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Section 1: 8-K (8-K 1ST 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): April 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)
 
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 April 25, 2019, First Merchants Corporation issued a press release to report its financial results for the first quarter ended March 31, 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 April 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: April 25, 2019




EXHIBIT INDEX

Exhibit No.
Description


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

(Back To Top)

Section 2: EX-99.1 (1ST QTR 2019 EARNINGS RELEASE)

Exhibit


N / E / W / S R / E / L / E / A / S / E
    
April 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 5.4 PERCENT INCREASE IN FIRST QUARTER 2019 EARNINGS PER SHARE

First Merchants Corporation (NASDAQ - FRME) has reported first quarter 2019 net income of $38.8 million, an increase of 5.8 percent, compared to $36.7 million during the same period in 2018. Earnings per share for the period totaled $.78 per share, an increase of 5.4 percent, compared to the first quarter of 2018 result of $.74 per share.

Total assets equaled $10.2 billion as of quarter-end and loans totaled $7.3 billion. The Corporation’s loan portfolio increased by $397 million, or 5.7 percent, during the past twelve months. Investments increased $319 million, or 20.7 percent, during the same period and now total $1.9 billion. Total deposits equaled $8.0 billion as of quarter-end and increased by $720 million, or 9.8 percent, while borrowings, totaling $615 million, declined during the period by $161 million, or 20.8 percent. As a result, the loan-to-deposit ratio now totals 90.7 percent and loan-to-asset ratio totals 71.5 percent. Additionally, the Corporation’s total risk-based capital ratio equaled 14.71 percent, common equity tier 1 capital ratio equaled 12.12 percent, and the tangible common equity ratio totaled 10.14 percent.

Michael C. Rechin, President and Chief Executive Officer, stated, “We are excited to begin 2019 with a solid quarter of operating results. Our focus on the marketplace produced strong deposit growth and liquidity for our balance sheet. The loan pipeline continues to reflect an expanding Midwest economy with healthy asset quality throughout the portfolio. Our primary financial ratios and related key performance indicators continue to reflect the results of a high performing company.”

Rechin continued, “We now have shareholder, Indiana Department of Financial Institutions and the Federal Deposit Insurance Corporation approvals in hand regarding our merger with Monroe Bank & Trust. We continue to anticipate our holding company’s approval from the Federal Reserve Bank and a legal closing in the current quarter. Our integration activities and re-branding efforts are planned for the third quarter.”

Net-interest income totaled $84.9 million for the quarter, an increase of $5 million, or 6.3 percent, over the same period in 2018. Net-interest margin, totaling 3.84 percent, declined by 8 basis points. Yields on earning assets increased by 32 basis points and totaled 4.89 percent, while the cost of supporting liabilities increased by 40 basis points and totaled 1.05 percent. Fair value accretion negatively impacted yields as it declined from 15 basis points in first quarter of 2018 to 9 basis points in 2019.

Non-interest income totaled $18.7 million for the quarter, an $848,000 decrease from the first quarter of 2018. Gains from the sale of loans accounted for $526,000 of the decline, as approximately one-half of the quarter’s production was added to the balance sheet versus being sold into the secondary market. Non-interest expense totaled $56.6 million, up from the 2018 total of $53.7 million. Of the $2.9 million increase, salary and benefits accounted for $802,000, other real estate and foreclosure expense accounted for $763,000 and outside data processing accounted for $720,000.

The Corporation’s provision expense totaled $1.2 million due to loan growth, while net charge offs totaled $850,000. The allowance for loan losses totaled $80.9 million as of March 31, 2019, up from $76.4 million as of March 31, 2018. Non-accrual loans totaled $27.9 million as of quarter-end and the allowance is 1.11 percent of total loans and 1.24 percent of non-purchased loans.






