First Merchants Corporation Announces Second Quarter 2023 Earnings Per Share

MUNCIE, Ind., July 25, 2023 (GLOBE NEWSWIRE) -- Mark Hardwick, Chief Executive Officer, stated, “We are pleased to report our second quarter 2023 results. Performance remains healthy and strong and our teams continue to meet the demands of our communities and client base.”

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Tuesday, July 25, 2023

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Webcast, Sale, First Merchants Corporation, PPP, ACL, FDIC, Acquisition, Level One (The Eleventh House album), Investment, Current Expected Credit Losses, Video game, Bank, Online shopping

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Summary

Key Points:

Diluted earnings per common share for the period totaled $1.02 per share compared to the second quarter of 2022 result of $.63 per share.
Non-performing assets to total assets were 0.43 percent for the second quarter of 2023, an increase of 13 basis points compared to 0.30 percent in the second quarter of 2022.
Non-interest income, totaling $26.3 million for the quarter, increased $1.3 million or 5.3 percent compared to the first quarter of 2023 but decreased $2.0 million from the second quarter of 2022.
First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 11:30 a.m. (ET) on Tuesday, July 25, 2023.

First Merchants Corporation (NASDAQ - FRME)

Second Quarter 2023 Highlights:

Net income available to common stockholders was $60.4 million and diluted earnings per common share totaled $1.02, compared to $38.5 million and $.63 in the second quarter of 2022, and $63.6 million and $1.07 in the first quarter of 2023.
Adjusted net income¹ was $60.4 million and adjusted diluted earnings per share¹ totaled $1.02, compared to $60.0 million and $1.01 in the second quarter of 2022, and $63.6 million and $1.07 in the first quarter of 2023.
Strong capital position with Common Equity Tier 1 Capital Ratio of 11.07 percent
Total loans grew $46.7 million, or 1.5 percent annualized on a linked quarter basis, and $163.2 million, or 5.4 percent annualized when excluding non-relationship based commercial loan sales that occurred during the quarter of $116.6 million.
Total deposits declined $122.1 million, or 3.3 percent annualized on a linked quarter basis
Nonaccrual loans totaled $69.2 million compared to $46.6 million on a linked quarter basis
The efficiency ratio totaled 52.21 percent for the quarter

MUNCIE, Ind., July 25, 2023 (GLOBE NEWSWIRE) -- Mark Hardwick, Chief Executive Officer, stated, “We are pleased to report our second quarter 2023 results. Performance remains healthy and strong and our teams continue to meet the demands of our communities and client base.”

Second Quarter Financial Results:

First Merchants Corporation (the “Corporation) has reported second quarter 2023 net income available to common stockholders of $60.4 million compared to $38.5 million during the same period in 2022. Diluted earnings per common share for the period totaled $1.02 per share compared to the second quarter of 2022 result of $.63 per share. Prior year results included acquisition costs related to the acquisition of Level One of $29.3 million resulting in a reduction of $.38 of diluted earnings per common share.

Total assets equaled $18.0 billion as of quarter-end and loans totaled $12.3 billion. During the past twelve months, total loans grew by $1.0 billion, or 9.2 percent and were offset by the non-relationship based commercial loan sale of $116.6 million and PPP loan forgiveness of $29.6 million. On a linked quarter basis, loans grew $163.2 million, or 5.4 percent, when excluding the loan sale that occurred during the quarter of $116.6 million.

Investments, totaling $3.9 billion, decreased $738.5 million, or 16.0 percent, during the last twelve months and decreased $165.9 million, or 16.4 percent annualized on a linked quarter basis. The decline during the quarter was primarily due to $101.0 million of bond sales.

Total deposits equaled $14.6 billion as of quarter-end and increased by $10.3 million over the past twelve months. Total deposits declined $122.1 million, or 3.3 percent annualized on a linked quarter basis. The loan to deposit ratio for the current quarter ended at 84.3 percent.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $221.1 million as of quarter-end, or 1.80 percent of total loans, a decrease of $5.1 million from prior year. Loan charge-offs, net of recoveries, for the quarter totaled $1.9 million. No provision expense was recorded during the quarter or during the last twelve months. Non-performing assets to total assets were 0.43 percent for the second quarter of 2023, an increase of 13 basis points compared to 0.30 percent in the second quarter of 2022.

