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First Merchants Corporation Announces 40 Percent Increase in Second Quarter 2018 Earnings Per Share

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MUNCIE, Ind., July 25, 2018 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ:FRME) has reported second quarter 2018 net income of $39.6 million, an increase of 64 percent, compared to $24.1 million during the same period in 2017.  Earnings per share for the period totaled $.80 per share, an increase of 40 percent, compared to the second quarter of 2017 result of $.57 per share.  Net income for the six months ended June 30, 2018 totaled $76.3 million, compared to $47.3 million during the same period in 2017.  Year-to-date earnings per share totaled $1.54 per share, an increase of $.41 per share, or 36 percent, over the same period in 2017. The increases in net income were driven by several key factors including strong core banking performance, two acquisitions that were fully integrated during the second half of 2017 and the impact of tax reform.

Total assets equaled $9.7 billion as of quarter-end and loans totaled $7.1 billion.  The Corporation's loan portfolio increased, by $1.5 billion, or 26 percent, during the past twelve months.  The acquisition of Independent Alliance Banks, Inc. in Fort Wayne, Indiana accounted for $726 million, or 13 percent.  Additionally, organic loan growth totaled $740 million, or 13 percent.  Total deposits equaled $7.5 billion as of quarter-end and increased by $1.5 billion, or 25 percent.  Our acquisition activity accounted for growth of $862 million, or 14 percent, while organic deposit growth totaled $624 million, or 10 percent.

Michael C. Rechin, President and Chief Executive Officer, stated, "Our second quarter results reflect a sustained effort by our teammates on high performance.  Our daily execution of market coverage and high touch service continues to yield strong organic growth.  In combination with our highly efficient operating model, we continue to drive net interest income, profitability, performance and returns at levels produced by the best firms in our industry.  We are optimistic about the health of our markets and are investing in the talent and technology we need going forward."

Net-interest income totaled $84.6 million for the quarter, an increase of $21.5 million, or 34 percent.  Net-interest margin totaling 3.99 percent, increased by 4 basis points and included a reduction of 12 basis points related to tax reform.  Yields on earning assets totaled 4.74 percent and the cost of supporting liabilities totaled .75 percent.

Non-interest income totaled $18.2 million for the quarter, a $243,000 decrease from the second quarter of 2017.  Non-interest expense totaled $53.5 million up from the 2017 total of $47.3 million.  Increases in non-interest expense are primarily related to acquisition activity in 2017.

Tax expense for the second quarter of 2018 totaled $8 million, or 16.7 percent of pre-tax net income.  Tax expense in the prior year totaled $7.2 million, or 23 percent.  The improvement in tax expense was due to a decline in the federal tax rate from 35 percent to 21 percent.  Our effective rate is lower than the federal tax rate of 21 percent, primary due to approximately $10.9 million of tax free loan, securities and life insurance income in the quarter.

The Corporation's provision expense totaled $1.7 million during the quarter primarily due to loan growth, with net charge-offs totaling $540,000.  The allowance for loan losses totaled $77.5 million as of June 30, 2018, up from $70.5 million during the same period in 2017, and equaled 1.09 percent of total loans and 1.28 percent of non-purchased loans.  Credit metrics continued to improve, including a decline in non-accrual loans, which totaled $20.1 million as of quarter-end.

As of June 30, 2018, the Corporation's total risk-based capital ratio equaled 13.81 percent, common equity tier 1 capital ratio equaled 11.21 percent, and the tangible common equity ratio totaled 9.36 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, July 26, 2018.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's second quarter earnings release. International callers please call +1 412-317-1073.  A replay of the call will be available until August 26, 2018. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529, or for International participants, dial +1 412-317-0088. The replay access code is 10120572.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme180726.html during the time of the call.  A replay of the web cast will be available until July 26, 2019.

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 Lafayette Bank & Trust  and First Merchants Private Wealth Advisors (each 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.

