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Section 1: 8-K (8-K 2ND QTR 2019 EARNINGS RELEASE)

Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
DATE OF REPORT (Date of earliest event reported): July 25, 2019

 Commission File Number 0-17071
FIRST MERCHANTS CORPORATION
(Exact name of registrant as specified in its charter)

INDIANA
35-1544218
(State or other jurisdiction of incorporation)
(IRS Employer Identification No.)

200 East Jackson Street
P.O. Box 792
Muncie, IN 47305-2814
(Address of principal executive offices, including zip code)
 
(765) 747-1500
(Registrant's telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report)

Title of Each Class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.125 state value per share
FRME
The NASDAQ Stock Market LLC

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o




ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On July 25, 2019, First Merchants Corporation issued a press release to report its financial results for the second quarter ended June 30, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Current Report on Form 8-K, including Exhibit No. 99.1 hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section. The information in this Current Report shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(a)    Not applicable.

(b)    Not applicable.

(c)    Not applicable.

(d)    Exhibits.

Exhibit 99.1 Press Release, dated July 25, 2019, issued by First Merchants Corporation




SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
First Merchants Corporation
(Registrant)

By: /s/ Mark K. Hardwick
Mark K. Hardwick
Executive Vice President,
Chief Financial Officer and Chief Operating Officer



Dated: July 25, 2019




EXHIBIT INDEX

Exhibit No.
Description


99.1    Press Release, dated July 25, 2019, issued by First Merchants Corporation

(Back To Top)

Section 2: EX-99.1 (2ND QTR 2019 EARNINGS RELEASE)

Exhibit


N / E / W / S R / E / L / E / A / S / E
    
July 25, 2019

FOR IMMEDIATE RELEASE
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


FIRST MERCHANTS CORPORATION ANNOUNCES 3.8 PERCENT INCREASE IN SECOND QUARTER 2019 EARNINGS PER SHARE

First Merchants Corporation (NASDAQ - FRME) has reported second quarter 2019 net income of $41.1 million, an increase of 3.6 percent, compared to $39.6 million during the same period in 2018. Earnings per share for the period totaled $.83 per share, an increase of 3.8 percent, compared to the second quarter of 2018 result of $.80 per share.

Total assets equaled $10.7 billion as of quarter-end and loans totaled $7.5 billion. The Corporation’s loan portfolio increased, by $434 million, or 6.1 percent, during the past twelve months. Investments increased $473 million, or 29.2 percent, during the same period and now total $2.1 billion. Total deposits equaled $8.3 billion as of quarter-end and increased by $816 million, or 10.9 percent, while borrowings, totaling $793 million, declined during the period by $46 million, or 5.5 percent. As a result, the loan-to-deposit ratio now totals 90.4 percent and loan-to-asset ratio totals 70 percent. Additionally, the Corporation’s total risk-based capital ratio equaled 14.56 percent, common equity tier 1 capital ratio equaled 12.05 percent, and the tangible common equity ratio totaled 10.07 percent.

Michael C. Rechin, President and Chief Executive Officer, stated, “Our second quarter of 2019 results continued to reflect effective market coverage by our bankers coupled with healthy levels of activity from our commercial and consumer clients throughout our franchise. We are pleased with our execution producing second quarter organic loan growth of 11.8% and deposit growth of 13.5% on an annualized basis. Net Income and earnings per share improved during the quarter despite margin pressure and legal and settlement expenses of $1.3 million reflected in our marketing line item. We continue to anticipate closing our acquisition with Monroe Bank & Trust during the third quarter of 2019 and completing the integration in the fourth quarter of 2019.”

Net interest income for the quarter totaled $85.3 million, an increase of $707,000, even as net interest margin totaling 3.71 percent declined from the same period in 2018 by 28 basis points. Yields on earning assets increased by 12 basis points totaling 4.86 percent and the cost of supporting liabilities increased by 40 basis points and totaled 1.15 percent. Fair value accretion negatively impacted yields as it declined from 18 basis points in second quarter of 2018 to 9 basis points in 2019. Additionally, strong growth in institutional deposits and deployment into the bond portfolio produced earnings per share of $.01 for the quarter but negatively impacted net interest margin by 10 basis points.

