N / E / W / S R / E / L / E / A / S / E
    
October 24, 2018

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 66 PERCENT INCREASE IN THIRD QUARTER 2018 EARNINGS PER SHARE

First Merchants Corporation (NASDAQ - FRME) has reported third quarter 2018 net income of $41.1 million, an increase of 69 percent, compared to $24.4 million during the same period in 2017. Earnings per share for the period totaled $.83, an increase of 66 percent, compared to the third quarter of 2017 result of $.50 per share. Net income for the nine months ended September 30, 2018 totaled $117.4 million, compared to $71.7 million during the same period in 2017. Year-to-date earnings per share totaled $2.37, an increase of $.74 per share, or 45 percent, over the same period in 2017. The increase in net income was driven by several key factors including the two fully integrated acquisitions in 2017, strong organic growth throughout 2017 and 2018, and the impact of tax reform.

Michael C. Rechin, President and Chief Executive Officer, stated, “Deposit betas, deposit growth and flattening yield curves seem to be a primary focus of investors this quarter. First Merchants continues to perform well delivering strong net interest income and net interest margin coupled with high, single-digit organic balance sheet growth. Our highly efficient business model continues to drive performance and returns at levels produced by the best banks in the industry.”

Rechin continued, “On October 10th we announced the signing of a definitive agreement to merge Monroe Bank and Trust (MBT) into First Merchants. Currently we are working closely with the MBT executives to sustain their performance momentum and the community leadership they enjoy throughout their marketplace.”

The combination would assure First Merchants will cross the $10 billion asset threshold early in 2019. The opportunity is accretive to earnings in the first full year of the merger through the revenue added and resultant scale benefits achieved through the anticipated mid-2019 integration. Management has been planning and investing to meet the required regulatory expectations of crossing the threshold and are excited with the Monroe acquisition as a means to build value in our franchise.

First Merchants’     total assets equaled $9.8 billion as of quarter-end and loans totaled $7.1 billion. The loan portfolio increased by $605 million, or 9.3 percent, during the past twelve months. Total deposits equaled $7.6 billion as of quarter-end and increased by $722 million, or 10.4 percent, compared to the same period in 2017.

Net-interest income totaled $86.5 million for the quarter, an increase of $12.1 million, or 16.2 percent. Net-interest margin totaling 4.05 percent on a fully tax-equivalent basis, increased by 2 basis points and included a reduction of 13 basis points related to tax reform. Yields on earning assets totaled 4.88 percent and the cost of supporting liabilities totaled .83 percent.

Non-interest income totaled $19.5 million for the quarter, an $859,000 increase over the third quarter of 2017. Gains from the sale of securities, growth in service charges, interchange income and improved fiduciary and wealth management fees off-set declines in earnings on cash surrender value and gains on the sales of loans. Non-interest expense totaled $55 million, down from the 2017 total of $58.7 million due to the completion of all integration activities in 2017.

Tax expense for the third quarter of 2018 totaled $8.5 million, or 17.1 percent of pre-tax net income. Tax expense in the prior year totaled $7.9 million, or 24.6 percent. The improvement in tax expense was due to a decline in the federal statutory tax rate from 35 percent to 21 percent. Our effective rate is 3.9 percentage points lower than the statutory rate primarily due to approximately $11.2 million of tax free loan, securities and life insurance income in the quarter.

The allowance for loan losses totaled $78.4 million as of September 30, 2018, up from $73.4 million during the same period in 2017. Non-accrual loans totaled $20.4 million as of quarter-end and the allowance is 1.11 percent of total loans and 1.28 percent of non-purchased loans. The Corporation’s total risk-based capital ratio equaled 14.25 percent, common equity tier 1 capital ratio equaled 11.64 percent, and the tangible common equity ratio totaled 9.55 percent.





CONFERENCE CALL

First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 2:30 p.m. (ET) on Wednesday, October 24, 2018.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's third quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until November 24, 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 10124461.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme181024.html during the time of the call. A replay of the web cast will be available until October 24, 2019.

