Slide 1: 4th Quarter 2011 Earnings Call
January 26, 2012 4th Quarter 2011 Earnings Call
Slide 2: Michael C. Rechin, President and CEO
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: 4th Quarter and Fiscal Year-End 2011 Highlights
4 th Quarter and Fiscal Year-End 2011 Highlights § The company continued its trend of improving core earnings resulting in quarter-to-date earnings per share of $.24 per fully diluted common share. § Pre-tax pre-provision earnings improved by $2.6M over 2010 to $70.9M through non-interest income imp
Slide 5: Mark K. Hardwick, EVP and CFO
Mark K. Hardwick Executive Vice President and Chief Financial Officer
Slide 6: Total Assets
2009 2010 2011 1. Investments $ 563 $ 827 $ 946 2. Loans 3,278 2,857 2,731 3. Allowance (92) (83) (71) 4. CD&I & Goodwill 159 154 150 5. BOLI 95 97 124 6. Other 478 319 293 7. Total Assets $4,481 $4,171 $4,173 ($ in Millions) TOTAL ASSETS
Slide 7: Loan Portfolio
(as of 12/31/2011 ) YTD Yield = 5.41% Total = $2.7B LOAN PORTFOLIO
Slide 8: Investment Portfolio: $946 Million Balance
§ $946 Million Balance § Average duration - 3.8 years § Tax equivalent yield of 3.91% § Net unrealized gain of $29.6 million
Slide 9: Total Liabilities and Capital
2009 2010 2011 1. Customer Non-Maturity Deposits $2,042 $2,127 $2,196 2. Customer Time Deposits 1,220 996 816 3. Brokered Deposits 275 146 123 4. Borrowings 339 277 378 5. Other Liabilities 30 28 34 6. Hybrid Capital 111 142 111 7. Preferred Stock (CPP) 112 68 ― 8. Preferred Stock (SBLF) ― ― 91 9. C
Slide 10: Deposits
First Merchants BANKING, INSURANCE. TRUST, | WWW.TIRSTMERCHANTS.CO DEPOSITS (as of 12/31/2011) Brokered Deposits 4% Demand Deposits 46% Certificates & Time Deposits of <$100,000 18% Certificates & Time Deposits of >$100,000 8% Savings Deposits 24% ‘TH OF BIG. THE SERVICE OF SMALL.
Slide 11: Capital Ratios
2009 2010 2011 1. Total Risk-Based Capital Ratio 13.04% 15.74% 16.54% 2. Tier 1 Risk-Based Capital Ratio 10.32% 12.82% 13.92% 3. Leverage Ratio 8.20% 9.50% 10.17% 4. Tier 1 Common Risk- Based Capital Ratio 5.40% 7.64% 8.83% 5. TCE/TCA 4.54% 5.86% 6.84% CAPITAL RATIOS
Slide 12: Net Interest Income and Net Interest Margin
First Merchants BANKING, INSURANCE, TRUST, | WWW.TIRSTMERCHANT: Net Interest Income-FTE(Smilions) $ 392 $ 378 $ 377 $ 372 $ B87 S$ 29S 3735 83S 376 Tax Equivalent Yield on Earning Assets 548% «5.30% © 5.38% = 5.38% «= 8.13% © 5.11% «= 5.04% «= 8.01% «= 83% Cost of Supporting Liabilities 162% «1.57%
Slide 13: Non-Interest Income
2009 2010 2011 1. Service Charges on Deposit Accounts $15.1 $13.3 $12.0 2. Trust Fees 7.4 7.7 7.7 3. Insurance Commission Income 6.4 6.2 5.7 4. Electronic Card Fees 4.9 6.1 6.5 5. Cash Surrender Value of Life Ins 1.6 2.1 2.6 6. Gains on Sales Mortgage Loans 6.8 6.8 7.4 7. Securities Gains/Losses 4.4
Slide 14: Non-Interest Expense
NON-INTEREST EXPENSE 2010 2011 1. Salary & Benefits $ 76.3 $ 73.3 $74.7 2. Premises & Equipment 17.9 17.2 16.9 3. Core Deposit Intangible 5.1 4.7 3.5 4. Professional Services 1.3 1.4 2.2 5. OREO/Credit-Related Expense 12.9 14.6 10.6 6. FDIC Expense 10.4 8.1 5.5 7. FHLB Prepayment Penalties 1.9 ― ― 8
Slide 15: Earnings
2010 2011 1. Net Interest Income-FTE $159.1 $149.4 $149.1 2. Non Interest Income 1 46.5 46.6 47.1 3. Non Interest Expense 2 ( 134.7) ( 127.7) ( 125.3) 4. Pre-Tax Pre-Provision Earnings $ 70.9 $ 68.3 $ 70.9 5. Provision ( 122.2) ( 46.5) ( 22.6) 6. Adjustments ( 12.1) ( 12.7) ( 8.6) 7. Taxes - FTE 22.