Non-interest income totaled $21.6 million for the quarter, a $3.4 million, or 18.8 percent increase from the second quarter of 2018. Customer-specific line items accounted for $2.4 million of the increase while being fueled by derivative hedge income growth of $1.3 million. Non-interest expense totaled $57.6 million up from the 2018 total of $53.5 million. Of the $4.1 million increase, $1.3 million was related to the fair lending legal and settlement expenses, with the remaining in professional services - $587,000, equipment - $561,000, other real estate expense - $541,000, and salary and benefits - $517,000.

The Corporation’s provision expense totaled $500,000 and net charge-offs were just $128,000. The allowance for loan losses reached $81.3 million as of June 30, 2019, up from $77.5 million as of June 30, 2018. Non-accrual loans declined to $25.6 million as of quarter-end and the allowance was 1.08 percent of total loans and 1.19 percent of non-purchased loans.






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 25, 2019.

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 25, 2019. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529, Canada participants should dial 855-669-9658, or for International participants, dial +1 412-317-0088. The replay access code is 10132272.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme190725.html during the time of the call. A replay of the web cast will be available until July 25, 2020.

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.

* * * *




CONSOLIDATED BALANCE SHEETS
 
 
 
(Dollars In Thousands)
June 30,
 
2019
 
2018
ASSETS
 
 
 
Cash and cash equivalents
$
128,185

 
$
133,893

Interest-bearing time deposits
129,614

 
36,599

Investment securities
2,092,924

 
1,619,683

Loans held for sale
5,854

 
2,046

Loans
7,511,370

 
7,081,059

Less: Allowance for loan losses
(81,274
)
 
(77,543
)
Net loans
7,430,096

 
7,003,516

Premises and equipment
91,767

 
94,397

Federal Home Loan Bank stock
24,588

 
24,588

Interest receivable
45,150

 
38,530

Goodwill and other intangibles
466,736

 
473,059

Cash surrender value of life insurance
226,241

 
222,905

Other real estate owned
1,131

 
9,071

Tax asset, deferred and receivable
12,340

 
24,619

Other assets
83,231

 
51,809

TOTAL ASSETS
$
10,737,857

 
$
9,734,715

LIABILITIES
 
 
 
Deposits:
 
 
 
Noninterest-bearing
$
1,353,165

 
$
1,571,194

Interest-bearing
6,966,163

 
5,932,621

Total Deposits
8,319,328

 
7,503,815

Borrowings:
 
 
 
Federal funds purchased
75,000

 
109,000

Securities sold under repurchase agreements
119,674

 
122,513

Federal Home Loan Bank advances
460,042

 
469,261

Subordinated debentures and term loans
138,574

 
138,352

Total Borrowings
793,290

 
839,126

Interest payable
6,740

 
4,807

Other liabilities
116,863

 
46,639

Total Liabilities
9,236,221

 
8,394,387

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 - 49,456,594 and 49,280,188 shares
6,182

 
6,160

Additional paid-in capital
841,365

 
836,549

Retained earnings
639,362

 
522,362

Accumulated other comprehensive income (loss)
14,602

 
(24,868
)
Total Stockholders' Equity
1,501,636

 
1,340,328

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
10,737,857

 
$
9,734,715








CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
 
Six Months Ended
(Dollars In Thousands, Except Per Share Amounts)
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
INTEREST INCOME
 
 
 
 
 
 
 
Loans receivable:
 
 
 
 
 
 
 
Taxable
$
92,824

 
$
84,663

 
$
183,305

 
$
162,930

Tax-exempt
4,244

 
3,632

 
8,397

 
7,228

Investment securities:
 
 
 
 
 
 
 
Taxable
6,998

 
5,434

 
13,093

 
10,530

Tax-exempt
7,454

 
6,246

 
14,325

 
12,372

Deposits with financial institutions
784

 
633

 
1,659

 
764

Federal Home Loan Bank stock
335

 
263

 
673

 
667

Total Interest Income
112,639

 
100,871

 
221,452

 
194,491

INTEREST EXPENSE
 
 
 
 
 
 
 
