First Merchants Corporation · NASDAQ:FRME
First Merchants — Q3 2014 Earnings Presentation
25 slides from First Merchants's earnings presentation, Oct 23, 2014
Slide 1: 3rd Quarter 2014 Earnings Call
First Merchants Corporation NASDAQ: FRME Michael C. Rechin Mark K. Hardwick John J. Martin President Executive Vice President Executive Vice President Chief Executive Officer Chief Financial Officer Chief Credit Officer ® THE STRENGTH OF BIG. THE SERVICE OF SMALL. 3rd QUARTER 2014 EARNINGS CALL Octo
Slide 2: Forward-Looking Statement
Forward-Looking Statement THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com www.firstmerchants.com ® 2 This presentation contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking state
Slide 3: Additional Information
Additional Information THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com www.firstmerchants.com ® 3 This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any proxy vote or approval. The proposed merger will
Slide 4: 3rd Quarter 2014 Highlights
www.firstmerchants.com 3rd Quarter 2014 Highlights 4 Earnings • Earnings Per Share of $.45, a 29% Increase over 3rd Quarter of 2013 • Net Income of $16.1 Million • Return on Average Assets of 1.16% • Return on Tangible Equity of 13.64% • Efficiency Ratio 58.52% Balance Sheet • Organic Loan Growth Y-
Slide 5: Executive Vice President and Chief Financial Officer
Executive Vice President and Chief Financial Officer www.firstmerchants.com ® 5 THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Slide 6: Total Assets
www.firstmerchants.com Total Assets 2012 2013 Q1-’14 Q2-’14 Q3-’14 1. Investments $ 874 $1,096 $1,150 $1,214 $1,190 2. Loans Held for Sale 22 5 7 7 6 3. Loans 2,902 3,633 3,617 3,723 3,773 4. Allowance (69) (68) (70) (68) (66) 5. CD&I & Goodwill 150 203 202 202 201 6. BOLI 125 165 165 166 165 7. Oth
Slide 7: Loan and Yield Detail
www.firstmerchants.com Commercial & Industrial 23.8% Commercial Real Estate Owner-Occupied 13.0% Commercial Real Estate Non-Owner Occupied 25.2%Construction, Land & Land Development 4.7% Agricultural Land 4.2% Agricultural Production 2.6% Other Non-Consumer 0.7% Residential Mortgage 16.7% Home Equit
Slide 8: Investment Portfolio
www.firstmerchants.com • $1.2 billion balance • Average duration of 4.3 years • Tax equivalent yield of 3.87% • Net unrealized gain of $34.3 million Investment Portfolio (as of 9/30/2014) 8 Mortgage- Backed Securities 32% Collateralized Mortgage Obligations 30% Corporate Obligations 4% Tax-Exempt Mu
Slide 9: Total Liabilities and Capital
www.firstmerchants.com 2012 2013 Q1-’14 Q2-’14 Q3-’14 1. Customer Non-Maturity Deposits $2,479 $3,276 $3,249 $3,292 $3,229 2. Customer Time Deposits 739 868 834 786 744 3. Brokered Deposits 128 87 200 251 337 4. Borrowings 260 401 362 459 440 5. Other Liabilities 39 48 34 34 34 6. Hybrid Capital 107
Slide 10: Deposits and Cost of Funds Detail
www.firstmerchants.com Deposits and Cost of Funds Detail (as of 09/30/2014) 10 ® Demand Deposits 45% Savings Deposits 30% Certificates & Time Deposits of >$100,000 5% Certificates & Time Deposits of <$100,000 12% Brokered Deposits 8% QTD Cost = .34% YTD Cost = .33% Total Deposits = $4.3 Billion THE
Slide 11: Capital Ratios
www.firstmerchants.com Capital Ratios 9.71% 9.62% 10.20% 10.13% 10.42% 10.37% 10.86% 11.00% 11.16% 7.51% 7.55% 7.88% 7.74% 7.97% 8.34% 8.65% 8.74% 9.05% 16.62% 16.34% 15.91% 15.69% 14.96% 14.54% 15.04% 15.11% 15.21% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00% 13.00% 14.00% 15.00% 16.00% 17.00% 18.0
Slide 12: Net Interest Margin
www.firstmerchants.com Net Interest Margin 12 ® Q3 - '12 Q4 - '12 Q1 - '13 Q2 - '13 Q3 - '13 Q4 - '13 Q1 - '14 Q2 - '14 Q3 - '14 Net Interest Income - FTE ($millions) $ 41.3 $ 39.7 $ 40.8 $ 38.1 $ 38.6 $ 42.8 $ 47.8 $ 48.1 $ 49.9 Fair Value Accretion ($millions) $ 2.6 $ 1.3 $ 0.8 $ 0.4 $ 0.4 $ 0.6 $
