MUNCIE, Ind., Jan. 27, 2022 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported fourth quarter 2021 net income of $47.7 million compared to $45.1 million during the same period in 2020. Earnings per share for the period totaled $.89 per share compared to the fourth quarter 2020 result of $.83 per share. Net income for the year ended December 31, 2021 totaled $205.5 million, compared to $148.6 million during the same period in 2020. Year-to-date earnings per share totaled $3.81 compared to $2.74 in 2020.
Total assets equaled $15.5 billion as of year-end and loans totaled $9.3 billion. The Corporation experienced organic loan growth of $566 million, or 6.6 percent, during 2021. This was offset by the forgiveness of Paycheck Protection Program (“PPP”) loans of $560 million, resulting in net loan growth of $6 million. Investments increased $1.4 billion, or 43.8 percent, during the year and now total $4.5 billion. Total deposits equaled $12.7 billion as of year-end and increased by $1.4 billion, or 12.1 percent, during 2021.
The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $195.4 million as of year-end, or 2.11 percent of total loans. Net charge-offs for the quarter totaled $4.6 million and no provision expense was recorded during the quarter or during the year ended 2021. Provision expense taken during the three and twelve months ended December 31, 2020 of $4.5 million and $58.7 million, respectively, reflected our view of increased credit risk in 2020 related to the COVID-19 pandemic. An increase of $74.1 million in the ACL was also recorded on January 1, 2021 reflecting the adoption of the current expected credit losses (CECL) model. Non-accrual loans totaled $43.1 million as of year-end.
Mark Hardwick, Chief Executive Officer, stated, “2021 proved to be a record year on many levels, including total assets, loans, deposits, net income and earnings per share. Our employees, customers and communities showed an incredible amount of toughness, determination, teamwork and compassion for one another during a difficult year. First Merchants’ future is bright because of this special combination of heart and grit.” Hardwick also added, “It’s an honor to lead this First Merchants team and to be part of the dynamic markets that we serve.”
Net-interest income totaled $410.7 million for the year, an increase of $28.6 million or 7.5 percent, in the face of a net-interest margin decline of 11 basis points to 3.18 percent, reflecting an asset sensitive balance sheet. Yield on earning assets declined by 40 basis points totaling 3.44 percent offset by a decline of 29 basis points in the cost of supporting liabilities, which totaled 26 basis points for the year-ended 2021. Yield on earning assets for the fourth quarter totaled 3.29 percent with cost of supporting liabilities totaling 25 basis points, resulting in a margin of 3.04 percent. PPP loans contributed 8 basis points to margin during the fourth quarter of 2021, which was a decline of 9 basis points from the third quarter 2021 and a decline of 8 basis points from the fourth quarter of 2020, as the pace of PPP loan forgiveness slowed.
Non-interest income totaled $109.3 million for the year, a $0.6 million decline from 2020. Customer-related line items accounted for an increase of $2.6 million, or 3 percent, and was offset by a decline of $6.2 million on the gains on sales of securities. Fiduciary and wealth management fees hit a record high of $28.4 million for 2021, which included an increase of $1 million from the acquisition of Hoosier Trust Company. This was offset by the headwinds of the full year impact of the Durbin Amendment adoption on card payment fees which was effective July of 2020.
Non-interest expense totaled $279.2 million for the year ended 2021, a $15.8 million increase from 2020. The increase is primarily due to higher salaries, incentives, and employee benefits costs.
The Corporation’s loan to deposit ratio now totals 73 percent and loan to asset ratio totals 60 percent. Additionally, the Corporation’s total risk-based capital ratio equaled 13.92 percent, common equity tier 1 capital ratio equaled 11.68 percent, and the tangible common equity ratio totaled 9.01 percent. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.
CONFERENCE CALL
First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, January 27, 2022.
To participate, dial (Toll Free) 877-806-2932 and reference Conference ID 2169777. International callers please call +1 478-219-0639.
In order to view the webcast and presentation slides, please go to https://edge.media-server.com/mmc/p/i8985qq2 during the time of the call. A replay of the webcast will be available until January 27, 2023.
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, 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.