CONSOLIDATED BALANCE SHEETS  
(Dollars In Thousands) June 30,
  2018   2017
ASSETS              
Cash and cash equivalents $ 133,893     $ 142,650  
Interest-bearing time deposits 36,599     48,305  
Investment securities 1,619,683     1,343,323  
Loans held for sale 2,046     4,036  
Loans 7,081,059     5,613,144  
Less: Allowance for loan losses (77,543 )   (70,471 )
Net loans 7,003,516     5,542,673  
Premises and equipment 94,397     92,637  
Federal Home Loan Bank stock 24,588     19,015  
Interest receivable 38,530     27,597  
Goodwill and other intangibles 473,059     309,686  
Cash surrender value of life insurance 222,905     200,125  
Other real estate owned 9,071     11,893  
Tax asset, deferred and receivable 24,619     27,331  
Other assets 51,809     35,758  
TOTAL ASSETS $ 9,734,715     $ 7,805,029  
LIABILITIES      
Deposits:      
Noninterest-bearing $ 1,571,194     $ 1,398,237  
Interest-bearing 5,932,621     4,618,867  
Total Deposits 7,503,815     6,017,104  
Borrowings:      
Federal funds purchased 109,000     134,608  
Securities sold under repurchase agreements 122,513     127,884  
Federal Home Loan Bank advances 469,261     312,715  
Subordinated debentures and term loans 138,352     128,742  
Total Borrowings 839,126     703,949  
Interest payable 4,807     3,477  
Other liabilities 46,639     45,383  
Total Liabilities 8,394,387     6,769,913  
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 - 49,280,188 and 43,153,509 shares 6,160     5,394  
Additional paid-in capital 836,549     593,904  
Retained earnings 522,362     434,309  
Accumulated other comprehensive income (loss) (24,868 )   1,384  
Total Stockholders' Equity 1,340,328     1,035,116  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,734,715     $ 7,805,029  
               


CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
  2018   2017   2018   2017
INTEREST INCOME            
Loans receivable:            
Taxable $ 84,663     $ 59,386   $ 162,930     $ 115,743  
Tax-exempt 3,632     2,492   7,228     4,825  
Investment securities:            
Taxable 5,434     4,180   10,530     8,488  
Tax-exempt 6,246     5,091   12,372     10,094  
Deposits with financial institutions 633     114   764     158  
Federal Home Loan Bank stock 263     204   667     393  
Total Interest Income 100,871     71,467   194,491     139,701  
INTEREST EXPENSE            
Deposits 12,165     5,137   21,167     9,261  
Federal funds purchased 61     103   441     331  
Securities sold under repurchase agreements 172     110   345     198  
Federal Home Loan Bank advances 1,845     1,177   4,004     2,155  
Subordinated debentures and term loans 2,057     1,840   4,047     3,657  
Total Interest Expense 16,300     8,367   30,004     15,602  
NET INTEREST INCOME 84,571     63,100   164,487     124,099  
Provision for loan losses 1,663     2,875   4,163     5,260  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 82,908     60,225   160,324     118,839  
OTHER INCOME            
Service charges on deposit accounts 5,038     4,438   9,815     8,612  
Fiduciary and wealth management fees 3,150     2,609   6,566     5,249  
Other customer fees 5,362     5,406   10,778     10,269  
Earnings on cash surrender value of life insurance 1,007     2,971   2,183     3,869  
Net gains and fees on sales of loans 1,600     1,617   3,421     2,892  
Net realized gains on sales of available for sale securities 1,122     567   2,731     1,165  
Other income 912     826   2,258     1,224  
Total Other Income 18,191     18,434   37,752     33,280  
OTHER EXPENSES            
Salaries and employee benefits 32,192     27,076   64,418     52,808  
Net occupancy 4,348     3,965   9,018     8,181  
Equipment 3,556     2,907   7,224     5,714  
Marketing 1,474     792   2,358     1,357  
Outside data processing fees 3,462     3,086   6,426     5,702  
Printing and office supplies 324     275   658     539  
Intangible asset amortization 1,718     991   3,444     1,894  
FDIC assessments 711     579   1,430     1,149  
Other real estate owned and foreclosure expenses 362     731   764     1,262  
Professional and other outside services 1,789     3,266   3,330     5,000  
Other expenses 3,568     3,648   8,121     6,809  
Total Other Expenses 53,504     47,316   107,191     90,415  
INCOME BEFORE INCOME TAX 47,595     31,343   90,885     61,704  
Income tax expense 7,961     7,207   14,572     14,375  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 39,634     $ 24,136   $ 76,313     $ 47,329  
Per Share Data:            
Basic Net Income Available to Common Stockholders $ 0.80     $ 0.57   $ 1.55     $ 1.14  
Diluted Net Income Available to Common Stockholders $ 0.80     $ 0.57   $ 1.54     $ 1.13  
Cash Dividends Paid $ 0.22     $ 0.18   $ 0.40     $ 0.33  
Average Diluted Shares Outstanding (in thousands) 49,451     42,244   49,440     41,735  
                     