Net-interest income, totaling $137.8 million for the quarter, declined $6.3 million, or 4.4 percent, compared to prior quarter and increased $9.2 million, or 7.1 percent compared to the second quarter of 2022. Stated net-interest margin on a tax equivalent basis, totaling 3.39 percent, declined by 19 basis points compared to the first quarter of 2023 but increased 11 basis points compared to the second quarter of 2022. Net-interest margin, excluding the impact of fair value accretion and PPP loans, totaled 3.34 percent, a decrease of 18 basis points compared to 3.52 percent for the first quarter of 2023 but an increase of 15 basis points from the second quarter of 2022. During the quarter, increased deposit costs and mix offset the increase in earning asset yields reducing net-interest margin.

Non-interest income, totaling $26.3 million for the quarter, increased $1.3 million or 5.3 percent compared to the first quarter of 2023 but decreased $2.0 million from the second quarter of 2022. The increase over first quarter of 2023 was driven primarily by higher gains on the sales of loans and BOLI death benefit gains.

Non-interest expense totaled $92.6 million for the quarter, a decline of $1.1 million from the first quarter of 2023. The decrease was from lower salaries and employee benefits, partially offset by increases in FDIC assessments and other real estate owned and foreclosure expense.

The Corporation’s total risk-based capital ratio equaled 13.48 percent, common equity tier 1 capital ratio equaled 11.07 percent, and the tangible common equity ratio totaled 7.99 percent. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

¹ See “Non-GAAP Financial Information” for reconciliation

CONFERENCE CALL

First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 11:30 a.m. (ET) on Tuesday, July 25, 2023.

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/BIc7becea7282048a2b5559e10b25ca4af)

In order to view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/athyqu7i) during the time of the call. A replay of the webcast will be available until July 25, 2024.

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.

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	June 30,
		2023			2022
ASSETS
Cash and due from banks	$	108,975		$	212,559
Interest-bearing deposits		219,480			136,702
Investment securities, net of allowance for credit losses of $245,000 and $245,000		3,891,491			4,630,030
Loans held for sale		27,297			9,060
Loans		12,270,233			11,397,417
Less: Allowance for credit losses - loans		(221,147	)		(226,275	)
Net loans		12,049,086			11,171,142
Premises and equipment		114,402			117,757
Federal Home Loan Bank stock		41,842			38,111
Interest receivable		89,784			68,728
Goodwill and other intangibles		743,465			753,649
Cash surrender value of life insurance		307,020			323,013
Other real estate owned		7,685			6,521
Tax asset, deferred and receivable		113,724			114,965
Other assets		254,161			198,255
TOTAL ASSETS	$	17,968,412		$	17,780,492
LIABILITIES
Deposits:
Noninterest-bearing	$	2,636,017		$	3,435,331
Interest-bearing		11,945,138			11,135,538
Total Deposits		14,581,155			14,570,869
Borrowings:
Federal funds purchased		—			100,000
Securities sold under repurchase agreements		152,472			186,468
Federal Home Loan Bank advances		723,480			598,865
Subordinated debentures and other borrowings		151,325			151,299
Total Borrowings		1,027,277			1,036,632
Interest payable		13,595			2,978
Other liabilities		200,820			192,372
Total Liabilities		15,822,847			15,802,851
STOCKHOLDERS' EQUITY
Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 cumulative shares
Issued and outstanding - 125 cumulative shares		125			125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized -- 10,000 non-cumulative perpetual shares
Issued and outstanding - 10,000 non-cumulative perpetual shares		25,000			25,000
Common Stock, $.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding - 59,297,148 and 59,059,866 shares		7,412			7,383
Additional paid-in capital		1,233,593			1,226,378
Retained earnings		1,097,399			917,311
Accumulated other comprehensive loss		(217,964	)		(198,556	)
Total Stockholders' Equity		2,145,565			1,977,641
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,968,412		$	17,780,492

CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended						Six Months Ended
(Dollars In Thousands, Except Per Share Amounts)	June 30,						June 30,
		2023			2022			2023			2022
INTEREST INCOME
Loans receivable:
Taxable	$	186,256		$	106,787		$	358,609		$	185,862
Tax-exempt		7,760			5,990			15,469			11,694
Investment securities:
Taxable		8,886			10,372			17,973			18,882
Tax-exempt		14,279			17,212			30,349			33,087
Deposits with financial institutions		3,164			610			3,801			840
Federal Home Loan Bank stock		1,020			175			1,562			321
Total Interest Income		221,365			141,146			427,763			250,686
INTEREST EXPENSE
Deposits		73,201			8,485			123,886			12,779
Federal funds purchased		123			76			1,420			76
Securities sold under repurchase agreements		979			134			1,827			223
Federal Home Loan Bank advances		6,815			1,774			13,879			2,992
Subordinated debentures and other borrowings		2,412			2,016			4,797			3,675
Total Interest Expense		83,530			12,485			145,809			19,745
NET INTEREST INCOME		137,835			128,661			281,954			230,941
Provision for credit losses - loans		—			16,755			—			16,755
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		137,835			111,906			281,954			214,186
NON-INTEREST INCOME
Service charges on deposit accounts		7,813			7,690			15,172			14,109
Fiduciary and wealth management fees		7,397			7,634			15,259			14,966
Card payment fees		4,537			5,175			9,709			10,898
Net gains and fees on sales of loans		3,632			3,226			6,031			5,425
Derivative hedge fees		672			1,444			1,820			2,362
Other customer fees		742			662			1,259			1,072
Earnings on cash surrender value of life insurance		2,096			1,308			3,384			3,004
Net realized gains (losses) on sales of available for sale securities		(1,392	)		90			(2,963	)		656
Other income		822			1,048			1,645			1,682
Total Non-Interest Income		26,319			28,277			51,316			54,174
NON-INTEREST EXPENSES
Salaries and employee benefits		54,753			56,041			112,212			98,560
Net occupancy		6,674			6,648			13,933			12,835
Equipment		6,181			6,720			12,307			11,800
Marketing		1,102			1,414			2,411			2,150
Outside data processing fees		6,604			4,881			12,717			9,244
Printing and office supplies		434			381			817			726
Intangible asset amortization		2,182			2,303			4,379			3,669
FDIC assessments		2,740			2,924			4,136			5,116
Other real estate owned and foreclosure expenses		916			(266	)		898			298
Professional and other outside services		4,660			10,267			8,358			13,220
Other expenses		6,347			6,000			14,145			12,020
Total Non-Interest Expenses		92,593			97,313			186,313			169,638
INCOME BEFORE INCOME TAX		71,561			42,870			146,957			98,722
Income tax expense		10,699			3,879			22,016			11,145
NET INCOME		60,862			38,991			124,941			87,577
Preferred stock dividends		469			469			938			469
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	60,393		$	38,522		$	124,003		$	87,108
Per Share Data:
Basic Net Income Available to Common Stockholders	$	1.02		$	0.64		$	2.09		$	1.55
Diluted Net Income Available to Common Stockholders	$	1.02		$	0.63		$	2.09		$	1.54
Cash Dividends Paid to Common Stockholders	$	0.34		$	0.32		$	0.66		$	0.61
Average Diluted Common Shares Outstanding (in thousands)		59,448			59,308			59,446			56,516

FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2023			2022			2023			2022
NET CHARGE-OFFS (RECOVERIES)	$	1,905		$	263		$	2,130		$	(324	)

AVERAGE BALANCES:
Total Assets	$	18,170,649		$	17,778,221		$	18,096,832		$	16,627,804
Total Loans		12,369,673			11,175,188			12,253,176			10,220,860
Total Earning Assets		16,968,465			16,435,747			16,896,834			15,355,265
Total Deposits		14,719,913			14,809,528			14,572,480			13,819,111
Total Stockholders' Equity		2,139,877			2,021,123			2,111,658			1,956,532

FINANCIAL RATIOS:
Return on Average Assets		1.34	%		0.88	%		1.38	%		1.05	%
Return on Average Stockholders' Equity		11.29			7.62			11.74			8.90
Return on Tangible Common Stockholders' Equity		18.04			12.91			18.91			13.98
Average Earning Assets to Average Assets		93.38			92.45			93.37			92.35
Allowance for Credit Losses - Loans as % of Total Loans		1.80			1.98			1.80			1.98
Net Charge-offs as % of Average Loans (Annualized)		0.06			0.01			0.03			(0.01	)
Average Stockholders' Equity to Average Assets		11.78			11.37			11.67			11.77
Tax Equivalent Yield on Average Earning Assets		5.36			3.58			5.21			3.42
Interest Expense/Average Earning Assets		1.97			0.30			1.73			0.26
Net Interest Margin (FTE) on Average Earning Assets		3.39			3.28			3.48			3.16
Efficiency Ratio		52.21			58.45			51.96			55.90
Tangible Common Book Value Per Share	$	23.34		$	20.45		$	23.34		$	20.45

