3rd Quarter Earnings Highlights October 24, 2018 1


 
Forward-Looking Statement This presentation 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 forward-looking statements include, but are not limited to, statements relating to 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 economic and business conditions; the existence or exacerbation of general geopolitical instability and uncertainty; the ability of First Merchants to integrate recent acquisitions and attract new customers; 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 undertakes no obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this presentation or press release. In addition, the company’s past results of operations do not necessarily indicate its anticipated future results. NON-GAAP FINANCIAL MEASURES These slides contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of the registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of Regulation G, First Merchants Corporation has provided reconciliations within the slides, as necessary, of the non-GAAP financial measure to the most directly comparable GAAP financial measure. 2


 
Additional Information Communications in this press release do not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any proxy vote or approval. The proposed merger will be submitted to MBT Financial Corporation shareholders for their consideration. In connection with the proposed merger, it is expected that MBT Financial Corporation will provide its shareholders with a Proxy Statement, as well as other relevant documents concerning the proposed transaction. SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING THE MERGER WHEN IT BECOMES AVAILABLE, AS WELL AS ANY OTHER RELEVANT DOCUMENTS CONCERNING THE PROPOSED TRANSACTION, TOGETHER WITH ALL AMENDMENTS OR SUPPPLEMENTS TO THOSE DOCUMENTS, AS THEY WILL CONTAIN IMPORTANT INFORMATION. MBT Financial Corporation and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of MBT Financial Corporation in connection with the proposed merger. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement regarding the proposed merger when it becomes available. 3


 
3rd Quarter 2018 Highlights  $41.1 Million of Net Income, a 68.8% Increase over 3Q2017  Earnings Per Share of $.83, a 66.0% Increase over 3Q2017  Total Assets of $9.8 Billion Grew Organically by 8.2% over 3Q2017  1.69% ROAA; 12.10% ROAE  49.25% Efficiency Ratio  Definitive Agreement Announced October 10, 2018 with MBT Financial Corporation 4


 
Mark K. Hardwick EXECUTIVE VICE PRESIDENT CHIEF FINANCIAL OFFICER AND CHIEF OPERATING OFFICER 5


 
Total Assets ($ in Millions) 2016 2017 Q1-’18 Q2-’18 Q3-’18 1. Investments $1,305 $1,561 $1,544 $1,620 $1,625 2. Loans 5,143 6,758 6,906 7,083 7,091 3. Allowance (66) (75) (76) (78) (78) 4. Goodwill & Intangibles 259 477 475 473 471 5. BOLI 202 224 222 223 224 6. Other 369 422 402 414 454 7. Total Assets $7,212 $9,367 $9,473 $9,735 $9,787 Annualized Asset Growth 29.9% 6.0% 1 1 Annualized from December 31, 2017 6


 
Loan and Yield Detail (as of 9/30/2018) QTD Yield = 5.25% Agricultural YTD Yield = 5.08% Commercial Construction Land & Agricultural Land Public Total Loans = $7.1 Billion Real Estate Land Development Production 3.4% Finance/Other Non-Owner 1.2% 9.4% Commercial Occupied 5.6% Variable = $4.8 Billion 24.8% Fixed = $2.3 Billion Residential Mortgage 13.7% Home Equity 7.3% LIBOR 35% Other Prime Consumer 20% 1.4% Commercial Real Estate Owner-Occupied 9.9% Commercial & Industrial 23.3% Fixed 32% Other Variable 13% 7


 
Investment Portfolio (as of 9/30/2018) Mortgage-Backed Securities Tax-Exempt 24% Municipals 48%  $1.6 Billion Portfolio  Modified duration of 5.9 years  Tax equivalent yield of 3.48%  Net unrealized loss of $34.6 Million Collateralized Mortgage Obligations Corporate 24% Obligations U. S. Agencies 2% 2% 8