FINANCIAL HIGHLIGHTS      
(Dollars in thousands) Three Months Ended
June 30,
  Six Months Ended
June 30,
  2018   2017   2018   2017
NET CHARGE-OFFS $ 540     $ 629     $ 1,652     $ 826  
                               
AVERAGE BALANCES:                              
Total Assets $ 9,697,020     $ 7,571,789     $ 9,535,774     $ 7,395,450  
Total Loans 6,975,737     5,436,961     6,893,867     5,309,311  
Total Earning Assets 8,741,173     6,812,451     8,579,076     6,670,358  
Total Deposits 7,636,821     5,930,532     7,396,328     5,761,384  
Total Stockholders' Equity 1,327,341     983,096     1,318,124     948,769  
               
FINANCIAL RATIOS:              
Return on Average Assets 1.63 %   1.28 %   1.60 %   1.28 %
Return on Average Stockholders' Equity 11.94     9.82     11.58     9.98  
Return on Average Common Stockholders' Equity 11.95     9.82     11.58     9.98  
Average Earning Assets to Average Assets 90.14     89.97     89.97     90.20  
Allowance for Loan Losses as % of Total Loans 1.09     1.25     1.09     1.25  
Net Charge-offs as % of Average Loans (Annualized) 0.03     0.05     0.05     0.03  
Average Stockholders' Equity to Average Assets 13.69     12.98     13.82     12.83  
Tax Equivalent Yield on Average Earning Assets 4.74     4.44     4.66     4.43  
Interest Expense/Average Earning Assets 0.75     0.49     0.70     0.47  
Net Interest Margin (FTE) on Average Earning Assets 3.99     3.95     3.96     3.96  
Efficiency Ratio 49.32     53.61     50.30     53.13  
Tangible Common Book Value Per Share $ 17.71     $ 16.97     $ 17.71     $ 16.97  
                               


NON-PERFORMING ASSETS                  
(Dollars In Thousands) June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
Non-Accrual Loans $ 20,143     $ 27,497     $ 28,724     $ 32,253     $ 27,347  
Renegotiated Loans 544     579     1,013     626     384  
Non-Performing Loans (NPL) 20,687     28,076     29,737     32,879     27,731  
Other Real Estate Owned 9,071     9,698     10,373     11,912     11,893  
Non-Performing Assets (NPA) 29,758     37,774     40,110     44,791     39,624  
90+ Days Delinquent 184     738     924     425     634  
NPAs & 90 Day Delinquent $ 29,942     $ 38,512     $ 41,034     $ 45,216     $ 40,258  
                   
Allowance for Loan Losses $ 77,543     $ 76,420     $ 75,032     $ 73,354     $ 70,471  
Quarterly Net Charge-offs 540     1,112     122     (800 )   629  
NPAs / Actual Assets % 0.31 %   0.40 %   0.43 %   0.49 %   0.51 %
NPAs & 90 Day / Actual Assets % 0.31 %   0.41 %   0.44 %   0.50 %   0.52 %
NPAs / Actual Loans and OREO % 0.42 %   0.55 %   0.59 %   0.69 %   0.70 %
Allowance for Loan Losses / Actual Loans (%) 1.09 %   1.11 %   1.11 %   1.13 %   1.25 %
Net Charge-offs as % of Average Loans (Annualized) 0.03 %   0.07 %   0.01 %   (0.05 )%   0.05 %
                             


