Slide 1: First Merchants Corporation 1st Quarter 2012 Earnings Call
First Merchants Corporation 1st Quarter 2012 Earnings Call April 26, 2012
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 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
Slide 4: 1st Quarter 2012 Highlights
1 st QUARTER 2012 HIGHLIGHTS • EPS – $.46 per share (171% year-over-year growth) – Core EPS: $.25 per share (47% year-over-year growth) – SCB bargain purchase gain of $.21 per share • SCB FDIC-Modified Whole-Bank Transaction • Core Revenue Growth – $1.7M increase year-over-year • Balance Sheet Well
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
TOTAL ASSETS 2010 2011 Q1-’11 Q1-’12 1. Investments $ 827 $ 946 $ 886 $ 960 2. Loans 2,857 2,731 2,766 2,815 3. Allowance (83) (71) (81) (70) 4. CD&I & Goodwill 154 150 153 150 5. BOLI 97 124 102 123 6. Other 319 293 291 258 7. Total Assets $4,171 $4,173 $4,117 $4,236 ($ in Millions)
Slide 7: Loan and Credit Detail
LOAN AND CREDIT DETAIL Loan Composition (as of 3/31/12) YTD Yield = 5.17%
Slide 8: Investment Portfolio (as of 3/31/12)
INVESTMENT PORTFOLIO (as of 3/31/12)
Slide 9: Total Liabilities and Capital
TOTAL LIABILITIES AND CAPITAL 2010 2011 Q1-’11 Q1-’12 1. Customer Non-Maturity Deposits $2,127 $2,196 $2,083 $2,273 2. Customer Time Deposits 996 816 943 836 3. Brokered Deposits 146 123 126 170 4. Borrowings 277 378 305 287 5. Other Liabilities 28 34 56 31 6. Hybrid Capital 142 111 142 111 7. Prefe
Slide 10: Deposit Composition, YTD Cost .66%
YTD Cost = .66% Total = $3.3B Brokered Deposits, 5% Demand Deposits, 46% Certificates & Time Deposits of <$100,000, 17% Certificates & Time Deposits of Savings Deposits, >$100,000, 24% 8% ii First Merchants Corporation
Slide 11: Capital Ratios
CAPITAL RATIOS 2010 2011 Q1-’11 Q1-’12 1. Total Risk-Based Capital Ratio 15.74% 16.54% 15.66% 16.39% 2. Tier 1 Risk-Based Capital Ratio 12.82% 13.92% 13.05% 14.14% 3. Leverage Ratio 9.50% 10.17% 9.80% 10.61% 4. Tier 1 Common Risk- Based Capital Ratio 7.64% 8.83% 7.75% 9.20% 5. TCE/TCA 5.86% 6.84% 6.
Slide 12: Net Interest Margin
Q1 - '10 Q2 - '10 Q3 - '10 Q4 - '10 Q1 - '11 Q2 - '11 Q3 - '11 Q4 - '11 Q1 - '12 Net Interest Income - FTE ($ in millions) $37.8 $37.7 $37.2 $36.7 $36.9 $37.3 $37.3 $37.6 $37.6 Tax Equivalent Yield on Earning Assets 5.39% 5.38% 5.38% 5.13% 5.11% 5.04% 5.01% 4.83% 4.74% Cost of Supporting Liabilities
Slide 13: Non-Interest Income
NON-INTEREST INCOME 2010 2011 Q1-’11 Q1-’12 1. Service Charges on Deposit Accounts $13.3 $12.0 $ 2.8 $2.8 2. Trust Fees 7.7 7.7 2.0 2.0 3. Insurance Commission Income 6.2 5.7 1.9 1.7 4. Electronic Card Fees 6.1 6.5 1.5 1.7 5. Cash Surrender Value of Life Ins 2.1 2.6 0.6 1.4 6. Gains on Sales Mortgag
Slide 14: Non-Interest Expense
NON-INTEREST EXPENSE Q1-’11 Q1-’12 1. Salary & Benefits $73.3 $74.7 $17.2 $19.4 2. Premises & Equipment 17.2 16.9 4.5 4.4 3. Core Deposit Intangible 4.7 3.5 1.1 0.5 4. Professional Services 1.4 2.2 0.6 0.7 5. OREO/Credit-Related Expense 14.6 10.6 3.2 2.2 6. FDIC Expense 8.1 5.5 2.1 1.1 7. Outside Da
Slide 15: Earnings
EARNINGS 2011 Q1-’11 Q1-’12 1. Net Interest Income-FTE $149.4 $149.1 $36.9 $37.6 2. Non Interest Income 1 46.6 47.1 11.8 12.8 3. Non Interest Expense (142.3) (135.9) (33.9) (34.0) 4. Pre-Tax Pre-Provision Earnings $53.7 $60.3 $14.8 $16.4 5. Provision (46.5) (22.6) (5.6) (4.9) 6. Adjustments 1 1.9 2.
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 Q1 Q2 Q3 Q4 Total 5. Actual $ .46 - - - $ .46 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: Credit Quality Summary Table
Q1-'12 FV ($ in Millions) 2010 2011 Q1-11 Core Port. Q1-'12 1. Non-Accrual Loans $ 90.6 $ 69.6 | $ 87.7||$ 696/$ 49] $ 74.5 2. Other Real Estate 20.9 16.3 17.0 15.6 15.6 3. Restructured Loans 7.1 14.3 21 6.7 6.7 4. 90-Day Delinquent Loans 1.3 0.6 0.8 0.1 0.1 0.2 5. Impaired Loans 116.2 79.8 116.8 78
Slide 19: Credit Metrics and ALLL Coverage
CREDIT METRICS AND ALLL COVERAGE Criticized Assets down 11.1% Q1-’12 compared to Q1-’11 and up 6.9% linked quarter Classified Assets down 23.3% Q1-’12 compared to Q1-’11 and down .9% linked quarter Non-Accrual Loans down 15.1% Q1-’12 compared to Q1-’11 and up 7.0% linked quarter *Q1 2012 includes lo
Slide 20: Non-Performing Asset Reconciliation
NON-PERFORMING ASSET RECONCILIATION ($ in millions) Q4-’10 Q1-’11 Q2-’11 Q3-’11 Q4-’11 Q1-’12* 1. Beginning Balance NPAs & 90+ Days Delinquent $ 130.8 $ 120.0 $ 107.6 $ 109.5 $ 106.7 $ 100.8 Non-Accrual 2. Add: New Non-Accruals* 27.4 11.7 26.7 21.4 10.2 16.4 3. Less: To Accrual/Payoff/Restructured (
Slide 21: Net Charge-Offs, Provision and Allowance
NET CHARGE-OFFS, PROVISION AND ALLOWANCE ($ in Millions)
Slide 22: Credit Summary
Credit Summary • Asset quality trends continue to improve • Decrease in Restructured Loans following their return to market terms, demonstrated performance and loss recognition • Charge-offs and provision expense lower and in line with improvement in credit quality • Total loan pipeline improving dr
Slide 23: Michael C. Rechin, President and Chief Executive Officer
Michael C. Rechin President and Chief Executive Officer
Slide 24: Overview of 2012 Strategy and Tactics
Overview of 2012 Strategy and Tactics “Growth and Top-Tier Performance” • Shelby County Bank integration • Grow revenue by intensifying revenue-generating activity: – Market coverage tactics . . . including SCB – Additional investment in business banking professionals in key markets – Retail CRM and
Slide 25: 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