First Merchants Corporation · NASDAQ:FRME
First Merchants — Q3 2011 Earnings Presentation
24 slides from First Merchants's earnings presentation, Oct 25, 2011
Slide 1: 3rd Quarter 2011 Earnings Call
3rd Quarter 2011 Earnings Call October 25, 2011
Slide 2: Michael C. Rechin, President and Chief Executive Officer
Michael C. Rechin President and Chief Executive Officer
Slide 3: Forward-Looking Statement
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 affect
Slide 4: 3rd Quarter 2011 Highlights
3rd Quarter 2011 Highlights § Quarter-to-date earnings per share, including one-time charge, resulted in a loss of $.25 per fully diluted common share. After adjusting for the one-time charge, the normalized core earnings totaled $.22 per fully diluted common share. § Quarterly pre-tax pre-provision
Slide 5: Mark K. Hardwick, Executive Vice President and Chief Financial Officer
Mark K. Hardwick Executive Vice President and Chief Financial Officer
Slide 6: Total Assets
2009 2010 Q1-’11 Q2-’11 Q3-’11 1. Investments $ 563 $ 827 $ 886 $ 938 $ 938 2. Loans 3,278 2,857 2,766 2,729 2,725 3. Allowance (92) (83) (81) (77) (73) 4. CD&I & Goodwill 159 154 153 152 151 5. BOLI 95 97 102 103 124 6. Other 478 319 291 249 254 7. Total Assets $4,481 $4,171 $4,117 $4,094 $4,119 ($
Slide 7: Loan Portfolio
(as of 9/30/2011 ) YTD Yield = 5.45% Total = $2.7B LOAN PORTFOLIO
Slide 8: $938 Million Investment Portfolio
§ $938 Million Balance § Average duration - 3.9 years § Tax equivalent yield of 4.03% § Net unrealized gain of $25.4 million
Slide 9: Total Liabilities and Capital
2009 2010 Q1-’11 Q2- ’11 Q3 -’11 1. Customer Non-Maturity Deposits $2,042 $2,127 $2,083 $2,114 $2,073 2. Customer Time Deposits 1,220 996 943 890 848 3. Brokered Deposits 275 146 126 139 143 4. Borrowings 339 277 305 306 398 5. Other Liabilities 30 28 56 35 33 6. Hybrid Capital 111 142 142 142 111 7
Slide 10: Deposits
First Merchants BANKING. INSURANCE. TRUST. | WWW.TIRSTMERCHANTS.COM DEPOSITS (as of 9/30/2011) Brokered Deposits, 5% Demand Deposits, Certificates & Time 44% Deposits of <$100,000, 19% Certificates & Time Deposits of Savings Deposits, >$100,000, 23% 9% THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Slide 11: Capital Ratios
2009 2010 Q1-’11 Q2-’11 Q3-’11 1. Total Risk-Based Capital Ratio 13.04% 15.74% 15.66% 16.05% 16.21% 2. Tier 1 Risk-Based Capital Ratio 10.32% 12.82% 13.05% 13.42% 13.60% 3. Leverage Ratio 8.20% 9.50% 9.80% 9.94% 10.20% 4. Tier 1 Common Risk- Based Capital Ratio 5.40% 7.64% 7.75% 8.06% 8.53% 5. TCE/T
Slide 12: Net Interest Margin
Q3-’09 Q4-’09 Q1-’10 Q2-’10 Q3-’10 Q4-’10 Q1-’11 Q2-’11 Q3-’11 Net Interest Income - FTE ($millions) $ 40.5 $ 39.2 $ 37.8 $ 37.7 $ 37.2 $ 36.7 $ 36.9 $ 37.3 $ 37.3 Tax Equivalent Yield on Earning Assets 5.56% 5.48% 5.39% 5.38% 5.38% 5.13% 5.11% 5.04% 5.01% Cost of Supporting Liabilities 1.73% 1.62%
Slide 13: Non-Interest Income