CONSOLIDATED BALANCE SHEETS                  
(Dollars In Thousands) June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
ASSETS                                      
Cash and cash equivalents $ 133,893     $ 128,828     $ 154,905     $ 146,607     $ 142,650  
Interest-bearing time deposits 36,599     24,233     35,027     72,950     48,305  
Investment securities 1,619,683     1,543,820     1,560,602     1,468,887     1,343,323  
Loans held for sale 2,046     4,469     7,216     4,514     4,036  
Loans 7,081,059     6,901,696     6,751,199     6,483,448     5,613,144  
Less: Allowance for loan losses (77,543 )   (76,420 )   (75,032 )   (73,354 )   (70,471 )
Net loans 7,003,516     6,825,276     6,676,167     6,410,094     5,542,673  
Premises and equipment 94,397     94,741     95,852     102,485     92,637  
Federal Home Loan Bank stock 24,588     24,588     23,825     23,825     19,015  
Interest receivable 38,530     35,223     37,130     32,366     27,597  
Goodwill and other intangibles 473,059     474,777     476,503     478,558     309,686  
Cash surrender value of life insurance 222,905     221,949     223,557     222,437     200,125  
Other real estate owned 9,071     9,698     10,373     11,912     11,893  
Tax asset, deferred and receivable 24,619     24,177     23,983     36,024     27,331  
Other assets 51,809     61,017     42,338     38,744     35,758  
TOTAL ASSETS $ 9,734,715     $ 9,472,796     $ 9,367,478     $ 9,049,403     $ 7,805,029  
                   
LIABILITIES                  
Deposits:                  
Noninterest-bearing $ 1,571,194     $ 1,698,958     $ 1,761,553     $ 1,662,814     $ 1,398,237  
Interest-bearing 5,932,621     5,628,677     5,410,977     5,248,205     4,618,867  
Total Deposits 7,503,815     7,327,635     7,172,530     6,911,019     6,017,104  
Borrowings:                  
Federal funds purchased 109,000     50,000     144,038     100,000     134,608  
Securities sold under repurchase agreements 122,513     138,910     136,623     142,107     127,884  
Federal Home Loan Bank advances 469,261     449,419     414,377     406,820     312,715  
Subordinated debentures and term loans 138,352     138,297     139,349     139,686     128,742  
Total Borrowings 839,126     776,626     834,387     788,613     703,949  
Interest payable 4,807     5,376     4,390     4,956     3,477  
Other liabilities 46,639     50,086     52,708     61,695     45,383  
Total Liabilities 8,394,387     8,159,723     8,064,015     7,766,283     6,769,913  
STOCKHOLDERS' EQUITY                  
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:                  
Authorized -- 600 shares                  
Issued and outstanding 125     125     125     125     125  
Common Stock, $.125 stated value:                  
Authorized -- 100,000,000 shares                  
Issued and outstanding 6,160     6,155     6,145     6,143     5,394  
Additional paid-in capital 836,549     834,894     834,870     833,451     593,904  
Retained earnings 522,362     493,624     465,231     449,759     434,309  
Accumulated other comprehensive income (loss) (24,868 )   (21,725 )   (2,908 )   (6,358 )   1,384  
Total Stockholders' Equity 1,340,328     1,313,073     1,303,463     1,283,120     1,035,116  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,734,715     $ 9,472,796     $ 9,367,478     $ 9,049,403     $ 7,805,029  
                   


