First Merchants Corporation · NASDAQ:FRME
First Merchants — Q1 2014 Earnings Presentation
25 slides from First Merchants's earnings presentation, Apr 24, 2014
Slide 1: 1st Quarter 2014 Earnings Call
First Merchants Corporation NASDAQ: FRME 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 ® THE STRENGTH OF BIG. THE SERVICE OF SMALL. 1st QUARTER 2014 EARNINGS CALL Apri
Slide 2: Forward-Looking Statement
Forward-Looking Statement THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com The Corporation may make forward-looking statements about its relative business outlook. These forward- looking statements and all other state
Slide 3: 1st Quarter 2014 Highlights
www.firstmerchants.com THE STRENGTH OF BIG. THE SERVICE OF SMALL. 1st Quarter 2014 Highlights 3 • Solid quarter with Net Income Available to Shareholders of $13.6 Million, EPS of $.38 per share, ROAA 1.01% • Successfully Completed CFS Bancorp Integration; Expense Takeout Target on Track • Continued
Slide 4: Executive Vice President and Chief Financial Officer
Executive Vice President and Chief Financial Officer www.firstmerchants.com THE STRENGTH OF BIG. THE SERVICE OF SMALL. ® 4
Slide 5: Total Assets
www.firstmerchants.com Total Assets THE STRENGTH OF BIG. THE SERVICE OF SMALL. 2012 2013 Q1-’13 Q1-’14 1. Investments $ 874 $1,096 $ 870 $1,150 2. Loans Held for Sale 22 5 27 7 3. Loans 2,902 3,633 2,880 3,617 4. Allowance (69) (68) (69) (70) 5. CD&I & Goodwill 150 203 149 202 6. BOLI 125 165 126 16
Slide 6: Loan and Yield Detail
www.firstmerchants.com Commercial & Industrial 21.7% Commercial Real Estate Owner-Occupied 13.9% Commercial Real Estate Non-Owner Occupied 26.4%Construction, Land & Land Development 4.3% Agricultural Land 4.1% Agricultural Production 2.7% Other Non-Consumer 0.6% Residential Mortgage 17.5% Home Equit
Slide 7: Investment Portfolio
www.firstmerchants.com • $1.2 billion balance • Average duration of 4.4 years • Tax equivalent yield of 3.87% • Net unrealized gain of $20.8 million Investment Portfolio (as of 3/31/2014) THE STRENGTH OF BIG. THE SERVICE OF SMALL. 7 Mortgage- Backed Securities 32% Collateralized Mortgage Obligations
Slide 8: Total Liabilities and Capital
www.firstmerchants.com 2012 2013 Q1-’13 Q1-’14 1. Customer Non-Maturity Deposits $2,479 $3,276 $2,482 $3,249 2. Customer Time Deposits 739 868 706 834 3. Brokered Deposits 128 87 123 200 4. Borrowings 260 401 260 362 5. Other Liabilities 39 48 37 34 6. Hybrid Capital 107 122 107 122 7. Preferred Sto
Slide 9: Deposits and Cost of Funds Detail
www.firstmerchants.com Deposits and Cost of Funds Detail (as of 03/31/2014) THE STRENGTH OF BIG. THE SERVICE OF SMALL. 9 ® Demand Deposits 46% Savings Deposits 30% Certificates & Time Deposits of >$100,000 6% Certificates & Time Deposits of <$100,000 13% Brokered Deposits 5% YTD Cost = .31% Total =
Slide 10: Capital Ratios
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com Capital Ratios 9.20% 9.54% 9.71% 9.62% 10.20% 10.13% 10.42% 10.37% 10.86% 7.07% 7.27% 7.51% 7.55% 7.88% 7.74% 7.97% 8.34% 8.65% 16.39% 16.75% 16.62% 16.34% 15.91% 15.69% 14.96% 14.54% 15.04% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00
Slide 11: Net Interest Margin
www.firstmerchants.com Net Interest Margin THE STRENGTH OF BIG. THE SERVICE OF SMALL. 11 Q1 - '12 Q2 - '12 Q3 - '12 Q4 - '12 Q1 - '13 Q2 - '13 Q3 - '13 Q4 - '13 Q1 - '14 Net Interest Income - FTE ($millions) $ 37.6 $ 39.5 $ 41.3 $ 39.7 $ 40.8 $ 38.1 $ 38.6 $ 42.8 $ 47.8 Fair Value Accretion $ 0.7 $
Slide 12: Non-Interest Income
www.firstmerchants.com 2012 2013 Q1-’13 Q1-’14 1. Service Charges on Deposit Accounts $11.6 $12.4 $ 2.7 $ 3.6 2. Trust Fees 7.9 8.6 2.1 2.2 3. Insurance Commission Income 6.2 7.1 2.2 2.3 4. Electronic Card Fees 7.3 7.5 1.8 2.3 5. Cash Surrender Value of Life Ins 3.4 2.6 0.7 0.7 6. Gains on Sales Mor
Slide 13: Non-Interest Expense
www.firstmerchants.com Non-Interest Expense 2012 2013 Q1-’13 Q1-’14 1. Salary & Benefits $ 79.4 $ 85.4 $ 20.8 $ 25.3 2. Premises & Equipment 17.4 18.0 4.4 6.6 3. Core Deposit Intangible 1.9 1.6 0.4 0.6 4. Professional & Other Outside Services 6.2 8.3 1.7 1.4 5. OREO/Credit-Related Expense 8.2 6.7 1.