 
Total Liabilities and Capital ($ in Millions) 2016 2017 Q1-’18 Q2-’18 Q3-’18 1. Customer Non-Maturity Deposits $4,428 $5,741 $5,850 $6,033 $6,084 2. Customer Time Deposits 747 1,051 1,137 1,158 1,227 3. Brokered Deposits 381 381 341 313 322 4. Borrowings 572 701 644 706 600 5. Other Liabilities 60 57 55 52 60 6. Hybrid Capital 122 133 133 133 133 7. Common Equity 902 1,303 1,313 1,340 1,361 8. Total Liabilities and Capital $7,212 $9,367 $9,473 $9,735 $9,787 9


 
Deposit Detail (as of 9/30/2018) QTD Cost = .90% YTD Cost = .79% Total = $7.6 Billion Certificates & Certificates & Time Deposits of Time Deposits of >$100,000 <$100,000 Savings 8% 8% Deposits Brokered 29% Deposits 4% Demand Deposits 51% 10


 
Capital Ratios Total Risk-Based Capital Ratio (Target = 12.50%) Common Equity Tier 1 Capital Ratio (Target = 10.00%) 16.00% Tangible Common Equity Ratio (TCE) (Target = 9.00%) 15.00% 14.18% 14.21% 14.24% 14.25% 14.01% 13.81% 14.00% 13.76% 13.69% 13.69% 13.00% 12.00% 11.64% 11.10% 11.16% 11.11% 11.03% 11.21% 11.05% 11.00% 11.04% 11.00% 10.00% 9.48% 9.50% 9.68% 9.55% 9.24% 9.39% 9.30% 9.32% 9.36% 9.00% 8.00% 7.00% 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 11


 
Net Interest Margin Q3 - '16 Q4 - '16 Q1 - '17 Q2 - '17 Q3 - '17 Q4 - '17 Q1 - '18 Q2 - '18 Q3 - '18 Net Interest Income - FTE ($millions) $ 61.1 $ 62.1 $ 64.9 $ 67.2 $ 78.9 $ 83.5 $ 82.5 $ 87.2 $ 89.2 Fair Value Accretion $ 3.8 $ 2.9 $ 4.3 $ 2.3 $ 3.2 $ 4.1 $ 3.2 $ 3.8 $ 3.2 1 2 3 Tax Equivalent Yield on Earning Assets 4.37% 4.32% 4.42% 4.44% 4.56% 4.67% 4.57% 4.74% 4.88% Interest Expense/Average Earning Assets 0.43% 0.42% 0.44% 0.49% 0.53% 0.57% 0.65% 0.75% 0.83% Net Interest Margin 3.94% 3.90% 3.98% 3.95% 4.03% 4.10% 3.92% 3.99% 4.05% Fair Value Accretion Effect 0.24% 0.18% 0.26% 0.14% 0.17% 0.20% 0.15% 0.18% 0.15% $92 3 4.20% 4.10% 2 4.05% $88 4.03% 3.99% 3.98% 3.95% 1 $84 3.94% 3.90% 3.92% 4.00% $80 3.80% $76 $72 3.60% $68 $64 3.40% $60 3.20% $56 $52 3.00% Q3 - '16 Q4 - '16 Q1 - '17 Q2 - '17 Q3 - '17 Q4 - '17 Q1 - '18 Q2 - '18 Q3 - '18 Net Interest Income - FTE ($millions) Net Interest Margin 1 Reflects 13 bps impact of Tax Cuts and Jobs Act 2 Reflects 12 bps impact of Tax Cuts and Jobs Act 3 Reflects 13 bps impact of Tax Cuts and Jobs Act 12


 
Non-Interest Income ($ in Millions) 2016 2017 Q1-’18 Q2-’18 Q3-’18 1. Service Charges on Deposit Accounts $17.8 $ 18.7 $ 4.8 $ 5.0 $ 5.6 2. Wealth Management Fees 12.6 14.7 3.8 3.6 3.7 3. Card Payment Fees 15.0 16.1 4.6 4.5 4.6 4. Cash Surrender Value of Life Ins 4.3 6.6 1.2 1.0 1.0 5. Gains on Sales of Mortgage Loans 7.1 7.6 1.8 1.6 1.8 6. Gains on Sales of Securities 3.4 2.6 1.6 1.1 1.3 7. Other 5.0 4.7 1.8 1.4 1.5 8. Total Non-Interest Income $65.2 $71.0 $19.6 $18.2 $19.5 13