Deposits
23,087

 
12,165

 
42,681

 
21,167

Federal funds purchased
117

 
61

 
210

 
441

Securities sold under repurchase agreements
342

 
172

 
672

 
345

Federal Home Loan Bank advances
1,692

 
1,845

 
3,506

 
4,004

Subordinated debentures and term loans
2,123

 
2,057

 
4,239

 
4,047

Total Interest Expense
27,361

 
16,300

 
51,308

 
30,004

NET INTEREST INCOME
85,278

 
84,571

 
170,144

 
164,487

Provision for loan losses
500

 
1,663

 
1,700

 
4,163

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
84,778

 
82,908

 
168,444

 
160,324

OTHER INCOME
 
 
 
 
 
 
 
Service charges on deposit accounts
5,437

 
5,038

 
10,532

 
9,815

Fiduciary and wealth management fees
3,931

 
3,595

 
7,749

 
7,391

Card payment fees
4,829

 
4,462

 
9,655

 
9,056

Net gains and fees on sales of loans
1,736

 
1,600

 
3,031

 
3,421

Derivative hedge fees
1,487

 
231

 
2,268

 
1,073

Other customer fees
341

 
455

 
780

 
897

Earnings on cash surrender value of life insurance
946

 
1,007

 
1,935

 
2,183

Net realized gains on sales of available for sale securities
1,843

 
1,122

 
2,983

 
2,731

Other income
1,064

 
681

 
1,394

 
1,185

Total Other Income
21,614

 
18,191

 
40,327

 
37,752

OTHER EXPENSES
 
 
 
 
 
 
 
Salaries and employee benefits
32,709

 
32,192

 
65,737

 
64,418

Net occupancy
4,469

 
4,348

 
9,496

 
9,018

Equipment
4,117

 
3,556

 
7,759

 
7,224

Marketing
2,752

 
1,474

 
3,826

 
2,358

Outside data processing fees
3,929

 
3,462

 
7,613

 
6,426

Printing and office supplies
334

 
324

 
649

 
658

Intangible asset amortization
1,520

 
1,718

 
3,048

 
3,444

FDIC assessments
678

 
711

 
1,385

 
1,430

Other real estate owned and foreclosure expenses
903

 
362

 
2,068

 
764

Professional and other outside services
2,376

 
1,789

 
4,260

 
3,330

Other expenses
3,800

 
3,568

 
8,367

 
8,121

Total Other Expenses
57,587

 
53,504

 
114,208

 
107,191

INCOME BEFORE INCOME TAX
48,805

 
47,595

 
94,563

 
90,885

Income tax expense
7,749

 
7,961

 
14,690

 
14,572

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
41,056

 
$
39,634

 
$
79,873

 
$
76,313

Per Share Data:
 
 
 
 
 
 
 
Basic Net Income Available to Common Stockholders
$
0.83

 
$
0.80

 
$
1.62

 
$
1.55

Diluted Net Income Available to Common Stockholders
$
0.83

 
$
0.80

 
$
1.61

 
$
1.54

Cash Dividends Paid
$
0.26

 
$
0.22

 
$
0.48

 
$
0.40

Average Diluted Shares Outstanding (in thousands)
49,550

 
49,451

 
49,545

 
49,440





FINANCIAL HIGHLIGHTS
 
 
 
 
 
 
 
(Dollars in thousands)
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
NET CHARGE-OFFS
$
128

 
$
540

 
$
978

 
$
1,652

 

 

 

 

AVERAGE BALANCES:

 

 

 

Total Assets
$
10,499,948

 
$
9,697,020

 
$
10,291,205

 
$
9,535,774

Total Loans
7,385,315

 
6,975,737

 
7,308,146

 
6,893,867

Total Earning Assets
9,518,892

 
8,741,173

 
9,326,579

 
8,579,076

Total Deposits
8,321,459

 
7,636,821

 
8,130,120

 
7,396,328

Total Stockholders' Equity
1,479,254

 
1,327,341

 
1,454,633

 
1,318,124

 
 
 
 
 
 
 
 
FINANCIAL RATIOS:
 
 
 
 
 
 
 
