				111				26
Securities sold under repurchase agreements	77				83				92				352				367
Federal Home Loan Bank advances	1,656				1,749				1,794				1,774				1,776
Subordinated debentures and other borrowings	1,669				1,691				1,639				1,945				1,994
Total Interest Expense	10,913				13,304				16,234				25,930				28,237
NET INTEREST INCOME	102,311				92,921				93,018				93,877				97,584
Provision for loan losses	4,482				12,544				21,895				19,752				500
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	97,829				80,377				71,123				74,125				97,084
OTHER INCOME
Service charges on deposit accounts	5,508				5,209				4,312				5,970				6,312
Fiduciary and wealth management fees	6,251				5,910				5,601				5,985				5,384
Card payment fees	3,502				3,996				6,097				5,907				5,430
Net gains and fees on sales of loans	5,393				5,841				3,674				3,363				2,633
Derivative hedge fees	2,281				1,715				1,042				1,939				1,405
Other customer fees	394				372				333				398				434
Earnings on cash surrender value of life insurance	1,283				1,171				1,326				1,360				1,458
Net realized gains on sales of available for sale securities	2,398				1,817				3,068				4,612				1,039
Other income	473				132				1,028				265				150
Total Other Income	27,483				26,163				26,481				29,799				24,245
OTHER EXPENSES
Salaries and employee benefits	41,809				39,187				35,698				39,243				39,358
Net occupancy	9,653				5,855				5,447				5,801				5,311
Equipment	5,555				4,956				4,489				4,344				4,429
Marketing	1,763				1,311				2,092				1,443				1,492
Outside data processing fees	3,839				3,776				2,618				4,199				4,428
Printing and office supplies	307				331				279				387				484
Intangible asset amortization	1,476				1,486				1,511				1,514				1,590
FDIC assessments	1,560				1,249				1,472				1,523				—
Other real estate owned and foreclosure expenses	(1,576		)		717				684				505				66
Professional and other outside services	2,836				2,254				1,553				2,258				2,899
Other expenses	5,314				3,587				4,146				4,954				5,144
Total Other Expenses	72,536				64,709				59,989				66,171				65,201
INCOME BEFORE INCOME TAX	52,776				41,831				37,615				37,753				56,128
Income tax expense	7,641				5,621				4,623				3,490				8,298
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	45,135			$	36,210			$	32,992			$	34,263			$	47,830
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.83			$	0.67			$	0.62			$	0.63			$	0.87
Diluted Net Income Available to Common Stockholders	$	0.83			$	0.67			$	0.62			$	0.62			$	0.87
Cash Dividends Paid	$	0.26			$	0.26			$	0.26			$	0.26			$	0.26
Average Diluted Shares Outstanding (in thousands)	54,050				53,971				53,943				54,918				55,520
FINANCIAL RATIOS:
Return on Average Assets	1.29		%		1.06		%		0.97		%		1.09		%		1.53		%
Return on Average Stockholders' Equity	9.72				7.91				7.35				7.55				10.82
Return on Average Common Stockholders' Equity	9.72				7.91				7.35				7.55				10.82
Average Earning Assets to Average Assets	90.66				90.34				89.25				89.81				89.71
Allowance for Loan Losses as % of Total Loans	1.41				1.37				1.30				1.15				0.95
Net Charge-offs as % of Average Loans (Annualized)	0.02				0.30				0.01				0.03				0.04
Average Stockholders' Equity to Average Assets	13.29				13.41				13.15				14.45				14.17
Tax Equivalent Yield on Average Earning Assets	3.72				3.58				3.72				4.38				4.63
Interest Expense/Average Earning Assets	0.34				0.43				0.53				0.92				1.01
Net Interest Margin (FTE) on Average Earning Assets	3.38				3.15				3.19				3.46				3.62
Efficiency Ratio	55.01				51.40				47.95				52.17				51.07
Tangible Common Book Value Per Share	$	24.27			$	23.48			$	23.04			$	22.46			$	21.94