 
Non-Interest Expense ($ in Millions) 2016 2017 Q1-’18 Q2-’18 Q3-’18 1. Salary & Benefits $102.6 $119.8 $ 32.2 $ 32.2 $32.9 2. Premises & Equipment 29.5 30.1 8.4 7.9 8.1 3. Intangible Asset Amortization 3.9 5.6 1.7 1.7 1.7 4. Professional & Other Outside Services 6.5 12.8 1.5 1.8 1.8 5. OREO/Credit-Related Expense 2.9 1.9 0.4 0.4 0.5 6. FDIC Expense 3.0 2.6 0.7 0.7 0.9 7. Outside Data Processing 9.2 12.2 3.0 3.4 3.4 8. Marketing 3.0 3.7 0.9 1.5 1.2 9. Other 16.7 16.9 4.9 3.9 4.5 10. Total Non-Interest Expense $177.3 $ 205.6 1 $ 53.7 $ 53.5 $55.0 1 2017 includes acquisition-related expenses of $12.2 million 14


 
Earnings ($ in Millions) 2016 2017 Q1-’18 Q2-’18 Q3-’18 1. Net Interest Income $226.5 $ 277.3 $ 79.9 $ 84.6 $86.5 2. Provision for Loan Losses (5.7) (9.1) (2.5) (1.7) (1.4) 3. Net Interest Income after Provision 220.8 268.2 77.4 82.9 85.1 4. Non-Interest Income 65.2 71.0 19.6 18.2 19.5 5. Non-Interest Expense (177.3) (205.6) (53.7) (53.5) (55.0) 6. Income before Income Taxes 108.7 133.6 43.3 47.6 49.6 7. Income Tax Expense (27.6) (37.5)1 (6.6) (8.0) (8.5) 8. Net Income Avail. for Distribution $ 81.1 $ 96.1 $ 36.7 $ 39.6 $ 41.1 9. EPS $ 1.98 $ 2.122 $ 0.74 $ 0.80 $ 0.83 10. Efficiency Ratio 56.51% 54.56% 51.33% 49.32% 49.25% 1 2017 includes $5.1 million of additional tax expense due to revaluing deferred taxes as a result of the Tax Cuts and Jobs Act 2 Acquisition-related expenses, the impact of tax reform, and pension settlement accounting reduced EPS by $0.30 for 2017 15


 
Per Share Results 2017 Q1 Q2 Q3 Q4 Total 1. Earnings Per Share $ .56 $ .57 $ .50 $ .49 $ 2.12 2. Dividends $ .15 $ .18 $ .18 $ .18 $ .69 3. Tangible Book Value $16.49 $16.97 $16.62 $16.96 2018 Q1 Q2 Q3 Q4 Total 1. Earnings Per Share $ .74 $ .80 $ .83 – $ 2.37 2. Dividends $ .18 $ .22 $ .22 – $ .62 3. Tangible Book Value $17.14 $17.71 $18.16 – 16


 
Dividends and Tangible Book Value Quarterly Dividends Tangible Book Value .22 0.22 $18.16 0.20 $16.96 .18 $15.85 0.18 $14.68 0.16 .15 $13.65 .14 $12.17 0.14 $10.95 .11 0.12 $9.21 $9.64 0.10 .08 0.08 0.06 .05 0.04 .03 0.02 .01 0.00 1.96% Forward Dividend Yield Compound Annual Growth Rate of 9.16% Equals 26.2% Dividend Payout Ratio 17