NON-PERFORMING ASSETS
(Dollars In Thousands)	June 30,			March 31,			December 31,			September 30,			June 30,
		2023			2023			2022			2022			2022
Non-Accrual Loans	$	69,240		$	46,576		$	42,324		$	43,508		$	45,970
Troubled Debt Restructures (TDR)		—			—			224			195			233
Non-Performing Loans (NPL)		69,240			46,576			42,548			43,703			46,203
Other Real Estate Owned and Repossessions		7,685			7,777			6,431			6,454			6,521
Non-Performing Assets (NPA)		76,925			54,353			48,979			50,157			52,724
90+ Days Delinquent		428			7,032			1,737			764			592
NPAs & 90 Day Delinquent	$	77,353		$	61,385		$	50,716		$	50,921		$	53,316

Allowance for Credit Losses - Loans	$	221,147		$	223,052		$	223,277		$	226,702		$	226,275
Quarterly Net Charge-offs (Recoveries)		1,905			225			2,674			(427	)		263
NPAs / Actual Assets %		0.43	%		0.30	%		0.27	%		0.28	%		0.30	%
NPAs & 90 Day / Actual Assets %		0.43	%		0.34	%		0.28	%		0.29	%		0.30	%
NPAs / Actual Loans and OREO %		0.63	%		0.44	%		0.41	%		0.43	%		0.46	%
Allowance for Credit Losses - Loans / Actual Loans (%)		1.80	%		1.82	%		1.86	%		1.94	%		1.98	%
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)		0.06	%		0.01	%		0.12	%	(0.01) %				0.01	%

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	June 30,			March 31,			December 31,			September 30,			June 30,
		2023			2023			2022			2022			2022
ASSETS
Cash and due from banks	$	108,975		$	125,818		$	122,594		$	119,532		$	212,559
Interest-bearing deposits		219,480			352,695			126,061			179,593			136,702
Investment securities, net of allowance for credit losses		3,891,491			4,057,389			4,263,788			4,294,768			4,630,030
Loans held for sale		27,297			9,408			9,094			25,394			9,060
Loans		12,270,233			12,241,461			12,003,894			11,650,002			11,397,417
Less: Allowance for credit losses - loans		(221,147	)		(223,052	)		(223,277	)		(226,702	)		(226,275	)
Net loans		12,049,086			12,018,409			11,780,617			11,423,300			11,171,142
Premises and equipment		114,402			115,857			117,118			116,306			117,757
Federal Home Loan Bank stock		41,842			41,878			38,525			38,056			38,111
Interest receivable		89,784			85,515			85,070			71,605			68,728
Goodwill and other intangibles		743,465			745,647			747,844			750,713			753,649
Cash surrender value of life insurance		307,020			309,090			308,311			306,932			323,013
Other real estate owned		7,685			7,777			6,431			6,454			6,521
Tax asset, deferred and receivable		113,724			103,070			111,222			142,110			114,965
Other assets		254,161			206,355			221,631			244,222			198,255
TOTAL ASSETS	$	17,968,412		$	18,178,908		$	17,938,306		$	17,718,985		$	17,780,492
LIABILITIES
Deposits:
Noninterest-bearing	$	2,636,017		$	2,964,355		$	3,173,417		$	3,356,651		$	3,435,331
Interest-bearing		11,945,138			11,738,932			11,209,328			11,078,174			11,135,538
Total Deposits		14,581,155			14,703,287			14,382,745			14,434,825			14,570,869
Borrowings:
Federal funds purchased		—			20			171,560			185,000			100,000
Securities sold under repurchase agreements		152,472			179,067			167,413			194,482			186,468
Federal Home Loan Bank advances		723,480			823,577			823,674			643,769			598,865
Subordinated debentures and other borrowings		151,325			151,312			151,298			151,301			151,299
Total Borrowings		1,027,277			1,153,976			1,313,945			1,174,552			1,036,632
Interest payable		13,595			11,979			7,530			4,971			2,978
Other liabilities		200,820			187,218			199,316			197,971			192,372
Total Liabilities		15,822,847			16,056,460			15,903,536			15,812,319			15,802,851
STOCKHOLDERS' EQUITY
Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 cumulative shares
Issued and outstanding - 125 cumulative shares		125			125			125			125			125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized -- 10,000 non-cumulative perpetual shares
Issued and outstanding - 10,000 non-cumulative perpetual shares		25,000			25,000			25,000			25,000			25,000
Common Stock, $.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding		7,412			7,407			7,396			7,393			7,383
Additional paid-in capital		1,233,593			1,231,532			1,228,626			1,226,695			1,226,378
Retained earnings		1,097,399			1,057,298			1,012,774			961,542			917,311
Accumulated other comprehensive loss		(217,964	)		(198,914	)		(239,151	)		(314,089	)		(198,556	)
Total Stockholders' Equity		2,145,565			2,122,448			2,034,770			1,906,666			1,977,641
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,968,412		$	18,178,908		$	17,938,306		$	17,718,985		$	17,780,492

CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	June 30,			March 31,			December 31,			September 30,			June 30,
		2023			2023			2022			2022			2022
INTEREST INCOME
Loans receivable:
Taxable	$	186,256		$	172,353		$	156,102		$	128,504		$	106,787
Tax-exempt		7,760			7,709			6,930			6,500			5,990
Investment securities:
Taxable		8,886			9,087			9,417			10,055			10,372
Tax-exempt		14,279			16,070			17,033			17,261			17,212
Deposits with financial institutions		3,164			637			959			704			610
Federal Home Loan Bank stock		1,020			542			541			314			175
Total Interest Income		221,365			206,398			190,982			163,338			141,146
INTEREST EXPENSE
Deposits		73,201			50,685			33,516			16,644			8,485
Federal funds purchased		123			1,297			808			418			76
Securities sold under repurchase agreements		979			848			541			372			134
Federal Home Loan Bank advances		6,815			7,064			4,932			3,493			1,774
Subordinated debentures and other borrowings		2,412			2,385			2,229			2,105			2,016
Total Interest Expense		83,530			62,279			42,026			23,032			12,485
NET INTEREST INCOME		137,835			144,119			148,956			140,306			128,661
Provision for credit losses - loans		—			—			—			—			16,755
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		137,835			144,119			148,956			140,306			111,906
NON-INTEREST INCOME
Service charges on deposit accounts		7,813			7,359			7,097			7,165			7,690
Fiduciary and wealth management fees		7,397			7,862			7,501			7,221			7,634
Card payment fees		4,537			5,172			4,533			4,776			5,175
Net gains and fees on sales of loans		3,632			2,399			2,087			2,543			3,226
Derivative hedge fees		672			1,148			326			700			1,444
Other customer fees		742			517			362			501			662
Earnings on cash surrender value of life insurance		2,096			1,288			1,515			6,655			1,308
Net realized gains (losses) on sales of available for sale securities		(1,392	)		(1,571	)		57			481			90
Other income (loss)		822			823			672			(425	)		1,048
Total Non-Interest Income		26,319			24,997			24,150			29,617			28,277
NON-INTEREST EXPENSES
Salaries and employee benefits		54,753			57,459			52,331			56,002			56,041
Net occupancy		6,674			7,259			6,638			6,738			6,648
Equipment		6,181			6,126			6,148			5,997			6,720
Marketing		1,102			1,309			3,157			2,401			1,414
Outside data processing fees		6,604			6,113			5,611			6,827			4,881
Printing and office supplies		434			383			390			472			381
Intangible asset amortization		2,182			2,197			2,303			2,303			2,303
FDIC assessments		2,740			1,396			2,295			2,824			2,924
Other real estate owned and foreclosure expenses		916			(18	)		197			328			(266	)
Professional and other outside services		4,660			3,698			3,961			4,461			10,267
Other expenses		6,347			7,798			6,668			8,025			6,000
Total Non-Interest Expenses		92,593			93,720			89,699			96,378			97,313
INCOME BEFORE INCOME TAX		71,561			75,396			83,407			73,545			42,870
Income tax expense		10,699			11,317			12,647			9,793			3,879
NET INCOME		60,862			64,079			70,760			63,752			38,991
Preferred stock dividends		469			469			468			469			469
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	60,393		$	63,610		$	70,292		$	63,283		$	38,522
Per Share Data:
Basic Net Income Available to Common Stockholders	$	1.02		$	1.07		$	1.20		$	1.08		$	0.64
Diluted Net Income Available to Common Stockholders	$	1.02		$	1.07		$	1.19		$	1.08		$	0.63
Cash Dividends Paid to Common Stockholders	$	0.34		$	0.32		$	0.32		$	0.32		$	0.32
Average Diluted Common Shares Outstanding (in thousands)		59,448			59,441			59,384			59,339			59,308
FINANCIAL RATIOS:
Return on Average Assets		1.34	%		1.42	%		1.59	%		1.43	%		0.88	%
Return on Average Stockholders' Equity		11.29			12.21			14.36			12.54			7.62
Return on Tangible Common Stockholders' Equity		18.04			19.82			24.21			20.85			12.91
Average Earning Assets to Average Assets		93.38			93.35			93.66			92.90			92.45
Allowance for Credit Losses - Loans as % of Total Loans		1.80			1.82			1.86			1.94			1.98
Net Charge-offs (Recoveries) as % of Average Loans (Annualized)		0.06			0.01			0.12			(0.01	)		0.01
Average Stockholders' Equity to Average Assets		11.78			11.56			10.98			11.36			11.37
Tax Equivalent Yield on Average Earning Assets		5.36			5.06			4.73			4.11			3.58
Interest Expense/Average Earning Assets		1.97			1.48			1.01			0.56			0.30
Net Interest Margin (FTE) on Average Earning Assets		3.39			3.58			3.72			3.55			3.28
Efficiency Ratio		52.21			51.72			48.60			53.34			58.45
Tangible Common Book Value Per Share	$	23.34		$	22.93		$	21.45		$	19.26		$	20.45