Slide 13: Non-Interest Income
www.firstmerchants.com 2012 2013 Q1-’14 Q2-’14 Q3-’14 1. Service Charges on Deposit Accounts $11.6 $12.4 $ 3.6 $ 4.1 $ 4.1 2. Trust Fees 7.9 8.6 2.2 2.4 2.2 3. Insurance Commission Income 6.2 7.1 2.3 1.9 1.7 4. Electronic Card Fees 7.3 7.5 2.3 2.5 2.4 5. Cash Surrender Value of Life Ins 3.4 2.6 0.7
Slide 14: Non-Interest Expense
www.firstmerchants.com Non-Interest Expense 2012 2013 Q1-’14 Q2-’14 Q3-’14 1. Salary & Benefits $ 79.4 $ 85.4 $ 25.3 $23.4 $24.2 2. Premises & Equipment 17.4 18.0 6.6 5.3 5.6 3. Core Deposit Intangible 1.9 1.6 0.6 0.6 0.6 4. Professional & Other Outside Services 6.2 8.3 1.4 1.5 1.6 5. OREO/Credit-Re
Slide 15: Earnings
2012 2013 Q1-’14 Q2-’14 Q3-’14 1. Net Interest Income $152.3 $154.3 $ 45.9 $ 46.1 $ 47.9 2. Provision for Loan Losses (18.5) (6.6) – – (1.6) 3. Net Interest Income after Provision 133.8 147.7 45.9 46.1 46.3 4. Non-Interest Income 64.3 54.8 15.2 15.9 18.3 5. Non-Interest Expense (137.1) (143.2) (43.1
Slide 16: Earnings Per Share
www.firstmerchants.com Earnings Per Share 2013 Q1 Q2 Q3 Q4 Total 1. Reported $ .38 $ .34 $ .35 $ .34 $ 1.41 2. FV Accretion EPS Impact $ .02 $ .01 $ .01 $ .01 $ .05 2014 Q1 Q2 Q3 Q4 Total 1. Reported $ .38 $ .41 $ .45 – $ 1.24 2. FV Accretion EPS Impact $ .03 $ .04 $ .06 – $ .13 ® 16 THE STRENGTH OF
Slide 17: Executive Vice President and Chief Credit Officer
Executive Vice President and Chief Credit Officer www.firstmerchants.com ® 17 THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Slide 18: Loan Portfolio Trends
® www.firstmerchants.com 18 Loan Portfolio Trends ($ in Millions) Change 2012 2013 Q1-'14 Q2-'14 Q3-'14 $ % 149.9 1. Commercial & Industrial 622.6$ 761.7$ 787.4$ 857.8$ 901.0$ 43.2$ 5.0% 2. Construction, Land and Land Development 98.6 177.1 155.1 165.4 178.2 12.8 7.7% 3. CRE Non-Owner Occupied 706.3
Slide 19: Asset Quality Summary
www.firstmerchants.com Asset Quality Summary ® 19 ($ in Millions) 2012 2013 Q1-'14 Q2-'14 Q3-'14 $ % 1. Non-Accrual Loans 53.4$ 56.4$ 55.7$ 51.3$ 49.1$ (2.2)$ (4.3%) 2. Other Real Estate 13.3$ 22.2$ 21.1$ 18.6$ 14.5$ (4.1)$ (22.0%) 3. Renegotiated Loans 12.7$ 3.0$ 0.4$ 1.4$ 1.2$ (0.2)$ (14.3%) 4. 90
Slide 20: Non-Performing Asset Reconciliation
www.firstmerchants.com Non-Performing Asset Reconciliation ® 20 ($ in Millions) Q4-'13 Q1-'14 Q2-'14 Q3-'14 1. Beginning Balance NPA's & 90+ Days Delinquent 51.2$ 83.0$ 78.9$ 72.4$ Non-Accrual 2. Add: New Non-Accruals 4.2 9.1 8.3 18.3 3. Add: Citizens Non-Accruals 22.7 4. Less: To Accrual/Payoff/Ren
Slide 21: Net Charge-Offs, Provision & Allowance
www.firstmerchants.com Net Charge-Offs, Provision & Allowance ® 21 ($ in Millions) THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Slide 22: ALLL and Fair Value Summary
® www.firstmerchants.com 22 ALLL and Fair Value Summary (as of 09/30/2014) ($ in Millions) FMB 1 SCB CFS Total 1. Allowance for Loan Losses (ALLL) 65.1$ 0.1$ 0.4$ 65.6$ 2. Fair Value Adjustment 6.8 28.7 35.5 3. Total ALLL plus FV Adjustments 65.1$ 6.9$ 29.1$ 101.1$ 4. Gross Loan Balances 3,218.1$ 48
Slide 23: President and Chief Executive Officer
President and Chief Executive Officer www.firstmerchants.com ® 23 THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Slide 24: Strategy and Tactics Overview
www.firstmerchants.com Strategy and Tactics Overview ® 24 Assess Acquisition Opportunities in Our Marketplace • Received regulatory approvals for the Community Bank acquisition • Targeting a 4th quarter close of the transaction Intensify Revenue-Generating Activities • Achieve organic growth through
Slide 25: Contact Information
First Merchants Corporation common stock is traded on the NASDAQ Global Select Market under the symbol FRME Additional information can be found at www.firstmerchants.com Investor inquiries: David L. Ortega Investor Relations Telephone: 765.378.8937 dortega@firstmerchants.com FIRST MERCHANTS and the