 
John J. Martin EXECUTIVE VICE PRESIDENT AND CHIEF CREDIT OFFICER 18


 
Loan Portfolio Trends Change ($ in Millions) Linked Quarter 2016 2017 Q1-'18 Q2-'18 Q3-'18 $ % 1. Commercial & Industrial $ 1,195 $ 1,494 $ 1,554 $ 1,658 $ 1,656 $ (2) (0.1%) Commitments: 2. Construction, Land and 3Q ‘18 $1.200 B Land Development 419 612 590 715 669 (46) (6.4%) 2Q ‘18 $1.244 B 1Q ‘18 $1.151 B 3. CRE Non-Owner Occupied 1,272 1,618 1,760 1,700 1,761 61 3.6% 4Q ‘17 $1.253 B 4. CRE Owner Occupied 531 700 709 714 700 (14) (2.0%) 5. Agricultural Production 80 122 98 89 88 (1) (1.1%) 6. Agricultural Land 149 244 245 239 239 0 0.0% 7. Public Finance/Other Commercial 258 397 398 389 394 5 1.3% 8. Total Commercial 3,904 5,187 5,354 5,504 5,507 3 0.1% 9. Residential Mortgage 742 970 953 968 968 0 0.0% 10. Home Equity 419 514 511 519 517 (2) (0.4%) 11. Other Consumer 78 87 88 92 99 7 7.6% 12. Total Resi. and Consumer 1,239 1,571 1,552 1,579 1,584 5 0.3% 13. Total Loans $ 5,143 $ 6,758 $ 6,906 $ 7,083 $ 7,091 $ 8 0.1% 14. Construction Concentration1 52% 60% 57% 67% 62% 15. Investment RE Concentration1 211% 219% 226% 227% 224% 1As a % of Risk Based Capital 19


 
Asset Quality Summary Change ($ in Millions) Linked Quarter 2016 186.1 2017 Q1-'18 Q2-'18 Q3-'18 $ % 1. Non-Accrual Loans $ 30.0 $ 28.7 $ 27.5 $ 20.1 $ 20.4 $ 0.3 2. Other Real Estate 9.0 10.4 9.7 9.1 8.9 (0.2) 3. Renegotiated Loans 4.7 1.0 0.6 0.5 0.9 0.4 4. 90+ Days Delinquent Loans 0.1 0.9 0.7 0.2 0.1 (0.1) 5. Total NPAs & 90+ Days Delinquent $ 43.8 $ 41.0 $ 38.5 $ 29.9 $ 30.3 $ 0.4 1.3% 6. Total NPAs & 90+ Days/Loans & ORE 0.9% 0.6% 0.6% 0.4% 0.4% 7. Classified Assets $ 174.1 $ 153.1 $ 178.4 $ 166.3 $ 174.2 $ 7.9 4.8% 8. Specific Reserves $ 0.9 $ 1.6 $ 1.3 $ 0.5 $ 0.4 $ (0.1) 20


 
Non-Performing Asset Reconciliation ($ in Millions) Q4-'17 Q1-'18 Q2-'18 Q3-'18 1. Beginning Balance NPAs & 90+ Days Delinquent $ 45.2 $ 41.0 $ 38.5 $ 29.9 Non-Accrual 2. Add: New Non-Accruals 4.9 4.8 2.7 4.6 3. Less: To Accrual/Payoff/Renegotiated (7.3) (4.1) (6.3) (2.5) 4. Less: To OREO (0.2) (0.1) (0.1) (0.1) 5. Less: Charge-offs (1.0) (1.8) (3.7) (1.7) 6. Increase / (Decrease): Non-Accrual Loans (3.6) (1.2) (7.4) 0.3 Other Real Estate Owned (ORE) 7. Add: New ORE Properties 0.2 0.1 0.1 0.1 8. Less: ORE Sold (1.5) (0.7) (0.5) (0.2) 9. Less: ORE Losses (write-downs) (0.2) (0.1) (0.2) (0.1) 10. Increase / (Decrease): ORE (1.5) (0.7) (0.6) (0.2) 11. Increase / (Decrease): 90+ Days Delinquent 0.5 (0.2) (0.5) (0.1) 12. Increase / (Decrease): Renegotiated Loans 0.4 (0.4) (0.1) 0.4 13. Total NPAs & 90+ Days Delinquent Change (4.2) (2.5) (8.6) 0.4 14. Ending Balance NPAs & 90+ Days Delinquent $ 41.0 $ 38.5 $ 29.9 $ 30.3 21