LOANS
(Dollars In Thousands)	June 30,			March 31,			December 31,			September 30,			June 30,
		2023			2023			2022			2022			2022
Commercial and industrial loans	$	3,531,395		$	3,502,204		$	3,437,126		$	3,330,529		$	3,297,477
Agricultural land, production and other loans to farmers		230,003			219,598			241,793			221,954			214,904
Real estate loans:
Construction		949,918			960,979			835,582			828,923			745,983
Commercial real estate, non-owner occupied		2,379,819			2,375,410			2,407,475			2,299,272			2,423,185
Commercial real estate, owner occupied		1,179,739			1,244,117			1,246,528			1,268,567			1,264,563
Residential		2,248,473			2,185,943			2,096,655			1,990,668			1,813,297
Home equity		614,366			621,354			630,632			621,619			586,108
Individuals' loans for household and other personal expenditures		172,896			172,389			175,211			173,225			157,264
Public finance and other commercial loans		963,624			959,467			932,892			915,245			894,636
Loans		12,270,233			12,241,461			12,003,894			11,650,002			11,397,417
Allowance for credit losses - loans		(221,147	)		(223,052	)		(223,277	)		(226,702	)		(226,275	)
NET LOANS	$	12,049,086		$	12,018,409		$	11,780,617		$	11,423,300		$	11,171,142

DEPOSITS
(Dollars In Thousands)	June 30,		March 31,		December 31,		September 30,		June 30,
		2023		2023		2022		2022		2022
Demand deposits	$	8,045,455	$	8,422,387	$	8,448,797	$	8,534,950	$	8,785,889
Savings deposits		4,530,255		4,499,487		4,657,140		5,054,490		4,875,880
Certificates and other time deposits of $100,000 or more		1,160,303		1,040,379		742,539		443,588		436,942
Other certificates and time deposits		680,965		574,886		468,712		381,365		446,973
Brokered certificates of deposits		164,177		166,148		65,557		20,432		25,185
TOTAL DEPOSITS	$	14,581,155	$	14,703,287	$	14,382,745	$	14,434,825	$	14,570,869