LOANS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
	2020				2020				2020				2020				2019
Commercial and industrial loans	$	2,776,699			$	2,875,331			$	2,898,329			$	2,199,226			$	2,109,879
Agricultural land, production and other loans to farmers	281,884				301,192				316,815				315,950				334,172
Real estate loans:
Construction	484,723				622,084				640,560				643,674				787,568
Commercial real estate, non-owner occupied	2,220,949				2,098,589				2,097,767				2,118,148				1,902,692
Commercial real estate, owner occupied	958,501				931,815				919,254				921,491				909,695
Residential	1,234,741				1,146,406				1,145,187				1,121,556				1,143,217
Home equity	508,259				527,458				532,314				570,398				588,984
Individuals' loans for household and other personal expenditures	129,479				125,411				123,611				129,765				135,989
Public finance and other commercial loans	647,939				615,547				624,704				586,641				547,114
Loans	9,243,174				9,243,833				9,298,541				8,606,849				8,459,310
Allowance for loan losses	(130,648		)		(126,726		)		(121,119		)		(99,454		)		(80,284		)
NET LOANS	$	9,112,526			$	9,117,107			$	9,177,422			$	8,507,395			$	8,379,026

DEPOSITS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
	2020				2020				2020				2020				2019
Demand deposits	$	6,821,152			$	6,279,554			$	6,288,360			$	5,293,200			$	5,250,568
Savings deposits	3,661,713				3,518,286				3,278,156				2,962,821				2,896,177
Certificates and other time deposits of $100,000 or more	346,194				467,610				607,474				694,062				736,843
Other certificates and time deposits	459,168				542,919				669,119				717,723				741,759
Brokered deposits	73,383				97,784				122,879				202,678				214,609
TOTAL DEPOSITS	$	11,361,610			$	10,906,153			$	10,965,988			$	9,870,484			$	9,839,956