 
ALLL and Fair Value Summary ($ in Millions) Q4-'17 Q1-'18 Q2-'18 Q3-'18 1. Beginning Allowance for Loan Losses (ALLL) $ 73.4 $ 75.0 $ 76.4 $ 77.5 2. Net Charge-offs (Recoveries) 0.2 1.1 0.6 0.5 3. Provision Expense 1.8 2.5 1.7 1.4 4. Ending Allowance for Loan Losses (ALLL) $ 75.0 $ 76.4 $ 77.5 $ 78.4 5. ALLL/Non-Accrual Loans 261.2% 277.9% 385.0% 383.9% 6. ALLL/Non-Purchased Loans 1.36% 1.32% 1.28% 1.28% 7. ALLL/Loans 1.11% 1.11% 1.09% 1.11% 8. Fair Value Adjustment (FVA) $ 46.3 $ 43.1 $ 37.2 $ 33.9 9. Total ALLL plus FVA 121.3 119.5 114.7 112.3 10. Purchased Loans plus FVA 1,304.7 1,179.8 1,059.1 979.2 11. FVA/Purchased Loans plus FVA 3.55% 3.65% 3.51% 3.46% 22


 
Portfolio Summary  Loan portfolio remained at $7.1 Billion with an increase in CRE of $61 Million offset by a decline in construction loans of $46 Million and owner occupied real estate loans of $14 Million.  Total NPAs & 90+ Days remained low at 0.4% of Loans and ORE.  Classified Assets increased $7.9 Million to $174.2 Million.  Quarterly Net charge-offs were $0.5 Million, or 3 bps annualized with provision expense of $1.4 Million.  ALLL to Total Loans of 1.11% and 1.28% to Non-Purchased Loans. Allowance coverage to Non-Accruals Loans at 384%. 23


 
Michael C. Rechin PRESIDENT AND CHIEF EXECUTIVE OFFICER 24


 
A Leading Midwest Banking Franchise Crossing $10 Billion with Strategic Entry into Michigan Pro Forma Highlights1 Ticker: FRME Headquarters: Muncie, IN Founded: 1893 Banking Centers: 134 Assets: $11.1 Billion Loans: $7.8 Billion Deposits: $8.7 Billion Current First Merchants Locations MBTF Locations 1Balance sheet figures as of 6/30/18 and do not include any merger related adjustments 25


 
Overview of MBT Financial Corporation Company Highlights Geographic FootprintFarmington Hills . Northville Headquartered in Monroe, Michigan Plymouth Redford Highland Park Livonia 75 . Westland Founded in 1858 Dearborn Ann Arbor 275 Allen Park . 94 Southgate Operates 20 Banking Centers 75 MICHIGAN Trenton . Flat Rock Balance Sheet as of June 30, 2018 Milan Rockwood • Assets: $1.3 Billion MICHIGAN Dundee • Loans: $741 Million 496 Monroe • Deposits: $1.1 Billion (89% non-maturity) Blissfield 75 94 Temperance • Loans / Deposits: 65% • 9.10% TCE/TA Deposit Market Share by County • 0.91% NPAs/Assets Market Deposits Mkt. Share % of . Income Statement for the quarter ending June 30, 2018 County Rank Branches ($000) (%) Franchise • ROAA: 1.51% / ROATCE: 16.59% Monroe, MI 1 15* $998,139 50.1% 86.9% • Efficiency Ratio: 61.8% Wayne, MI 14 6 $150,913 0.3% 13.1% • Net Interest Margin: 3.63% Source: S&P Global Market Intelligence and FDIC Summary of Deposits as of June 30, 2018. • Cost of Interest Bearing Deposits: 0.18% *Includes one non-banking center 26


 
FMC Strategy and Tactics Overview Looking Forward . . .  Manage market presence and our core banking business. Continue organic growth protocol.  Optimize our retail and commercial deposit strategy… products and pricing.  Build out of specialty finance businesses in sponsor finance, public finance, asset-based lending, and loan syndications.  Finalize planning to cross $10 Billion with the acquisition of MBT Financial Corporation.  Design integration schedule and marketing plan for Michigan entry. “Responsive, Knowledgeable, High-Performing” 27