CONFERENCE CALL

First Merchants Corporation will conduct a first quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, April 25, 2019.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's first quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until May 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 10127190.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme190425.html during the time of the call. A replay of the web cast will be available until April 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)
March 31,
 
2019
 
2018
ASSETS
 
 
 
Cash and cash equivalents
$
115,878

 
$
128,828

Interest-bearing time deposits
70,672

 
24,233

Investment securities
1,862,659

 
1,543,820

Loans held for sale
3,330

 
4,469

Loans
7,299,320

 
6,901,696

Less: Allowance for loan losses
(80,902
)
 
(76,420
)
Net loans
7,218,418

 
6,825,276

Premises and equipment
91,863

 
94,741

Federal Home Loan Bank stock
24,588

 
24,588

Interest receivable
40,931

 
35,223

Goodwill and other intangibles
468,256

 
474,777

Cash surrender value of life insurance
225,928

 
221,949

Other real estate owned
1,877

 
9,698

Tax asset, deferred and receivable
16,094

 
24,177

Other assets
70,431

 
61,017

TOTAL ASSETS
$
10,210,925

 
$
9,472,796

LIABILITIES
 
 
 
Deposits:
 
 
 
Noninterest-bearing
$
1,381,183

 
$
1,698,958

Interest-bearing
6,666,615

 
5,628,677

Total Deposits
8,047,798

 
7,327,635

Borrowings:
 
 
 
Federal funds purchased
20,000

 
50,000

Securities sold under repurchase agreements
111,783

 
138,910

Federal Home Loan Bank advances
345,013

 
449,419

Subordinated debentures and term loans
138,519

 
138,297

Total Borrowings
615,315

 
776,626

Interest payable
7,313

 
5,376

Other liabilities
84,651

 
50,086

Total Liabilities
8,755,077

 
8,159,723

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 - 49,428,468 and 49,243,096 shares
6,179

 
6,155

Additional paid-in capital
839,919

 
834,894

Retained earnings
611,220

 
493,624

Accumulated other comprehensive loss
(1,595
)
 
(21,725
)
Total Stockholders' Equity
1,455,848

 
1,313,073

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
10,210,925

 
$
9,472,796








CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(Dollars In Thousands, Except Per Share Amounts)
March 31,
 
2019
 
2018
INTEREST INCOME
 
 
 
Loans receivable:
 
 
 
Taxable
$
90,481

 
$
78,267

Tax-exempt
4,153

 
3,596

Investment securities:
 
 
 
Taxable
6,095

 
5,096

Tax-exempt
6,871

 
6,126

Deposits with financial institutions
875

 
131

Federal Home Loan Bank stock
338

 
404

Total Interest Income
108,813

 
93,620

INTEREST EXPENSE
 
 
 
Deposits
19,594

 
9,002

Federal funds purchased
93

 
380

Securities sold under repurchase agreements
330

 
173

Federal Home Loan Bank advances
1,814

 
2,159

Subordinated debentures and term loans
2,116

 
1,990

Total Interest Expense
23,947

 
13,704

NET INTEREST INCOME
84,866

 
79,916

Provision for loan losses
1,200

 
2,500

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
83,666

 
77,416

OTHER INCOME
 
 
 
Service charges on deposit accounts
5,095

 
4,777

Fiduciary and wealth management fees
3,818

 
3,796

Card payment fees
4,826

 
4,594

Net gains and fees on sales of loans
1,295

 
1,821

Derivative hedge fees
781

 
842

Other customer fees
439

 
442

Earnings on cash surrender value of life insurance
989

 
1,176

Net realized gains on sales of available for sale securities
1,140

 
1,609

Other income
330

 
504

Total Other Income
18,713

 
19,561

OTHER EXPENSES
 
 
 
Salaries and employee benefits
33,028

 
32,226

Net occupancy
5,027

 
4,670

Equipment
3,642

 
3,668

Marketing
1,074

 
884

Outside data processing fees
3,684

 
2,964

Printing and office supplies
315

 
334

Intangible asset amortization
1,528

 
1,726

FDIC assessments
707

 
719

Other real estate owned and foreclosure expenses
1,165

 
402

Professional and other outside services
1,884

 
1,541

Other expenses
4,567

 
4,553

Total Other Expenses
56,621

 
53,687

INCOME BEFORE INCOME TAX
45,758

 
43,290

Income tax expense
6,941

 
6,611

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
38,817

 
$
36,679

Per Share Data:
 
