First Merchants Corporation · NASDAQ:FRME
First Merchants — Q1 2013 Earnings Presentation
25 slides from First Merchants's earnings presentation, Apr 25, 2013
Slide 1: First Merchants Corporation
First Merchants Corporation INDIANA KENTUCKY = NASDAQ: FRME April 25, 2013 Michael C. Rechin Mark K. Hardwick John J. Martin President Chief Executive Officer Chief Financial Officer Chief Credit Officer
Slide 2: Michael C. Rechin, President and Chief Executive Officer
Michael C. Rechin President and Chief Executive Officer THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com ®
Slide 3: Forward-Looking Statement
3 Forward-Looking Statement The Corporation may make forward-looking statements about its relative business outlook. These forward-looking statements and all other statements made during this meeting that do not concern historical facts are subject to risks and uncertainties that may materially affe
Slide 4: 1st Quarter 2013 Highlights
• $0.38 1st Quarter EPS • Revenue Momentum Throughout Results • Asset Quality Improvement Continues • Partial SBLF Repayment • Increased Common Dividend Announced 4 1st Quarter 2013 Highlights THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com ®
Slide 5: Mark K. Hardwick, Executive Vice President and Chief Financial Officer
Mark K. Hardwick Executive Vice President and Chief Financial Officer THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com ®
Slide 6: Total Assets
6 Total Assets 2011 2012 Q1-’12 Q1-’13 1. Investments $ 946 $ 874 $ 960 $ 870 2. Loans Held for Sale 18 22 22 27 3. Loans 2,713 2,902 2,793 2,880 4. Allowance (71) (69) (70) (69) 5. CD&I & Goodwill 150 150 150 149 6. BOLI 124 125 123 126 7. Other 293 301 258 270 8. Total Assets $4,173 $4,305 $4,236
Slide 7: Loan and Yield Detail
7 Commercial & Industrial Loans 22.0% Commercial Real Estate Owner- Occupied 15.0% Commercial Real Estate Non- Owner Occupied 24.8% Land & Lot 2.6% Agricultural Land 4.3% Agricultural Production 3.6% Other Non- Consumer 1.3% Residential Mortgage 17.0% Home Equity 6.9% Other Consumer 2.5% Loan and Yi
Slide 8: Investment Portfolio
8 Investment Portfolio (as of 3/31/2013) • $870 Million Balance • Average duration – 3.9 years • Tax equivalent yield of 3.69% • Net unrealized gain of $33.8 million THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com Tax-Exempt Municipals 29% Mortgage-Backed Securities 33% Collaterali
Slide 9: Total Liabilities and Capital
9 2011 2012 Q1-’12 Q1-’13 1. Customer Non-Maturity Deposits $2,196 $2,479 $2,273 $2,482 2. Customer Time Deposits 816 739 836 706 3. Brokered Deposits 123 128 170 123 4. Borrowings 378 260 287 260 5. Other Liabilities 34 39 31 37 6. Hybrid Capital 111 107 111 107 7. Preferred Stock (SBLF) 91 91 91 6
Slide 10: Deposits and Cost of Funds Detail
10 Demand Deposits, 47% Savings Deposits, 27% Certificates & Time Deposits of >$100,000, 7% Certificates & Time Deposits of <$100,000, 15% Brokered Deposits, 4% YTD Cost = .46% Total = $3.3B Deposits and Cost of Funds Detail (as of 03/31/2013) THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerc
Slide 11: Capital Ratios
11 2011 2012 Q1-’12 Q1-’13 1. Total Risk-Based Capital Ratio 16.54% 16.34% 16.39% 15.91% 2. Tier 1 Risk-Based Capital Ratio 13.92% 14.15% 14.14% 14.03% 3. Leverage Ratio 10.17% 11.03% 10.61% 11.00% 4. Tier 1 Common Risk- Based Capital Ratio 8.83% 9.62% 9.20% 10.20% 5. TCE/TCA 6.84% 7.55% 7.07% 7.88%
Slide 12: Net Interest Margin
12 Net Interest Margin THE STRENGTH OF BIG. THE SERVICE OF SMALL. Q1 - '11 Q2 - '11 Q3 - '11 Q4 - '11 Q1 - '12 Q2 - '12 Q3 - '12 Q4 - '12 Q1 - '13 Net Interest Income - FTE ($millions) $ 36.9 $ 37.3 $ 37.3 $ 37.6 $ 37.6 $ 39.5 $ 41.3 $ 39.7 $ 40.8 Tax Equivalent Yield on Earning Assets 5.11% 5.04% 5
