MUNCIE, Ind., Jan. 30, 2025 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME)

Fourth Quarter 2024 Highlights:

• Net income available to common stockholders was $63.9 million and diluted earnings per common share totaled $1.10, compared to $48.7 million and $0.84 in the third quarter of 2024, and $42.0 million and $0.71 in the fourth quarter of 2023. Excluding the impact of the branch sale and repositioning of the available for sale securities portfolio, adjusted net income available to common stockholders¹ was $58.1 million or $1.00 per share for the fourth quarter of 2024.
• Strong capital position with Common Equity Tier 1 Capital Ratio of 11.43% and Tangible Common Equity to Tangible Assets Ratio of 8.81%.
• Net interest margin was 3.28% compared to 3.23% on a linked quarter basis and 3.16% in the fourth quarter of 2023.
• Total loans grew $185.6 million, or 5.9% annualized, on a linked quarter basis, and $368.1 million, or 2.9% during the last twelve months.
• Total deposits increased $156.5 million, or 4.4% annualized, on a linked quarter basis, and declined $32.4 million, or 0.2%, during the last twelve months after normalizing for deposits sold during the fourth quarter.
• Nonperforming assets to total assets were 43 basis points compared to 35 basis points on a linked quarter basis.
• Adjusted efficiency ratio totaled 53.60%¹ for the quarter.
• Completed the sale of five Illinois branches and certain loans and deposits to Old Second National Bank on December 6, 2024.

"The fourth quarter was a strong finish to the year and showed the momentum we have built with healthy increases in core earnings, NIM and ROA," said Mark Hardwick, Chief Executive Officer of First Merchants Bank. "We restructured a portion of our securities portfolio and completed the Illinois branch sale to help prioritize our core markets. These actions and the completion of multiple technology initiatives in 2024 have positioned First Merchants to deliver strong results in 2025."

Fourth Quarter Financial Results:

First Merchants Corporation (the “Corporation”) reported fourth quarter 2024 net income available to common stockholders of $63.9 million compared to $42.0 million during the same period in 2023. Diluted earnings per common share for the period totaled $1.10 compared to the fourth quarter of 2023 result of $0.71. Excluding non-core income and expenses incurred in each period, adjusted net income available to common stockholders¹ for the fourth quarter 2024 was $58.1 million, or $1.00 diluted earnings per common share compared to $53.4 million, or $0.90 in the same period in 2023.

During the quarter, the Corporation completed the sale of five Illinois branches along with loans of $7.4 million and deposits of $267.4 million, generating a gain of $20.0 million recorded in non-interest income. The sale of these branches represents the Corporation’s exit from suburban Chicago markets.

Total assets equaled $18.3 billion and loans totaled $12.9 billion as of quarter-end. During the past twelve months, total loans grew by $368.1 million, or 2.9%. On a linked quarter basis, loans grew $185.6 million, or 5.9% annualized, with growth primarily in commercial loans.

Investments totaling $3.5 billion decreased $350.7 million, or 9.2%, during the last twelve months and decreased $201.5 million on a linked quarter basis. The decline during the quarter was partially due to the sale of $109.6 million of available for sale securities with a weighted average tax-equivalent yield of 2.31%, which resulted in a loss of $11.6 million. The remaining decline for the quarter was due to security paydowns and maturities, as well as a decline in valuation of securities reflecting the movement of interest rates. Sales of available for sale securities in 2024 totaled $268.5 million and resulted in a loss of $20.8 million.