Return on Average Assets
1.56
%
 
1.63
%
 
1.55
%
 
1.60
%
Return on Average Stockholders' Equity
11.10

 
11.94

 
10.98

 
11.58

Return on Average Common Stockholders' Equity
11.10

 
11.95

 
10.98

 
11.58

Average Earning Assets to Average Assets
90.66

 
90.14

 
90.63

 
89.97

Allowance for Loan Losses as % of Total Loans
1.08

 
1.09

 
1.08

 
1.09

Net Charge-offs as % of Average Loans (Annualized)
0.01

 
0.03

 
0.03

 
0.05

Average Stockholders' Equity to Average Assets
14.09

 
13.69

 
14.13

 
13.82

Tax Equivalent Yield on Average Earning Assets
4.86

 
4.74

 
4.88

 
4.66

Interest Expense/Average Earning Assets
1.15

 
0.75

 
1.10

 
0.70

Net Interest Margin (FTE) on Average Earning Assets
3.71

 
3.99

 
3.78

 
3.96

Efficiency Ratio
51.00


49.32


51.09


50.30

Tangible Common Book Value Per Share
$
21.01

 
$
17.71

 
$
21.01

 
$
17.71



NON-PERFORMING ASSETS
 
 
 
 
 
 
 
 
 
(Dollars In Thousands)
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
2019
 
2019
 
2018
 
2018
 
2018
Non-Accrual Loans
$
25,635

 
$
27,949

 
$
26,148

 
$
20,421

 
$
20,143

Renegotiated Loans
640

 
709

 
1,103

 
968

 
544

Non-Performing Loans (NPL)
26,275

 
28,658

 
27,251

 
21,389

 
20,687

Other Real Estate Owned
1,131

 
1,877

 
2,179

 
8,859

 
9,071

Non-Performing Assets (NPA)
27,406

 
30,535

 
29,430

 
30,248

 
29,758

90+ Days Delinquent
209

 
134

 
1,855

 
50

 
184

NPAs & 90 Day Delinquent
$
27,615

 
$
30,669

 
$
31,285

 
$
30,298

 
$
29,942

 
 
 
 
 
 
 
 
 
 
Allowance for Loan Losses
$
81,274

 
$
80,902

 
$
80,552

 
$
78,406

 
$
77,543

Quarterly Net Charge-offs
128

 
850

 
(482
)
 
537

 
540

NPAs / Actual Assets %
0.26
%
 
0.30
%
 
0.30
 %
 
0.31
%
 
0.31
%
NPAs & 90 Day / Actual Assets %
0.26
%
 
0.30
%
 
0.32
 %
 
0.31
%
 
0.31
%
NPAs / Actual Loans and OREO %
0.36
%
 
0.42
%
 
0.41
 %
 
0.43
%
 
0.42
%
Allowance for Loan Losses / Actual Loans (%)
1.08
%
 
1.11
%
 
1.11
 %
 
1.11
%
 
1.09
%
Net Charge-offs as % of Average Loans (Annualized)
0.01
%
 
0.05
%
 
(0.03
)%
 
0.03
%
 
0.03
%




CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
(Dollars In Thousands)
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
2019
 
2019
 
2018
 
2018
 
2018
ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
128,185

 
$
115,878

 
$
139,247

 
$
142,501

 
$
133,893

Interest-bearing time deposits
129,614

 
70,672

 
36,963

 
66,763

 
36,599

Investment securities
2,092,924

 
1,862,659

 
1,632,582

 
1,625,251

 
1,619,683

Loans held for sale
5,854

 
3,330

 
4,778

 
3,022

 
2,046

Loans
7,511,370

 
7,299,320

 
7,224,467

 
7,088,071

 
7,081,059

Less: Allowance for loan losses
(81,274
)
 
(80,902
)
 
(80,552
)
 
(78,406
)
 