 
Contact Information First Merchants Corporation common stock is traded on the NASDAQ Global Select Market under the symbol FRME. Additional information can be found at www.FIRSTMERCHANTS.COM Investor inquiries: Nicole M. Weaver Investor Relations Telephone: 765.521.7619 nweaver@firstmerchants.com 28


 
Appendix 29


 
Appendix – Non-GAAP Reconciliation CAPITAL RATIOS (dollars in thousands): 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Total Risk-Based Capital Ratio Total Stockholders' Equity (GAAP) 900,865 901,657 929,470 1,035,116 1,283,120 1,303,463 1,313,073 1,340,328 1,361,426 Adjust for Accumulated Other Comprehensive (Income) Loss 1 (3,924) 13,581 3,722 (1,384) 6,358 3,534 21,725 24,868 35,409 Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125) Add: Qualifying Capital Securities 55,355 55,415 55,474 55,534 65,864 65,919 65,975 66,030 66,086 Less: Tier 1 Capital Deductions (1,440) (376) (80) (166) - - - - - Less: Disallowed Goodwill and Intangible Assets (249,541) (249,104) (250,493) (300,307) (462,080) (464,066) (467,518) (466,063) (464,658) Less: Disallowed Deferred Tax Assets (2,161) (564) (320) (665) - - (2,594) (2,104) (1,111) Total Tier 1 Capital (Regulatory) $ 699,029 $ 720,484 $ 737,648 $ 788,003 $ 893,137 $ 908,725 $ 930,536 $ 962,934 $ 997,027 Qualifying Subordinated Debentures 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 Allowance for Loan Losses includible in Tier 2 Capital 63,456 66,037 68,225 70,471 73,354 75,032 76,420 77,543 78,406 Total Risk-Based Capital (Regulatory) $ 827,485 $ 851,521 $ 870,873 $ 923,474 $ 1,031,491 $ 1,048,757 $ 1,071,956 $ 1,105,477 $ 1,140,433 Net Risk-Weighted Assets (Regulatory) $ 5,836,806 $ 5,993,381 $ 6,114,112 $ 6,592,710 $ 7,497,321 $ 7,660,604 $ 7,831,727 $ 8,002,666 $ 8,001,191 Total Risk-Based Capital Ratio (Regulatory) 14.18% 14.21% 14.24% 14.01% 13.76% 13.69% 13.69% 13.81% 14.25% Common Equity Tier 1 Capital Ratio Total Tier 1 Capital (Regulatory) $ 699,029 $ 720,484 $ 737,648 $ 788,003 $ 893,137 $ 908,725 $ 930,536 $ 962,934 $ 997,027 Less: Qualified Capital Securities (55,355) (55,415) (55,474) (55,534) (65,864) (65,919) (65,975) (66,030) (66,086) Add: Additional Tier 1 Capital Deductions 1,440 376 80 166 - - - - - Common Equity Tier 1 Capital (Regulatory) $ 645,114 $ 665,445 $ 682,254 $ 732,635 $ 827,273 $ 842,806 $ 864,561 $ 896,904 $ 930,941 Net Risk-Weighted Assets (Regulatory) $ 5,836,806 $ 5,993,381 $ 6,114,112 $ 6,592,710 $ 7,497,321 $ 7,660,604 $ 7,831,727 $ 8,002,666 $ 8,001,191 Common Equity Tier 1 Capital Ratio (Regulatory) 11.05% 11.10% 11.16% 11.11% 11.03% 11.00% 11.04% 11.21% 11.64% 1 Includes net unrealized gains or losses on securities available for sale, net gains or losses on cash flow hedges, and amounts resulting from the application of the applicable accounting guidance for defined benefit and other postretirement plans. 30