CONSOLIDATED STATEMENTS OF INCOME                  
(Dollars In Thousands, Except Per Share Amounts) June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
INTEREST INCOME                  
Loans receivable:                  
Taxable $ 84,663     $ 78,267     $ 76,470     $ 71,491     $ 59,386  
Tax-exempt 3,632     3,596     3,018     2,851     2,492  
Investment securities:                  
Taxable 5,434     5,096     4,477     4,524     4,180  
Tax-exempt 6,246     6,126     5,830     5,455     5,091  
Deposits with financial institutions 633     131     294     284     114  
Federal Home Loan Bank stock 263     404     259     242     204  
Total Interest Income 100,871     93,620     90,348     84,847     71,467  
INTEREST EXPENSE                  
Deposits 12,165     9,002     7,835     6,710     5,137  
Federal funds purchased 61     380     55     175     103  
Securities sold under repurchase agreements 172     173     146     133     110  
Federal Home Loan Bank advances 1,845     2,159     1,577     1,464     1,177  
Subordinated debentures and term loans 2,057     1,990     1,970     1,945     1,840  
Total Interest Expense 16,300     13,704     11,583     10,427     8,367  
NET INTEREST INCOME 84,571     79,916     78,765     74,420     63,100  
Provision for loan losses 1,663     2,500     1,800     2,083     2,875  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 82,908     77,416     76,965     72,337     60,225  
OTHER INCOME                  
Service charges on deposit accounts 5,038     4,777     5,066     5,044     4,438  
Fiduciary and wealth management fees 3,150     3,416     3,345     2,995     2,609  
Other customer fees 5,362     5,416     5,346     5,341     5,406  
Earnings on cash surrender value of life insurance 1,007     1,176     1,133     1,575     2,971  
Net gains and fees on sales of loans 1,600     1,821     2,355     2,317     1,617  
Net realized gains on sales of available for sale securities 1,122     1,609     1,134     332     567  
Other income 912     1,346     682     1,064     826  
Total Other Income 18,191     19,561     19,061     18,668     18,434  
OTHER EXPENSES                  
Salaries and employee benefits 32,192     32,226     33,760     33,244     27,076  
Net occupancy 4,348     4,670     4,424     4,371     3,965  
Equipment 3,556     3,668     3,898     3,478     2,907  
Marketing 1,474     884     1,361     1,021     792  
Outside data processing fees 3,462     2,964     3,378     3,162     3,086  
Printing and office supplies 324     334     378     366     275  
Intangible asset amortization 1,718     1,726     2,055     1,698     991  
FDIC assessments 711     719     711     704     579  
Other real estate owned and foreclosure expenses 362     402     311     330     731  
Professional and other outside services 1,789     1,541     1,914     5,843     3,266  
Other expenses 3,568     4,553     4,243     4,491     3,648  
Total Other Expenses 53,504     53,687     56,433     58,708     47,316  
INCOME BEFORE INCOME TAX 47,595     43,290     39,593     32,297     31,343  
Income tax expense 7,961     6,611     15,210     7,939     7,207  
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 39,634     $ 36,679     $ 24,383     $ 24,358     $ 24,136  
                   
Per Share Data:                  
Basic Net Income Available to Common Stockholders $ 0.80     $ 0.75     $ 0.49     $ 0.50     $ 0.57  
Diluted Net Income Available to Common Stockholders $ 0.80     $ 0.74     $ 0.49     $ 0.50     $ 0.57  
Cash Dividends Paid $ 0.22     $ 0.18     $ 0.18     $ 0.18     $ 0.18  
Average Diluted Shares Outstanding (in thousands) 49,451     49,428     49,379     48,644     42,244  
FINANCIAL RATIOS:                  
Return on Average Assets 1.63 %   1.57 %   1.06 %   1.11 %   1.28 %
Return on Average Stockholders' Equity 11.94     11.21     7.53     7.83     9.82  
Return on Average Common Stockholders' Equity 11.95     11.21     7.53     7.83     9.82  
Average Earning Assets to Average Assets 90.14     89.78     88.73     89.16     89.97  
Allowance for Loan Losses as % of Total Loans 1.09     1.11     1.11     1.13     1.25  
Net Charge-offs as % of Average Loans (Annualized) 0.03     0.07     0.01     (0.05 )   0.05  
Average Stockholders' Equity to Average Assets 13.69     13.96     14.11     14.15     12.98  
Tax Equivalent Yield on Average Earning Assets 4.74     4.57     4.67     4.56     4.44  
Interest Expense/Average Earning Assets 0.75     0.65     0.57     0.53     0.49  
Net Interest Margin (FTE) on Average Earning Assets 3.99     3.92     4.10     4.03     3.95  
Efficiency Ratio 49.32     51.33     53.29     58.30     53.61  
Tangible Common Book Value Per Share $ 17.71     $ 17.14     $ 16.96     $ 16.62     $ 16.97  
                                       