(77,543
)
Net loans
7,430,096

 
7,218,418

 
7,143,915

 
7,009,665

 
7,003,516

Premises and equipment
91,767

 
91,863

 
93,420

 
93,728

 
94,397

Federal Home Loan Bank stock
24,588

 
24,588

 
24,588

 
24,588

 
24,588

Interest receivable
45,150

 
40,931

 
40,881

 
38,531

 
38,530

Goodwill and other intangibles
466,736

 
468,256

 
469,784

 
471,409

 
473,059

Cash surrender value of life insurance
226,241

 
225,928

 
224,939

 
223,865

 
222,905

Other real estate owned
1,131

 
1,877

 
2,179

 
8,859

 
9,071

Tax asset, deferred and receivable
12,340

 
16,094

 
23,668

 
25,933

 
24,619

Other assets
83,231

 
70,431

 
47,772

 
53,167

 
51,809

TOTAL ASSETS
$
10,737,857

 
$
10,210,925

 
$
9,884,716

 
$
9,787,282

 
$
9,734,715

LIABILITIES
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
1,353,165

 
$
1,381,183

 
$
1,447,907

 
$
1,464,190

 
$
1,571,194

Interest-bearing
6,966,163

 
6,666,615

 
6,306,686

 
6,168,962

 
5,932,621

Total Deposits
8,319,328

 
8,047,798

 
7,754,593

 
7,633,152

 
7,503,815

Borrowings:
 
 
 
 
 
 
 
 
 
Federal funds purchased
75,000

 
20,000

 
104,000

 
90,000

 
109,000

Securities sold under repurchase agreements
119,674

 
111,783

 
113,512

 
118,824

 
122,513

Federal Home Loan Bank advances
460,042

 
345,013

 
314,986

 
385,458

 
469,261

Subordinated debentures and term loans
138,574

 
138,519

 
138,463

 
138,408

 
138,352

Total Borrowings
793,290

 
615,315

 
670,961

 
732,690

 
839,126

Interest payable
6,740

 
7,313

 
5,607

 
5,920

 
4,807

Other liabilities
116,863

 
84,651

 
45,295

 
54,094

 
46,639

Total Liabilities
9,236,221

 
8,755,077

 
8,476,456

 
8,425,856

 
8,394,387

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
6,182

 
6,179

 
6,169

 
6,163

 
6,160

Additional paid-in capital
841,365

 
839,919

 
840,052

 
837,996

 
836,549

Retained earnings
639,362

 
611,220

 
583,336

 
552,551

 
522,362

Accumulated other comprehensive income (loss)
14,602

 
(1,595
)
 
(21,422
)
 
(35,409
)
 
(24,868
)
Total Stockholders' Equity
1,501,636

 
1,455,848

 
1,408,260

 
1,361,426

 
1,340,328

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
10,737,857

 
$
10,210,925

 
$
9,884,716

 
$
9,787,282

 
$
9,734,715

 
 
 
 
 
 
 
 
 
 








CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
 
 
 
 
(Dollars In Thousands, Except Per Share Amounts)
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
2019
 
2019
 
2018
 
2018
 
2018
INTEREST INCOME
 
 
 
 
 
 
 
 
 
Loans receivable:
 
 
 
 
 
 
 
 
 
Taxable
$
92,824

 
$
90,481

 
$
91,092

 
$
88,479

 
$
84,663

Tax-exempt
4,244

 
4,153

 
3,873

 
3,761

 
3,632

Investment securities:
 
 
 
 
 
 
 
 
 
Taxable
6,998

 
6,095

 
5,553

 
5,514

 
5,434

Tax-exempt
7,454

 
6,871

 
6,644

 
6,493

 
6,246

Deposits with financial institutions
784

 
875

 
1,207

 
270

 
633

Federal Home Loan Bank stock
335

 
338

 
284

 
283

 
263

Total Interest Income
112,639

 
108,813

 
108,653

 
104,800

 
100,871

INTEREST EXPENSE
 
 
 
 
 
 
 
 
 