 
 
Basic Net Income Available to Common Stockholders
$
0.79

 
$
0.75

Diluted Net Income Available to Common Stockholders
$
0.78

 
$
0.74

Cash Dividends Paid
$
0.22

 
$
0.18

Average Diluted Shares Outstanding (in thousands)
49,541

 
49,428





FINANCIAL HIGHLIGHTS
 
 
 
(Dollars in thousands)
Three Months Ended
 
March 31,
 
2019
 
2018
NET CHARGE-OFFS
$
850

 
$
1,112

 

 

AVERAGE BALANCES:

 

Total Assets
$
10,080,142

 
$
9,372,736

Total Loans
7,230,119

 
6,811,087

Total Earning Assets
9,132,129

 
8,415,177

Total Deposits
7,936,656

 
7,153,164

Total Stockholders' Equity
1,429,739

 
1,308,804

 
 
 
 
FINANCIAL RATIOS:
 
 
 
Return on Average Assets
1.54
%
 
1.57
%
Return on Average Stockholders' Equity
10.86

 
11.21

Return on Average Common Stockholders' Equity
10.86

 
11.21

Average Earning Assets to Average Assets
90.60

 
89.78

Allowance for Loan Losses as % of Total Loans
1.11

 
1.11

Net Charge-offs as % of Average Loans (Annualized)
0.05

 
0.07

Average Stockholders' Equity to Average Assets
14.18

 
13.96

Tax Equivalent Yield on Average Earning Assets
4.89

 
4.57

Interest Expense/Average Earning Assets
1.05

 
0.65

Net Interest Margin (FTE) on Average Earning Assets
3.84

 
3.92

Efficiency Ratio
51.18


51.33

Tangible Common Book Value Per Share
$
20.07

 
$
17.14



NON-PERFORMING ASSETS
 
 
 
 
 
 
 
 
 
(Dollars In Thousands)
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
2019
 
2018
 
2018
 
2018
 
2018
Non-Accrual Loans
$
27,949

 
$
26,148

 
$
20,421

 
$
20,143

 
$
27,497

Renegotiated Loans
709

 
1,103

 
968

 
544

 
579

Non-Performing Loans (NPL)
28,658

 
27,251

 
21,389

 
20,687

 
28,076

Other Real Estate Owned
1,877

 
2,179

 
8,859

 
9,071

 
9,698

Non-Performing Assets (NPA)
30,535

 
29,430

 
30,248

 
29,758

 
37,774

90+ Days Delinquent
134

 
1,855

 
50

 
184

 
738

NPAs & 90 Day Delinquent
$
30,669

 
$
31,285

 
$
30,298

 
$
29,942

 
$
38,512

 
 
 
 
 
 
 
 
 
 
Allowance for Loan Losses
$
80,902

 
$
80,552

 
$
78,406

 
$
77,543

 
$
76,420

Quarterly Net Charge-offs
850

 
(482
)
 
537

 
540

 
1,112

NPAs / Actual Assets %
0.30
%
 
0.30
 %
 
0.31
%
 
0.31
%
 
0.40
%
NPAs & 90 Day / Actual Assets %
0.30
%
 
0.32
 %
 
0.31
%
 
0.31
%
 
0.41
%
NPAs / Actual Loans and OREO %
0.42
%
 
0.41
 %
 
0.43
%
 
0.42
%
 
0.55
%
Allowance for Loan Losses / Actual Loans (%)
1.11
%
 
1.11
 %
 
1.11
%
 
1.09
%
 
1.11
%
Net Charge-offs as % of Average Loans (Annualized)
0.05
%
 
(0.03
)%
 
0.03
%
 
0.03
%
 
0.07
%




CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
(Dollars In Thousands)
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
2019
 
