First Merchants Corporation · NASDAQ:FRME
First Merchants — Q1 2015 Earnings Presentation
28 slides from First Merchants's earnings presentation, Apr 23, 2015
Slide 1: First Merchants Corporation 1st Quarter 2015 Earnings Highlights
First Merchants Corporation 1st QUARTER 2015 Earnings Highlights April 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
Slide 2: Forward-Looking Statement
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com Forward-Looking Statement 2 ® 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
Slide 3: 1st Quarter 2015 Highlights
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 3 ® 1st Quarter 2015 Highlights 1st Quarter Highlights • Earnings Per Share of $ .43, a 13% increase over 1Q2014 • $16.2 Million of Net Income, a 19% increase over 1Q2014 • $16.2 Million of Non-Interest Income, a 5% increase over 1Q20
Slide 4: Mark K. Hardwick, Chief Financial Officer
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 4 ® Mark K. Hardwick Executive Vice President and Chief Financial Officer
Slide 5: Total Assets
THE STRENGTH OF BIG. THE SERVICE OF SMALL. ® www.firstmerchants.com 5 Total Assets 2013 2014 Q1-’14 Q1-’15 1. Investments $ 1,096 $1,181 $1,150 $1,189 2. Loans Held for Sale 5 7 7 6 3. Loans 3,633 3,925 3,617 3,966 4. Allowance (68) (64) (70) (63) 5. CD&I & Goodwill 203 219 202 218 6. BOLI 165 169 1
Slide 6: Loan and Yield Detail
Commercial & Industrial 23.6% Commercial Real Estate Owner- Occupied 13.5% Commercial Real Estate Non-Owner Occupied 24.2%Construction, Land & Land Development 6.0% Agricultural Land 3.8% Agricultural Production 2.4% Other Non-Consumer 1.3% Residential Mortgage 16.3% Home Equity 7.2% Other Consumer
Slide 7: Investment Portfolio
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 7 ® Mortgage- Backed Securities 31% Collateralized Mortgage Obligations 27% Corporate Obligations 4% Tax-Exempt Municipals 38% Investment Portfolio (as of 3/31/2015) • $1.2 Billion • Modified duration of 4.2 • Tax equivalent yield of
Slide 8: Total Liabilities and Capital
® THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 8 Total Liabilities and Capital 2013 2014 Q1-’14 Q1-’15 1. Customer Non-Maturity Deposits $3,276 $3,523 $3,249 $3,518 2. Customer Time Deposits 868 784 834 800 3. Brokered Deposits 87 334 200 330 4. Borrowings 401 290 362 305 5. Oth
Slide 9: Deposits and Cost of Funds Detail
Demand Deposits 46% Savings Deposits 30% Certificates & Time Deposits of >$100,000 6% Certificates & Time Deposits of <$100,000 11% Brokered Deposits 7% THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 9 ® Deposits and Cost of Funds Detail (as of 03/31/2015) YTD Cost = .40% Total =
Slide 10: Capital Ratios
Total Risk-Based Capital Ratio (Target = 14.50%) Common Equity Tier 1 Capital Ratio (Target = 10.00%) Tangible Common Equity/Tangible Assets (TCE) (Target = 8.00%) THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 10 ® 10.20% 10.13% 10.42% 10.37% 10.86% 11.00% 11.16% 11.40% 11.37% 7.
Slide 11: Net Interest Margin
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 11 Net Interest Margin ® Q1 - '13 Q2 - '13 Q3 - '13 Q4 - '13 Q1 - '14 Q2 - '14 Q3 - '14 Q4 - '14 Q1 - '15 Net Interest Income - FTE ($millions) $ 40.8 $ 38.1 $ 38.6 $ 42.8 $ 47.8 $ 48.1 $ 49.9 $ 49.2 $ 49.2 Fair Value Accretion $ 0.8
Slide 12: Non-Interest Income
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 12 ® Non-Interest Income 1Adjusted for Bond Gains & Losses ($ in Millions) 2013 2014 Q1-’14 Q1-’15 1. Service Charges on Deposit Accounts $12.4 $15.7 $ 3.6 $ 3.5 2. Trust Fees 8.6 9.0 2.2 2.5 3. Insurance Commission Income 7.1 7.4 2.3
Slide 13: Non-Interest Expense
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 13 ® Non-Interest Expense 2013 2014 Q1-’14 Q1-’15 1. Salary & Benefits $ 85.4 $ 96.5 $ 25.3 $ 24.5 2. Premises & Equipment 18.0 23.2 6.6 6.4 3. Core Deposit Intangible 1.6 2.4 0.6 0.7 4. Professional & Other Outside Services 8.3 8.1 1
Slide 14: Earnings
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 14 ® 2013 2014 Q1-’14 Q1-’15 1. Net Interest Income $154.3 $187.0 $ 45.9 $ 47.0 2. Provision for Loan Losses (6.6) (2.6) 3. Net Interest Income after Provision 147.7 184.4 45.9 47.0 4. Non-Interest Income 56.0 66.4 15.4 16.2 5. Non-In
Slide 15: Earnings Per Share
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 15 ® 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 – – – $ .43 2. FV Accretion EPS Impact $ .04 – – – $ .04 Earnings
Slide 16: John J. Martin, Chief Credit Officer
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 16 ® John J. Martin Executive Vice President and Chief Credit Officer
Slide 17: Loan Portfolio Trends
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 17 Loan Portfolio Trends ® ($ in Millions) 2013 2014 Q1-'14 Q1-'15 $ % $ %186.1 1. Commercial & Industrial 761.7$ 896.7$ 787.4$ 938.9$ 42.2$ 4.7% 151.5$ 19.2% 2. Construction, Land and Land Development 177.1 207.3 155.1 237.0 29.7 14.
