FRME 8-K

First Merchants Corp (FRME)

8-K 2024-01-25 For: 2024-01-25

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Added on July 08, 2026

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Indiana
(State or other jurisdiction of incorporation)
001-41342			35-1544218
(Commission File Number)			(IRS Employer Identification No.)


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.125 stated value per share	FRME	The Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/100th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series A	FRMEP	The Nasdaq Stock Market LLC


									First Merchants Corporation
									(Registrant)

									By: /s/ Michele M. Kawiecki Michele M. Kawiecki Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)
Dated: January 25, 2024


CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	December 31,
	2023		2022
ASSETS
Cash and due from banks	$	112,649	$	122,594
Interest-bearing deposits	436,080		126,061
Investment securities, net of allowance for credit losses of $245,000 and $245,000	3,811,364		4,263,788
Loans held for sale	18,934		9,094
Loans	12,486,027		12,003,894
Less: Allowance for credit losses - loans	(204,934)		(223,277)
Net loans	12,281,093		11,780,617
Premises and equipment	133,896		117,118
Federal Home Loan Bank stock	41,769		38,525
Interest receivable	97,664		85,070
Goodwill and other intangibles	739,101		747,844
Cash surrender value of life insurance	306,301		308,311
Other real estate owned	4,831		6,431
Tax asset, deferred and receivable	99,883		111,222
Other assets	225,914		221,631
TOTAL ASSETS	$	18,309,479	$	17,938,306
LIABILITIES
Deposits:
Noninterest-bearing	$	2,500,062	$	3,173,417
Interest-bearing	12,321,391		11,209,328
Total Deposits	14,821,453		14,382,745
Borrowings:
Federal funds purchased	—		171,560
Securities sold under repurchase agreements	157,280		167,413
Federal Home Loan Bank advances	712,852		823,674
Subordinated debentures and other borrowings	158,644		151,298
Total Borrowings	1,028,776		1,313,945
Interest payable	18,912		7,530
Other liabilities	192,625		199,316
Total Liabilities	16,061,766		15,903,536
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 - 59,424,122 and 59,170,583 shares	7,428		7,396
Additional paid-in capital	1,236,506		1,228,626
Retained earnings	1,154,624		1,012,774
Accumulated other comprehensive income (loss)	(175,970)		(239,151)
Total Stockholders' Equity	2,247,713		2,034,770
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,309,479	$	17,938,306


CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended				Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts)	December 31.				December 31.
	2023		2022		2023		2022
INTEREST INCOME
Loans receivable:
Taxable	$	197,523	$	156,102	$	747,837	$	470,468
Tax-exempt	8,197		6,930		31,954		25,124
Investment securities:
Taxable	8,644		9,417		35,207		38,354
Tax-exempt	13,821		17,033		58,117		67,381