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank. The Bank also operates as Lafayette Bank & Trust and First Merchants Private Wealth Advisors (each as a division of First Merchants Bank).

First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company’s Internet web page (http://www.firstmerchants.com).

FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.

Forward-Looking Statements

This release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These statements include statements of First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity, credit and interest rate risks associated with the First Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, First Merchants’ past results of operations do not necessarily indicate its anticipated future results.

* * * *




CONSOLIDATED BALANCE SHEETS
 
 
 
(Dollars In Thousands)
September 30,
 
2018
 
2017
ASSETS
 
 
 
Cash and cash equivalents
$
142,501

 
$
146,607

Interest-bearing time deposits
66,763

 
72,950

Investment securities
1,625,251

 
1,468,887

Loans held for sale
3,022

 
4,514

Loans
7,088,071

 
6,483,448

Less: Allowance for loan losses
(78,406
)
 
(73,354
)
Net loans
7,009,665

 
6,410,094

Premises and equipment
93,728

 
102,485

Federal Home Loan Bank stock
24,588

 
23,825

Interest receivable
38,531

 
32,366

Goodwill and other intangibles
471,409

 
478,558

Cash surrender value of life insurance
223,865

 
222,437

Other real estate owned
8,859

 
11,912

Tax asset, deferred and receivable
25,933

 
36,024

Other assets
53,167

 
38,744

TOTAL ASSETS
$
9,787,282

 
$
9,049,403

LIABILITIES
 
 
 
Deposits:
 
 
 
Noninterest-bearing
$
1,464,190

 
$
1,662,814

Interest-bearing
6,168,962

 
5,248,205

Total Deposits
7,633,152

 
6,911,019

Borrowings:
 
 
 
Federal funds purchased
90,000

 
100,000

Securities sold under repurchase agreements
118,824

 
142,107

Federal Home Loan Bank advances
385,458

 
406,820

Subordinated debentures and term loans
138,408

 
139,686

Total Borrowings
732,690

 
788,613

Interest payable
5,920

 
4,956

Other liabilities
54,094

 
61,695

Total Liabilities
8,425,856

 
7,766,283

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 - 49,304,542 and 43,140,594 shares
6,163

 
6,143

Additional paid-in capital
837,996

 
833,451

Retained earnings
552,551

 
449,759

Accumulated other comprehensive loss
(35,409
)
 
(6,358
)
Total Stockholders' Equity
1,361,426

 
1,283,120

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
9,787,282

 
$
9,049,403








CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts)
September 30,
September 30,
 
2018
 
2017
2018
 
2017
INTEREST INCOME
 
 
 
 
 
 
Loans receivable:
 
 
 
 
 
 
Taxable
$
88,479

 
$
71,491

$
251,409

 
$
187,234

Tax-exempt
3,761

 
2,851

10,989

 
7,676

Investment securities:
 
 
 
 
 
 
Taxable
5,514

 
4,524

16,044

 
13,012

Tax-exempt
6,493

 
5,455

18,865

 
15,549

Deposits with financial institutions
270

 
284

1,034

 
442

Federal Home Loan Bank stock
283

 
242

950

 
635

Total Interest Income
104,800

 
84,847

299,291

 
224,548

INTEREST EXPENSE
 
 
 
 
 
 
Deposits
13,685

 
6,710

34,852

 
15,971

Federal funds purchased
229

 
175

670

 
506

Securities sold under repurchase agreements
174

 
133

519

 
331

Federal Home Loan Bank advances
2,137

 
1,464

6,141

 
3,619

Subordinated debentures and term loans
2,089

 
1,945

6,136

 
5,602

Total Interest Expense
18,314

 
10,427

48,318

 
26,029

NET INTEREST INCOME
86,486

 
74,420

250,973

 
198,519

Provision for loan losses
1,400

 
2,083

5,563

 
7,343

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
85,086

 
72,337

245,410

 
191,176

OTHER INCOME
 
 
 
 
 