 
Appendix – Non-GAAP Reconciliation TANGIBLE COMMON EQUITY RATIO (dollars in thousands): 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Total Stockholders' Equity (GAAP) $ 900,865 $ 901,657 $ 929,470 $ 1,035,116 $ 1,283,120 $ 1,303,463 $ 1,313,073 $ 1,340,328 $ 1,361,426 Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125) Less: Intangible Assets (259,844) (258,866) (257,963) (309,686) (478,558) (476,503) (474,777) (473,059) (471,409) Tangible Common Equity (non-GAAP) $ 640,896 $ 642,666 $ 671,382 $ 725,305 $ 804,437 $ 826,835 $ 838,171 $ 867,144 $ 889,892 Total Assets (GAAP) $ 7,022,352 $ 7,211,611 $ 7,326,193 $ 7,805,029 $ 9,049,403 $ 9,367,478 $ 9,472,796 $ 9,734,715 $ 9,787,282 Less: Intangible Assets (259,844) (258,866) (257,963) (309,686) (478,558) (476,503) (474,777) (473,059) (471,409) Tangible Assets (non-GAAP) $ 6,762,508 $ 6,952,745 $ 7,068,230 $ 7,495,343 $ 8,570,845 $ 8,890,975 $ 8,998,019 $ 9,261,656 $ 9,315,873 Tangible Common Equity Ratio (non-GAAP) 9.48% 9.24% 9.50% 9.68% 9.39% 9.30% 9.32% 9.36% 9.55% TANGIBLE COMMON EQUITY PER SHARE (dollars in thousands): 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Total Stockholders' Equity (GAAP) $ 454,408 $ 514,467 $ 552,236 $ 634,923 $ 726,827 $ 850,509 $ 901,657 $ 929,470 $ 1,035,116 $ 1,283,120 $ 1,303,463 $ 1,313,073 $ 1,340,328 $ 1,361,426 Less: Preferred Stock (67,880) (90,783) (90,908) (125) (125) (125) (125) (125) (125) (125) (125) (125) (125) (125) Less: Intangible Assets (154,019) (150,471) (149,529) (202,767) (218,755) (259,764) (258,866) (257,963) (309,686) (478,558) (476,503) (474,777) (473,059) (471,409) Tax Benefit 2,907 2,224 2,249 4,973 6,085 6,278 5,930 5,659 6,941 12,510 6,788 6,043 5,690 5,351 Tangible Common Equity, Net of Tax (non-GAAP) $ 235,416 $ 275,437 $ 314,048 $ 437,004 $ 514,032 $ 596,898 $ 648,596 $ 677,041 $ 732,246 $ 816,947 $ 833,623 $ 844,214 $ 872,834 $ 895,243 0 Shares Outstanding 25,574,251 28,559,707 28,692,616 35,921,761 37,669,948 40,664,258 40,912,697 41,047,543 43,153,509 49,140,594 49,158,238 49,243,096 49,280,188 49,304,542 Tangible Common Equity per Share (non-GAAP) $ 9.21 $ 9.64 $ 10.95 $ 12.17 $ 13.65 $ 14.68 $ 15.85 $ 16.49 $ 16.97 $ 16.62 $ 16.96 $ 17.14 $ 17.71 $ 18.16 31


 
Appendix – Non-GAAP Reconciliation EFFICIENCY RATIO (dollars in thousands): 2016 2017 1Q18 2Q18 3Q18 Non Interest Expense (GAAP) $ 177,359 $ 205,556 $ 53,687 $ 53,504 $ 55,022 Less: Intangible Asset Amortization (3,910) (5,647) (1,726) (1,718) (1,650) Less: OREO and Foreclosure Expenses (2,877) (1,903) (402) (362) (455) Adjusted Non Interest Expense (non-GAAP) 170,572 198,006 51,559 51,424 52,917 Net Interest Income (GAAP) 226,473 277,284 79,916 84,571 86,486 Plus: Fully Taxable Equivalent Adjustment 13,541 17,270 2,584 2,625 2,726 Net Interest Income on a Fully Taxable Equivalent Basis (non-GAAP) 240,014 294,554 82,500 87,196 89,212 Non Interest Income (GAAP) 65,203 71,009 19,561 18,191 19,527 Less: Investment Securities Gains (Losses) (3,389) (2,631) (1,609) (1,122) (1,285) Adjusted Non Interest Income (non-GAAP) 61,814 68,378 17,952 17,069 18,242 Adjusted Revenue (non-GAAP) 301,828 362,932 100,452 104,265 107,454 Efficiency Ratio (non-GAAP) 56.51% 54.56% 51.33% 49.32% 49.25% FORWARD DIVIDEND YIELD 3Q18 Most recent quarter's dividend per share $ 0.22 Most recent quarter's dividend per share - Annualized $ 0.88 Stock Price at 9/30/18 $ 44.99 Forward Dividend Yield 1.96% DIVIDEND PAYOUT RATIO 2018 YTD Dividends per share $ 0.62 Earnings Per Share $ 2.37 Dividend Payout Ratio 26.2% 32


