First Merchants Corporation · NASDAQ:FRME
First Merchants — Q3 2012 Earnings Presentation
26 slides from First Merchants's earnings presentation, Oct 25, 2012
Slide 1: First Merchants Corporation 3rd Quarter 2012 Earnings Call
First Merchants Corporation 3rd Quarter 2012 Earnings Call October 25, 2012
Slide 2: Michael C. Rechin, President and Chief Executive Officer
Michael C. Rechin President and Chief Executive Officer
Slide 3: Forward-looking statements
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 actual results. Specific
Slide 4: EPS and Reported Total Revenue and Loan Growth
EPS § $.35 3 rd Quarter EPS § $1.09 YTD EPS Reported Total Revenue and Loan Growth § $38.7M 3 rd Quarter Loan Growth (1.4% Qtr-over-Qtr, 5.5% Annualized) § $41.3M 3 rd Quarter Total Net-Interest Income-FTE (4.6% Qtr-over-Qtr Increase) § $14.3M 3 rd Quarter Total Non-Interest Income (8.3% Qtr-over-Qt
Slide 5: Mark K. Hardwick, Executive Vice President and Chief Financial Officer
Mark K. Hardwick Executive Vice President and Chief Financial Officer
Slide 6: Assets
2011 Q1-’12 Q2-’12 Q3-’12 1. Investments $ 827 $ 946 $ 960 $ 944 $ 929 2. Loans Held for Sale 21 18 22 15 28 3. Loans 2,836 2,713 2,793 2,798 2,836 4. Allowance (83) (71) (70) (70) (69) 5. CD&I & Goodwill 154 150 150 150 150 6. BOLI 97 124 123 124 125 7. Other 319 293 258 271 251 8. Total Assets $4,
Slide 7: Loan portfolio as of 09/30/2012
(as of 09/30/2012 ) QTD Yield = 5.29% YTD Yield = 5.23% Total = $2.9B
Slide 8: Investment portfolio as of 09/30/2012
(as of 09/30/2012) § $929 Million Balance § Average duration - 3.8 years § Tax equivalent yield of 3.66% § Net unrealized gain of $44.8 million
Slide 9: Liabilities and Capital
2011 Q1-’12 Q2-’12 Q3-’12 1. Customer Non-Maturity Deposits $2,127 $2,196 $2,273 $2,343 $2,293 2. Customer Time Deposits 996 816 836 808 784 3. Brokered Deposits 146 123 170 138 118 4. Borrowings 277 378 287 263 361 5. Other Liabilities 28 34 31 33 40 6. Hybrid Capital 142 111 111 111 107 7. Preferr
Slide 10: Deposits and Cost of Funds Detail
Deposits and Cost of Funds Detail QTD Cost = .54% YTD Cost = .60% Brokered Deposits A% Total = $3.2B Certificates & Time Deposits of <$100,000 16% Demand Deposits 46% Certificates & Time Deposits of >$100,000 8% Savings Deposits 26% First Merchants Corporation
Slide 11: Capital ratios
2011 Q1-’12 Q2-’12 Q3-’12 1. Total Risk-Based Capital Ratio 15.74% 16.54% 16.39% 16.75% 16.62% 2. Tier 1 Risk-Based Capital Ratio 12.82% 13.92% 14.14% 14.49% 14.39% 3. Leverage Ratio 9.50% 10.17% 10.61% 10.73% 10.98% 4. Tier 1 Common Risk- Based Capital Ratio 7.64% 8.83% 9.20% 9.54% 9.71% 5. TCE/TCA
Slide 12: Net Interest Income - FTE
Q3-’10 Q4-’10 Q1-’11 Q2-’11 Q3-’11 Q4-’11 Q1-’12 Q2-’12 Q3-’12 Net Interest Income - FTE ($millions) $ 37.2 $ 36.7 $ 36.9 $ 37.3 $ 37.3 $ 37.6 $ 37.6 $ 39.5 $ 41.3 Tax Equivalent Yield on Earning Assets 5.38% 5.13% 5.11% 5.04% 5.01% 4.83% 4.74% 4.75% 4.89% Cost of Supporting Liabilities 1.45% 1.30%
Slide 13: Non-Interest Income
2010 2011 Q1-’12 Q2-’12 Q3-’12 1. Service Charges on Deposit Accounts $13.3 $12.0 $2.8 $ 2.9 $ 2.9 2. Trust Fees 7.7 7.7 2.0 1.9 2.0 3. Insurance Commission Income 6.2 5.7 1.7 1.5 1.6 4. Electronic Card Fees 6.1 6.5 1.7 2.1 1.7 5. Cash Surrender Value of Life Ins 2.1 2.6 1.4 0.7 0.7 6. Gains on Sale
Slide 14: Non-Interest Expense
2011 Q1-’12 Q2-’12 Q3-’12 1. Salary & Benefits $ 73.3 $74.7 $19.4 $19.6 $20.1 2. Premises & Equipment 17.2 16.9 4.4 4.1 4.4 3. Core Deposit Intangible 4.7 3.5 0.5 0.5 0.5 4. Professional Services 1.4 2.2 0.7 0.5 0.5 5. OREO/Credit-Related Expense 14.6 10.6 2.2 2.1 2.1 6. FDIC Expense 8.1 5.5 1.1 0.9