Deposits
23,087

 
19,594

 
16,690

 
13,685

 
12,165

Federal funds purchased
117

 
93

 
48

 
229

 
61

Securities sold under repurchase agreements
342

 
330

 
243

 
174

 
172

Federal Home Loan Bank advances
1,692

 
1,814

 
1,691

 
2,137

 
1,845

Subordinated debentures and term loans
2,123

 
2,116

 
2,097

 
2,089

 
2,057

Total Interest Expense
27,361

 
23,947

 
20,769

 
18,314

 
16,300

NET INTEREST INCOME
85,278

 
84,866

 
87,884

 
86,486

 
84,571

Provision for loan losses
500

 
1,200

 
1,664

 
1,400

 
1,663

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
84,778

 
83,666

 
86,220

 
85,086

 
82,908

OTHER INCOME
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
5,437

 
5,095

 
5,516

 
5,619

 
5,038

Fiduciary and wealth management fees
3,931

 
3,818

 
3,842

 
3,673

 
3,595

Card payment fees
4,829

 
4,826

 
4,393

 
4,586

 
4,462

Net gains and fees on sales of loans
1,736

 
1,295

 
1,767

 
1,841

 
1,600

Derivative hedge fees
1,487

 
781

 
645

 
775

 
231

Other customer fees
341

 
439

 
511

 
452

 
455

Earnings on cash surrender value of life insurance
946

 
989

 
1,074

 
961

 
1,007

Net realized gains on sales of available for sale securities
1,843

 
1,140

 
253

 
1,285

 
1,122

Other income
1,064

 
330

 
1,179

 
335

 
681

Total Other Income
21,614

 
18,713

 
19,180

 
19,527

 
18,191

OTHER EXPENSES
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
32,709

 
33,028

 
34,350

 
32,936

 
32,192

Net occupancy
4,469

 
5,027

 
4,737

 
4,586

 
4,348

Equipment
4,117

 
3,642

 
3,627

 
3,483

 
3,556

Marketing
2,752

 
1,074

 
1,107

 
1,216

 
1,474

Outside data processing fees
3,929

 
3,684

 
3,367

 
3,422

 
3,462

Printing and office supplies
334

 
315

 
433

 
334

 
324

Intangible asset amortization
1,520

 
1,528

 
1,625

 
1,650

 
1,718

FDIC assessments
678

 
707

 
634

 
856

 
711

Other real estate owned and foreclosure expenses
903

 
1,165

 
251

 
455

 
362

Professional and other outside services
2,376

 
1,884

 
3,002

 
1,844

 
1,789

Other expenses
3,800

 
4,567

 
4,605

 
4,240

 
3,568

Total Other Expenses
57,587

 
56,621

 
57,738

 
55,022

 
53,504

INCOME BEFORE INCOME TAX
48,805

 
45,758

 
47,662

 
49,591

 
47,595

Income tax expense
7,749

 
6,941

 
5,949

 
8,478

 
7,961

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
41,056

 
$
38,817

 
$
41,713

 
$
41,113

 
$
39,634

 
 
 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
 
 
Basic Net Income Available to Common Stockholders
$
0.83

 
$
0.79

 
$
0.85

 
$
0.83

 
$
0.80

Diluted Net Income Available to Common Stockholders
$
0.83

 
$
0.78

 
$
0.85

 
$
0.83

 
$
0.80

Cash Dividends Paid
$
0.26

 
$
0.22

 
$
0.22

 
$
0.22

 
$
0.22

Average Diluted Shares Outstanding (in thousands)
49,550

 
49,541

 
49,511

 
49,492

 
49,451

FINANCIAL RATIOS:
 
 
 
 
 
 
 
 
 
Return on Average Assets
1.56
%
 
1.54
%
 
1.68
%
 
1.69
%
 
1.63
%
Return on Average Stockholders' Equity
11.10

 
10.86

 
12.10

 
12.10

 
11.94

Return on Average Common Stockholders' Equity
11.10

 
10.86

 
12.10

 
12.10

 
11.95

Average Earning Assets to Average Assets
90.66

 
90.60

 
90.41

 
90.30

 
90.14

Allowance for Loan Losses as % of Total Loans
1.08

 
1.11

 
1.11

 
1.11

 
1.09

Net Charge-offs as % of Average Loans (Annualized)
0.01

 
0.05

 
(0.03
)
 
0.03

 
0.03

Average Stockholders' Equity to Average Assets
14.09

 
14.18

 
13.90

 
13.93

 
13.69

Tax Equivalent Yield on Average Earning Assets
4.86

 
4.89

 
4.97

 
4.88

 
4.74

Interest Expense/Average Earning Assets
1.15

 
1.05

 
0.93

 
0.83

 
0.75

Net Interest Margin (FTE) on Average Earning Assets
3.71

 
3.84

 
4.04

 
4.05

 
3.99

Efficiency Ratio
51.00

 
51.18

 
50.97

 
49.25

 
49.32

Tangible Common Book Value Per Share
$
21.01

 
$
20.07

 
$
19.12

 
$
18.16

 
$
17.71





LOANS
 
 
 