Slide 18: Asset Quality Summary
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 18 Asset Quality Summary ® ($ in Millions) 2013 2014 Q1-'14 Q1-'15 $ % $ % 1. Non-Accrual Loans 56.4$ 48.8$ 55.7$ 44.3$ (4.5)$ (9.2%) (11.4)$ (20.5%) 2. Other Real Estate 22.2 19.3 21.1 19.1 (0.2) (1.0%) (2.0) (9.5%) 3. Renegotiated L
Slide 19: Non-Performing Asset Reconciliation
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 19 ® Non-Performing Asset Reconciliation ($ in Millions) Q2-'14 Q3-'14 Q4-'14 Q1-'15 1. Beginning Balance NPA's & 90+ Days Delinquent 78.9$ 72.4$ 65.6$ 74.7$ Non-Accrual 2. Add: New Non-Accruals 8.3 18.3 11.1 7.8 3. Less: To Accrual/P
Slide 20: ALLL and Fair Value Summary
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 20 ® ALLL and Fair Value Summary 14.7% 27.7% 57.6% ($ in Millions) Q1-'14 Q2-'14 Q3-'14 Q4-'14 Q1-'15 1. Allowance for Loan Losses (ALLL) 69.6$ 68.4$ 65.6$ 64.0$ 62.8$ 2. Fair Value Adjustment (FVA) 47.2 43.9 35.5 43.2 40.6 3. Total A
Slide 21: Portfolio Perspective
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 21 ® Portfolio Perspective • Continued strong demand in the construction portfolio • Opportunities in the Public Finance sector • Consumer lending demand improving following lower regional unemployment • Cooper State Bank portfolio ha
Slide 22: Michael C. Rechin, President and Chief Executive Officer
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 22 ® Michael C. Rechin President and Chief Executive Officer
Slide 23: FMC Strategy and Tactics Overview
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 23 ® FMC Strategy and Tactics Overview Focus on the Customer Experience • Complete mobile and online banking upgrade in 3rd Quarter 2015 • Achieve organic growth throughout the franchise • Develop and retain outstanding talent for mar
Slide 24: Contact Information
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 24 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
Slide 25: Appendix
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 25 ® Appendix
Slide 26: Appendix – Non-GAAP Reconciliation: Capital Ratios
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 26 Appendix – Non-GAAP Reconciliation CAPITAL RATIOS (dollars in thousands) 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 Total Risk-Based Capital Ratio Total Stockholders' Equity (GAAP) 538,558 539,293 513,469 634,923 652,111 670,596
Slide 27: Appendix – Non-GAAP Reconciliation: Tangible Equity and Tangible Ratios
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 27 ® Appendix – Non-GAAP Reconciliation TANGIBLE EQUITY AND TANGIBLE RATIOS (dollars in thousands) Tangible Common Equity/Tangible Assets (non-GAAP) 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 Total Stockholders' Equity (GAAP) $ 538,
Slide 28: Appendix – Non-GAAP Reconciliation: Allowance Ratios
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 28 ® Appendix – Non-GAAP Reconciliation ALLOWANCE RATIOS (dollars in thousands) 1Q14 2Q14 3Q14 4Q14 1Q15 Allowance as a Percentage of Non-Purchased Loans Loans Held for Sale (GAAP) $ 6,586 $ 7,370 $ 6,423 $ 7,235 $ 6,392 Loans (GAAP)