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	December 31, 2020											December 31, 2019
	Average Balance				Interest  Income / Expense				Average Rate			Average Balance				Interest  Income / Expense				Average Rate
Assets:
Interest-bearing deposits	$	437,766			$	139			0.13	%		$	291,616			$	1,203			1.65	%
Federal Home Loan Bank stock	28,736				214				2.98			28,736				342				4.76
Investment Securities: (1)
Taxable	1,222,916				5,263				1.72			1,339,068				7,993				2.39
Tax-Exempt (2)	1,734,081				15,261				3.52			1,176,851				11,386				3.87
Total Investment Securities	2,956,997				20,524				2.78			2,515,919				19,379				3.08
Loans held for sale	19,103				200				4.19			23,712				267				4.50
Loans: (3)
Commercial	6,925,491				73,530				4.25			6,111,179				81,374				5.33
Real Estate Mortgage	911,042				9,482				4.16			916,247				11,256				4.91
Installment	698,619				6,925				3.96			747,166				9,720				5.20
Tax-Exempt (2)	686,049				6,854				4.00			560,379				5,913				4.22
Total Loans	9,240,304				96,991				4.20			8,358,683				108,530				5.19
Total Earning Assets	12,663,803				117,868				3.72	%		11,194,954				129,454				4.63	%
Net unrealized gain (loss) on securities available for sale	62,666											31,979
Allowance for loan losses	(130,317		)									(80,491		)
Cash and cash equivalents	169,358											179,582
Premises and equipment	114,013											113,333
Other assets	1,088,524											1,039,682
Total Assets	$	13,968,047										$	12,479,039
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	4,393,991			$	3,888			0.35	%		$	3,513,297			$	9,077			1.03	%
Money market deposits	2,051,985				1,164				0.23			1,529,156				4,054				1.06
Savings deposits	1,613,886				634				0.16			1,406,548				2,149				0.61
Certificates and other time deposits	961,187				1,823				0.76			1,736,058				8,794				2.03
Total Interest-bearing Deposits	9,021,049				7,509				0.33			8,185,059				24,074				1.18
Borrowings	683,068				3,404				1.99			669,756				4,163				2.49
Total Interest-bearing Liabilities	9,704,117				10,913				0.45			8,854,815				28,237				1.28
Noninterest-bearing deposits	2,261,991											1,741,735
Other liabilities	145,043											113,641
Total Liabilities	12,111,151											10,710,191
Stockholders' Equity	1,856,896											1,768,848
Total Liabilities and Stockholders' Equity	$	13,968,047			10,913							$	12,479,039			28,237
Net Interest Income (FTE)					$	106,955										$	101,217
Net Interest Spread (FTE) (4)									3.27	%										3.35	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets									3.72	%										4.63	%
Interest Expense / Average Earning Assets									0.34	%										1.01	%
Net Interest Margin (FTE) (5)									3.38	%										3.62	%
(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 2020 and 2019. These totals equal $4,644 and $3,633 for the three months ended December 31, 2020 and 2019, 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 Twelve Months Ended
	December 31, 2020											December 31, 2019
	Average Balance				Interest  Income / Expense				Average Rate			Average Balance				Interest  Income / Expense				Average Rate
Assets:
Federal Funds Sold
Interest-bearing deposits	$	319,686			$	938			0.29	%		$	211,683			$	4,225			2.00	%
Federal Home Loan Bank stock	28,736				1,042				3.63			25,645				1,370				5.34
Investment Securities: (1)
Taxable	1,282,827				24,440				1.91			1,101,247				27,815				2.53
Tax-Exempt (2)	1,440,913				53,596				3.72			987,006				40,070				4.06
Total Investment Securities	2,723,740				78,036				2.87			2,088,253				67,885				3.25
Loans held for sale	18,559				781				4.21			18,402				780				4.24
Loans: (3)
Commercial	6,755,215				286,773				4.25			5,631,146				306,139				5.44
Real Estate Mortgage	889,083				40,002				4.50			811,188				37,782				4.66
Installment	718,815				30,708				4.27			701,459				38,071				5.43
Tax-Exempt (2)	669,483				27,194				4.06			527,995				22,238				4.21
Total Loans	9,051,155				385,458				4.26			7,690,190				405,010				5.27
Total Earning Assets	12,123,317				465,474				3.84	%		10,015,771				478,490				4.78	%
Net unrealized gain on securities available for sale	59,639											17,676
Allowance for loan losses	(110,963		)									(81,000		)
Cash and cash equivalents	200,366											142,857
Premises and equipment	113,642											99,343
Other assets	1,080,268											896,673
Total Assets	$	13,466,269										$	11,091,320
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	4,009,566			$	20,239			0.50	%		$	3,070,861			$	33,921			1.10	%
Money market deposits	1,769,478				7,810				0.44			1,300,064				14,111				1.09
Savings deposits	1,534,069				3,641				0.24			1,242,468				9,464				0.76
Certificates and other time deposits	1,346,967				20,050				1.49			1,673,292				34,089				2.04
Total Interest-bearing Deposits	8,660,080				51,740				0.60			7,286,685				91,585				1.26
Borrowings	768,238				14,641				1.91			644,729				17,160				2.66
Total Interest-bearing Liabilities	9,428,318				66,381				0.70			7,931,414				108,745				1.37
Noninterest-bearing deposits	2,068,026											1,495,949
Other liabilities	144,790											94,342
Total Liabilities	11,641,134											9,521,705
Stockholders' Equity	1,825,135											1,569,615
Total Liabilities and Stockholders' Equity	$	13,466,269			66,381							$	11,091,320			108,745
Net Interest Income (FTE)					$	399,093										$	369,745
Net Interest Spread (FTE) (4)									3.14	%										3.41	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets									3.84	%										4.78	%
Interest Expense / Average Earning Assets									0.55	%										1.09	%
Net Interest Margin (FTE) (5)									3.29	%										3.69	%
(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 2020 and 2019. These totals equal $16,966 and $13,085 for the twelve months ended December 31, 2020 and 2019, 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.

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

SOURCE: First Merchants Corporation

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