Deposits with financial institutions	8,034		959		17,719		2,503
Federal Home Loan Bank stock	771		541		3,052		1,176
Total Interest Income	236,990		190,982		893,886		605,006
INTEREST EXPENSE
Deposits	96,655		33,516		306,092		62,939
Federal funds purchased	1		808		1,421		1,302
Securities sold under repurchase agreements	827		541		3,451		1,136
Federal Home Loan Bank advances	6,431		4,932		27,206		11,417
Subordinated debentures and other borrowings	3,013		2,229		10,316		8,009
Total Interest Expense	106,927		42,026		348,486		84,803
NET INTEREST INCOME	130,063		148,956		545,400		520,203
Provision for credit losses	1,500		—		3,500		16,755
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	128,563		148,956		541,900		503,448
NONINTEREST INCOME
Service charges on deposit accounts	7,690		7,097		30,837		28,371
Fiduciary and wealth management fees	8,187		7,501		30,840		29,688
Card payment fees	4,437		4,533		18,862		20,207
Net gains and fees on sales of loans	4,111		2,087		15,659		10,055
Derivative hedge fees	1,049		326		3,385		3,388
Other customer fees	237		362		1,880		1,935
Earnings on cash surrender value of life insurance	3,202		1,515		8,347		11,174
Net realized gains (losses) on sales of available for sale securities	(2,317)		57		(6,930)		1,194
Other income (loss)	(152)		672		2,722		1,929
Total Noninterest Income	26,444		24,150		105,602		107,941
NONINTEREST EXPENSES
Salaries and employee benefits	60,967		52,331		228,745		206,893
Net occupancy	9,089		6,638		29,859		26,211
Equipment	6,108		6,148		24,113		23,945
Marketing	2,647		3,157		7,427		7,708
Outside data processing fees	5,875		5,611		25,165		21,682
Printing and office supplies	402		390		1,552		1,588
Intangible asset amortization	2,182		2,303		8,743		8,275
FDIC assessments	7,557		2,295		14,674		10,235
Other real estate owned and foreclosure expenses	1,743		197		3,318		823
Professional and other outside services	3,981		3,961		16,172		21,642
Other expenses	7,552		6,668		28,502		26,713
Total Noninterest Expenses	108,103		89,699		388,270		355,715
INCOME BEFORE INCOME TAX	46,904		83,407		259,232		255,674
Income tax expense	4,425		12,647		35,446		33,585
NET INCOME	42,479		70,760		223,786		222,089
Preferred stock dividends	469		468		1,875		1,406
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	42,010	$	70,292	$	221,911	$	220,683
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.71	$	1.20	$	3.74	$	3.83
Diluted Net Income Available to Common Stockholders	$	0.71	$	1.19	$	3.73	$	3.81
Cash Dividends Paid to Common Stockholders	$	0.34	$	0.32	$	1.34	$	1.25
Average Diluted Common Shares Outstanding (in thousands)	59,556		59,384		59,489		57,950


FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2023			2022			2023			2022
NET CHARGE-OFFS (RECOVERIES)	$	3,148		$	3,425		$	25,643		$	2,674

AVERAGE BALANCES:
Total Assets	$	18,397,200		$	17,834,468		$	18,186,507		$	17,220,002
Total Loans	12,396,451			11,818,911			12,297,974			10,943,051
Total Earning Assets	17,222,714			16,702,944			16,991,787			15,985,691
Total Deposits	15,000,580			14,564,853			14,721,498			14,198,243
Total Stockholders' Equity	2,130,993			1,958,041			2,127,262			1,972,445

FINANCIAL RATIOS:
Return on Average Assets	0.92		%	1.59		%	1.23		%	1.29		%
Return on Average Stockholders' Equity	7.89			14.36			10.43			11.19
Return on Tangible Common Stockholders' Equity	12.75			24.21			16.76			18.12
Average Earning Assets to Average Assets	93.62			93.66			93.43			92.83
Allowance for Credit Losses - Loans as % of Total Loans	1.64			1.86			1.64			1.86
Net Charge-offs as % of Average Loans (Annualized)	0.10			0.12			0.21			0.02
Average Stockholders' Equity to Average Assets	11.58			10.98			11.70			11.45
Tax Equivalent Yield on Average Earning Assets	5.64			4.73			5.40			3.94
Interest Expense/Average Earning Assets	2.48			1.01			2.05			0.53
Net Interest Margin (FTE) on Average Earning Assets	3.16			3.72			3.35			3.41
Efficiency Ratio	63.26			48.60			55.17			53.20
Tangible Common Book Value Per Share	$	25.06		$	21.45		$	25.06		$	21.45


NONPERFORMING ASSETS
(Dollars In Thousands)	December 31,			September 30,			June 30,			March 31,			December 31,
	2023			2023			2023			2023			2022
Nonaccrual Loans	$	53,580		$	53,102		$	69,240		$	46,576		$	42,324
Troubled Debt Restructures (TDR)	—			—			—			—			224
Nonperforming Loans (NPL)	53,580			53,102			69,240			46,576			42,548
Other Real Estate Owned and Repossessions	4,831			6,480			7,685			7,777			6,431
Nonperforming Assets (NPA)	58,411			59,582			76,925			54,353			48,979
90+ Days Delinquent	172			89			428			7,032			1,737
NPAs & 90 Day Delinquent	$	58,583		$	59,671		$	77,353		$	61,385		$	50,716