Slide 15: Income statement summary
2010 2011 Q1-’12 Q2-’12 Q3-’12 1. Net Interest Income-FTE $149.4 $149.1 $37.6 $38.8 $38.7 2. Non Interest Income 1 46.6 47.1 12.8 12.7 13.5 3. Non Interest Expense (142.3) (135.9) (34.0) (34.2) (34.4) 4. Pre-Tax Pre-Provision Earnings $53.7 $60.3 $16.4 $17.3 $17.8 5. Provision (46.5) (22.6) (4.9) (4
Slide 16: Reported and adjusted EPS
2010 Q1 Q2 Q3 Q4 Total 1. Reported $ .01 $ .35 $ .02 $ .10 $ .48 2. Adjusted $ .01 ($ .05) $ .02 $ .10 $ .08 2011 Q1 Q2 Q3 Q4 Total 3. Reported $ .17 $ .18 ($ .25) $ .24 $ .34 4. Adjusted $ .17 $ .18 $ .21 $ .24 $ .80 2012 Q1 Q2 Q3 Q4 Total 5. Reported $ .46 $ .28 $ .35 - $1.09 6. Adjusted $ .25 $ .
Slide 17: John J. Martin, Senior Vice President and Chief Credit Officer
John J. Martin Senior Vice President and Chief Credit Officer
Slide 18: Asset Quality Summary
Asset Quality Summary . Non-Accrual Loans . Other Real Estate . Renegotiated Loans . 90+ Days Delinquent Loans . Specific Reserves . Allowance for Loan and Lease Losses . ALLL/Non-Accrual Loans Classified Assets . Criticized Assets (includes Classified) 1.3 13.9 83.0 91.6% $ 313.0 $ 393.0 16.3 15.6
Slide 19: Net Charge-Offs, Provision & Allowance
Net Charge-Offs, Provision & Allowance ($ in Millions) 3789 = S05) 5634] (557D) | som $70 sa et — ee | acon = Si Allowance coverage of non-accrual loans so ley is a oo Fiza] | 10s increasedto 121.9% 20 [111.1%] ° 70% nom aos 1002 2072 «302 DAL te Nonscenat Loans S-ALLL % of NomAcerual Loans a Allowa
Slide 20: Non-Performing Asset Reconciliation
Non-Performing Asset Reconciliation Q2-41 Q3'-11 411 1122-12 Q3'-12 1. Beginning Balance NPA's & 90+ Days Delinquent $107.6 | $109.5 $1067 $100.8 $97.0 $81.9 Non-Accrual 2. Add: New Non-Aceruals 27 «24 869102 16.4 66 83 3. Less: To Accrual/PayoffRenegotiated @3) 7) (76) (2.7) ~— (9.2) (51) am 4. Les
Slide 21: Loan portfolio growth and declines
($ in Millions) $ ▲ 3Q-’11 4Q-’11 1Q-’12 2Q-’12 3Q-’12 2Q to 3Q 1. Core Loan Portfolio 2,712.9 2,713.4 2,793.0 2,797.6 2,836.3 38.7 2. Held for Sale 12.3 17.9 22.1 15.3 27.7 12.4 Loan Growth: 3. CRE Non-Owner Occupied 598.9 598.1 632.7 639.2 682.0 42.8 4. Commercial/Industrial 552.9 572.0 583.2 597.
Slide 22: Core Loan Portfolio Growth Led by C&I and Non-Owner Occupied CRE
Core Loan Portfolio Growth Led by C & I and Non-Owner Occupied CRE Renegotiated “A/B” Note Strategy Improving Asset Quality Limited Impact from Drought on the Agriculture Portfolio OREO and Other Credit-Related Expenses Trending Lower
Slide 23: Michael C. Rechin, President and Chief Executive Officer
Michael C. Rechin President and Chief Executive Officer
Slide 24: Growth Company Attributes
Growth Company Attributes § Robust Mortgage and Commercial Pipelines § Loan Growth Beginning to Take Hold § Strong Core Deposit Funding Base § Tangible Common Equity - 7.51% § Adequate Reserve Level for Portfolio Risk § Engaged Workforce Directed Towards Customers and Communities Continue Investment
Slide 25: Growth and Top-Tier Performance
“Growth and Top-Tier Performance” Intensify Revenue-Generating Activity and Grow Revenue § Accelerate Pipeline Conversion of Commercial Banking Opportunities § Deploy Retail Point-of-Sale CRM System § Add Business Banking Professionals in Key Markets Improve Efficiency and Utilize Capital Flexibilit
Slide 26: Stock listing and investor contact
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