First Merchants Corporation · NASDAQ:FRME

First Merchants — Q2 2015 Earnings Presentation

32 slides from First Merchants's earnings presentation, Jul 23, 2015

  1. Slide 1: 2nd Quarter 2015 Earnings Highlights

    First Merchants Corporation 2nd QUARTER 2015 Earnings Highlights July 23, 2015 ® Michael C. Rechin Mark K. Hardwick John J. Martin President Executive Vice President Executive Vice President Chief Executive Officer Chief Financial Officer Chief Credit Officer NASDAQ: FRME Filed by First Merchants Co

  2. Slide 2: Forward-Looking Statement

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com Forward-Looking Statement 2 ® 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 no

  3. Slide 3: Forward-Looking Statement and Additional Information

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com Forward-Looking Statement 3 ® First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this filing. In addition, First Merchants’ and Amer

  4. Slide 4: 2nd Quarter 2015 Highlights

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 4 ® 2nd Quarter 2015 Highlights 2nd Quarter Highlights • Earnings Per Share of $ .47, a 15% Increase over 2Q2014 • $18 Million of Net Income, a 19% Increase over 2Q2014 • 1.19% Return on Average Assets • 9.63% Return on Average Stockh

  5. Slide 5: Mark K. Hardwick, Chief Financial Officer

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 5 ® Mark K. Hardwick Executive Vice President and Chief Financial Officer

  6. Slide 6: Total Assets

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. ® www.firstmerchants.com 6 Total Assets 2013 2014 Q1-’15 Q2-’15 1. Investments $1,096 $1,181 $1,189 $1,213 2. Loans Held for Sale 5 7 6 8 3. Loans 3,633 3,925 3,966 4,238 4. Allowance (68) (64) (63) (63) 5. CD&I & Goodwill 203 219 218 220 6. BOLI 165 169 17

  7. Slide 7: Loan and Yield Detail

    Commercial & Industrial 23.2% Commercial Real Estate Owner- Occupied 12.8% Commercial Real Estate Non-Owner Occupied 23.9% Construction, Land & Land Development 6.0% Agricultural Land 3.5% Agricultural Production 2.2% Other Commercial 3.4% Residential Mortgage 16.4% Home Equity 7.1% Other Consumer 1

  8. Slide 8: Investment Portfolio

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 8 ® Investment Portfolio (as of 6/30/2015) • $1.2 Billion • Modified duration of 4.6 years • Tax equivalent yield of 3.93% • Net unrealized gain of $28.1 Million Mortgage- Backed Securities 30% Collateralized Mortgage Obligations 26%

  9. Slide 9: Total Liabilities and Capital

    ® THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 9 Total Liabilities and Capital 2013 2014 Q1-’15 Q2-’15 1. Customer Non-Maturity Deposits $3,276 $3,523 $3,518 $3,651 2. Customer Time Deposits 868 784 800 812 3. Brokered Deposits 87 334 330 327 4. Borrowings 401 290 305 431 5. Oth

  10. Slide 10: Deposits and Cost of Funds Detail

    Demand Deposits 46% Savings Deposits 30% Certificates & Time Deposits of >$100,000 6% Certificates & Time Deposits of <$100,000 11% Brokered Deposits 7% THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 10 ® Deposits and Cost of Funds Detail (as of 06/30/2015) QTD Cost = .40% YTD Cos

  11. Slide 11: Capital Ratios

    Total Risk-Based Capital Ratio (Target = 14.50%) Common Equity Tier 1 Capital Ratio (Target = 10.00%) Tangible Common Equity/Tangible Assets (TCE) (Target = 8.00%) THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 11 ® 10.13% 10.42% 10.37% 10.86% 11.00% 11.16% 11.40% 11.37% 11.22% 7.

  12. Slide 12: Net Interest Margin

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com Net Interest Margin ® Q2 - '13 Q3 - '13 Q4 - '13 Q1 - '14 Q2 - '14 Q3 - '14 Q4 - '14 Q1 - '15 Q2 - '15 Net Interest Income - FTE ($millions) $ 38.1 $ 38.6 $ 42.8 $ 47.8 $ 48.1 $ 49.9 $ 49.2 $ 49.2 $ 51.7 Fair Value Accretion $ 0.4 $ 0

  13. Slide 13: Non-Interest Income

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 13 ® Non-Interest Income 1Adjusted for Bond Gains & Losses and Gain on Sale of Insurance Subsidiary 2013 2014 Q1-’15 Q2-’15 1. Service Charges on Deposit Accounts $12.4 $15.7 $ 3.5 $ 4.1 2. Trust Fees 8.6 9.0 2.5 2.3 3. Insurance Comm

  14. Slide 14: Non-Interest Expense

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 14 ® Non-Interest Expense 2013 2014 Q1-’15 Q2-’15 1. Salary & Benefits $ 85.4 $ 96.5 $ 24.5 $26.4 2. Premises & Equipment 18.0 23.2 6.4 6.3 3. Core Deposit Intangible 1.6 2.4 0.7 0.7 4. Professional & Other Outside Services 8.3 8.1 1.

  15. Slide 15: Non-Interest Expense – Core vs. Non-Recurring

    Core + FMIG + Community + Cooper + Non-Recurring* Q2 Total Core FMIG Community Bank Cooper State Bank Other Non-Recurring $42.0 + $2.3 + $0.8 + $1.1 + $0.2 $46.4 THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 15 ® Non-Interest Expense – Core vs. Non-Recurring *Other Non-Recurring

  16. Slide 16: Earnings

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 16 ® 2013 2014 Q1-’15 Q2-’15 1. Net Interest Income $154.3 $187.0 $ 47.0 $ 49.0 2. Provision for Loan Losses (6.6) (2.6) (0.4) 3. Net Interest Income after Provision 147.7 184.4 47.0 48.6 4. Non-Interest Income 56.0 66.4 16.2 24.6 5.