 
 
 
 
 
 
(Dollars In Thousands)
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
2019
 
2019
 
2018
 
2018
 
2018
Commercial and industrial loans
$
1,877,042

 
$
1,788,628

 
$
1,726,664

 
$
1,655,569

 
$
1,657,591

Agricultural production financing and other loans to farmers
83,452

 
80,357

 
92,404

 
88,504

 
89,093

Real estate loans:
 
 
 
 
 
 
 
 
 
Construction
624,548

 
542,501

 
545,729

 
668,608

 
714,866

Commercial and farmland
2,821,689

 
2,838,798

 
2,832,102

 
2,699,629

 
2,652,782

Residential
993,802

 
976,668

 
966,421

 
965,893

 
965,720

Home equity
548,006

 
536,208

 
528,157

 
517,303

 
518,699

Individuals' loans for household and other personal expenditures
98,384

 
108,216

 
99,788

 
98,709

 
92,809

Public finance and other commercial loans
464,447

 
427,944

 
433,202

 
393,856

 
389,499

Loans
7,511,370

 
7,299,320

 
7,224,467

 
7,088,071

 
7,081,059

Allowance for loan losses
(81,274
)
 
(80,902
)
 
(80,552
)
 
(78,406
)
 
(77,543
)
NET LOANS
$
7,430,096

 
$
7,218,418

 
$
7,143,915

 
$
7,009,665

 
$
7,003,516



DEPOSITS
 
 
 
 
 
 
 
 
 
(Dollars In Thousands)
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
2019
 
2019
 
2018
 
2018
 
2018
Demand deposits
$
4,309,473

 
$
4,101,156

 
$
3,985,178

 
$
3,870,816

 
$
3,933,233

Savings deposits
2,358,720

 
2,338,266

 
2,282,701

 
2,212,675

 
2,099,771

Certificates and other time deposits of $100,000 or more
720,536

 
670,199

 
593,592

 
602,002

 
555,910

Other certificates and time deposits
729,392

 
704,527

 
646,682

 
625,341

 
602,239

Brokered deposits
201,207

 
233,650

 
246,440

 
322,318

 
312,662

TOTAL DEPOSITS
$
8,319,328

 
$
8,047,798

 
$
7,754,593

 
$
7,633,152

 
$
7,503,815





CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
 
 
 
 
 
 
 
(Dollars in Thousands)
 
 
 
 
 
 
 
 
 
 
 

For the Three Months Ended
 
June 30, 2019
 
June 30, 2018
 
Average Balance
 
Interest
 Income /
Expense
 
Average
Rate
 
Average Balance
 
Interest
 Income /
Expense
 
Average
Rate
Assets:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing time deposits
$
144,626

 
$
784

 
2.17
%
 
$
142,385

 
$
633

 
1.78
%
Federal Home Loan Bank stock
24,588

 
335

 
5.45

 
24,588

 
263

 
4.28

Investment Securities: (1)
 
 
 
 
 
 
 
 
 
 
 
Taxable
1,054,068

 
6,998

 
2.66

 
852,865

 
5,434

 
2.55

Tax-Exempt (2)
910,295

 
9,435

 
4.15

 
745,598

 
7,906

 
4.24

Total Investment Securities
1,964,363

 
16,433

 
3.35

 
1,598,463

 
13,340

 
3.34

Loans held for sale
11,430

 
127

 
4.44

 
6,408

 
83

 
5.18

Loans: (3)
 
 
 
 
 
 
 
 
 
 
 