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) $ .24 $ .34 4. Adjusted $ .17 $ .18 $ .21 $ .24 $ .80 * Adjusted for gains and losses on CPP/Trust Preferred refinance
Slide 17: John J. Martin, SVP and Chief Credit Officer
John J. Martin Senior Vice President and Chief Credit Officer
Slide 18: Asset Quality Summary
($ in Millions) ASSET QUALITY SUMMARY 2009 2010 2011 1. Non-Accrual Loans $118.4 $ 90.6 $ 69.6 2. Other Real Estate 14.9 20.9 16.3 3. Restructured Loans 8.8 7.1 14.3 4. 90-Day Delinquent Loans 4.0 1.3 .6 5. Impaired Loans 178.8 116.2 79.8 6. Specific Reserves 26.3 13.9 7.6 7. Allowance for Loan and
Slide 19: Improvement in Credit Metrics and ALLL Coverage
Criticized Assets down 18.8% YOY and 8.3% linked quarter Classified Assets down 27.4% YOY and 8.4% linked quarter Non-Accrual Loans down 23.2% YOY and 11.8% linked quarter Allowance for Loan and Lease Losses as a % of Nonaccrual Loans exceeds 100% ($ in Millions) ($ in Millions) IMPROVEMENT IN CREDI
Slide 20: Non-Performing Assets Rollforward
($ in millions) Q3-’10 Q4-’10 Q1-’11 Q2-’11 Q3-’11 Q4-’11 1. Beginning Balance NPAs & 90+ Days Delinquent $ 146.5 $ 130.8 $ 120.0 $ 107.6 $ 109.5 $ 106.7 Non-Accrual 2. Add: New Non-Accruals 15.5 27.4 11.7 26.7 21.4 10.2 3. Less: To Accrual/Payoff/Restructured ( 18.6) ( 14.5) ( 3.2) ( 8.3) ( 8.7) (
Slide 21: Net Charge-Offs, Provision and Allowance
i 1] First Merchants BANKING. INSURANCE. TRUST, | WWW.TIRSTMERCHANTS.COM NET CHARGE-OFFS, PROVISION AND ALLOWANCE $122.2 $70.9 $34.7 $22.6) 2009 2010 2011 @ Net Charge-offs @ Provision Expense @ Allowance for Loan Losses THE STRENGTH OF BIG. THE SERVICE OF SMALL.
Slide 22: Credit Summary
Credit Summary § Asset Quality continues to show improvement. § Lower OREO and other related credit expenses associated with fewer properties and improved credit metrics. § Increase in Restructured Loans resulting from “A/B” restructures until performance demonstrated. § Charge-offs and provision ex
Slide 23: Michael C. Rechin, President and CEO
Michael C. Rechin President and Chief Executive Officer
Slide 24: 2011 Review
2011 Review § Capital strategy executed successfully § Tangible Common Equity ratio improved by 98 basis points in 2011 to 6.84% through: § Core earnings improvement § $21.2M Direct Private Placement § $90.8M SBLF investment § $116M TARP CPP redemption § Solidified our brand position as a community
Slide 25: 2012 Strategy and Tactics
2012 Strategy and Tactics “Growth and Top Tier Performance” § Grow revenue by intensifying revenue-generating activity: § market coverage tactics § accelerate commercial banking opportunities § additional investment in business banking professionals in key markets § retail CRM and sales management s
Slide 26: 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