 
Appendix – Non-GAAP Reconciliation CONSTRUCTION AND INVESTMENT REAL ESTATE CONCENTRATIONS (dollars in thousands): 2016 2017 1Q18 2Q18 3Q18 Total Risk-Based Capital (Subsidiary Bank Only) Total Stockholders' Equity (GAAP) $ 973,641 $ 1,404,303 $ 1,414,109 $ 1,432,722 $ 1,436,173 Adjust for Accumulated Other Comprehensive (Income) Loss 1 9,701 763 19,231 22,589 33,302 Less: Preferred Stock (125) (125) (125) (125) (125) Less: Tier 1 Capital Deductions - - - - - Less: Disallowed Goodwill and Intangible Assets (248,656) (463,618) (467,070) (465,616) (464,210) Less: Disallowed Deferred Tax Assets - - (2,234) (1,862) (965) Total Tier 1 Capital (Regulatory) 734,561 941,323 963,911 987,708 1,004,175 Allowance for Loan Losses includible in Tier 2 Capital 66,037 75,032 76,420 77,543 78,406 Total Risk-Based Capital (Regulatory) $ 800,598 $ 1,016,355 $ 1,040,331 $ 1,065,251 $ 1,082,581 Construction, Land and Land Development Loans $ 418,703 $ 612,219 $ 590,093 $ 714,866 $ 668,608 Concentration as a % of the Bank's Risk-Based Capital 52% 60% 57% 67% 62% Construction, Land and Land Development Loans $ 418,703 $ 612,219 $ 590,093 $ 714,866 $ 668,608 Investment Real Estate Loans 1,272,415 1,617,943 1,760,226 1,699,962 1,760,714 Total Construction and Investment RE Loans $ 1,691,118 $ 2,230,162 $ 2,350,319 $ 2,414,828 $ 2,429,322 Concentration as a % of the Bank's Risk-Based Capital 211% 219% 226% 227% 224% 1 Includes net unrealized gains or losses on securities available for sale, net gains or losses on cash flow hedges, and amounts resulting from the application of the applicable accounting guidance for defined benefit and other postretirement plans. ALLOWANCE AS A PERCENTAGE OF NON-PURCHASED LOANS (dollars in thousands): 4Q17 1Q18 2Q18 3Q18 Loans Held for Sale (GAAP) $ 7,216 $ 4,469 $ 2,046 $ 3,022 Loans (GAAP) 6,751,199 6,901,696 7,081,059 7,088,071 Total Loans 6,758,415 6,906,165 7,083,105 7,091,093 Less: Purchased Loans (1,258,386) (1,136,711) (1,022,160) (945,330) Non-Purchased Loans (non-GAAP) $ 5,500,029 $ 5,769,454 $ 6,060,945 $ 6,145,763 Allowance for Loan Losses (GAAP) $ 75,032 $ 76,420 $ 77,543 $ 78,406 Fair Value Adjustment (FVA) (GAAP) 46,304 43,121 37,221 33,905 Allowance plus FVA (non-GAAP) $ 121,336 $ 119,541 $ 114,764 $ 112,311 Purchased Loans (GAAP) $ 1,258,386 $ 1,136,711 $ 1,022,160 $ 945,330 Fair Value Adjustment (FVA) (GAAP) 46,304 43,121 37,221 33,905 Purchased Loans plus FVA (non-GAAP) $ 1,304,690 $ 1,179,832 $ 1,059,381 $ 979,235 Allowance as a Percentage of Non-Purchased Loans (non-GAAP) 1.36% 1.32% 1.28% 1.28% FVA as a Percentage of Purchased Loans plus FVA (non-GAAP) 3.55% 3.65% 3.51% 3.46% 33


 

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