 
Service charges on deposit accounts
5,619

 
5,044

15,434

 
13,656

Fiduciary and wealth management fees
3,673

 
3,783

11,064

 
10,556

Other customer fees
5,038

 
4,553

14,991

 
13,298

Earnings on cash surrender value of life insurance
961

 
1,575

3,144

 
5,444

Net gains and fees on sales of loans
1,841

 
2,317

5,262

 
5,209

Net realized gains on sales of available for sale securities
1,285

 
332

4,016

 
1,497

Other income
1,110

 
1,064

3,368

 
2,288

Total Other Income
19,527

 
18,668

57,279

 
51,948

OTHER EXPENSES
 
 
 
 
 
 
Salaries and employee benefits
32,936

 
33,244

97,354

 
86,052

Net occupancy
4,586

 
4,371

13,604

 
12,552

Equipment
3,483

 
3,478

10,707

 
9,192

Marketing
1,216

 
1,021

3,574

 
2,378

Outside data processing fees
3,422

 
3,162

9,848

 
8,864

Printing and office supplies
334

 
366

992

 
905

Intangible asset amortization
1,650

 
1,698

5,094

 
3,592

FDIC assessments
856

 
704

2,286

 
1,853

Other real estate owned and foreclosure expenses
455

 
330

1,219

 
1,592

Professional and other outside services
1,844

 
5,843

5,174

 
10,843

Other expenses
4,240

 
4,491

12,361

 
11,300

Total Other Expenses
55,022

 
58,708

162,213

 
149,123

INCOME BEFORE INCOME TAX
49,591

 
32,297

140,476

 
94,001

Income tax expense
8,478

 
7,939

23,050

 
22,314

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
41,113

 
$
24,358

$
117,426

 
$
71,687

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

 
$
0.50

$
2.38

 
$
1.64

Diluted Net Income Available to Common Stockholders
$
0.83

 
$
0.50

$
2.37

 
$
1.63

Cash Dividends Paid
$
0.22

 
$
0.18

$
0.62

 
$
0.51

Average Diluted Shares Outstanding (in thousands)
49,492

 
48,644

49,458

 
44,063





FINANCIAL HIGHLIGHTS
 
 
 
 
 
 
 
(Dollars in thousands)
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
NET CHARGE-OFFS
$
537

 
$
(800
)
 
$
2,189

 
$
26

 

 

 

 

AVERAGE BALANCES:

 

 

 

Total Assets
$
9,756,680

 
$
8,793,666

 
$
9,610,219

 
$
7,866,643

Total Loans
7,099,694

 
6,312,810

 
6,962,460

 
5,647,486

Total Earning Assets
8,810,758

 
7,840,403

 
8,657,152

 
7,064,659

Total Deposits
7,603,625

 
6,790,053

 
7,466,187

 
6,108,042

Total Stockholders' Equity
1,358,904

 
1,244,472

 
1,331,867

 
1,048,420

 
 
 
 
 
 
 
 
FINANCIAL RATIOS:
 
 
 
 
 
 
 
Return on Average Assets
1.69
%
 
1.11
%
 
1.63
%
 
1.22
%
Return on Average Stockholders' Equity
12.10

 
7.83

 
11.76

 
9.12

Return on Average Common Stockholders' Equity
12.10

 
7.83

 
11.76

 
9.12

Average Earning Assets to Average Assets
90.30

 
89.16

 
90.08

 
89.81

Allowance for Loan Losses as % of Total Loans
1.11

 
1.13

 
1.11

 
1.13

Net Charge-offs as % of Average Loans (Annualized)
0.03

 
(0.05
)
 
0.04

 

Average Stockholders' Equity to Average Assets
13.93

 
14.15

 
13.86

 
13.33

Tax Equivalent Yield on Average Earning Assets
4.88

 
4.56

 
4.73

 
4.47

Interest Expense/Average Earning Assets
0.83

 
0.53

 
0.74

 
0.49

Net Interest Margin (FTE) on Average Earning Assets
4.05

 
4.03

 
3.99

 
3.98

Efficiency Ratio
49.25


58.30


49.94


55.05

Tangible Common Book Value Per Share
$
18.16

 
$
16.62

 
$
18.16

 
$
16.62



NON-PERFORMING ASSETS
 
 
 