LOANS                  
(Dollars In Thousands) June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
Commercial and industrial loans $ 1,657,591     $ 1,554,169     $ 1,493,493     $ 1,436,092     $ 1,289,884  
Agricultural production financing and other loans to farmers 89,093     98,315     121,757     117,751     75,746  
Real estate loans:                  
Construction 714,866     590,093     612,219     498,862     442,389  
Commercial and farmland 2,652,782     2,713,994     2,562,691     2,571,253     2,167,729  
Residential 965,720     948,644     962,765     938,437     847,580  
Home equity 518,699     510,545     514,021     502,240     436,038  
Individuals' loans for household and other personal expenditures 92,809     88,235     86,935     86,406     79,887  
Lease financing receivables, net of unearned income 1,945     2,193     2,527     3,877     232  
Other commercial loans 387,554     395,508     394,791     328,530     273,659  
Loans 7,081,059     6,901,696     6,751,199     6,483,448     5,613,144  
Allowance for loan losses (7,543 )   (76,420 )   (75,032 )   (73,354 )   (70,471 )
NET LOANS $ 7,073,516     $ 6,825,276     $ 6,676,167     $ 6,410,094     $ 5,542,673  
                                       


DEPOSITS                  
(Dollars In Thousands) June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
Demand deposits $ 3,933,233     $ 3,740,395     $ 3,746,654     $ 3,562,718     $ 3,015,846  
Savings deposits 2,099,771     2,109,071     1,994,366     1,884,705     1,708,478  
Certificates and other time deposits of $100,000 or more 555,910     552,643     468,895     503,668     362,589  
Other certificates and time deposits 602,239     584,377     581,894     585,042     511,935  
Brokered deposits 312,662     341,149     380,721     374,886     418,256  
TOTAL DEPOSITS $ 7,503,815     $ 7,327,635     $ 7,172,530     $ 6,911,019     $ 6,017,104  
                                       


NET INTEREST INCOME  
(Dollars in Thousands) For the Three Months Ended
  June 30, 2018   June 30, 2017
  Average
Balance
  Interest
Income /
Expense
  Average
Rate
  Average
Balance
  Interest
Income /
Expense
  Average
Rate
Assets:                              
Interest-bearing time deposits $ 142,385     $ 633     1.78 %   $ 42,794     $ 114     1.07 %
Federal Home Loan Bank stock 24,588     263     4.28     18,655     204     4.37  
Investment Securities: (1)                      
Taxable 852,865     5,434     2.55     717,818     4,180     2.33  
Tax-Exempt (2) 745,598     7,906     4.24     596,223     7,832     5.25  
Total Investment Securities 1,598,463     13,340     3.34     1,314,041     12,012     3.66  
Loans held for sale 6,408     83     5.18     3,791     65     6.86  
Loans: (3)                      
Commercial 5,142,093     67,510     5.25     3,911,477     45,400     4.64  
Real Estate Mortgage 729,681     8,792     4.82     647,032     7,229     4.47  
Installment 631,897     8,278     5.24     546,339     6,692     4.90  
Tax-Exempt (2) 465,658     4,597     3.95     328,322     3,834     4.67  
Total Loans 6,975,737     89,260     5.12     5,436,961     63,220     4.65  
Total Earning Assets 8,741,173     103,496     4.74     6,812,451     75,550     4.44  
Net unrealized gain (loss) on securities available for sale (13,068 )           4,908          
Allowance for loan losses (77,197 )           (69,068 )        
Cash and cash equivalents 132,481             153,247          
Premises and equipment 94,757             92,026          
Other assets 818,874             578,225          
Total Assets $ 9,697,020             $ 7,571,789          
Liabilities:                      
Interest-bearing deposits:                      
Interest-bearing NOW deposits $ 2,325,705     $ 4,276     0.74 %   $ 1,596,182     $ 1,089     0.27 %
Money market deposits 1,081,830     1,583     0.59     901,077     600     0.27  
Savings deposits 1,096,003     1,332     0.49     791,464     161     0.08  
Certificates and other time deposits 1,491,207     4,974     1.33     1,281,132     3,287     1.03  
Total Interest-bearing Deposits 5,994,745     12,165     0.81     4,569,855     5,137     0.45  
Borrowings 674,040     4,135     2.45     618,335     3,230     2.09  
Total Interest-bearing Liabilities 6,668,785     16,300     0.98     5,188,190     8,367     0.65  
Noninterest-bearing deposits 1,642,076             1,360,677          
Other liabilities 58,818             39,826          
Total Liabilities 8,369,679             6,588,693          
Stockholders' Equity 1,327,341             983,096          
Total Liabilities and Stockholders' Equity $ 9,697,020     16,300         $ 7,571,789     8,367      
Net Interest Income (FTE)     $ 87,196             $ 67,183      
Net Interest Spread (FTE)         3.76 %           3.79 %
                       
