Slide 1: First Quarter 2016 Earnings Highlights
FIRST MERCHANTS CORPORATION THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com First Quarter 2016 Earnings Highlights April 26, 2016 NASDAQ: FRME Michael C. Rechin Mark K. Hardwick John J. Martin President Executive Vice President Executive Vice President Chief Executive Officer Chief
Slide 2: Forward-Looking Statement
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 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 facts are subject to risks an
Slide 3: 1st Quarter 2016 Highlights
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com 3 1st Quarter 2016 Highlights 1st Quarter Highlights • Earnings Per Share of $ .43, Equal to 1Q2015 • $17.7 Million of Net Income, a 9.4% increase over 1Q2015 • 1st Quarter Results Include Acquisition Expenses of $1.9 Million ($.03 pe
Slide 4: Mark K. Hardwick, Chief Financial Officer
4 Mark K. Hardwick Executive Vice President and Chief Financial Officer ®
Slide 5: Total Assets
5 Total Assets 2014 2015 Q1-’15 Q1-’16 1. Investments $1,181 $1,277 $1,189 $1,271 2. Loans Held for Sale 7 10 6 4 3. Loans 3,925 4,694 3,966 4,710 4. Allowance (64) (62) (63) (62) 5. CD&I & Goodwill 219 260 218 262 6. BOLI 169 201 170 201 7. Other 387 381 392 413 8. Total Assets $5,824 $6,761 $5,878
Slide 6: Loan and Yield Detail
® THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com Commercial & Industrial 22.5% Commercial Real Estate Owner- Occupied 11.6% Commercial Real Estate Non-Owner Occupied 23.5% Construction, Land & Land Development 8.3% Agricultural Land 3.3% Agricultural Production 2.0% Other Commerci
Slide 7: Investment Portfolio
® THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com Mortgage- Backed Securities 31% Collateralized Mortgage Obligations 24% U. S. Agencies 1% Corporate Obligations 3% Tax-Exempt Municipals 41% Investment Portfolio (as of 3/31/2016) • $1.3 Billion • Modified duration of 4.2 years • Ta
Slide 8: Total Liabilities and Capital
2014 2015 Q1-’15 Q1-’16 1. Customer Non-Maturity Deposits $3,523 $4,096 $3,518 $4,140 2. Customer Time Deposits 784 880 800 841 3. Brokered Deposits 334 314 330 330 4. Borrowings 290 446 305 420 5. Other Liabilities 44 51 63 79 6. Hybrid Capital 122 123 122 122 7. Common Equity 727 851 740 867 8. To
Slide 9: Deposit Detail
® THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com Demand Deposits 49% Savings Deposits 29% Certificates & Time Deposits of >$100,000 6% Certificates & Time Deposits <$100,000 10% Brokered Deposits 6% Deposit Detail (as of 03/31/2016) YTD Cost = .40% Total = $5.3 Billion 9
Slide 10: Capital Ratios
THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com Total Risk-Based Capital Ratio (Target = 13.50%) Common Equity Tier 1 Capital Ratio (Target = 10.00%) Tangible Common Equity/Tangible Assets (TCE) (Target = 8.50%) 10 10.86% 11.00% 11.16% 11.40% 11.37% 11.22% 11.31% 11.49% 11.42% 8.65
Slide 11: Net Interest Margin
3.97% 3.89% 3.98% 3.80% 3.78% 3.81% 3.85% 3.75% 3.83% 3.83% 3.71% 3.71% 3.69% 3.61% 3.65% 3.71% 3.62% 3.66% 2.50% 2.70% 2.90% 3.10% 3.30% 3.50% 3.70% 3.90% 4.10% $30 $34 $38 $42 $46 $50 $54 $58 Q1 - '14 Q2 - '14 Q3 - '14 Q4 - '14 Q1 - '15 Q2 - '15 Q3 - '15 Q4 - '15 Q1 - '16 Net Interest Income - FTE
Slide 12: Non-Interest Income
($ in Millions) 2014 2015 Q1-’15 Q1-’16 1. Service Charges on Deposit Accounts $15.7 $16.2 $ 3.5 $ 4.1 2. Trust Fees 9.0 9.2 2.5 2.5 3. Insurance Commission Income 7.4 4.1 2.3 4. Electronic Card Fees 9.7 11.1 2.5 3.2 5. Cash Surrender Value of Life Ins 3.7 2.9 0.7 1.5 6. Gains on Sales Mortgage Loan
Slide 13: Non-Interest Expense