 
 
 
 
 
 
(Dollars In Thousands)
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2018
 
2018
 
2018
 
2017
 
2017
Non-Accrual Loans
$
20,421

 
$
20,143

 
$
27,497

 
$
28,724

 
$
32,253

Renegotiated Loans
968

 
544

 
579

 
1,013

 
626

Non-Performing Loans (NPL)
21,389

 
20,687

 
28,076

 
29,737

 
32,879

Other Real Estate Owned
8,859

 
9,071

 
9,698

 
10,373

 
11,912

Non-Performing Assets (NPA)
30,248

 
29,758

 
37,774

 
40,110

 
44,791

90+ Days Delinquent
50

 
184

 
738

 
924

 
425

NPAs & 90 Day Delinquent
$
30,298

 
$
29,942

 
$
38,512

 
$
41,034

 
$
45,216

 
 
 
 
 
 
 
 
 
 
Allowance for Loan Losses
$
78,406

 
$
77,543

 
$
76,420

 
$
75,032

 
$
73,354

Quarterly Net Charge-offs
537

 
540

 
1,112

 
122

 
(800
)
NPAs / Actual Assets %
0.31
%
 
0.31
%
 
0.40
%
 
0.43
%
 
0.49
 %
NPAs & 90 Day / Actual Assets %
0.31
%
 
0.31
%
 
0.41
%
 
0.44
%
 
0.50
 %
NPAs / Actual Loans and OREO %
0.43
%
 
0.42
%
 
0.55
%
 
0.59
%
 
0.69
 %
Allowance for Loan Losses / Actual Loans (%)
1.11
%
 
1.09
%
 
1.11
%
 
1.11
%
 
1.13
 %
Net Charge-offs as % of Average Loans (Annualized)
0.03
%
 
0.03
%
 
0.07
%
 
0.01
%
 
(0.05
)%




CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
(Dollars In Thousands)
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2018
 
2018
 
2018
 
2017
 
2017
ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
142,501

 
$
133,893

 
$
128,828

 
$
154,905

 
$
146,607

Interest-bearing time deposits
66,763

 
36,599

 
24,233

 
35,027

 
72,950

Investment securities
1,625,251

 
1,619,683

 
1,543,820

 
1,560,602

 
1,468,887

Loans held for sale
3,022

 
2,046

 
4,469

 
7,216

 
4,514

Loans
7,088,071

 
7,081,059

 
6,901,696

 
6,751,199

 
6,483,448

Less: Allowance for loan losses
(78,406
)
 
(77,543
)
 
(76,420
)
 
(75,032
)
 
(73,354
)
Net loans
7,009,665

 
7,003,516

 
6,825,276

 
6,676,167

 
6,410,094

Premises and equipment
93,728

 
94,397

 
94,741

 
95,852

 
102,485

Federal Home Loan Bank stock
24,588

 
24,588

 
24,588

 
23,825

 
23,825

Interest receivable
38,531

 
38,530

 
35,223

 
37,130

 
32,366

Goodwill and other intangibles
471,409

 
473,059

 
474,777

 
476,503

 
478,558

Cash surrender value of life insurance
223,865

 
222,905

 
221,949

 
223,557

 
222,437

Other real estate owned
8,859

 
9,071

 
9,698

 
10,373

 
11,912

Tax asset, deferred and receivable
25,933

 
24,619

 
24,177

 
23,983

 
36,024

Other assets
53,167

 
51,809

 
61,017

 
42,338

 
38,744

TOTAL ASSETS
$
9,787,282

 
$
9,734,715

 
$
9,472,796

 
$
9,367,478

 
$
9,049,403

LIABILITIES
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
1,464,190

 
$
1,571,194

 
$
1,698,958

 
$
1,761,553

 
$
1,662,814

Interest-bearing
6,168,962

 
5,932,621

 
5,628,677

 
5,410,977

 
5,248,205

Total Deposits
7,633,152

 
7,503,815

 
7,327,635

 
7,172,530

 
6,911,019

Borrowings:
 