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	June 30, 2023						June 30, 2022
	Average Balance		Interest Income / Expense		Average Rate		Average Balance		Interest Income / Expense		Average Rate
ASSETS
Interest-bearing deposits	$	343,253	$	3,164	3.69	%	$	329,626	$	610	0.74	%
Federal Home Loan Bank stock		41,873		1,020	9.74			38,111		175	1.84
Investment Securities:⁽¹⁾
Taxable		1,876,676		8,886	1.89			2,189,193		10,372	1.90
Tax-exempt⁽²⁾		2,336,990		18,075	3.09			2,703,629		21,788	3.22
Total Investment Securities		4,213,666		26,961	2.56			4,892,822		32,160	2.63
Loans held for sale		19,328		300	6.21			28,491		315	4.42
Loans:⁽³⁾
Commercial		8,605,339		150,766	7.01			8,134,050		85,867	4.22
Real estate mortgage		2,031,136		20,345	4.01			1,458,317		12,657	3.47
Installment		831,775		14,844	7.14			772,610		7,948	4.11
Tax-exempt⁽²⁾		882,095		9,823	4.45			781,720		7,582	3.88
Total Loans		12,369,673		196,078	6.34			11,175,188		114,369	4.09
Total Earning Assets		16,968,465		227,223	5.36	%		16,435,747		147,314	3.58	%
Total Non-Earning Assets		1,202,184						1,342,474
TOTAL ASSETS	$	18,170,649					$	17,778,221
LIABILITIES
Interest-Bearing Deposits:
Interest-bearing deposits	$	5,546,232	$	34,574	2.49	%	$	5,372,474	$	4,569	0.34	%
Money market deposits		2,766,876		18,684	2.70			3,024,560		2,130	0.28
Savings deposits		1,724,816		3,884	0.90			1,966,054		916	0.19
Certificates and other time deposits		1,883,998		16,059	3.41			948,799		870	0.37
Total Interest-Bearing Deposits		11,921,922		73,201	2.46			11,311,887		8,485	0.30
Borrowings		1,110,486		10,329	3.72			818,851		4,000	1.95
Total Interest-Bearing Liabilities		13,032,408		83,530	2.56			12,130,738		12,485	0.41
Noninterest-bearing deposits		2,797,991						3,497,641
Other liabilities		200,373						128,719
Total Liabilities		16,030,772						15,757,098
STOCKHOLDERS' EQUITY		2,139,877						2,021,123
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,170,649		83,530			$	17,778,221		12,485
Net Interest Income (FTE)			$	143,693					$	134,829
Net Interest Spread (FTE)⁽⁴⁾					2.80	%					3.17	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.36	%					3.58	%
Interest Expense / Average Earning Assets					1.97	%					0.30	%
Net Interest Margin (FTE)⁽⁵⁾					3.39	%					3.28	%

⁽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. Annualized amounts are computed using a 30/360 day basis.
⁽²⁾Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2023 and 2022. These totals equal $5,858 and $6,168 for the three months ended June 30, 2023 and 2022, respectively.
⁽³⁾Non accruing loans have been included in the average balances.
⁽⁴⁾Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
⁽⁵⁾Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Six Months Ended
	June 30, 2023						June 30, 2022
	Average Balance		Interest Income / Expense		Average Rate		Average Balance		Interest Income / Expense		Average Rate
Assets:
Interest-bearing deposits	$	258,504	$	3,801	2.94	%	$	406,698	$	840	0.41	%
Federal Home Loan Bank stock		40,821		1,562	7.65			33,040		321	1.94
Investment Securities:⁽¹⁾
Taxable		1,900,247		17,973	1.89			2,074,074		18,882	1.82
Tax-exempt⁽²⁾		2,444,086		38,416	3.14			2,620,593		41,882	3.20
Total Investment Securities		4,344,333		56,389	2.60			4,694,667		60,764	2.59
Loans held for sale		21,952		660	6.01			18,181		355	3.91
Loans:⁽³⁾
Commercial		8,544,945		290,428	6.80			7,504,740		150,545	4.01
Real estate mortgage		1,972,680		38,736	3.93			1,191,075		20,497	3.44
Installment		836,088		28,785	6.89			741,994		14,465	3.90
Tax-exempt⁽²⁾		877,511		19,581	4.46			764,870		14,803	3.87
Total Loans		12,253,176		378,190	6.17			10,220,860		200,665	3.93
Total Earning Assets		16,896,834		439,942	5.21	%		15,355,265		262,590	3.42	%
Total Non-Earning Assets		1,199,998						1,272,539
Total Assets	$	18,096,832					$	16,627,804
Liabilities:
Interest-Bearing deposits:
Interest-bearing deposits	$	5,405,696	$	59,237	2.19	%	$	5,200,923	$	6,977	0.27	%
Money market deposits		2,756,519		32,261	2.34			2,770,904		3,002	0.22
Savings deposits		1,775,233		6,849	0.77			1,917,005		1,357	0.14
Certificates and other time deposits		1,676,291		25,539	3.05			813,482		1,443	0.35
Total Interest-Bearing Deposits		11,613,739		123,886	2.13			10,702,314		12,779	0.24
Borrowings		1,201,392		21,923	3.65			718,270		6,966	1.94
Total Interest-Bearing Liabilities		12,815,131		145,809	2.28			11,420,584		19,745	0.35
Noninterest-bearing deposits		2,958,741						3,116,797
Other liabilities		211,302						133,891
Total Liabilities		15,985,174						14,671,272
Stockholders' Equity		2,111,658						1,956,532
Total Liabilities and Stockholders' Equity	$	18,096,832		145,809			$	16,627,804		19,745
Net Interest Income (FTE)			$	294,133					$	242,845
Net Interest Spread (FTE)⁽⁴⁾					2.93	%					3.07	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.21	%					3.42	%
Interest Expense / Average Earning Assets					1.73	%					0.26	%
Net Interest Margin (FTE)⁽⁵⁾					3.48	%					3.16	%