2009 2010 Q1-’11 Q2-’11 Q3-’11 1. Service Charges on Deposit Accounts $15.1 $13.3 $ 2.8 $ 3.0 $ 3.2 2. Trust Fees 7.4 7.7 2.0 1.9 1.9 3. Insurance Commission Income 6.4 6.2 1.9 1.0 1.5 4. Electronic Card Fees 4.9 6.2 1.5 1.7 1.7 5. Cash Surrender Value of Life Ins 1.6 2.1 0.6 0.6 0.6 6. Gains on Sal
Slide 14: Non-Interest Expense
NON-INTEREST EXPENSE 2010 Q1-’11 Q2-’11 Q3-’11 1. Salary & Benefits $ 76.3 $ 73.3 $ 17.2 $ 18.6 $ 20.0 2. Premises & Equipment 17.9 17.2 4.5 4.1 4.2 3. Core Deposit Intangible 5.1 4.7 1.1 1.1 0.8 4. P rofessional Services 1.3 1.4 0.6 0.5 0.5 5. OREO/Credit-Related Expense 12.9 14.6 3.2 2.8 2.0 6. FD
Slide 15: Earnings
2010 Q1-’11 Q2-’11 Q3-’11 1. Net Interest Income-FTE $159.1 $149.4 $ 36.9 $ 37.3 $37.3 2. Non Interest Income 1 46.5 46.6 11.8 10.3 12.3 3. Non Interest Expense 2 (134.7) (127.7) (30.7) (31.6) (32.2) 4. Pre-Tax Pre-Provision Earnings $ 70.9 $ 68.3 $ 18.0 $ 16.0 $ 17.4 5. Provision (122.2) (46.5) (5.
Slide 16: Earnings Per Share
EARNINGS PER SHARE 2010 Q1 Q2 Q3 Q4 Total 1. Actual $ .01 $ .35 $ .02 $ .10 $ .48 2. Adjusted * $ .01 ($.05) $ .02 $ ..10 $ .08 2011 Q1 Q2 Q3 Q4 Total 3. Actual $ .17 $ .18 ($.25) − $ .10 4. Adjusted * $ .17 $ .18 $ .22 − $ .57 * Adjusted for gains and losses on CPP/Trust Preferred refinance and rep
Slide 17: John J. Martin, Senior Vice President and Chief Credit Officer
John J. Martin Senior Vice President and Chief Credit Officer
Slide 18: Improvement and Stabilization in Credit Metrics
IMPROVEMENT AND STABILIZATION IN CREDIT METRICS $ 1.6 $ .2 $ .8 $ 1.3 $ 5.3 3. 90 day Delinquent Loans $ 87.8 $108.3 $116.8 $116.2 $125.7 5. Impaired Loans $ 78.9 $ 87.6 $ 87.7 $ 90.6 $ 98.6 4. Non-Accrual Loans $347.9 $360.5 $383.7 $393.0 $408.6 2. Criticized Assets (includes Classified) $248.1 $28
Slide 19: Non-Performing Assets Rollforward
($ in millions) Q3-’10 Q4-’10 Q1-’11 Q2-’11 Q3-’11 1. Beginning Balance NPAs & 90+ Days Delinquent $ 146.5 $ 130.8 $ 120.0 $ 107.6 $ 109.5 Non-Accrual 2. Add: New Non-Accruals 15.5 27.4 11.7 26.7 21.4 3. Less: To Accrual/Payoff/Restructured ( 18.6) ( 14.5) ( 3.2) ( 8.3) ( 8.7) 4. Less: To OREO (6.7)
Slide 20: Net Charge-Offs, Provision and Allowance
NET CHARGE-OFFS, PROVISION AND ALLOWANCE ($ in millions)
Slide 21: Credit Summary
Credit Summary § Key credit metrics continue to improve although challenges remain. § Criticized and Classified Assets continue to show improving trends. § Other Real Estate and other credit related expenses moderating. § Charge-offs and provision expense lower with improvement in credit quality.
Slide 22: Michael C. Rechin, President and Chief Executive Officer
Michael C. Rechin President and Chief Executive Officer
Slide 23: Overview of 2011 Strategy and Tactics
Overview of 2011 Strategy and Tactics “Strengthen and Grow” § Streamline and solidify our brand position as a community bank competing primarily in consumer, small business and middle market. § Pipeline is growing by intensifying revenue activity using market coverage tactics and the addition of rev
Slide 24: Contact Information
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