  17. Slide 17: Earnings Per Share

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 17 ® 2014 Q1 Q2 Q3 Q4 Total 1. Reported $ .38 $ .41 $ .45 $ .41 $ 1.65 2. FV Accretion EPS Impact $ .03 $ .04 $ .06 $ .03 $ .16 2015 Q1 Q2 Q3 Q4 Total 1. Reported $ .43 $ .47 – – $ .90 2. FV Accretion EPS Impact $ .04 $ .04 – – $ .08

  18. Slide 18: John J. Martin, Chief Credit Officer

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 18 ® John J. Martin Executive Vice President and Chief Credit Officer

  19. Slide 19: Loan Portfolio Trends

    ($ in Millions) 2013 2014 Q1-'15 Q2-'15186.1 186.1 1. Commercial & Industrial 761.7$ 896.7$ 938.9$ 984.2$ 45.3$ 4.8% 2. Construction, Land and Land Development 177.1 207.3 237.0 256.1 19.1 8.1% 3. CRE Non-Owner Occupied 963.4 975.7 960.2 1,014.0 53.8 5.6% 4. CRE Owner Occupied 501.1 534.7 537.2 541.

  20. Slide 20: Asset Quality Summary

    ($ in Millions) 2013 2014 Q1-'15 Q2-'15 1. Non-Accrual Loans 56.4$ 48.8$ 44.3$ 37.7$ (6.6)$ (14.9%) 2. Other Real Estate 22.2 19.3 19.1 19.3 0.2 1.0% 3. Renegotiated Loans 3.0 2.0 1.3 0.9 (0.4) (30.8%) 4. 90+ Days Delinquent Loans 1.4 4.6 1.7 0.6 (1.1) (64.7%) 5. Total NPA's & 90+ Days Delinquent 83

  21. Slide 21: Non-Performing Asset Reconciliation

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 21 ® Non-Performing Asset Reconciliation ($ in Millions) Q2-'14 Q3-'14 Q4-'14 Q1-'15 Q2-'15 1. Beginning Balance NPA's & 90+ Days Delinquent 78.9$ 72.4$ 65.6$ 74.7$ 66.4$ Non-Accrual 2. Add: New Non-Accruals 8.3 18.3 11.1 7.8 4.4 3. L

  22. Slide 22: ALLL and Fair Value Summary

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 22 ® ALLL and Fair Value Summary 29.8% 14.6% 55.6% ($ in Millions) Q2-'14 Q3-'14 Q4-'14 Q1-'15 Q2-'15 1. Allowance for Loan Losses (ALLL) 68.4$ 65.6$ 64.0$ 62.8$ 62.6$ 2. Fair Value Adjustment (FVA) 43.9 35.5 43.2 40.6 40.7 3. Total A

  23. Slide 23: Portfolio Perspective

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 23 ® Portfolio Perspective • Deep Ameriana Bank due diligence which covered 80% of the commercial portfolio resulting in an estimated $11.3 million credit mark. • Granular Ameriana Bank loan portfolio that should be easy to assimilate

  24. Slide 24: Michael C. Rechin, President and CEO

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 24 ® Michael C. Rechin President and Chief Executive Officer

  25. Slide 25: Ameriana Bank Acquisition Overview

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 25 ® Ameriana Bank Acquisition Overview Deal Value $68.8 Million Consideration 100% Stock, .9037 Fixed Exchange Ratio Required Approvals Regulatory and Ameriana Bancorp Shareholders Key Assumptions Cost Savings Estimated to be 57%, or

  26. Slide 26: Ameriana Bank Summary

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 26 ® Ameriana Bank Summary  Headquartered in New Castle, Indiana  Founded in 1890  Operates 13 Banking Centers  Balance Sheet as of March 31, 2015  $483 Million in Assets  $325 Million in Loans  $391 Million in Deposits  Incom

  27. Slide 27: Ameriana Bank Transaction Rationale

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 27 ® Ameriana Bank Transaction Rationale Strategic Opportunity Attractive Risk Profile  Full Due Diligence Process Completed  Midwestern Cultural Fit  FMC Experienced Acquirer, Core Competency in Integration Processes Proforma Firs

  28. Slide 28: FMC Strategy and Tactics Overview

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 28 ® FMC Strategy and Tactics Overview Focus on our Customer and Performance • Completed mobile and online banking upgrade in 3rd Quarter 2015 • Achieve organic growth throughout the franchise • Develop and retain outstanding talent f

  29. Slide 29: Contact Information

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 29 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 In

  30. Slide 30: Appendix

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 30 ® Appendix

  31. Slide 31: Appendix – Non-GAAP Reconciliation: Capital Ratios

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 31 ® Appendix – Non-GAAP Reconciliation CAPITAL RATIOS (dollars in thousands) 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Total Risk-Based Capital Ratio Total Stockholders' Equity (GAAP) 539,293 513,469 634,923 652,111 670,596 684,55

  32. Slide 32: Appendix – Non-GAAP Reconciliation: Tangible Equity and Ratios

    THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 32 ® Appendix – Non-GAAP Reconciliation TANGIBLE EQUITY AND TANGIBLE RATIOS (dollars in thousands) Tangible Common Equity/Tangible Assets (non-GAAP) 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Total Stockholders' Equity (GAAP) 539,29

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