SOURCE: First Merchants Corporation, Muncie, Indiana
For more information, contact: Nicole M. Weaver, Vice President and Director of Corporate Administration 765-521-7619 http://www.firstmerchants.com
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
December 31,
2021
2020
ASSETS
Cash and cash equivalents
$
167,146
$
192,896
Interest-bearing deposits
474,154
392,305
Investment securities, net of allowance for credit losses of $245,000 and $0
4,524,353
3,146,787
Loans held for sale
11,187
3,966
Loans
9,241,861
9,243,174
Less: Allowance for credit losses - loans
(195,397
)
(130,648
)
Net loans
9,046,464
9,112,526
Premises and equipment
105,655
111,062
Federal Home Loan Bank stock
28,736
28,736
Interest receivable
57,187
53,948
Goodwill and other intangibles
570,860
572,893
Cash surrender value of life insurance
291,041
292,745
Other real estate owned
558
940
Tax asset, deferred and receivable
35,641
12,340
Other assets
140,167
146,066
TOTAL ASSETS
$
15,453,149
$
14,067,210
LIABILITIES
Deposits:
Noninterest-bearing
$
2,709,646
$
2,298,138
Interest-bearing
10,022,931
9,063,472
Total Deposits
12,732,577
11,361,610
Borrowings:
Securities sold under repurchase agreements
181,577
177,102
Federal Home Loan Bank advances
334,055
389,430
Subordinated debentures and other borrowings
118,618
118,380
Total Borrowings
634,250
684,912
Interest payable
2,762
3,287
Other liabilities
170,989
141,756
Total Liabilities
13,540,578
12,191,565
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding - 125 shares
125
125
Common Stock, $.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding - 53,410,411 and 53,922,359 shares
6,676
6,740
Additional paid-in capital
985,818
1,005,366
Retained earnings
864,839
788,578
Accumulated other comprehensive income
55,113
74,836
Total Stockholders' Equity
1,912,571
1,875,645
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
15,453,149
$
14,067,210
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts)
December 31,
December 31,
2021
2020
2021
2020
INTEREST INCOME
Loans receivable:
Taxable
$
80,583
$
90,138
$
338,009
$
358,264
Tax-exempt
5,635
5,414
22,110
21,483
Investment securities:
Taxable
8,028
5,263
29,951
24,440
Tax-exempt
15,411
12,056
55,331
42,341
Deposits with financial institutions
173
139
634
938
Federal Home Loan Bank stock
163
214
597
1,042
Total Interest Income
109,993
113,224
446,632
448,508
INTEREST EXPENSE
Deposits
5,589
7,509
23,319
51,740
Federal funds purchased
1
2
5
120
Securities sold under repurchase agreements
75
77
314
604
Federal Home Loan Bank advances
1,389
1,656
5,672
6,973
Subordinated debentures and other borrowings
1,666
1,669
6,642
6,944
Total Interest Expense
8,720
10,913
35,952
66,381
NET INTEREST INCOME
101,273
102,311
410,680
382,127
Provision for credit losses - loans
—
4,482
—
58,673
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
101,273
97,829
410,680
323,454
OTHER INCOME
Service charges on deposit accounts
6,462
5,508
23,571
20,999
Fiduciary and wealth management fees
7,078
6,251
28,362
23,747
Card payment fees
3,937
3,502
16,619
19,502
Net gains and fees on sales of loans
3,423
5,393
19,689
18,271
Derivative hedge fees
1,562
2,281
3,850
6,977
Other customer fees
361
394
1,490
1,497
Earnings on cash surrender value of life insurance
2,051
1,283
7,060
5,140
Net realized gains on sales of available for sale securities
358
2,398
5,674
11,895
Other income
615
473
3,008
1,898
Total Other Income
25,847
27,483
109,323
109,926
OTHER EXPENSES
Salaries and employee benefits
42,432
41,809
166,995
155,937
Net occupancy
5,644
9,653
23,326
26,756
Equipment
4,994
5,555
19,401
19,344
Marketing
1,840
1,763
5,762
6,609
Outside data processing fees
4,581
3,839
18,317
14,432
Printing and office supplies
356
307
1,217
1,304
Intangible asset amortization
1,463
1,476
5,747
5,987
FDIC assessments
1,862
1,560
6,243
5,804
Other real estate owned and foreclosure expenses
171
(1,576
)
992
330
Professional and other outside services
3,627
2,836
11,913
8,901
Other expenses
5,466
5,314
19,300
18,001
Total Other Expenses
72,436
72,536
279,213
263,405
INCOME BEFORE INCOME TAX
54,684
52,776
240,790
169,975
Income tax expense
6,951
7,641
35,259
21,375
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
47,733
$
45,135
$
205,531
$
148,600
Per Share Data:
Basic Net Income Available to Common Stockholders
$
0.89
$
0.83
$
3.82
$
2.75
Diluted Net Income Available to Common Stockholders
$
0.89
$
0.83
$
3.81
$
2.74
