FRME 8-K

First Merchants Corp (FRME)

8-K 2020-04-23 For: 2020-04-23

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Added on July 08, 2026

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Indiana	35-1544218
(State or other jurisdiction of incorporation)	(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	Nasdaq Global Select Market



CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	March 31,
	2020			2019
ASSETS
Cash and cash equivalents	$	127,731		$	115,878
Interest-bearing time deposits	132,944			70,672
Investment securities	2,697,954			1,862,659
Loans held for sale	5,039			3,330
Loans	8,606,849			7,299,320
Less: Allowance for loan losses	(99,454		)	(80,902		)
Net loans	8,507,395			7,218,418
Premises and equipment	114,045			91,863
Federal Home Loan Bank stock	28,736			24,588
Interest receivable	47,489			40,931
Goodwill and other intangibles	577,366			468,256
Cash surrender value of life insurance	289,574			225,928
Other real estate owned	7,972			1,877
Tax asset, deferred and receivable	9,497			16,094
Other assets	147,776			70,431
TOTAL ASSETS	$	12,693,518		$	10,210,925
LIABILITIES
Deposits:
Noninterest-bearing	$	1,688,205		$	1,381,183
Interest-bearing	8,182,279			6,666,615
Total Deposits	9,870,484			8,047,798
Borrowings:
Federal funds purchased	47,000			20,000
Securities sold under repurchase agreements	183,317			111,783
Federal Home Loan Bank advances	480,995			345,013
Subordinated debentures and term loans	128,741			138,519
Total Borrowings	840,053			615,315
Interest payable	7,746			7,313
Other liabilities	197,275			84,651
Total Liabilities	10,915,558			8,755,077
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 - 53,754,137 and 49,428,468 shares	6,719			6,179
Additional paid-in capital	1,000,942			839,919
Retained earnings	716,518			611,220
Accumulated other comprehensive income (loss)	53,656			(1,595		)
Total Stockholders' Equity	1,777,960			1,455,848
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	12,693,518		$	10,210,925



CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended
(Dollars In Thousands, Except Per Share Amounts)	March 31,
	2020		2019
INTEREST INCOME
Loans receivable:
Taxable	$	96,652	$	90,481
Tax-exempt	5,315		4,153
Investment securities:
Taxable	7,631		6,095
Tax-exempt	9,335		6,871
Deposits with financial institutions	575		875
Federal Home Loan Bank stock	299		338
Total Interest Income	119,807		108,813
INTEREST EXPENSE
Deposits	21,748		19,594
Federal funds purchased	111		93
Securities sold under repurchase agreements	352		330
Federal Home Loan Bank advances	1,774		1,814
Subordinated debentures and term loans	1,945		2,116
Total Interest Expense	25,930		23,947
NET INTEREST INCOME	93,877		84,866
Provision for loan losses	19,752		1,200
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	74,125		83,666
OTHER INCOME
Service charges on deposit accounts	5,970		5,095
Fiduciary and wealth management fees	5,985		3,818
Card payment fees	5,907		4,826
Net gains and fees on sales of loans	3,363		1,295
Derivative hedge fees	1,939		781
Other customer fees	398		439
Earnings on cash surrender value of life insurance	1,360		989
Net realized gains on sales of available for sale securities	4,612		1,140
Other income	265		330
Total Other Income	29,799		18,713
OTHER EXPENSES
Salaries and employee benefits	39,243		33,028
Net occupancy	5,801		5,027
Equipment	4,344		3,642
Marketing	1,443		1,074
Outside data processing fees	4,199		3,684
Printing and office supplies	387		315
Intangible asset amortization	1,514		1,528
FDIC assessments	1,523		707
Other real estate owned and foreclosure expenses	505		1,165
Professional and other outside services	2,258		1,884
Other expenses	4,954		4,567
Total Other Expenses	66,171		56,621
INCOME BEFORE INCOME TAX	37,753		45,758
Income tax expense	3,490		6,941
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	34,263	$	38,817
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.63	$	0.79
Diluted Net Income Available to Common Stockholders	$	0.62	$	0.78
Cash Dividends Paid	$	0.26	$	0.22
Average Diluted Shares Outstanding (in thousands)	54,918		49,541



FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended
	March 31,
	2020			2019
NET CHARGE-OFFS	$	582		$	850

AVERAGE BALANCES:
Total Assets	$	12,573,238		$	10,080,142
Total Loans	8,526,571			7,230,119
Total Earning Assets	11,292,430			9,132,129
Total Deposits	9,886,273			7,936,656
Total Stockholders' Equity	1,816,418			1,429,739

FINANCIAL RATIOS:
Return on Average Assets	1.09		%	1.54		%
Return on Average Stockholders' Equity	7.55			10.86
Return on Average Common Stockholders' Equity	7.55			10.86
Average Earning Assets to Average Assets	89.81			90.60
Allowance for Loan Losses as % of Total Loans	1.15			1.11
Net Charge-offs as % of Average Loans (Annualized)	0.03			0.05
Average Stockholders' Equity to Average Assets	14.45			14.18
Tax Equivalent Yield on Average Earning Assets	4.38			4.89
Interest Expense/Average Earning Assets	0.92			1.05
Net Interest Margin (FTE) on Average Earning Assets	3.46			3.84
Efficiency Ratio	52.17			51.18
Tangible Common Book Value Per Share	$	22.46		$	20.07



NON-PERFORMING ASSETS
(Dollars In Thousands)	March 31,			December 31,			September 30,			June 30,			March 31,
	2020			2019			2019			2019			2019
Non-Accrual Loans	$	15,649		$	15,949		$	22,728		$	25,635		$	27,949
Renegotiated Loans	665			841			576			640			709
Non-Performing Loans (NPL)	16,314			16,790			23,304			26,275			28,658
Other Real Estate Owned and Repossessions	8,017			7,527			7,156			1,131			1,877
Non-Performing Assets (NPA)	24,331			24,317			30,460			27,406			30,535
90+ Days Delinquent	312			69			82			209			134
NPAs & 90 Day Delinquent	$	24,643		$	24,386		$	30,542		$	27,615		$	30,669

Allowance for Loan Losses	$	99,454		$	80,284		$	80,571		$	81,274		$	80,902
Quarterly Net Charge-offs	582			787			1,303			128			850
NPAs / Actual Assets %	0.19		%	0.20		%	0.25		%	0.26		%	0.30		%
NPAs & 90 Day / Actual Assets %	0.19		%	0.20		%	0.25		%	0.26		%	0.30		%
NPAs / Actual Loans and OREO %	0.28		%	0.29		%	0.37		%	0.36		%	0.42		%
Allowance for Loan Losses / Actual Loans (%)	1.15		%	0.95		%	0.97		%	1.08		%	1.11		%
Net Charge-offs as % of Average Loans (Annualized)	0.03		%	0.04		%	0.07		%	0.01		%	0.05		%



CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	March 31, 2020							March 31, 2019
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	159,859		$	575	1.44	%	$	145,935		$	875	2.40	%
Federal Home Loan Bank stock	28,737			299		4.16		24,588			338		5.50
Investment Securities: ⁽¹⁾
Taxable	1,368,546			7,631		2.23		902,402			6,095		2.70
Tax-Exempt ⁽²⁾	1,208,717			11,816		3.91		829,085			8,697		4.20
Total Investment Securities	2,577,263			19,447		3.02		1,731,487			14,792		3.42
Loans held for sale	17,217			193		4.48		9,703			112		4.62
Loans: ⁽³⁾
Commercial	6,235,336			76,952		4.94		5,309,998			72,758		5.48
Real Estate Mortgage	870,654			10,402		4.78		743,736			8,321		4.48
Installment	759,614			9,105		4.79		665,050			9,290		5.59
Tax-Exempt ⁽²⁾	643,750			6,728		4.18		501,632			5,257		4.19
Total Loans	8,526,571			103,380		4.85		7,230,119			95,738		5.30
Total Earning Assets	11,292,430			123,701		4.38	%	9,132,129			111,743		4.89	%
Net unrealized gain (loss) on securities available for sale	48,656							(5,015		)
Allowance for loan losses	(81,160		)					(80,907		)
Cash and cash equivalents	159,757							117,224
Premises and equipment	113,812							93,236
Other assets	1,039,743							823,475
Total Assets	$	12,573,238						$	10,080,142
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	3,589,240		$	8,276	0.92	%	$	2,689,797		$	7,019	1.04	%
Money market deposits	1,535,844			3,783		0.99		1,139,062			2,782		0.98
Savings deposits	1,425,054			1,827		0.51		1,150,725			2,267		0.79
Certificates and other time deposits	1,666,642			7,862		1.89		1,565,578			7,526		1.92
Total Interest-bearing Deposits	8,216,780			21,748		1.06		6,545,162			19,594		1.20
Borrowings	748,185			4,182		2.24		635,058			4,353		2.74
Total Interest-bearing Liabilities	8,964,965			25,930		1.16		7,180,220			23,947		1.33
Noninterest-bearing deposits	1,669,493							1,391,494
Other liabilities	122,362							78,689
Total Liabilities	10,756,820							8,650,403
Stockholders' Equity	1,816,418							1,429,739
Total Liabilities and Stockholders' Equity	$	12,573,238		25,930				$	10,080,142		23,947
Net Interest Income (FTE)				$	97,771						$	87,796
Net Interest Spread (FTE) ⁽⁴⁾						3.22	%						3.56	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets						4.38	%						4.89	%
Interest Expense / Average Earning Assets						0.92	%						1.05	%
Net Interest Margin (FTE) ⁽⁵⁾						3.46	%						3.84	%

⁽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 $3,894 and $2,930 for the three months ended March 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.


Exhibit No.	Description



LOANS
(Dollars In Thousands)	March 31,			December 31,			September 30,			June 30,			March 31,
	2020			2019			2019			2019			2019
Commercial and industrial loans	$	2,199,226		$	2,109,879		$	2,034,311		$	1,877,042		$	1,788,628
Agricultural production financing and other loans to farmers	87,421			93,861			90,462			83,452			80,357
Real estate loans:
Construction	643,674			787,568			670,138			624,548			542,501
Commercial and farmland	3,268,168			3,052,698			3,144,649			2,821,689			2,838,798
Residential	1,121,556			1,143,217			1,155,403			993,802			976,668
Home equity	570,398			588,984			601,335			548,006			536,208
Individuals' loans for household and other personal expenditures	129,765			135,989			131,246			98,384			108,216
Public finance and other commercial loans	586,641			547,114			471,716			464,447			427,944
Loans	8,606,849			8,459,310			8,299,260			7,511,370			7,299,320
Allowance for loan losses	(99,454		)	(80,284		)	(80,571		)	(81,274		)	(80,902		)
NET LOANS	$	8,507,395		$	8,379,026		$	8,218,689		$	7,430,096		$	7,218,418



DEPOSITS
(Dollars In Thousands)	March 31,		December 31,		September 30,		June 30,		March 31,
	2020		2019		2019		2019		2019
Demand deposits	$	5,293,200	$	5,250,568	$	5,183,971	$	4,309,473	$	4,101,156
Savings deposits	2,962,821		2,896,177		2,808,745		2,358,720		2,338,266
Certificates and other time deposits of $100,000 or more	694,062		736,843		731,693		720,536		670,199
Other certificates and time deposits	717,723		741,759		811,780		729,392		704,527
Brokered deposits	202,678		214,609		229,262		201,207		233,650
TOTAL DEPOSITS	$	9,870,484	$	9,839,956	$	9,765,451	$	8,319,328	$	8,047,798