 
 
 
 
 
 
 
 
Federal funds purchased
90,000

 
109,000

 
50,000

 
144,038

 
100,000

Securities sold under repurchase agreements
118,824

 
122,513

 
138,910

 
136,623

 
142,107

Federal Home Loan Bank advances
385,458

 
469,261

 
449,419

 
414,377

 
406,820

Subordinated debentures and term loans
138,408

 
138,352

 
138,297

 
139,349

 
139,686

Total Borrowings
732,690

 
839,126

 
776,626

 
834,387

 
788,613

Interest payable
5,920

 
4,807

 
5,376

 
4,390

 
4,956

Other liabilities
54,094

 
46,639

 
50,086

 
52,708

 
61,695

Total Liabilities
8,425,856

 
8,394,387

 
8,159,723

 
8,064,015

 
7,766,283

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
6,163

 
6,160

 
6,155

 
6,145

 
6,143

Additional paid-in capital
837,996

 
836,549

 
834,894

 
834,870

 
833,451

Retained earnings
552,551

 
522,362

 
493,624

 
465,231

 
449,759

Accumulated other comprehensive loss
(35,409
)
 
(24,868
)
 
(21,725
)
 
(2,908
)
 
(6,358
)
Total Stockholders' Equity
1,361,426

 
1,340,328

 
1,313,073

 
1,303,463

 
1,283,120

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
9,787,282

 
$
9,734,715

 
$
9,472,796

 
$
9,367,478

 
$
9,049,403

 
 
 
 
 
 
 
 
 
 








CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
 
 
 
 
(Dollars In Thousands, Except Per Share Amounts)
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2018
 
2018
 
2018
 
2017
 
2017
INTEREST INCOME
 
 
 
 
 
 
 
 
 
Loans receivable:
 
 
 
 
 
 
 
 
 
Taxable
$
88,479

 
$
84,663

 
$
78,267

 
$
76,470

 
$
71,491

Tax-exempt
3,761

 
3,632

 
3,596

 
3,018

 
2,851

Investment securities:
 
 
 
 
 
 
 
 
 
Taxable
5,514

 
5,434

 
5,096

 
4,477

 
4,524

Tax-exempt
6,493

 
6,246

 
6,126

 
5,830

 
5,455

Deposits with financial institutions
270

 
633

 
131

 
294

 
284

Federal Home Loan Bank stock
283

 
263

 
404

 
259

 
242

Total Interest Income
104,800

 
100,871

 
93,620

 
90,348

 
84,847

INTEREST EXPENSE
 
 
 
 
 
 
 
 
 
