First Merchants Corporation Announces First Quarter 2024 Earnings Per Share

MUNCIE, Ind., April 25, 2024 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)

First Quarter 2024 Highlights:

• Net income available to common stockholders was $47.5 million and diluted earnings per common share totaled $0.80 compared to $63.6 million and $1.07 in the first quarter of 2023, and $42.0 million and $0.71 in the fourth quarter of 2023.   Net income and diluted earnings per common share, excluding non-core charges of $3.5 million incurred during the quarter, totaled $50.1 million and $0.85, respectively.
• Strong capital position with Common Equity Tier 1 Capital Ratio of 11.25 percent.
• Total loans declined $24.3 million, or 0.8 percent annualized on a linked quarter basis, but increased $346.4 million, or 2.8 percent during the last twelve months when excluding the impact of a non-relationship commercial loan portfolio sale of $116.6 million that occurred during the second quarter of 2023.
• Total deposits increased $63.1 million, or 1.7 percent annualized on a linked quarter basis, and $181.3 million, or 1.2 percent during the last twelve months.
• Net charge-offs totaled 7 basis points of average loans (annualized) compared to 10 basis points on a linked quarter basis.
• Nonperforming assets to total assets were 37 basis points compared to 32 basis points on a linked quarter basis.
• The efficiency ratio totaled 59.21 percent for the quarter and 57.03 percent excluding $3.5 million of non-core charges incurred during the quarter.
  

Mark Hardwick, Chief Executive Officer, stated, "Given the length and severity of the inverted yield curve, we were pleased to see relative stabilization of our net interest margin during the quarter. Capital, liquidity, the allowance for credit losses and earnings are strong and supported share repurchase activity during the quarter of $30 million, as well as, the redemption of $40 million in sub-debt." Hardwick added, "Three of our four major technology initiatives have also been deployed to include in-branch account opening, consumer online and mobile upgrades, and a new Private Wealth platform."

First Quarter Financial Results:

First Merchants Corporation (the “Corporation) has reported first quarter 2024 net income available to common stockholders of $47.5 million compared to $63.6 million during the same period in 2023.   Diluted earnings per common share for the period totaled $0.80 compared to the first quarter of 2023 result of $1.07 per share. The corporation incurred $3.5 million of non-core charges during the quarter including $1.1 million from an additional FDIC special assessment and $2.4 million of digital platform conversion costs.  

Total assets equaled $18.3 billion as of quarter-end and loans totaled $12.5 billion.   During the past twelve months, total loans grew by $346.4 million, or 2.8 percent and were offset by a non-relationship based commercial loan sale of $116.6 million that occurred in the second quarter of 2023.   On a linked quarter basis, loans declined $24.3 million, or 0.8 percent annualized.

Investments securities, totaling $3.8 billion, decreased $273.8 million, or 6.7 percent, during the last twelve months and decreased $27.8 million, or 2.9 percent annualized on a linked quarter basis.

Total deposits equaled $14.9 billion as of quarter-end and increased by $181.3 million, or 1.2 percent, over the past twelve months. Total deposits increased $63.1 million, or 1.7 percent annualized on a linked quarter basis.   During the quarter, customer deposits increased $87.3 million which was offset by a reduction in brokered deposits of $24.2 million. The loan to deposit ratio declined slightly to 83.9 percent at period end from 84.4 percent in the prior quarter.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $204.7 million as of quarter-end, a decrease of $0.3 million from prior quarter.   Loan charge-offs, net of recoveries, for the quarter totaled $2.3 million. Provision expense for loans was recorded during the quarter of $2.0 million resulting in an ACL as a percent of loans of 1.64 percent.   Reserves for unfunded commitments totaling $19.5 million remain unchanged from prior quarter.   Non-performing assets to total assets were 0.37 percent for the first quarter of 2024, an increase of five basis points compared to 0.32 percent in the prior quarter.

Net interest income, totaling $127.1 million for the quarter, declined $3.0 million, or 2.3 percent, compared to prior quarter and decreased $17.1 million, or 11.8 percent, compared to the first quarter of 2023.   Stated net-interest margin on a tax equivalent basis totaling 3.10 percent, declined by six basis points compared to the fourth quarter of 2023 and decreased 48 basis points compared to the first quarter of 2023.   During the quarter, increased deposit costs and a continued change in deposit mix offset the increase in earning asset yields reducing net-interest margin.

Noninterest income, totaling $26.6 million for the quarter, increased $0.2 million, compared to the fourth quarter of 2023 and increased $1.6 million from the first quarter of 2023. Customer-related fees declined $1.2 million from prior quarter due to lower gains on sales of loans and derivative hedge fees.   Non-customer related fees increased $1.4 million from prior quarter primarily due to realized losses on the sales of securities recorded in the prior quarter.

Noninterest expense totaled $96.9 million for the quarter, a decrease of $11.2 million from the fourth quarter of 2023 due to a decline in non-core charges and lower marketing spend.   Non-core charges incurred during the quarter totaled $3.5 million and included $1.1 million from an additional FDIC special assessment and $2.4 million of digital platform conversion costs.   Non-core charges recorded in the prior quarter totaled $12.7 million and included $4.3 million from an FDIC special assessment, $6.3 million of early retirement and severance costs, and $2.1 million from a lease termination.   

The Corporation’s total risk-based capital ratio equaled 13.34 percent, common equity tier 1 capital ratio equaled 11.25 percent, and the tangible common equity ratio totaled 8.32 percent. These ratios continue to demonstrate the Corporation’s strong capital position.

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 11:30 a.m. (ET) on Thursday, April 25, 2024.

To access via phone, participants will need to register using the following link where they will be provided a phone number and access code: (https://register.vevent.com/register/BIdd109dbd75ba4d42a3ddae5a62b4e2a1)

In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/8p72e5ye) during the time of the call. A replay of the webcast will be available until April 25, 2025.

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank. The Bank also operates as First Merchants Private Wealth Advisors (as a division of First Merchants Bank).

First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company’s Internet web page (http://www.firstmerchants.com).

FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.

Forward-Looking Statements

This release 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 not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, “would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These statements include statements of First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity (including the ability to grow and maintain core deposits and retain large, uninsured deposits), credit and interest rate risks associated with the First Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, First Merchants’ past results of operations do not necessarily indicate its anticipated future results.

For more information, contact:
Nicole M. Weaver, Vice President and Director of Corporate Administration
765-521-7619
http://www.firstmerchants.com

SOURCE: First Merchants Corporation, Muncie, Indiana

¹ - Non-core expenses in 4Q23 included $6.3 million from early retirement and severance costs, $4.3 million from the FDIC special assessment, and $2.1 million from a lease termination.
² - Non-core expenses in 1Q24 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.