Cash Dividends Paid
$
0.29
$
0.26
$
1.13
$
1.04
Average Diluted Shares Outstanding (in thousands)
53,660
54,050
53,984
54,220
FINANCIAL HIGHLIGHTS
(Dollars in thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
2021
2020
NET CHARGE-OFFS
$
4,575
$
560
$
9,306
$
8,309
AVERAGE BALANCES:
Total Assets
$
15,298,655
$
13,968,047
$
14,830,397
$
13,466,269
Total Loans
9,076,652
9,240,304
9,170,650
9,051,155
Total Earning Assets
14,053,310
12,663,803
13,579,113
12,123,317
Total Deposits
12,647,737
11,283,040
12,176,231
10,728,106
Total Stockholders' Equity
1,890,229
1,856,896
1,866,632
1,825,135
FINANCIAL RATIOS:
Return on Average Assets
1.25
%
1.29
%
1.39
%
1.10
%
Return on Average Stockholders' Equity
10.10
9.72
11.01
8.14
Return on Average Common Stockholders' Equity
10.10
9.72
11.01
8.14
Average Earning Assets to Average Assets
91.86
90.66
91.56
90.03
Allowance for Credit Losses - Loans as % of Total Loans
2.11
1.41
2.11
1.41
Net Charge-offs as % of Average Loans (Annualized)
0.20
0.02
0.10
0.09
Average Stockholders' Equity to Average Assets
12.36
13.29
12.59
13.55
Tax Equivalent Yield on Average Earning Assets
3.29
3.72
3.44
3.84
Interest Expense/Average Earning Assets
0.25
0.34
0.26
0.55
Net Interest Margin (FTE) on Average Earning Assets
3.04
3.38
3.18
3.29
Efficiency Ratio
53.49
55.01
50.94
51.71
Tangible Common Book Value Per Share
$
25.21
$
24.27
$
25.21
$
24.27
NON-PERFORMING ASSETS
(Dollars In Thousands)
December 31,
September 30,
June 30,
March 31,
December 31,
2021
2021
2021
2021
2020
Non-Accrual Loans
$
43,062
$
51,502
$
57,556
$
57,923
$
61,471
Renegotiated Loans
329
439
629
655
3,240
Non-Performing Loans (NPL)
43,391
51,941
58,185
58,578
64,711
Other Real Estate Owned and Repossessions
558
698
601
604
940
Non-Performing Assets (NPA)
43,949
52,639
58,786
59,182
65,651
90+ Days Delinquent
963
157
183
1,093
746
NPAs & 90 Day Delinquent
$
44,912
$
52,796
$
58,969
$
60,275
$
66,397
Allowance for Credit Losses - Loans
$
195,397
$
199,972
$
199,775
$
201,082
$
130,648
Quarterly Net Charge-offs
4,575
(197
)
1,307
3,621
560
NPAs / Actual Assets %
0.28
%
0.35
%
0.39
%
0.40
%
0.47
%
NPAs & 90 Day / Actual Assets %
0.29
%
0.35
%
0.40
%
0.41
%
0.47
%
NPAs / Actual Loans and OREO %
0.47
%
0.58
%
0.64
%
0.63
%
0.71
%
Allowance for Credit Losses - Loans / Actual Loans (%)
2.11
%
2.21
%
2.19
%
2.16
%
1.41
%
Net Charge-offs as % of Average Loans (Annualized)
0.20
%
(0.01
)%
0.06
%
0.16
%
0.02
%
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
December 31,
September 30,
June 30,
March 31,
December 31,
2021
2021
2021
2021
2020
ASSETS
Cash and cash equivalents
$
167,146
$
169,261
$
167,596
$
187,901
$
192,896
Interest-bearing deposits
474,154
369,447
438,863
392,806
392,305
Investment securities, net of allowance for credit losses
4,524,353
4,445,516
4,148,314
3,700,857
3,146,787
Loans held for sale
11,187
5,990
18,582
4,430
3,966
Loans
9,241,861
9,041,576
9,121,250
9,318,228
9,243,174
Less: Allowance for credit losses - loans
(195,397
)
(199,972
)
(199,775
)
(201,082
)
(130,648
)
Net loans
9,046,464
8,841,604
8,921,475
9,117,146
9,112,526
Premises and equipment
105,655
104,814
103,822
109,432
111,062
Federal Home Loan Bank stock
28,736
28,736
28,736
28,736
28,736
Interest receivable
57,187
53,079
54,173
54,662
53,948
Goodwill and other intangibles
570,860
572,323
573,786
571,536
572,893
Cash surrender value of life insurance
291,041
291,825
294,462
293,766
292,745
Other real estate owned
558
698
601
604
940
Tax asset, deferred and receivable
35,641
39,504
36,924
40,163
12,340
Other assets
140,167
137,928
135,763
127,027
146,066
TOTAL ASSETS
$
15,453,149
$
15,060,725
$
14,923,097
$
14,629,066
$
14,067,210
LIABILITIES
Deposits:
Noninterest-bearing
$
2,709,646
$
2,554,323
$
2,479,853
$
2,494,891
$
2,298,138
Interest-bearing
10,022,931
9,794,366
9,723,547
9,456,889
9,063,472
Total Deposits
12,732,577
12,348,689
12,203,400
11,951,780
11,361,610
Borrowings:
Securities sold under repurchase agreements
181,577
183,589
146,904
185,721
177,102
Federal Home Loan Bank advances
334,055
334,149
334,243
359,337
389,430
Subordinated debentures and other borrowings
118,618
118,558
118,498
118,439
118,380
Total Borrowings
634,250
636,296
599,645
663,497
684,912
Interest payable
2,762
3,736
2,929
4,020
3,287
Other liabilities
170,989
203,914
245,323
203,913
141,756
Total Liabilities
13,540,578
13,192,635
13,051,297
12,823,210
12,191,565
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