13 Non-Interest Expense 2014 2015 Q1-’15 Q1-’16 1. Salary & Benefits $ 96.5 $101.9 $ 24.5 $ 27.3 2. Premises & Equipment 23.2 25.5 6.4 7.3 3. Core Deposit Intangible 2.4 2.8 0.7 1.0 4. Professional & Other Outside Services 8.1 9.9 1.5 2.2 5. OREO/Credit-Related Expense 8.0 6.1 1.2 1.2 6. FDIC Expens
Slide 14: Earnings
14 2014 2015 Q1-’15 Q1-’16 1. Net Interest Income $187.0 $196.4 $ 47.0 $ 54.5 2. Provision for Loan Losses (2.6) (0.4) (0.6) 3. Net Interest Income after Provision 184.4 196.0 47.0 53.9 4. Non-Interest Income 66.4 72.5 16.2 16.3 5. Non-Interest Expense (168.5) (177.5) (41.2) (46.9) 6. Income before
Slide 15: Per Share Results
15 2015 Q1 Q2 Q3 Q4 Total 1. Earnings Per Share $ .43 $ .47 $ .45 $ .37 $ 1.72 2. Tangible Book Value $13.96 $14.15 $14.59 $ 14.68 3. Dividends $ .08 $ .11 $ .11 $ .11 $ .41 2016 Q1 Q2 Q3 Q4 Total 1. Earnings Per Share $ .43 – – – $ .43 2. Tangible Book Value $ 15.02 – – – 3. Dividends $ .11 – – – $
Slide 16: John J. Martin, Chief Credit Officer
16 John J. Martin Executive Vice President and Chief Credit Officer ®
Slide 17: Loan Portfolio Trends
($ in Millions) 2014 2015 Q1-'15 Q1-'16 $ % $ %186.1 1. Commercial & Industrial 897$ 1,057$ 939$ 1,061$ 4$ 0.4% 122$ 13.0% 2. Construction, Land and Land Development 207 367 237 392 25 6.8% 155 65.4% 3. CRE Non-Owner Occupied 976 1,090 960 1,106 16 1.5% 146 15.2% 4. CRE Owner Occupied 535 554 537 54
Slide 18: Asset Quality Summary
($ in Millions) 2014 2015 Q1-'15 Q1-'16 $ % $ % 1. Non-Accrual Loans 48.8$ 31.4$ 44.3$ 36.7$ 5.3 16.9% (7.6) (17.2%) 2. Other Real Estate 19.3 17.3 19.1 15.6 (1.7) (9.8%) (3.5) (18.3%) 3. Renegotiated Loans 2.0 1.9 1.3 1.0 (0.9) (47.4%) (0.3) (23.1%) 4. 90+ Days Delinquent Loans 4.6 0.9 1.7 1.0 0.1
Slide 19: Non-Performing Asset Reconciliation
19 Non-Performing Asset Reconciliation THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com ($ in Millions) Q2-'15 Q3-'15 Q4-'15 Q1-'16 1. Beginning Balance NPAs & 90+ Days Delinquent 66.4$ 58.5$ 53.2$ 51.5$ Non-Accrual 2. Add: New Non-Accruals 4.4 3.9 3.9 10.7 3. Less: To Accrual/Payof
Slide 20: ALLL and Fair Value Summary
20 ALLL and Fair Value Summary THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com ® 32.5% 13.6% 53.9% ($ in Millions) Q1-'15 Q2-'15 Q3-'15 Q4-'15 Q1-'16 1. Allowance for Loan Losses (ALLL) 62.8$ 62.6$ 62.9$ 62.5$ 62.1$ 2. Fair Value Adjustment (FVA) 40.6 40.7 37.9 47.0 47.1 3. Total A
Slide 21: Asset Quality & Portfolio Summary
21 Asset Quality & Portfolio Summary THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com ® • Loan growth in Commercial Real Estate and Construction while a decline in 1-4 family mortgage portfolio. • Asset quality remains stable. Single $4.6 million CRE relationship moved to non-accrua
Slide 22: Michael C. Rechin, President and CEO
22 Michael C. Rechin President and Chief Executive Officer ®
Slide 23: FMC Strategy and Tactics Overview
23 FMC Strategy and Tactics Overview THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com Focus on our Clients, Performance and Growth • Focus on gaining deeper penetration of new Treasury Management, Mobile, and Online banking services for additional revenue and deposit generation • Re
Slide 24: Contact Information
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 Investor Relations Telephone: 765.378.8937 dortega@firstmerchants.com
Slide 25: Appendix
25 Appendix ®
Slide 26: Appendix – Non-GAAP Reconciliation
26 THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com Appendix – Non-GAAP Reconciliation ®
Slide 27: Appendix – Non-GAAP Reconciliation
27 Appendix – Non-GAAP Reconciliation THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com ®
Slide 28: Appendix – Non-GAAP Reconciliation
28 Appendix – Non-GAAP Reconciliation THE STRENGTH OF BIG. THE SERVICE OF SMALL. www.firstmerchants.com ®