Slide 1: Investor Update First Quarter 2024
INVESTOR UPDATE First Quarter 2024
Slide 2: Forward Looking Statement
Forward Looking Statement 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 statements can often, but not always, be identified by the use of words like “believe”, “continue”
Slide 3: Executive Management Team
Executive Management Team Mark Hardwick FMB: Chief Executive Officer 26 Yrs Mark K. Hardwick currently serves as the Chief Executive Officer of First Merchants Corporation and First Merchants Bank. Mark joined First Merchants in November of 1997 as Corporate Controller and was promoted to Chief Fina
Slide 4: First Merchants Corporation (NASDAQ: FRME)
First Merchants Corporation (NASDAQ: FRME) Largest financial services holding company headquartered in Central Indiana Financial Highlights as of 3/31/2024 $18.3 Billion YTD ROAA: 1.04% Total Assets YTD Return on TCE 13.21% $12.5 Billion TCE/TA: 8.32% Total Loans Market Cap $2.0B $14.9 Billion Divid
Slide 5: First Quarter Highlights
Highlights First Quarter Net Income & EPS1 ROA (Annualized) ROE & ROTCE (Annualized) $47.5 Million 1.04% ROA 8.47% ROE $0.80 Per Share 1.31% PTPP ROA2 13.21% ROTCE2 ▪ Stabilizing net interest margin; with new/renewed loan yields averaging 8.15% for the quarter ▪ Strong credit quality and a robust al
Slide 6: Business Strategy
Business Strategy Commercial Banking Consumer Banking Full Spectrum of Debt Capital and Treasury Service Offerings Full Spectrum of Consumer Deposit and Lending Offerings Located in Prime Growth Markets Supported by: Talented, Customer Service Oriented Banking Center Small Business & SBA Asset Based
Slide 7: Business Highlights
Business Highlights Loan Growth Annualized1 Michigan 1Q24 Balance ($B) Growth Monroe MSA Rank: 1 Commercial $9.4 -0.9% Detroit MSA Rank: 9 Deposits: $2.7B Consumer $2.9 -0.8% Loans: $2.7B Total Loan Growth QTD -0.8% ▪ Following strong Q4 growth of 8%, Commercial balances modestly declined as Northea
Slide 8: First Quarter Financial Results
First Quarter Financial Results ($M except per share data) For the Three Months Ended, Variance % Variance Linked Linked QTR- 3/31/23 6/30/23 9/30/23 12/31/23 3/31/24 Quarter Annualized Balance Sheet & Asset Quality 1Q24 Highlights 1. Total Assets $18,243.3 $18,032.3 $18,078.3 $18,309.5 $18,317.8 $8
Slide 9: Investment Portfolio Highlights
Investment Portfolio Highlights 1Q24 Investment Portfolio Composition Yield on Investments (%) / Total Investments ($B) Corporate U.S. Agencies Obligations 12% 1% Collateralized Mortgage 2.63% 2.56% 2.55% 2.56% 2.58% Obligations 5% $4.1 $3.9 $3.7 $3.8 $3.8 $3.8B Municipal Bonds 1Q23 2Q23 3Q23 4Q23 1
Slide 10: Loan Portfolio Highlights
Loan Portfolio Highlights 1Q24 Loan Composition Highlights Construction Land & Land Development 7.5% Agricultural Land & ▪ Portfolio composition is ~75% Commercial oriented Commercial Real Estate Production 1.9% Non-Owner Occupied 19.0% Public Finance/Other ▪ Total loan yield of 6.68% Commercial 7.7
Slide 11: Allowance for Credit Losses - Loans
Allowance for Credit Losses - Loans 1Q24 Allowance for Credit Losses - Loans Highlights ▪ $2.0 million Q1 provision expense 1.82% 1.80% ▪ The reserve for unfunded commitments totals $19.5 million 1.67% 1.64% 1.64% and is recorded in Other Liabilities ▪ The remaining fair value accretion on acquired