⁽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. Annualized amounts are computed using a 30/360 day basis.
⁽²⁾Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2023 and 2022. These totals equal $12,179 and $11,904 for the six months ended June 30, 2023 and 2022, respectively.
⁽³⁾Non accruing loans have been included in the average balances.
⁽⁴⁾Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
⁽⁵⁾Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

ADJUSTED EPS EXCLUDING PAYCHECK PROTECTION PROGRAM ("PPP") AND ACQUISITION-RELATED EXPENSES - NON-GAAP
(Dollars In Thousands, Except Per Share Amounts)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
		2023			2023			2022			2022			2022			2023			2022
Net Income Available to Common Stockholders - GAAP	$	60,393		$	63,610		$	70,292		$	63,283		$	38,522		$	124,003		$	87,108
Adjustments:
PPP loan income		(9	)		(25	)		(109	)		(323	)		(891	)		(34	)		(2,775	)
Acquisition-related expenses		—			—			413			3,417			12,549			—			12,701
Acquisition-related provision expense		—			—			—			—			16,755			—			16,755
Tax on adjustment		2			6			(75	)		(759	)		(6,967	)		8			(6,542	)
Adjusted Net Income Available to Common Stockholders - Non-GAAP	$	60,386		$	63,591		$	70,521		$	65,618		$	59,968		$	123,977		$	107,247

Average Diluted Common Shares Outstanding (in thousands)		59,448			59,441			59,384			59,339			59,308			59,446			56,516

Diluted Earnings Per Common Share - GAAP	$	1.02		$	1.07		$	1.19		$	1.08		$	0.63		$	2.09		$	1.54
Adjustments:
PPP loan income		—			—			(0.01	)		—			(0.01	)		—			(0.05	)
Acquisition-related expenses		—			—			0.01			0.05			0.22			—			0.22
Acquisition-related provision expense		—			—			—			—			0.30			—			0.30
Tax on adjustment		—			—			—			(0.01	)		(0.13	)		—			(0.12	)
Adjusted Diluted Earnings Per Common Share - Non-GAAP	$	1.02		$	1.07		$	1.19		$	1.12		$	1.01		$	2.09		$	1.89

RETURN ON TANGIBLE COMMON EQUITY - NON-GAAP
(Dollars In Thousands)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
		2023			2023			2022			2022			2022			2023			2022
Total Average Stockholders' Equity (GAAP)	$	2,139,877		$	2,083,125		$	1,958,041		$	2,018,156		$	2,021,123		$	2,111,658		$	1,956,532
Less: Average Preferred Stock		(25,125	)		(25,125	)		(25,125	)		(25,125	)		(25,125	)		(25,125	)		(12,625	)
Less: Average Intangible Assets, Net of Tax		(737,489	)		(739,190	)		(741,632	)		(744,069	)		(745,614	)		(738,334	)		(656,042	)
Average Tangible Common Equity, Net of Tax (Non-GAAP)	$	1,377,263		$	1,318,810		$	1,191,284		$	1,248,962		$	1,250,384		$	1,348,199		$	1,287,865

Net Income Available to Common Stockholders (GAAP)	$	60,393		$	63,610		$	70,292		$	63,283		$	38,521		$	124,003		$	87,108
Plus: Intangible Asset Amortization, Net of Tax		1,724			1,734			1,819			1,819			1,820			3,458			2,898
Tangible Net Income (Non-GAAP)	$	62,117		$	65,344		$	72,111		$	65,102		$	40,341		$	127,461		$	90,006

Return on Tangible Common Equity (Non-GAAP)		18.04	%		19.82	%		24.21	%		20.85	%		12.91	%		18.91	%		13.98	%

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