Deposits
13,685

 
12,165

 
9,002

 
7,835

 
6,710

Federal funds purchased
229

 
61

 
380

 
55

 
175

Securities sold under repurchase agreements
174

 
172

 
173

 
146

 
133

Federal Home Loan Bank advances
2,137

 
1,845

 
2,159

 
1,577

 
1,464

Subordinated debentures and term loans
2,089

 
2,057

 
1,990

 
1,970

 
1,945

Total Interest Expense
18,314

 
16,300

 
13,704

 
11,583

 
10,427

NET INTEREST INCOME
86,486

 
84,571

 
79,916

 
78,765

 
74,420

Provision for loan losses
1,400

 
1,663

 
2,500

 
1,800

 
2,083

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
85,086

 
82,908

 
77,416

 
76,965

 
72,337

OTHER INCOME
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
5,619

 
5,038

 
4,777

 
5,066

 
5,044

Fiduciary and wealth management fees
3,673

 
3,595

 
3,796

 
4,126

 
3,783

Other customer fees
5,038

 
4,917

 
5,036

 
4,565

 
4,553

Earnings on cash surrender value of life insurance
961

 
1,007

 
1,176

 
1,133

 
1,575

Net gains and fees on sales of loans
1,841

 
1,600

 
1,821

 
2,355

 
2,317

Net realized gains on sales of available for sale securities
1,285

 
1,122

 
1,609

 
1,134

 
332

Other income
1,110

 
912

 
1,346

 
682

 
1,064

Total Other Income
19,527

 
18,191

 
19,561

 
19,061

 
18,668

OTHER EXPENSES
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
32,936

 
32,192

 
32,226

 
33,760

 
33,244

Net occupancy
4,586

 
4,348

 
4,670

 
4,424

 
4,371

Equipment
3,483

 
3,556

 
3,668

 
3,898

 
3,478

Marketing
1,216

 
1,474

 
884

 
1,361

 
1,021

Outside data processing fees
3,422

 
3,462

 
2,964

 
3,378

 
3,162

Printing and office supplies
334

 
324

 
334

 
378

 
366

Intangible asset amortization
1,650

 
1,718

 
1,726

 
2,055

 
1,698

FDIC assessments
856

 
711

 
719

 
711

 
704

Other real estate owned and foreclosure expenses
455

 
362

 
402

 
311

 
330

Professional and other outside services
1,844

 
1,789

 
1,541

 
1,914

 
5,843

Other expenses
4,240

 
3,568

 
4,553

 
4,243

 
4,491

Total Other Expenses
55,022

 
53,504

 
53,687

 
56,433

 
58,708

INCOME BEFORE INCOME TAX
49,591

 
47,595

 
43,290

 
39,593

 
32,297

Income tax expense
8,478

 
7,961

 
6,611

 
15,210

 
7,939

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
41,113

 
$
39,634

 
$
36,679

 
$
24,383

 
$
24,358

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

 
$
0.80

 
$
0.75

 
$
0.49

 
$
0.50

Diluted Net Income Available to Common Stockholders
$
0.83

 
$
0.80

 
$
0.74

 
$
0.49

 
$
0.50

Cash Dividends Paid
$
0.22

 
$
0.22

 
$
0.18

 
$
0.18

 
$
0.18

Average Diluted Shares Outstanding (in thousands)
49,492

 
49,451

 
49,428

 
49,379

 
48,644

FINANCIAL RATIOS:
 
 
 
 
 
 
 
 
 
Return on Average Assets
1.69
%
 
1.63
%
 
1.57
%
 
1.06
%
 
1.11
%
Return on Average Stockholders' Equity
12.10

 
11.94

 
11.21

 
7.53

 
7.83

Return on Average Common Stockholders' Equity
12.10

 
11.95

 
11.21

 
7.53

 
7.83

Average Earning Assets to Average Assets
90.30

 
90.14

 
89.78

 
88.73

 
89.16

Allowance for Loan Losses as % of Total Loans
1.11

 
1.09

 
1.11

 
1.11

 
1.13

Net Charge-offs as % of Average Loans (Annualized)
0.03

 
0.03

 
0.07

 
0.01

 
(0.05
)
Average Stockholders' Equity to Average Assets
13.93

 
13.69

 
13.96

 
14.11

 
14.15

Tax Equivalent Yield on Average Earning Assets
4.88

 
4.74

 
4.57

 
4.67

 
4.56

Interest Expense/Average Earning Assets
0.83

 
0.75

 
0.65

 
0.57

 
0.53

Net Interest Margin (FTE) on Average Earning Assets
4.05

 
3.99

 
3.92

 
4.10

 
4.03

Efficiency Ratio
49.25

 
49.32

 
51.33

 
53.29

 
58.30

Tangible Common Book Value Per Share
$
18.16

 
$
17.71

 
$
17.14

 
$
16.96

 
$
16.62





LOANS
 
 
 
 
 
 
 
 
 
(Dollars In Thousands)
Septenber 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2018
 
2018
 
2018
 
2017
 
2017
Commercial and industrial loans
$
1,655,569

 
$
1,657,591

 
$
1,554,169

 
$
1,493,493

 
$
1,436,092

Agricultural production financing and other loans to farmers
88,504

 
89,093

 
98,315

 
121,757

 
117,751

Real estate loans:
 