Slide 13: Non-Interest Income
13 2011 2012 Q1-’12 Q1-’13 1. Service Charges on Deposit Accounts $12.0 $11.6 $ 2.8 $ 2.7 2. Trust Fees 7.7 7.9 2.0 2.1 3. Insurance Commission Income 5.7 6.2 1.7 2.2 4. Electronic Card Fees 6.5 7.3 1.7 1.8 5. Cash Surrender Value of Life Ins 2.6 3.4 1.4 0.7 6. Gains on Sales Mortgage Loans 7.4 10.6
Slide 14: Non-Interest Expense
14 Non-Interest Expense 2011 2012 Q1-’12 Q1-’13 1. Salary & Benefits $ 74.7 $ 79.4 $19.4 $20.8 2. Premises & Equipment 16.9 17.4 4.4 4.4 3. Core Deposit Intangible 3.5 1.9 0.5 0.4 4. Professional Services 2.2 2.3 0.7 0.6 5. OREO/Credit-Related Expense 10.6 8.2 2.2 1.9 6. FDIC Expense 5.5 3.5 1.1 0.7
Slide 15: Earnings
15 2011 2012 Q1-’12 Q1-’13 1. Net Interest Income-FTE1 $149.1 $153.5 $ 37.6 $ 40.0 2. Non Interest Income2 47.1 52.8 12.8 13.7 3. Non Interest Expense (135.9) (137.1) (34.0) (34.7) 4. Pre-Tax Pre-Provision Earnings $ 60.3 $ 69.2 $ 16.4 $ 19.0 5. Provision ( 22.6) ( 18.5) (4.9) (2.1) 6. Adjustments1,
Slide 16: Earnings Per Share
16 Earnings Per Share 2011 Q1 Q2 Q3 Q4 Total 1. Reported $ .17 $ .18 ($ .25) $ .24 $ .34 2. Adjusted $ .17 $ .18 $ .21 $ .24 $ .80 2012 Q1 Q2 Q3 Q4 Total 1. Reported $ .46 $ .28 $ .35 $ .32 $1.41 2. Adjusted $ .25 $ .26 $ .29 $ .29 $1.09 2013 Q1 Q2 Q3 Q4 Total 1. Reported $ .38 – – – $ .38 2. Adjust
Slide 17: John J. Martin, Executive Vice President and Chief Credit Officer
John J. Martin Executive Vice President and Chief Credit Officer ® THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
Slide 18: Asset Quality Summary
18 Asset Quality Summary THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com ® % Change % Change ($ in Millions) 2011 2012 Q1-'12 Q1-'13 Linked Qtr. Year over Year 1. Non-Accrual Loans 69.6$ 53.4$ 74.5$ 46.8$ (12.4%) (37.2%) 2. Other Real Estate 16.3 13.3 15.6 13.1 (1.5%) (16.0%) 3. Re
Slide 19: Net Charge-Offs, Provision & Allowance
19 Net Charge-Offs, Provision & Allowance Allowance coverage of non-accrual loans increases to 146.6% Allowance to loans at 2.36% Q1 gross charge-offs $6.6MM offset by recoveries of $3.7MM ® THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com
Slide 20: Non-Performing Asset Reconciliation
20 Non-Performing Asset Reconciliation ($ in Millions) Q2-'12 Q3-'12 Q4-'12 Q1-'13 1. Beginning Balance NPA's & 90+ Days Delinquent $97.0 $81.9 $79.6 $81.4 Non-Accrual 2. Add: New Non-Accruals 6.6 8.3 6.8 6.9 3. Less: To Accrual/Payoff/Renegotiated (9.2) (5.1) (3.2) (3.7) 4. Less: To OREO (1.1) (1.5
Slide 21: Loan Portfolio
($ in Millions) 2011 2012 Q1-'12 Q1-'13 $ % $ % 1. Commercial & Industrial 532.5$ 622.6$ 546.3$ 638.0$ 15.4$ 2.5% 91.7$ 16.8% 2. Construction (land and land development) 81.8 98.6 92.7 75.9 (22.7) (23.0%) (16.8) (18.1%) 3. CRE Non-Owner Occupied 598.1 706.3 632.7 722.1 15.8 2.2% 89.4 14.1% 4. CRE Ow
Slide 22: Michael C. Rechin, President and Chief Executive Officer
Michael C. Rechin President and Chief Executive Officer THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com ®
Slide 23: FMC Strategy
FMC Strategy THE STRENGTH OF BIG. THE SERVICE OF SMALL. “Service-driven alternative to super-regional bank competitors. Deliver superior service with presence close to the customer for . . .” • Retail Banking • Commercial Banking • Middle Market • Agriculture • Healthcare Services • Real Estate • Bu
Slide 24: 2013 Recap and Outlook
• Building on Our 120-Year History • Specific Key Projects for Compliance, Revenue and Efficiency • Promoted Chief Credit Officer to Executive Vice President • Continue to Assess M&A Environment Opportunities • Evaluate Hybrid Capital Structure Alternatives 24 2013 Recap and Outlook “The Strength of
Slide 25: Contact Information
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