2018
 
2018
 
2018
 
2018
ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
115,878

 
$
139,247

 
$
142,501

 
$
133,893

 
$
128,828

Interest-bearing time deposits
70,672

 
36,963

 
66,763

 
36,599

 
24,233

Investment securities
1,862,659

 
1,632,582

 
1,625,251

 
1,619,683

 
1,543,820

Loans held for sale
3,330

 
4,778

 
3,022

 
2,046

 
4,469

Loans
7,299,320

 
7,224,467

 
7,088,071

 
7,081,059

 
6,901,696

Less: Allowance for loan losses
(80,902
)
 
(80,552
)
 
(78,406
)
 
(77,543
)
 
(76,420
)
Net loans
7,218,418

 
7,143,915

 
7,009,665

 
7,003,516

 
6,825,276

Premises and equipment
91,863

 
93,420

 
93,728

 
94,397

 
94,741

Federal Home Loan Bank stock
24,588

 
24,588

 
24,588

 
24,588

 
24,588

Interest receivable
40,931

 
40,881

 
38,531

 
38,530

 
35,223

Goodwill and other intangibles
468,256

 
469,784

 
471,409

 
473,059

 
474,777

Cash surrender value of life insurance
225,928

 
224,939

 
223,865

 
222,905

 
221,949

Other real estate owned
1,877

 
2,179

 
8,859

 
9,071

 
9,698

Tax asset, deferred and receivable
16,094

 
23,668

 
25,933

 
24,619

 
24,177

Other assets
70,431

 
47,772

 
53,167

 
51,809

 
61,017

TOTAL ASSETS
$
10,210,925

 
$
9,884,716

 
$
9,787,282

 
$
9,734,715

 
$
9,472,796

LIABILITIES
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
1,381,183

 
$
1,447,907

 
$
1,464,190

 
$
1,571,194

 
$
1,698,958

Interest-bearing
6,666,615

 
6,306,686

 
6,168,962

 
5,932,621

 
5,628,677

Total Deposits
8,047,798

 
7,754,593

 
7,633,152

 
7,503,815

 
7,327,635

Borrowings:
 
 
 
 
 
 
 
 
 
Federal funds purchased
20,000

 
104,000

 
90,000

 
109,000

 
50,000

Securities sold under repurchase agreements
111,783

 
113,512

 
118,824

 
122,513

 
138,910

Federal Home Loan Bank advances
345,013

 
314,986

 
385,458

 
469,261

 
449,419

Subordinated debentures and term loans
138,519

 
138,463

 
138,408

 
138,352

 
138,297

Total Borrowings
615,315

 
670,961

 
732,690

 
839,126

 
776,626

Interest payable
7,313

 
5,607

 
5,920

 
4,807

 
5,376

Other liabilities
84,651

 
45,295

 
54,094

 
46,639

 
50,086

Total Liabilities
8,755,077

 
8,476,456

 
8,425,856

 
8,394,387

 
8,159,723

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
6,179

 
6,169

 
6,163

 
6,160

 
6,155

Additional paid-in capital
839,919

 
840,052

 
837,996

 
836,549

 
834,894

Retained earnings
611,220

 
583,336

 
552,551

 
522,362

 
493,624

Accumulated other comprehensive loss
(1,595
)
 
(21,422
)
 
(35,409
)
 
(24,868
)
 
(21,725
)
Total Stockholders' Equity
1,455,848

 
1,408,260

 
1,361,426

 
1,340,328

 
1,313,073

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
10,210,925

 
$
9,884,716

 
$
9,787,282

 
$
9,734,715

 
$
9,472,796

 
 
 
 
 
 
 
 
 
 








CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
 
 
 
 
(Dollars In Thousands, Except Per Share Amounts)
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
2019
 
2018
 
2018
 
2018
 
2018
INTEREST INCOME
 
 
 
 
 
 
 
 
 
Loans receivable:
 
 
 
 
 
 
 
 
 
Taxable
$
90,481

 
$
91,092

 
$
88,479

 
$
84,663

 
$
78,267

Tax-exempt
4,153

 
3,873

 
3,761

 
3,632

 
3,596

Investment securities:
 
 
 
 
 
 
 
 
 