Total deposits were $14.5 billion as of quarter-end and decreased by $299.8 million, or 2.0%, over the past twelve months. The decline was primarily due to the sale of the Illinois branches during the fourth quarter which included $267.4 million of deposits. Excluding this impact, deposits declined by $32.4 million in 2024. On a linked quarter basis, deposits grew by $156.5 million, or 4.4% annualized. The loan to deposit ratio increased slightly to 88.5% at period end from 88.0% in the prior quarter.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $192.8 million as of quarter-end, or 1.50% of total loans, an increase of $4.9 million from prior quarter. Loan charge-offs, net of recoveries totaled $0.8 million and provision for loans of $5.7 million was recorded during the quarter. Reserves for unfunded commitments totaled $18.0 million declining during the quarter due to reserve release of $1.5 million. Net provision for the quarter totaled $4.2 million. Non-performing assets to total assets were 43 basis points for the fourth quarter of 2024, an increase of eight basis points compared to 35 basis points in the prior quarter.

Net interest income totaled $134.4 million for the quarter, an increase of $3.3 million, or 2.5%, compared to the prior quarter and an increase of $4.3 million, or 3.3%, compared to the fourth quarter of 2023. Fully taxable equivalent net interest margin was 3.28%, an increase of five basis points compared to the third quarter of 2024, and an increase of 12 basis points compared to the fourth quarter of 2023. The increase in net interest margin compared to the third quarter was due to lower funding costs and a more favorable earning asset and funding mix.

Noninterest income totaled $42.7 million for the quarter, an increase of $17.9 million compared to the third quarter of 2024 and an increase of $16.3 million compared to the fourth quarter of 2023. When excluding non-core income from each period, noninterest income totaled $34.4 million for the quarter, an increase of $0.4 million compared to third quarter of 2024, and an increase of $5.6 million compared to the fourth quarter of 2023. The increase in core noninterest income over the fourth quarter of 2023 was primarily due to an increase in gains on sales of loans and CRA investment income.

Noninterest expense totaled $96.3 million for the quarter, an increase of $1.7 million from the third quarter of 2024 and a decrease of $11.8 million from the fourth quarter of 2023. The increase in the linked quarter was from higher marketing costs and other one-time operating expenses. The decrease from the fourth quarter of 2023 was due to one-time charges incurred in the prior year which included an FDIC special assessment, early retirement and severance costs, and a lease termination.

The Corporation’s total risk-based capital ratio totaled 13.31%, common equity tier 1 capital ratio totaled 11.43%, and the tangible common equity ratio totaled 8.81%. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

¹ See “Non-GAAP Financial Information” for reconciliation

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and webcast at 11:30 a.m. (ET) on Thursday, January 30, 2025.

To access via phone, participants will need to register using the following link where they will be provided a phone number and access code: (https://register.vevent.com/register/BIc49ad0293a7844dca2e7171f51e600dd95f36e86b6)

To view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/9t5v76m2) during the time of the call. A replay of the webcast will be available until January 30, 2026.

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 about 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 (including the ability to grow and maintain core deposits and retain large, uninsured deposits), 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)	December 31,
		2024				2023
ASSETS
Cash and due from banks	$	87,616			$	112,649
Interest-bearing deposits		298,891				436,080
Investment securities, net of allowance for credit losses of $245,000 and $245,000		3,460,695				3,811,364
Loans held for sale		18,663				18,934
Loans		12,854,359				12,486,027
Less: Allowance for credit losses - loans		(192,757	)			(204,934	)
Net loans		12,661,602				12,281,093
Premises and equipment		129,743				133,896
Federal Home Loan Bank stock		41,690				41,769
Interest receivable		91,829				97,664
Goodwill and other intangibles		731,830				739,101
Cash surrender value of life insurance		304,906				306,301
Other real estate owned		4,948				4,831
Tax asset, deferred and receivable		92,387				99,883
Other assets		387,169				322,322
TOTAL ASSETS	$	18,311,969			$	18,405,887
LIABILITIES
Deposits:
Noninterest-bearing	$	2,325,579			$	2,500,062
Interest-bearing		12,196,047				12,321,391
Total Deposits		14,521,626				14,821,453
Borrowings:
Federal funds purchased		99,226				—
Securities sold under repurchase agreements		142,876				157,280
Federal Home Loan Bank advances		822,554				712,852
Subordinated debentures and other borrowings		93,529				158,644
Total Borrowings		1,158,185				1,028,776
Interest payable		16,102				18,912
Other liabilities		311,073				289,033
Total Liabilities		16,006,986				16,158,174
STOCKHOLDERS' EQUITY
Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 cumulative shares
Issued and outstanding - 125 cumulative shares		125				125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized -- 10,000 non-cumulative perpetual shares
Issued and outstanding - 10,000 non-cumulative perpetual shares		25,000				25,000
Common Stock, $.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding - 57,974,535 and 59,424,122 shares		7,247				7,428
Additional paid-in capital		1,188,768				1,236,506
Retained earnings		1,272,528				1,154,624
Accumulated other comprehensive loss		(188,685	)			(175,970	)
Total Stockholders' Equity		2,304,983				2,247,713
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,311,969			$	18,405,887

CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended								Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts)	December 31,								December 31,
		2024				2023				2024				2023
INTEREST INCOME
Loans:
Taxable	$	197,536			$	197,523			$	803,652			$	747,837
Tax-exempt		9,020				8,197				34,262				31,954
Investment securities:
Taxable		9,024				8,644				36,086				35,207
Tax-exempt		12,754				13,821				53,487				58,117
Deposits with financial institutions		5,350				8,034				16,992				17,719
Federal Home Loan Bank stock		958				771				3,527				3,052
Total Interest Income		234,642				236,990				948,006				893,886
INTEREST EXPENSE
Deposits		89,835				96,655				386,127				306,092
Federal funds purchased		26				1				481				1,421
Securities sold under repurchase agreements		680				827				3,057				3,451
Federal Home Loan Bank advances		8,171				6,431				29,886				27,206
Subordinated debentures and other borrowings		1,560				3,013				7,341				10,316
Total Interest Expense		100,272				106,927				426,892				348,486
NET INTEREST INCOME		134,370				130,063				521,114				545,400
Provision for credit losses		4,200				1,500				35,700				3,500
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		130,170				128,563				485,414				541,900
NONINTEREST INCOME
Service charges on deposit accounts		8,124				7,690				32,606				30,837
Fiduciary and wealth management fees		8,665				8,187				34,215				30,840
Card payment fees		4,957				4,437				19,317				18,862
Net gains and fees on sales of loans		5,681				4,111				20,840				15,659
Derivative hedge fees		1,594				1,049				3,082				3,385
Other customer fees		316				237				1,547				1,880
Earnings on cash surrender value of life insurance		2,188				3,202				8,464				8,347
Net realized losses on sales of available for sale securities		(11,592	)			(2,317	)			(20,757	)			(6,930	)
Gain on branch sale		19,983				—				19,983				—
Other income (loss)		2,826				(152	)			6,283				2,722
Total Noninterest Income		42,742				26,444				125,580				105,602
NONINTEREST EXPENSES
Salaries and employee benefits		55,437				60,967				221,167				228,745
Net occupancy		7,335				9,089				28,387				29,859
Equipment		7,028				6,108				26,802				24,113
Marketing		2,582				2,647				7,389				7,427
Outside data processing fees		6,029				5,875				27,140				25,165
Printing and office supplies		377				402				1,462				1,552
Intangible asset amortization		1,771				2,182				7,271				8,743
FDIC assessments		3,744				7,557				15,029				14,674
Other real estate owned and foreclosure expenses		227				1,743				2,076				3,318
Professional and other outside services		3,777				3,981				14,586				16,172
Other expenses		7,982				7,552				27,957				28,502
Total Noninterest Expenses		96,289				108,103				379,266				388,270
INCOME BEFORE INCOME TAX		76,623				46,904				231,728				259,232
Income tax expense		12,274				4,425				30,326				35,446
NET INCOME		64,349				42,479				201,402				223,786
Preferred stock dividends		469				469				1,875				1,875
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	63,880			$	42,010			$	199,527			$	221,911
Per Share Data:
Basic Net Income Available to Common Stockholders	$	1.10			$	0.71			$	3.42			$	3.74
Diluted Net Income Available to Common Stockholders	$	1.10			$	0.71			$	3.41			$	3.73
Cash Dividends Paid to Common Stockholders	$	0.35			$	0.34			$	1.39			$	1.34
Average Diluted Common Shares Outstanding (in thousands)		58,247				59,556				58,533				59,489

FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
		2024				2023				2024				2023
NET CHARGE-OFFS	$	771			$	3,148			$	49,377			$	25,643
AVERAGE BALANCES:
Total Assets	$	18,478,303			$	18,397,200			$	18,400,495			$	18,186,507
Total Loans		12,757,676				12,396,451				12,634,324				12,297,974
Total Earning Assets		17,089,198				17,222,714				17,054,267				16,991,787
Total Deposits		14,788,294				15,000,580				14,816,564				14,721,498
Total Stockholders' Equity		2,312,270				2,130,993				2,252,491				2,127,262
FINANCIAL RATIOS:
Return on Average Assets		1.39	%			0.92	%			1.09	%			1.23	%
Return on Average Stockholders' Equity		11.05				7.89				8.86				10.43
Return on Tangible Common Stockholders' Equity		16.75				12.75				13.71				16.76
Average Earning Assets to Average Assets		92.48				93.62				92.68				93.43
Allowance for Credit Losses - Loans as % of Total Loans		1.50				1.64				1.50				1.64
Net Charge-offs as % of Average Loans (Annualized)		0.02				0.10				0.39				0.21
Average Stockholders' Equity to Average Assets		12.51				11.58				12.24				11.70
Tax Equivalent Yield on Average Earning Assets		5.63				5.64				5.69				5.40
Interest Expense/Average Earning Assets		2.35				2.48				2.50				2.05
Net Interest Margin (FTE) on Average Earning Assets		3.28				3.16				3.19				3.35
Efficiency Ratio		48.48				63.26				53.55				55.17
Tangible Common Book Value Per Share	$	26.78			$	25.06			$	26.78			$	25.06

NONPERFORMING ASSETS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
		2024				2024				2024				2024				2023
Nonaccrual Loans	$	73,773			$	59,088			$	61,906			$	62,478			$	53,580
Other Real Estate Owned and Repossessions		4,948				5,247				4,824				4,886				4,831
Nonperforming Assets (NPA)		78,721				64,335				66,730				67,364				58,411
90+ Days Delinquent		5,902				14,105				1,686				2,838				172
NPAs & 90 Day Delinquent	$	84,623			$	78,440			$	68,416			$	70,202			$	58,583
Allowance for Credit Losses - Loans	$	192,757			$	187,828			$	189,537			$	204,681			$	204,934
Quarterly Net Charge-offs		771				6,709				39,644				2,253				3,148
NPAs / Actual Assets %		0.43	%			0.35	%			0.36	%			0.37	%			0.32	%
NPAs & 90 Day / Actual Assets %		0.46	%			0.43	%			0.37	%			0.38	%			0.32	%
NPAs / Actual Loans and OREO %		0.61	%			0.51	%			0.53	%			0.54	%			0.47	%
Allowance for Credit Losses - Loans / Actual Loans (%)		1.50	%			1.48	%			1.50	%			1.64	%			1.64	%
Net Charge-offs as % of Average Loans (Annualized)		0.02	%			0.21	%			1.26	%			0.07	%			0.10	%