 
 
 
 
 
 
 
 
Construction
668,608

 
714,866

 
590,093

 
612,219

 
498,862

Commercial and farmland
2,699,629

 
2,652,782

 
2,713,994

 
2,562,691

 
2,571,253

Residential
965,893

 
965,720

 
948,644

 
962,765

 
938,437

Home equity
517,303

 
518,699

 
510,545

 
514,021

 
502,240

Individuals' loans for household and other personal expenditures
98,709

 
92,809

 
88,235

 
86,935

 
86,406

Lease financing receivables, net of unearned income
1,830

 
1,945

 
2,193

 
2,527

 
3,877

Other commercial loans
392,026

 
387,554

 
395,508

 
394,791

 
328,530

Loans
7,088,071

 
7,081,059

 
6,901,696

 
6,751,199

 
6,483,448

Allowance for loan losses
(78,406
)
 
(77,543
)
 
(76,420
)
 
(75,032
)
 
(73,354
)
NET LOANS
$
7,009,665

 
$
7,003,516

 
$
6,825,276

 
$
6,676,167

 
$
6,410,094



DEPOSITS
 
 
 
 
 
 
 
 
 
(Dollars In Thousands)
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2018
 
2018
 
2018
 
2017
 
2017
Demand deposits
$
3,870,816

 
$
3,933,233

 
$
3,740,395

 
$
3,746,654

 
$
3,562,718

Savings deposits
2,212,675

 
2,099,771

 
2,109,071

 
1,994,366

 
1,884,705

Certificates and other time deposits of $100,000 or more
602,002

 
555,910

 
552,643

 
468,895

 
503,668

Other certificates and time deposits
625,341

 
602,239

 
584,377

 
581,894

 
585,042

Brokered deposits
322,318

 
312,662

 
341,149

 
380,721

 
374,886

TOTAL DEPOSITS
$
7,633,152

 
$
7,503,815

 
$
7,327,635

 
$
7,172,530

 
$
6,911,019





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

For the Three Months Ended
 
September 30, 2018
 
September 30, 2017
 
Average Balance
 
Interest
 Income /
Expense
 
Average
Rate
 
Average Balance
 
Interest
 Income /
Expense
 
Average
Rate
Assets:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing time deposits
$
52,027

 
$
270

 
2.08
%
 
$
139,905

 
$
284

 
0.81
%
Federal Home Loan Bank stock
24,588

 
283

 
4.60

 
23,146

 
242

 
4.18

Investment Securities: (1)
 
 
 
 
 
 
 
 
 
 
 
Taxable
857,507

 
5,514

 
2.57

 
718,965

 
4,524

 
2.52

Tax-Exempt (2)
776,942

 
8,219

 
4.23

 
645,577

 
8,392

 
5.20

Total Investment Securities
1,634,449

 
13,733

 
3.36

 
1,364,542

 
12,916

 
3.79

Loans held for sale
11,038

 
142

 
5.15

 
8,117

 
136

 
6.70

Loans: (3)
 
 
 
 
 
 
 
 
 
 
 
Commercial
5,226,284

 
71,223

 
5.45

 
4,556,653

 
55,266

 
4.85

Real Estate Mortgage
739,356

 
8,383

 
4.54

 
785,317

 
8,596

 
4.38

Installment
655,738

 
8,731

 
5.33

 
595,164

 
7,494

 
5.04

Tax-Exempt (2)
467,278

 
4,761

 
4.08

 
367,559

 
4,385

 
4.77

Total Loans
7,099,694

 
93,240

 
5.25

 
6,312,810

 
75,877

 
4.81

Total Earning Assets
8,810,758

 
107,526

 
4.88

 
7,840,403

 
89,319

 
4.56

Net unrealized gain (loss) on securities available for sale
(15,245
)
 
 
 
 
 
7,733

 
 
 
 
Allowance for loan losses
(77,763
)
 
 
 
 
 
(71,753
)
 
 
 
 
Cash and cash equivalents
128,557

 
 
 
 
 
129,058

 
 