Slide 12: Deposit Portfolio Highlights
Deposit Portfolio Highlights 1Q24 Deposit Composition Highlights Certificates & Time Deposits Brokered Certificates of ▪ Strong core deposit base < $100k Deposits 1 6% 1% • 90% core deposits2 Certificates & Time Deposits • 16% noninterest bearing > $100k • 36% yield 5 bps or less 10% ▪ Total deposit
Slide 13: Net Interest Margin
Net Interest Margin 1Q23 2Q23 3Q23 4Q23 1Q24 1. Net Interest Income - FTE ($millions) $ 150.4 $ 143.7 $ 139.3 $ 135.9 $ 132.9 2. Fair Value Accretion $ 2.4 $ 2.0 $ 2.0 $ 1.7 $ 1.4 1 3. Adjusted Net Interest Income - FTE $ 148.0 $ 141.7 $ 137.3 $ 134.2 $ 131.5 4. Tax Equivalent Yield on Earning Asset
Slide 14: Noninterest Income Highlights
Noninterest Income Highlights 1Q24 Noninterest Income Detail ($M) Noninterest Income Trends ($M) Fee Income / Revenue Service Charges $7.9 16.6% 16.3% 16.7% 30% 15.5% 14.2% Card Gain on Payment Fees $27.8M Sale of Loans $3.3 $26.6M $4.5 17% $26.3M $2.2 $26.4M $26.6M 12% $25.0M Total Derivative $2.1
Slide 15: Noninterest Expense Highlights
Noninterest Expense Highlights 1Q24 Noninterest Expense Detail Noninterest Expense Trends ($M) Efficiency Ratio 63.26% 59.21% Premises & Equipment Outside Data Processing 52.21% 53.91% 51.72% $13.5 $6.9 14% 7% 55.56%1 57.03%1 Professional & Other Outside Services $4.0 $108.1M $96.9M 4% Intangible As
Slide 16: Capital Ratios
Capital Ratios Tangible Common Equity Ratio Highlights 8.40% 8.32% ▪ Quarter over quarter change in capital ratios reflects 7.72% 7.96% 7.65% 9.57% $40 million of sub debt redemption and $30 million of 9.31% stock buyback 9.31% ▪ TCE Ratio including marks on held-to-maturity 9.65% 9.04% 9.31% 9.57%
Slide 17: Loan Portfolio
Loan Portfolio Loan Portfolio Trends ($M) 1Q24 Highlights Stable C&I loan demand. Higher rates dampening 1Q23 2Q23 3Q23 4Q23 1Q24 investment real estate activity. 1. C&I - Regional Banking $ 2,831 $ 2,733 $ 2,662 $ 2,876 $ 2,910 ▪ C&I up $52.1 million 2. C&I - Sponsor Finance 674 798 829 795 813 ▪ C
Slide 18: Loan Portfolio Insights
Loan Portfolio Insights Commercial C&I C&I - Sponsor Finance ▪ $812.6 million to 86 companies, top borrowers in comm transportation equipment, finance and insurance, manufacturing, and packaging services industries. ▪ Senior Debt/Adj. EBITDA < 3.0X ~ 79% ▪ Total Debt/Adj. EBITDA < 4.0X ~ 81% ▪ FCCR
Slide 19: Loan Portfolio Insights (continued)
Loan Portfolio Insights (continued) Commercial Real Estate (Non-Owner Occupied) ($M) Office (Non-Owner Occupied) ($M) Office % Total Loans Office - Maturities Office Total Loans Maturities $12.5 $247.5 Billion Million ▪ Top 10 loans are 42% of total office with WALTV of ~59% at origination ▪ Largest
Slide 20: Asset Quality
Asset Quality Asset Quality Trends ($M) Highlights 1Q23 2Q23 3Q23 4Q23 1Q24 ▪ Largest Non-Accruals: • Hospitality (new) 1. Non-Accrual Loans $ 46.6 $ 69.2 $ 53.1 $ 53.6 $ 62.5 • Nursing • Other Comm/Industrial Machinery 2. Other Real Estate 7.8 7.7 6.5 4.8 4.9 3. 90PD Loans 7.0 0.4 0.1 0.2 2.8 ▪ NPA
Slide 21: Nonperforming Assets
Nonperforming Assets Nonperforming Assets Roll Forward ($M) 1Q24 Highlights 1Q23 2Q23 3Q23 4Q23 1Q24 Non-Accrual Migration: 1. Beginning Balance NPAs + 90PD $ 50.7 $ 61.4 $ 77.3 $ 59.7 $ 58.6 ▪ $11.6 million increase in NPAs and 90+ days past due Non-Accrual 2. Add: New Non-Accruals 15.4 33.2 7.5 10