Taxable
6,095

 
5,553

 
5,514

 
5,434

 
5,096

Tax-exempt
6,871

 
6,644

 
6,493

 
6,246

 
6,126

Deposits with financial institutions
875

 
1,207

 
270

 
633

 
131

Federal Home Loan Bank stock
338

 
284

 
283

 
263

 
404

Total Interest Income
108,813

 
108,653

 
104,800

 
100,871

 
93,620

INTEREST EXPENSE
 
 
 
 
 
 
 
 
 
Deposits
19,594

 
16,690

 
13,685

 
12,165

 
9,002

Federal funds purchased
93

 
48

 
229

 
61

 
380

Securities sold under repurchase agreements
330

 
243

 
174

 
172

 
173

Federal Home Loan Bank advances
1,814

 
1,691

 
2,137

 
1,845

 
2,159

Subordinated debentures and term loans
2,116

 
2,097

 
2,089

 
2,057

 
1,990

Total Interest Expense
23,947

 
20,769

 
18,314

 
16,300

 
13,704

NET INTEREST INCOME
84,866

 
87,884

 
86,486

 
84,571

 
79,916

Provision for loan losses
1,200

 
1,664

 
1,400

 
1,663

 
2,500

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
83,666

 
86,220

 
85,086

 
82,908

 
77,416

OTHER INCOME
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
5,095

 
5,516

 
5,619

 
5,038

 
4,777

Fiduciary and wealth management fees
3,818

 
3,842

 
3,673

 
3,595

 
3,796

Card payment fees
4,826

 
4,393

 
4,586

 
4,462

 
4,594

Net gains and fees on sales of loans
1,295

 
1,767

 
1,841

 
1,600

 
1,821

Derivative hedge fees
781

 
645

 
775

 
231

 
842

Other customer fees
439

 
511

 
452

 
455

 
442

Earnings on cash surrender value of life insurance
989

 
1,074

 
961

 
1,007

 
1,176

Net realized gains on sales of available for sale securities
1,140

 
253

 
1,285

 
1,122

 
1,609

Other income
330

 
1,179

 
335

 
681

 
504

Total Other Income
18,713

 
19,180

 
19,527

 
18,191

 
19,561

OTHER EXPENSES
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
33,028

 
34,350

 
32,936

 
32,192

 
32,226

Net occupancy
5,027

 
4,737

 
4,586

 
4,348

 
4,670

Equipment
3,642

 
3,627

 
3,483

 
3,556

 
3,668

Marketing
1,074

 
1,107

 
1,216

 
1,474

 
884

Outside data processing fees
3,684

 
3,367

 
3,422

 
3,462

 
2,964

Printing and office supplies
315

 
433

 
334

 
324

 
334

Intangible asset amortization
1,528

 
1,625

 
1,650

 
1,718

 
1,726

FDIC assessments
707

 
634

 
856

 
711

 
719

Other real estate owned and foreclosure expenses
1,165

 
251

 
455

 
362

 
402

Professional and other outside services
1,884

 
3,002

 
1,844

 
1,789

 
1,541

Other expenses
4,567

 
4,605

 
4,240

 
3,568

 
4,553

Total Other Expenses
56,621

 
57,738

 
55,022

 
53,504

 
53,687

INCOME BEFORE INCOME TAX
45,758

 
47,662

 
49,591

 
47,595

 
43,290

Income tax expense
6,941

 
5,949

 
8,478

 
7,961

 
6,611

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
38,817

 
$
41,713

 
$
41,113

 
$
39,634

 
$
36,679

 
 
 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
 
 
Basic Net Income Available to Common Stockholders
$
0.79

 
$
0.85

 
$
0.83

 
$
0.80

 
$
0.75

Diluted Net Income Available to Common Stockholders
$
0.78

 
$
0.85

 
$
0.83

 
$
0.80

 
$
0.74

Cash Dividends Paid
$
0.22

 
$
0.22

 
$
0.22

 
$
0.22

 
$
0.18

Average Diluted Shares Outstanding (in thousands)
49,541

 
49,511

 
49,492

 
49,451

 
49,428

FINANCIAL RATIOS:
 
 
 