 
 
Premises and equipment
94,422

 
 
 
 
 
101,979

 
 
 
 
Other assets
815,951

 
 
 
 
 
786,246

 
 
 
 
Total Assets
$
9,756,680

 
 
 
 
 
$
8,793,666

 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing NOW deposits
$
2,399,477

 
$
4,909

 
0.82
%
 
$
1,834,965

 
$
1,706

 
0.37
%
Money market deposits
1,062,154

 
1,551

 
0.58

 
990,682

 
747

 
0.30

Savings deposits
1,081,369

 
1,500

 
0.55

 
887,201

 
203

 
0.09

Certificates and other time deposits
1,536,697

 
5,725

 
1.49

 
1,450,448

 
4,054

 
1.12

Total Interest-bearing Deposits
6,079,697

 
13,685

 
0.90

 
5,163,296

 
6,710

 
0.52

Borrowings
741,092

 
4,629

 
2.50

 
694,203

 
3,717

 
2.14

Total Interest-bearing Liabilities
6,820,789

 
18,314

 
1.07

 
5,857,499

 
10,427

 
0.71

Noninterest-bearing deposits
1,523,928

 
 
 
 
 
1,626,757

 
 
 
 
Other liabilities
53,059

 
 
 
 
 
64,938

 
 
 
 
Total Liabilities
8,397,776

 
 
 
 
 
7,549,194

 
 
 
 
Stockholders' Equity
1,358,904

 
 
 
 
 
1,244,472

 
 
 
 
Total Liabilities and Stockholders' Equity
$
9,756,680

 
18,314

 


 
$
8,793,666

 
10,427

 


Net Interest Income (FTE)
 
 
$
89,212

 
 
 
 
 
$
78,892

 
 
Net Interest Spread (FTE)
 
 
 
 
3.81
%
 
 
 
 
 
3.85
%












Net Interest Margin (FTE):











Interest Income (FTE) / Average Earning Assets




4.88
%





4.56
%
Interest Expense / Average Earning Assets




0.83
%





0.53
%
Net Interest Margin (FTE)




4.05
%





4.03
%
 
 
 
 
 
 
 
 
 
 
 
 
(1)  Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent and 35 percent for 2018 and 2017, respectively. These totals equal $2,726 and $4,472 for the three months ended September 30, 2018 and 2017, respectively.
(3)  Non accruing loans have been included in the average balances.



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

For the Nine Months Ended

September 30, 2018

September 30, 2017

Average Balance

Interest
 Income /
Expense

Average
Rate

Average Balance

Interest
 Income /
Expense

Average
Rate
Assets:






 



 
Interest-bearing time deposits
$
76,570


$
1,034


1.80
%

$
71,456


$
442


0.82
%
Federal Reserve and Federal Home Loan Bank stock
24,521


950


5.17


19,941


635


4.25

Investment Securities: (1)











Taxable
840,425


16,044


2.55


716,118


13,012


2.42

Tax-Exempt (2)
753,176


23,880


4.23


609,658


23,922


5.23

Total Investment Securities
1,593,601


39,924


3.34


1,325,776


36,934


3.71

Loans held for sale
9,520


363


5.08


4,875


245


6.70

Loans: (3)











Commercial
5,116,405


200,886


5.24


4,085,901


144,759


4.72

Real Estate Mortgage
732,469


25,174


4.58


660,435


21,946


4.43

Installment
637,140


24,986


5.23


558,106


20,284


4.85

Tax-Exempt (2)
466,926


13,910


3.97


338,169


11,809


4.66

Total Loans
6,962,460


265,319


5.08


5,647,486


199,043


4.70

Total Earning Assets
8,657,152


307,227


4.73


7,064,659


237,054


4.47

Net unrealized gain on securities available for sale
(11,616
)






4,437






Allowance for loan losses
(76,944
)






(69,269
)





Cash and cash equivalents
129,181







128,866






Premises and equipment
94,897







95,707






Other assets
817,549







642,243






Total Assets
$
9,610,219







$
7,866,643