Slide 22: Track Record of Shareholder Value
Track Record of Shareholder Value 10-Year Total Return (2013-2023) Earnings per Share CAGR 2013-2023: 10.2% $3.81 $3.81 $3.73 215% $3.22 $3.19 $2.74 $1.98 $2.12 $1.65 $1.72 $1.41 $0.80 191% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 YTD'24 Dividends per Share FRME S&P BMI US Bank CAGR 20
Slide 23: History of Organic and Whole Bank Acquisition Growth
History of Organic and Whole Bank Acquisition Growth Total Assets ($B) Growth Through Acquisition ✓ Experienced Acquirer ✓ Expanded in Current High-Growth Markets ✓ Extended into Additional High-Growth Markets $17.9 $18.3 $18.3 ✓ Added to Franchise with Stable Deposit Gathering Markets $15.5 $14.1 $
Slide 24: Vision for the Future
Vision for the Future Our Vision: To enhance the financial wellness of the diverse communities we serve. Our Mission: To be the most attentive, knowledgeable, and high-performing bank for our clients, teammates, and shareholders. Our Team: We are a collection of dynamic colleagues with diverse exper
Slide 25: Appendix
APPENDIX ss 00) First Merchants Corporation Helping you prosper
Slide 26: Non-GAAP: Adjusted Net Income and EPS
Non-GAAP ADJUSTED NET INCOME AND DILUTED EARNINGS PER COMMON SHARE 1Q23 2Q23 3Q23 4Q23 1Q24 (Dollars in Thousands, Except Per Share Amounts) Net Income Available to Common Stockholders - GAAP $ 63,610 $ 60,393 $ 55,898 $ 42,010 $ 47,472 Adjustments: PPP loan income (25) (9) (8) (7) - 1,2 Non-core ex
Slide 27: Non-GAAP: Pre-Tax, Pre-Provision Earnings
Non-GAAP PRE-TAX, PRE-PROVISION ("PTPP") EARNINGS, AS ADJUSTED 1Q23 2Q23 3Q23 4Q23 1Q24 (Dollars in Thousands, Except Per Share Amounts) Net Interest Income (GAAP) $ 144,119 $ 137,835 $ 133,383 $ 130,064 $ 127,063 Other Income (GAAP) 24,997 26,319 27,842 26,443 26,638 Total Revenue 169,116 164,154 1
Slide 28: Non-GAAP: Efficiency Ratio
Non-GAAP EFFICIENCY RATIO (dollars in thousands): 1Q23 2Q23 3Q23 4Q23 1Q24 EFFICIENCY RATIO (dollars in thousands): Non Interest Expense (GAAP) $ 93,720 $ 92,593 $ 93,854 $ 108,103 $ 96,935 Less: Intangible Asset Amortization (2,197) (2,182) (2,182) (2,182) (1,957) Less: OREO and Foreclosure Expense
Slide 29: Non-GAAP: Capital Ratios
Non-GAAP CAPITAL RATIOS (dollars in thousands): 1Q23 2Q23 3Q23 4Q23 1Q24 Total Risk-Based Capital Ratio (dollars in thousands) Total Stockholders' Equity (GAAP) 2,122,448 2,145,565 2,092,644 2,247,713 2,224,803 1 Adjust for Accumulated Other Comprehensive (Income) Loss 198,914 217,964 307,270 175,97
Slide 30: Non-GAAP: Tangible Common Equity Ratio
Non-GAAP TANGIBLE COMMON EQUITY RATIO (dollars in thousands): 1Q23 2Q23 3Q23 4Q23 1Q24 Tangible Common Equity Ratio (dollars in thousands) Total Stockholders' Equity (GAAP) $ 2,122,448 $ 2,145,565 $ 2,092,644 $ 2,247,713 $ 2,224,803 Less: Preferred Stock (25,125) (25,125) (25,125) (25,125) (25,125)
Slide 31: Non-GAAP: Return on Tangible Common Equity
Non-GAAP RETURN ON TANGIBLE COMMON EQUITY (dollars in thousands): 2013 2014 2015 2016 2017 2018 2019 2020 Return on Tangible Common Equity Total Average Stockholders' Equity (GAAP) $ 540,255 $ 675,295 $ 753,724 $ 884,664 $ 1,110,524 $ 1,343,861 $ 1,569,615 $ 1,825,135 Less: Average Preferred Stock (