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First Merchants Corporation (NASDAQ - FRME) has reported second quarter 2018 net income of $39.6 million, an increase of 64 percent, compared to $24.1 million during the same period in 2017. Earnings per share for the period totaled $.80 per share, an increase of 40 percent, compared to the second quarter of 2017 result of $.57 per share. Net income for the six months ended June 30, 2018 totaled $76.3 million, compared to $47.3 million during the same period in 2017. Year-to-date earnings per share totaled $1.54 per share, an increase of $.41 per share, or 36 percent, over the same period in 2017. The increases in net income were driven by several key factors including strong core banking performance, two acquisitions that were fully integrated during the second half of 2017 and the impact of tax reform.
Total assets equaled $9.7 billion as of quarter-end and loans totaled $7.1 billion. The Corporation’s loan portfolio increased, by $1.5 billion, or 26 percent, during the past twelve months. The acquisition of Independent Alliance Banks, Inc. in Fort Wayne, Indiana accounted for $726 million, or 13 percent. Additionally, organic loan growth totaled $740 million, or 13 percent. Total deposits equaled $7.5 billion as of quarter-end and increased by $1.5 billion, or 25 percent. Our acquisition activity accounted for growth of $862 million, or 14 percent, while organic deposit growth totaled $624 million, or 10 percent.
Michael C. Rechin, President and Chief Executive Officer, stated, “Our second quarter results reflect a sustained effort by our teammates on high performance. Our daily execution of market coverage and high touch service continues to yield strong organic growth. In combination with our highly efficient operating model, we continue to drive net interest income, profitability, performance and returns at levels produced by the best firms in our industry. We are optimistic about the health of our markets and are investing in the talent and technology we need going forward.”
Net-interest income totaled $84.6 million for the quarter, an increase of $21.5 million, or 34 percent. Net-interest margin totaling 3.99 percent, increased by 4 basis points and included a reduction of 12 basis points related to tax reform. Yields on earning assets totaled 4.74 percent and the cost of supporting liabilities totaled .75 percent.
Non-interest income totaled $18.2 million for the quarter, a $243,000 decrease from the second quarter of 2017. Non-interest expense totaled $53.5 million up from the 2017 total of $47.3 million. Increases in non-interest expense are primarily related to acquisition activity in 2017.
Tax expense for the second quarter of 2018 totaled $8 million, or 16.7 percent of pre-tax net income. Tax expense in the prior year totaled $7.2 million, or 23 percent. The improvement in tax expense was due to a decline in the federal tax rate from 35 percent to 21 percent. Our effective rate is lower than the federal tax rate of 21 percent, primary due to approximately $10.9 million of tax free loan, securities and life insurance income in the quarter.
The Corporation’s provision expense totaled $1.7 million during the quarter primarily due to loan growth, with net charge-offs totaling $540,000. The allowance for loan losses totaled $77.5 million as of June 30, 2018, up from $70.5 million during the same period in 2017, and equaled 1.09 percent of total loans and 1.28 percent of non-purchased loans. Credit metrics continued to improve, including a decline in non-accrual loans, which totaled $20.1 million as of quarter-end.
As of June 30, 2018, the Corporation’s total risk-based capital ratio equaled 13.81 percent, common equity tier 1 capital ratio equaled 11.21 percent, and the tangible common equity ratio totaled 9.36 percent.
Conference Call
First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, July 26, 2018.
To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's second quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until August 26, 2018. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529, or for International participants, dial +1 412-317-0088. The replay access code is 10120572.
In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme180726.html during the time of the call. A replay of the web cast will be available until July 26, 2019.
About First Merchants Corporation
First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank. The Bank also operates as Lafayette Bank & Trust and First Merchants Private Wealth Advisors (each as a division of First Merchants Bank).
First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company’s Internet web page (http://www.firstmerchants.com).
FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.
Forward-Looking Statements
This release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These statements include statements of First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity, credit and interest rate risks associated with the First Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, First Merchants’ past results of operations do not necessarily indicate its anticipated future results.
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
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