 
 
 
 
 
 
Return on Average Assets
1.54
%
 
1.68
%
 
1.69
%
 
1.63
%
 
1.57
%
Return on Average Stockholders' Equity
10.86

 
12.10

 
12.10

 
11.94

 
11.21

Return on Average Common Stockholders' Equity
10.86

 
12.10

 
12.10

 
11.95

 
11.21

Average Earning Assets to Average Assets
90.60

 
90.41

 
90.30

 
90.14

 
89.78

Allowance for Loan Losses as % of Total Loans
1.11

 
1.11

 
1.11

 
1.09

 
1.11

Net Charge-offs as % of Average Loans (Annualized)
0.05

 
(0.03
)
 
0.03

 
0.03

 
0.07

Average Stockholders' Equity to Average Assets
14.18

 
13.90

 
13.93

 
13.69

 
13.96

Tax Equivalent Yield on Average Earning Assets
4.89

 
4.97

 
4.88

 
4.74

 
4.57

Interest Expense/Average Earning Assets
1.05

 
0.93

 
0.83

 
0.75

 
0.65

Net Interest Margin (FTE) on Average Earning Assets
3.84

 
4.04

 
4.05

 
3.99

 
3.92

Efficiency Ratio
51.18

 
50.97

 
49.25

 
49.32

 
51.33

Tangible Common Book Value Per Share
$
20.07

 
$
19.12

 
$
18.16

 
$
17.71

 
$
17.14





LOANS
 
 
 
 
 
 
 
 
 
(Dollars In Thousands)
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
2019
 
2018
 
2018
 
2018
 
2018
Commercial and industrial loans
$
1,788,628

 
$
1,726,664

 
$
1,655,569

 
$
1,657,591

 
$
1,554,169

Agricultural production financing and other loans to farmers
80,357

 
92,404

 
88,504

 
89,093

 
98,315

Real estate loans:
 
 
 
 
 
 
 
 
 
Construction
542,501

 
545,729

 
668,608

 
714,866

 
590,093

Commercial and farmland
2,838,798

 
2,832,102

 
2,699,629

 
2,652,782

 
2,713,994

Residential
976,668

 
966,421

 
965,893

 
965,720

 
948,644

Home equity
536,208

 
528,157

 
517,303

 
518,699

 
510,545

Individuals' loans for household and other personal expenditures
108,216

 
99,788

 
98,709

 
92,809

 
88,235

Public finance and other commercial loans
427,944

 
433,202

 
393,856

 
389,499

 
397,701

Loans
7,299,320

 
7,224,467

 
7,088,071

 
7,081,059

 
6,901,696

Allowance for loan losses
(80,902
)
 
(80,552
)
 
(78,406
)
 
(77,543
)
 
(76,420
)
NET LOANS
$
7,218,418

 
$
7,143,915

 
$
7,009,665

 
$
7,003,516

 
$
6,825,276



DEPOSITS
 
 
 
 
 
 
 
 
 
(Dollars In Thousands)
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
2019
 
2018
 
2018
 
2018
 
2018
Demand deposits
$
4,101,156

 
$
3,985,178

 
$
3,870,816

 
$
3,933,233

 
$
3,740,395

Savings deposits
2,338,266

 
2,282,701

 
2,212,675

 
2,099,771

 
2,109,071

Certificates and other time deposits of $100,000 or more
670,199

 
593,592

 
602,002

 
555,910

 
552,643

Other certificates and time deposits
704,527

 
646,682

 
625,341

 
602,239

 
584,377

Brokered deposits
233,650

 
246,440

 
322,318

 
312,662

 
341,149

TOTAL DEPOSITS
$
8,047,798

 
$
7,754,593

 
$
7,633,152

 
$
7,503,815

 
$
7,327,635





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

For the Three Months Ended
 
March 31, 2019
 
March 31, 2018
 
Average Balance
 
Interest
 Income /
Expense
 
Average
Rate
 
Average Balance
 
Interest
 Income /
Expense
 
Average
Rate
Assets:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing time deposits
$
145,935