Allowance for Credit Losses - Loans	$	204,934		$	205,782		$	221,147		$	223,052		$	223,277
Quarterly Net Charge-offs	3,148			20,365			1,905			225			2,674
NPAs / Actual Assets %	0.32		%	0.33		%	0.43		%	0.30		%	0.27		%
NPAs & 90 Day / Actual Assets %	0.32		%	0.33		%	0.43		%	0.34		%	0.28		%
NPAs / Actual Loans and OREO %	0.47		%	0.48		%	0.63		%	0.44		%	0.41		%
Allowance for Credit Losses - Loans / Actual Loans (%)	1.64		%	1.67		%	1.80		%	1.82		%	1.86		%
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)	0.10		%	0.66		%	0.06		%	0.01		%	0.12		%


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	December 31, 2023						December 31, 2022
	Average Balance		Interest Income / Expense		Average Rate		Average Balance		Interest Income / Expense		Average Rate
ASSETS

Interest-bearing deposits	$	700,705	$	8,034	4.59	%	$	187,204	$	959	2.05	%
Federal Home Loan Bank stock	41,792		771		7.38		38,066		541		5.68
Investment Securities: (1)
Taxable	1,801,533		8,644		1.92		1,987,161		9,417		1.90
Tax-exempt (2)	2,282,233		17,495		3.07		2,671,602		21,561		3.23
Total Investment Securities	4,083,766		26,139		2.56		4,658,763		30,978		2.66
Loans held for sale	16,355		246		6.02		4,732		71		6.00
Loans: (3)
Commercial	8,533,233		159,190		7.46		8,309,561		126,850		6.11
Real estate mortgage	2,118,060		21,829		4.12		1,827,749		16,654		3.64
Installment	820,728		16,258		7.92		843,562		12,527		5.94
Tax-exempt (2)	908,075		10,376		4.57		833,307		8,772		4.21
Total Loans	12,396,451		207,899		6.71		11,818,911		164,874		5.58
Total Earning Assets	17,222,714		242,843		5.64	%	16,702,944		197,352		4.73	%
Total Non-Earning Assets	1,174,486						1,131,524
TOTAL ASSETS	$	18,397,200					$	17,834,468
LIABILITIES
Interest-Bearing Deposits:
Interest-bearing deposits	$	5,504,725	$	40,996	2.98	%	$	5,238,422	$	16,810	1.28	%
Money market deposits	3,096,085		27,909		3.61		3,018,644		10,778		1.43
Savings deposits	1,587,758		3,913		0.99		1,895,551		2,125		0.45
Certificates and other time deposits	2,225,528		23,837		4.28		1,038,502		3,803		1.46
Total Interest-Bearing Deposits	12,414,096		96,655		3.11		11,191,119		33,516		1.20
Borrowings	1,013,856		10,272		4.05		1,097,586		8,510		3.10
Total Interest-Bearing Liabilities	13,427,952		106,927		3.19		12,288,705		42,026		1.37
Noninterest-bearing deposits	2,586,484						3,373,734
Other liabilities	251,771						213,988
Total Liabilities	16,266,207						15,876,427
STOCKHOLDERS' EQUITY	2,130,993						1,958,041
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,397,200	106,927				$	17,834,468	42,026
Net Interest Income (FTE)			$	135,916					$	155,326
Net Interest Spread (FTE) (4)					2.45	%					3.36	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.64	%					4.73	%
Interest Expense / Average Earning Assets					2.48	%					1.01	%
Net Interest Margin (FTE) (5)					3.16	%					3.72	%

(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 2023 and 2022. These totals equal $5,853 and $6.370 for the three months ended December 31, 2023 and 2022, 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, 2023						December 31, 2022
	Average Balance		Interest Income / Expense		Average Rate		Average Balance		Interest Income / Expense		Average Rate
Assets:

Interest-bearing deposits	$	431,581	$	17,719	4.11	%	$	296,863	$	2,503	0.84	%
Federal Home Loan Bank stock	41,319		3,052		7.39		35,580		1,176		3.31
Investment Securities: (1)
Taxable	1,854,438		35,207		1.90		2,056,586		38,354		1.86
Tax-exempt (2)	2,366,475		73,566		3.11		2,653,611		85,292		3.21
Total Investment Securities	4,220,913		108,773		2.58		4,710,197		123,646		2.63
Loans held for sale	21,766		1,292		5.94		14,715		692		4.70
Loans: (3)
Commercial	8,519,706		603,611		7.08		7,877,271		380,621		4.83
Real estate mortgage	2,035,488		82,183		4.04		1,471,802		51,853		3.52
Installment	830,006		60,751		7.32		785,520		37,302		4.75
Tax-exempt (2)	891,008		40,448		4.54		793,743		31,803		4.01
Total Loans	12,297,974		788,285		6.41		10,943,051		502,271		4.59
Total Earning Assets	16,991,787		917,829		5.40	%	15,985,691		629,596		3.94	%
Total Non-Earning Assets	1,194,720						1,234,311
Total Assets	$	18,186,507					$	17,220,002
Liabilities:
Interest-Bearing deposits:
Interest-bearing deposits	$	5,435,733	$	138,012	2.54	%	$	5,206,131	$	32,511	0.62	%
Money market deposits	2,884,271		83,777		2.90		2,915,397		19,170		0.66
Savings deposits	1,694,230		14,606		0.86		1,927,122		5,019		0.26
Certificates and other time deposits	1,923,268		69,697		3.62		881,176		6,239		0.71
Total Interest-Bearing Deposits	11,937,502		306,092		2.56		10,929,826		62,939		0.58
Borrowings	1,111,472		42,394		3.81		888,392		21,864		2.46
Total Interest-Bearing Liabilities	13,048,974		348,486		2.67		11,818,218		84,803		0.72
Noninterest-bearing deposits	2,783,996						3,268,417
Other liabilities	226,275						160,922
Total Liabilities	16,059,245						15,247,557
Stockholders' Equity	2,127,262						1,972,445
Total Liabilities and Stockholders' Equity	$	18,186,507	348,486				$	17,220,002	84,803
Net Interest Income (FTE)			$	569,343					$	544,793
Net Interest Spread (FTE) (4)					2.73	%					3.22	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.40	%					3.94	%
Interest Expense / Average Earning Assets					2.05	%					0.53	%
Net Interest Margin (FTE) (5)					3.35	%					3.41	%

(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 2023 and 2022. These totals equal $23,943 and $24,590 for the years ended December 31, 2023 and 2022, 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 NET INCOME AND DILUTED EARNINGS PER COMMON SHARE - NON-GAAP
(Dollars In Thousands, Except Per Share Amounts)	Three Months Ended										Twelve Months Ended
	December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
	2023		2023		2023		2023		2022		2023		2022
Net Income Available to Common Stockholders - GAAP	$	42,010	$	55,898	$	60,393	$	63,610	$	70,292	$	221,911	$	220,683
Adjustments:
PPP loan income	(7)		(8)		(9)		(25)		(109)		(49)		(3,207)
Acquisition-related expenses	—		—		—		—		413		—		16,531
Acquisition-related provision expense	—		—		—		—		—		—		16,755
Non-core expenses1	12,682		—		—		—		—		12,682		—
Tax on adjustments	(3,088)		2		2		6		(75)		(3,078)		(7,376)
Adjusted Net Income Available to Common Stockholders - Non-GAAP	$	51,597	$	55,892	$	60,386	$	63,591	$	70,521	$	231,466	$	243,386

Average Diluted Common Shares Outstanding (in thousands)	59,556		59,503		59,448		59,441		59,384		59,489		57,590