Slide 14: Earnings
2012 2013 Q1-’13 Q1-’14 1. Net Interest Income $152.3 $154.3 $ 39.4 $ 45.9 2. Provision for Loan Losses (18.5) (6.6) (2.1) – 3. Net Interest Income after Provision 133.8 147.7 37.3 45.9 4. Non-Interest Income 64.3 54.8 13.9 15.2 5. Non-Interest Expense (137.1) (143.2) (34.7) (43.1) 6. Income before
Slide 15: Earnings Per Share
www.firstmerchants.com Earnings Per Share 2013 Q1 Q2 Q3 Q4 Total 1. Reported $ .38 $ .34 $ .35 $ .34 $ 1.41 2. FV Accretion EPS Impact $ .02 $ .01 $ .01 $ .01 $ .05 2014 Q1 Q2 Q3 Q4 Total 1. Reported $ .38 – – – $ .38 2. FV Accretion EPS Impact $ .03 – – – $ .03 ® THE STRENGTH OF BIG. THE SERVICE OF
Slide 16: Executive Vice President and Chief Credit Officer
Executive Vice President and Chief Credit Officer www.firstmerchants.com THE STRENGTH OF BIG. THE SERVICE OF SMALL. ® 16
Slide 17: Loan Portfolio Trends
www.firstmerchants.com Loan Portfolio Trends ® THE STRENGTH OF BIG. THE SERVICE OF SMALL. 17 Change ($ in Millions) 2012 2013 Q1-'13 Q1-'14 $ % $ % 149.9 1. Commercial & Industrial 622.6$ 761.7$ 638.0$ 787.4$ 25.7$ 3.4% 149.4$ 23.4% 2. Construction, Land and Land Development 98.6 177.1 75.9 155.1 (2
Slide 18: Asset Quality Summary
www.firstmerchants.com Asset Quality Summary ® THE STRENGTH OF BIG. THE SERVICE OF SMALL. 18 Change ($ in Millions) 2012 2013 Q1-'13 Q1-'14 $ % $ % 1. Non-Accrual Loans 53.4$ 56.4$ 46.8$ 55.7$ (0.7)$ (1.2%) 8.9$ 19.0% 2. Other Real Estate 13.3$ 22.2$ 13.1$ 21.1$ (1.1)$ (5.0%) 8.0$ 61.1% 3. Renegotia
Slide 19: Non-Performing Asset Reconciliation
www.firstmerchants.com Non-Performing Asset Reconciliation ® THE STRENGTH OF BIG. THE SERVICE OF SMALL. 19 ($ in Millions) Q2-'13 Q3-'13 Q4-'13 Q1-'14 1. Beginning Balance NPA's & 90+ Days Delinquent $66.3 $56.2 $51.2 $83.0 Non-Accrual 2. Add: New Non-Accruals 4.2 7.7 4.2 9.1 3. Add: Citizens Non-Ac
Slide 20: Net Charge-Offs, Provision & Allowance
www.firstmerchants.com Net Charge-Offs, Provision & Allowance ® THE STRENGTH OF BIG. THE SERVICE OF SMALL. 20 • Decrease in non-accrual loans • Increased allowance coverage of non-accrual loans • Q1 recoveries of $3.6 million • Q1 charge-offs of $1.9 million ($ i n m ill io n s ) ($ i n m ill io n s
Slide 21: ALLL and Fair Value Summary
® www.firstmerchants.com THE STRENGTH OF BIG. THE SERVICE OF SMALL. 21 ALLL and Fair Value Summary (as of 03/31/2014) FMB SCB CFS Total 1. Allowance for Loan Losses (ALLL) $ 69.2 $ – $ 0.4 $ 69.6 2. Fair Value Adjustment – 8.9 38.3 47.2 3. Total ALLL Plus FV Adjustments $ 69.2 $ 8.9 $ 38.7 $ 116.8 4
Slide 22: President and Chief Executive Officer
President and Chief Executive Officer www.firstmerchants.com THE STRENGTH OF BIG. THE SERVICE OF SMALL. ® 22
Slide 23: FMC Strategy
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com ® FMC Strategy “Service-driven alternative to super-regional bank competitors. Deliver superior service with presence close to the customer for . . . ” • Retail Banking • Commercial Banking • Middle Market • Investment Real Estate • B
Slide 24: 2014 Tactics Overview
www.firstmerchants.com 2014 Tactics Overview ® THE STRENGTH OF BIG. THE SERVICE OF SMALL. 24 • Intensify Revenue-Generating Activities • Achieve organic growth throughout the franchise • First Merchants brand investment in new “Lakeshore Region” • Develop and retain outstanding talent • Leverage our
Slide 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 FIRST MERCHANTS and the