 
$
875

 
2.40
%
 
$
32,776

 
$
131

 
1.60
%
Federal Home Loan Bank stock
24,588

 
338

 
5.50

 
24,385

 
404

 
6.63

Investment Securities: (1)
 
 
 
 
 
 
 
 
 
 
 
Taxable
902,402

 
6,095

 
2.70

 
810,385

 
5,096

 
2.52

Tax-Exempt (2)
829,085

 
8,697

 
4.20

 
736,544

 
7,754

 
4.21

Total Investment Securities
1,731,487

 
14,792

 
3.42

 
1,546,929

 
12,850

 
3.32

Loans held for sale
9,703

 
112

 
4.62

 
10,636

 
137

 
5.15

Loans: (3)
 
 
 
 
 
 
 
 
 
 
 
Commercial
5,309,998

 
72,758

 
5.48

 
4,980,450

 
62,154

 
4.99

Real Estate Mortgage
743,736

 
8,321

 
4.48

 
728,725

 
7,999

 
4.39

Installment
665,050

 
9,290

 
5.59

 
623,429

 
7,977

 
5.12

Tax-Exempt (2)
501,632

 
5,257

 
4.19

 
467,847

 
4,552

 
3.89

Total Loans
7,230,119

 
95,738

 
5.30

 
6,811,087

 
82,819

 
4.86

Total Earning Assets
9,132,129

 
111,743

 
4.89

 
8,415,177

 
96,204

 
4.57

Net unrealized gain (loss) on securities available for sale
(5,015
)
 
 
 
 
 
(6,440
)
 
 
 
 
Allowance for loan losses
(80,907
)
 
 
 
 
 
(75,851
)
 
 
 
 
Cash and cash equivalents
117,224

 
 
 
 
 
126,484

 
 
 
 
Premises and equipment
93,236

 
 
 
 
 
95,525

 
 
 
 
Other assets
823,475

 
 
 
 
 
817,841

 
 
 
 
Total Assets
$
10,080,142

 
 
 
 
 
$
9,372,736

 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits
$
2,689,797

 
$
7,019

 
1.04
%
 
$
1,980,141

 
$
2,689

 
0.54
%
Money market deposits
1,139,062

 
2,782

 
0.98

 
1,089,694

 
1,275

 
0.47

Savings deposits
1,150,725

 
2,267

 
0.79

 
945,940

 
381

 
0.16

Certificates and other time deposits
1,565,578

 
7,526

 
1.92

 
1,486,093

 
4,657

 
1.25

Total Interest-bearing Deposits
6,545,162

 
19,594

 
1.20

 
5,501,868

 
9,002

 
0.65

Borrowings
635,058

 
4,353

 
2.74

 
848,208

 
4,702

 
2.22

Total Interest-bearing Liabilities
7,180,220

 
23,947

 
1.33

 
6,350,076

 
13,704

 
0.86

Noninterest-bearing deposits
1,391,494

 
 
 
 
 
1,651,296

 
 
 
 
Other liabilities
78,689

 
 
 
 
 
62,560

 
 
 
 
Total Liabilities
8,650,403

 
 
 
 
 
8,063,932

 
 
 
 
Stockholders' Equity
1,429,739

 
 
 
 
 
1,308,804

 
 
 
 
Total Liabilities and Stockholders' Equity
$
10,080,142

 
23,947

 


 
$
9,372,736

 
13,704

 


Net Interest Income (FTE)
 
 
$
87,796

 
 
 
 
 
$
82,500

 
 
Net Interest Spread (FTE) (4)
 
 
 
 
3.56
%
 
 
 
 
 
3.71
%












Net Interest Margin (FTE):











Interest Income (FTE) / Average Earning Assets




4.89
%





4.57
%
Interest Expense / Average Earning Assets




1.05
%





0.65
%
Net Interest Margin (FTE) (5)




3.84
%





3.92
%
 
 
 
 
 
 
 
 
 
 
 
 
(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 $2,930 and $2,584 for the three months ended March 31, 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.
 
 
 
 
 
 
 
 
 
 
 
 

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