Diluted Earnings Per Common Share - GAAP	$	0.71	$	0.94	$	1.02	$	1.07	$	1.19	$	3.73	$	3.81
Adjustments:
PPP loan income	—		—		—		—		(0.01)		—		(0.06)
Acquisition-related expenses	—		—		—		—		0.01		—		0.28
Acquisition-related provision expense	—		—		—		—		—		—		0.30
Non-core expenses1	0.21		—		—		—		—		0.21		—
Tax on adjustments	(0.05)		—		—		—		—		(0.05)		(0.13)
Adjusted Diluted Earnings Per Common Share - Non-GAAP	$	0.87	$	0.94	$	1.02	$	1.07	$	1.19	$	3.89	$	4.20


RETURN ON TANGIBLE COMMON EQUITY - NON-GAAP
(Dollars In Thousands)	Three Months Ended															Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
	2023			2023			2023			2023			2022			2023			2022
Total Average Stockholders' Equity (GAAP)	$	2,130,993		$	2,154,232		$	2,139,877		$	2,083,125		$	1,958,041		$	2,127,262		$	1,972,445
Less: Average Preferred Stock	(25,125)			(25,125)			(25,125)			(25,125)			(25,125)			(25,125)			(18,875)
Less: Average Intangible Assets, Net of Tax	(734,007)			(735,787)			(737,489)			(739,190)			(741,632)			(736,601)			(699,803)
Average Tangible Common Equity, Net of Tax (Non-GAAP)	$	1,371,861		$	1,393,320		$	1,377,263		$	1,318,810		$	1,191,284		$	1,365,536		$	1,253,767

Net Income Available to Common Stockholders (GAAP)	$	42,010		$	55,898		$	60,393		$	63,610		$	70,292		$	221,911		$	220,683
Plus: Intangible Asset Amortization, Net of Tax	1,724			1,724			1,724			1,734			1,819			6,906			6,537
Tangible Net Income (Non-GAAP)	$	43,734		$	57,622		$	62,117		$	65,344		$	72,111		$	228,817		$	227,220

Return on Tangible Common Equity (Non-GAAP)	12.75		%	16.54		%	18.04		%	19.82		%	24.21		%	16.76		%	18.12		%


LOANS
(Dollars In Thousands)	December 31,		September 30,		June 30,		March 31,		December 31,
	2023		2023		2023		2023		2022
Commercial and industrial loans	$	3,670,948	$	3,490,953	$	3,531,395	$	3,502,204	$	3,437,126
Agricultural land, production and other loans to farmers	263,414		233,838		230,003		219,598		241,793
Real estate loans:
Construction	957,545		1,022,261		949,918		960,979		835,582
Commercial real estate, non-owner occupied	2,400,839		2,360,596		2,379,819		2,375,410		2,407,475
Commercial real estate, owner occupied	1,162,083		1,153,707		1,179,739		1,244,117		1,246,528
Residential	2,288,921		2,257,385		2,248,473		2,185,943		2,096,655
Home equity	617,571		609,352		614,366		621,354		630,632
Individuals' loans for household and other personal expenditures	168,388		176,523		172,896		172,389		175,211
Public finance and other commercial loans	956,318		966,807		963,624		959,467		932,892
Loans	12,486,027		12,271,422		12,270,233		12,241,461		12,003,894
Allowance for credit losses - loans	(204,934)		(205,782)		(221,147)		(223,052)		(223,277)
NET LOANS	$	12,281,093	$	12,065,640	$	12,049,086	$	12,018,409	$	11,780,617


DEPOSITS
(Dollars In Thousands)	December 31,		September 30,		June 30,		March 31,		December 31,
	2023		2023		2023		2023		2022
Demand deposits	$	7,965,862	$	7,952,040	$	8,045,455	$	8,422,387	$	8,448,797
Savings deposits	4,516,433		4,572,162		4,530,255		4,499,487		4,657,140
Certificates and other time deposits of $100,000 or more	1,408,985		1,280,607		1,160,303		1,040,379		742,539
Other certificates and time deposits	849,906		761,196		680,965		574,886		468,712
Brokered certificates of deposits	80,267		80,571		164,177		166,148		65,557
TOTAL DEPOSITS	$	14,821,453	$	14,646,576	$	14,581,155	$	14,703,287	$	14,382,745