Net Interest Margin (FTE):                      
Interest Income (FTE) / Average Earning Assets         4.74 %           4.44 %
Interest Expense / Average Earning Assets         0.75 %           0.49 %
Net Interest Margin (FTE)         3.99 %           3.95 %
                       


(1)  Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
(2)  Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent and 35 percent for 2018 and 2017, respectively.  These totals equal $2,625 and $4,083 for the three months ended June 30, 2018 and 2017, respectively.
(3)  Non accruing loans have been included in the average balances.
 


NET INTEREST INCOME  
(Dollars in Thousands) For the Six Months Ended
  June 30, 2018   June 30, 2017
  Average
Balance
  Interest
Income /
Expense
  Average
Rate
  Average
Balance
  Interest
Income /
Expense
  Average
Rate
Assets:                                          
Interest-bearing time deposits $ 87,883     $ 764     1.74 %   $ 36,662     $ 158     0.86 %
Federal Reserve and Federal Home Loan Bank stock 24,487     667     5.45     18,312     393     4.29  
Investment Securities: (1)                      
Taxable 831,743     10,530     2.53     714,672     8,488     2.38  
Tax-Exempt (2) 741,096     15,661     4.23     591,401     15,529     5.25  
Total Investment Securities 1,572,839     26,191     3.33     1,306,073     24,017     3.68  
Loans held for sale 8,515     221     5.19     3,197     109     6.82  
Loans: (3)                      
Commercial 5,061,717     129,663     5.12     3,846,622     89,494     4.65  
Real Estate Mortgage 729,202     16,791     4.61     596,990     13,350     4.47  
Installment 627,686     16,255     5.18     539,272     12,790     4.74  
Tax-Exempt (2) 466,747     9,149     3.92     323,230     7,423     4.59  
Total Loans 6,893,867     172,079     4.99     5,309,311     123,166     4.64  
Total Earning Assets 8,579,076     199,701     4.66 %   6,670,358     147,734     4.43 %
Net unrealized gain on securities available for sale (9,772 )           2,762          
Allowance for loan losses (76,528 )           (68,007 )        
Cash and cash equivalents 129,499             128,768          
Premises and equipment 95,139             92,519          
Other assets 818,360             569,050          
Total Assets $ 9,535,774             $ 7,395,450          
Liabilities:                      
Interest-bearing deposits:                      
Interest-bearing NOW deposits $ 2,153,878     $ 6,965     0.65 %   $ 1,554,740     $ 1,926     0.25 %
Money market deposits 1,085,740     2,858     0.53     845,536     941     0.22  
Savings deposits 1,021,386     1,714     0.34     784,033     317     0.08  
Certificates and other time deposits 1,488,664     9,630     1.29     1,223,426     6,077     0.99  
Total Interest-bearing Deposits 5,749,668     21,167     0.74     4,407,735     9,261     0.42  
Borrowings 760,643     8,837     2.32     641,499     6,341     1.98  
Total Interest-bearing Liabilities 6,510,311     30,004     0.92     5,049,234     15,602     0.62  
Noninterest-bearing deposits 1,646,660             1,353,649          
Other liabilities 60,679             43,798          
Total Liabilities 8,217,650             6,446,681          
Stockholders' Equity 1,318,124             948,769          
Total Liabilities and Stockholders' Equity $ 9,535,774     30,004         $ 7,395,450     15,602      
Net Interest Income (FTE)     $ 169,697             $ 132,132      
Net Interest Spread (FTE)         3.74 %           3.81 %
                       
Net Interest Margin (FTE):                      
Interest Income (FTE) / Average Earning Assets         4.66 %           4.43 %
Interest Expense / Average Earning Assets         0.70 %           0.47 %
Net Interest Margin (FTE)         3.96 %           3.96 %
                       


(1)  Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
(2)  Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent and 35 percent for 2018 and 2017, respectively.  These totals equal $5,210 and $8,033 for the six months ended June 30, 2018 and 2017, respectively.
(3)  Non accruing loans have been included in the average balances.                      
                       

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

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