Commercial
5,419,169

 
74,638

 
5.51

 
5,142,093

 
67,510

 
5.25

Real Estate Mortgage
766,528

 
8,686

 
4.53

 
729,681

 
8,792

 
4.82

Installment
677,133

 
9,373

 
5.54

 
631,897

 
8,278

 
5.24

Tax-Exempt (2)
511,055

 
5,372

 
4.20

 
465,658

 
4,597

 
3.95

Total Loans
7,385,315

 
98,196

 
5.32

 
6,975,737

 
89,260

 
5.12

Total Earning Assets
9,518,892

 
115,748

 
4.86
%
 
8,741,173

 
103,496

 
4.74
%
Net unrealized gain (loss) on securities available for sale
12,841

 
 
 
 
 
(13,068
)
 
 
 
 
Allowance for loan losses
(81,691
)
 
 
 
 
 
(77,197
)
 
 
 
 
Cash and cash equivalents
130,987

 
 
 
 
 
132,481

 
 
 
 
Premises and equipment
91,563

 
 
 
 
 
94,757

 
 
 
 
Other assets
827,356

 
 
 
 
 
818,874

 
 
 
 
Total Assets
$
10,499,948

 
 
 
 
 
$
9,697,020

 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits
$
2,935,925

 
$
8,541

 
1.16
%
 
$
2,325,705

 
$
4,276

 
0.74
%
Money market deposits
1,220,020

 
3,509

 
1.15

 
1,081,830

 
1,583

 
0.59

Savings deposits
1,164,901

 
2,525

 
0.87

 
1,096,003

 
1,332

 
0.49

Certificates and other time deposits
1,652,203

 
8,512

 
2.06

 
1,491,207

 
4,974

 
1.33

Total Interest-bearing Deposits
6,973,049

 
23,087

 
1.32

 
5,994,745

 
12,165

 
0.81

Borrowings
613,446

 
4,274

 
2.79

 
674,040

 
4,135

 
2.45

Total Interest-bearing Liabilities
7,586,495

 
27,361

 
1.44

 
6,668,785

 
16,300

 
0.98

Noninterest-bearing deposits
1,348,410

 
 
 
 
 
1,642,076

 
 
 
 
Other liabilities
85,789

 
 
 
 
 
58,818

 
 
 
 
Total Liabilities
9,020,694

 
 
 
 
 
8,369,679

 
 
 
 
Stockholders' Equity
1,479,254

 
 
 
 
 
1,327,341

 
 
 
 
Total Liabilities and Stockholders' Equity
$
10,499,948

 
27,361

 


 
$
9,697,020

 
16,300

 


Net Interest Income (FTE)
 
 
$
88,387

 
 
 
 
 
$
87,196

 
 
Net Interest Spread (FTE) (4)
 
 
 
 
3.42
%
 
 
 
 
 
3.76
%












Net Interest Margin (FTE):











Interest Income (FTE) / Average Earning Assets




4.86
%





4.74
%
Interest Expense / Average Earning Assets




1.15
%





0.75
%
Net Interest Margin (FTE) (5)




3.71
%





3.99
%
 
 
 
 
 
 
 
 
 
 
 
 
(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 for 2019 and 2018. These totals equal $3,109 and $2,625 for the three months ended June 30, 2019 and 2018, 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, 2019

June 30, 2018

Average Balance

Interest
 Income /
Expense

Average
Rate

Average Balance

Interest
 Income /
Expense

Average
Rate
Assets:






 



 
Interest-bearing time deposits
$
145,277


$
1,659


2.28
%

$
87,883


$
764


1.74
%
Federal Home Loan Bank stock
24,588


673


5.47


24,487


667


5.45

Investment Securities: (1)











Taxable
978,654


13,093


2.68


831,743


10,530


2.53

Tax-Exempt (2)
869,914


18,133


4.17


741,096


15,661


4.23

Total Investment Securities
1,848,568


31,226


3.38


1,572,839


26,191


3.33

Loans held for sale
10,697


239


4.47


8,515


221


5.19

Loans: (3)











Commercial
5,364,884


147,394


5.49


5,061,717


129,663


5.12

Real Estate Mortgage
755,070


17,008


4.51


729,202


16,791


4.61

Installment
671,125


18,664


5.56


627,686


16,255


5.18

Tax-Exempt (2)
506,370


10,629


4.20


466,747


9,149


3.92

Total Loans
7,308,146


193,934


5.31


6,893,867


172,079


4.99