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
		2024				2024				2024				2024				2023
ASSETS
Cash and due from banks	$	87,616			$	84,719			$	105,372			$	100,514			$	112,649
Interest-bearing deposits		298,891				359,126				168,528				410,497				436,080
Investment securities, net of allowance for credit losses		3,460,695				3,662,145				3,753,088				3,783,574				3,811,364
Loans held for sale		18,663				40,652				32,292				15,118				18,934
Loans		12,854,359				12,646,808				12,639,650				12,465,582				12,486,027
Less: Allowance for credit losses - loans		(192,757	)			(187,828	)			(189,537	)			(204,681	)			(204,934	)
Net loans		12,661,602				12,458,980				12,450,113				12,260,901				12,281,093
Premises and equipment		129,743				129,582				133,245				132,706				133,896
Federal Home Loan Bank stock		41,690				41,716				41,738				41,758				41,769
Interest receivable		91,829				92,055				97,546				92,550				97,664
Goodwill and other intangibles		731,830				733,601				735,373				737,144				739,101
Cash surrender value of life insurance		304,906				304,613				306,379				306,028				306,301
Other real estate owned		4,948				5,247				4,824				4,886				4,831
Tax asset, deferred and receivable		92,387				86,732				107,080				101,121				99,883
Other assets		387,169				348,384				367,845				331,006				322,322
TOTAL ASSETS	$	18,311,969			$	18,347,552			$	18,303,423			$	18,317,803			$	18,405,887
LIABILITIES
Deposits:
Noninterest-bearing	$	2,325,579			$	2,334,197			$	2,303,313			$	2,338,364			$	2,500,062
Interest-bearing		12,196,047				12,030,903				12,265,757				12,546,220				12,321,391
Total Deposits		14,521,626				14,365,100				14,569,070				14,884,584				14,821,453
Borrowings:
Federal funds purchased		99,226				30,000				147,229				—				—
Securities sold under repurchase agreements		142,876				124,894				100,451				130,264				157,280
Federal Home Loan Bank advances		822,554				832,629				832,703				612,778				712,852
Subordinated debentures and other borrowings		93,529				93,562				93,589				118,612				158,644
Total Borrowings		1,158,185				1,081,085				1,173,972				861,654				1,028,776
Deposits and other liabilities held for sale		—				288,476				—				—				—
Interest payable		16,102				18,089				18,554				19,262				18,912
Other liabilities		311,073				292,429				329,302				327,500				289,033
Total Liabilities		16,006,986				16,045,179				16,090,898				16,093,000				16,158,174
STOCKHOLDERS' EQUITY
Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 cumulative shares
Issued and outstanding - 125 cumulative shares		125				125				125				125				125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized -- 10,000 non-cumulative perpetual shares
Issued and outstanding - 10,000 non-cumulative perpetual shares		25,000				25,000				25,000				25,000				25,000
Common Stock, $.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding		7,247				7,265				7,256				7,321				7,428
Additional paid-in capital		1,188,768				1,192,683				1,191,193				1,208,447				1,236,506
Retained earnings		1,272,528				1,229,125				1,200,930				1,181,939				1,154,624
Accumulated other comprehensive loss		(188,685	)			(151,825	)			(211,979	)			(198,029	)			(175,970	)
Total Stockholders' Equity		2,304,983				2,302,373				2,212,525				2,224,803				2,247,713
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,311,969			$	18,347,552			$	18,303,423			$	18,317,803			$	18,405,887

CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	December 31,				September 30,				June 30,				March 31,				December 31,
		2024				2024				2024				2024				2023
INTEREST INCOME
Loans:
Taxable	$	197,536			$	206,680			$	201,413			$	198,023			$	197,523
Tax-exempt		9,020				8,622				8,430				8,190				8,197
Investment securities:
Taxable		9,024				9,263				9,051				8,748				8,644
Tax-exempt		12,754				13,509				13,613				13,611				13,821
Deposits with financial institutions		5,350				2,154				2,995				6,493				8,034
Federal Home Loan Bank stock		958				855				879				835				771
Total Interest Income		234,642				241,083				236,381				235,900				236,990
INTEREST EXPENSE
Deposits		89,835				98,856				99,151				98,285				96,655
Federal funds purchased		26				329				126				—				1
Securities sold under repurchase agreements		680				700				645				1,032				827
Federal Home Loan Bank advances		8,171				8,544				6,398				6,773				6,431
Subordinated debentures and other borrowings		1,560				1,544				1,490				2,747				3,013
Total Interest Expense		100,272				109,973				107,810				108,837				106,927
NET INTEREST INCOME		134,370				131,110				128,571				127,063				130,063
Provision for credit losses		4,200				5,000				24,500				2,000				1,500
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		130,170				126,110				104,071				125,063				128,563
NONINTEREST INCOME
Service charges on deposit accounts		8,124				8,361				8,214				7,907				7,690
Fiduciary and wealth management fees		8,665				8,525				8,825				8,200				8,187
Card payment fees		4,957				5,121				4,739				4,500				4,437
Net gains and fees on sales of loans		5,681				6,764				5,141				3,254				4,111
Derivative hedge fees		1,594				736				489				263				1,049
Other customer fees		316				344				460				427				237
Earnings on cash surrender value of life insurance		2,188				2,755				1,929				1,592				3,202
Net realized losses on sales of available for sale securities		(11,592	)			(9,114	)			(49	)			(2	)			(2,317	)
Gain on branch sale		19,983				—				—				—				—
Other income (loss)		2,826				1,374				1,586				497				(152	)
Total Noninterest Income		42,742				24,866				31,334				26,638				26,444
NONINTEREST EXPENSES
Salaries and employee benefits		55,437				55,223				52,214				58,293				60,967
Net occupancy		7,335				6,994				6,746				7,312				9,089
Equipment		7,028				6,949				6,599				6,226				6,108
Marketing		2,582				1,836				1,773				1,198				2,647
Outside data processing fees		6,029				7,150				7,072				6,889				5,875
Printing and office supplies		377				378				354				353				402
Intangible asset amortization		1,771				1,772				1,771				1,957				2,182
FDIC assessments		3,744				3,720				3,278				4,287				7,557
Other real estate owned and foreclosure expenses		227				942				373				534				1,743
Professional and other outside services		3,777				3,035				3,822				3,952				3,981
Other expenses		7,982				6,630				7,411				5,934				7,552
Total Noninterest Expenses		96,289				94,629				91,413				96,935				108,103
INCOME BEFORE INCOME TAX		76,623				56,347				43,992				54,766				46,904
Income tax expense		12,274				7,160				4,067				6,825				4,425
NET INCOME		64,349				49,187				39,925				47,941				42,479
Preferred stock dividends		469				468				469				469				469
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	63,880			$	48,719			$	39,456			$	47,472			$	42,010
Per Share Data:
Basic Net Income Available to Common Stockholders	$	1.10			$	0.84			$	0.68			$	0.80			$	0.71
Diluted Net Income Available to Common Stockholders	$	1.10			$	0.84			$	0.68			$	0.80			$	0.71
Cash Dividends Paid to Common Stockholders	$	0.35			$	0.35			$	0.35			$	0.34			$	0.34
Average Diluted Common Shares Outstanding (in thousands)		58,247				58,289				58,328				59,273				59,556
FINANCIAL RATIOS:
Return on Average Assets		1.39	%			1.07	%			0.87	%			1.04	%			0.92	%
Return on Average Stockholders' Equity		11.05				8.66				7.16				8.47				7.89
Return on Tangible Common Stockholders' Equity		16.75				13.39				11.29				13.21				12.75
Average Earning Assets to Average Assets		92.48				92.54				92.81				92.91				93.62
Allowance for Credit Losses - Loans as % of Total Loans		1.50				1.48				1.50				1.64				1.64
Net Charge-offs as % of Average Loans (Annualized)		0.02				0.21				1.26				0.07				0.10
Average Stockholders' Equity to Average Assets		12.51				12.26				12.02				12.17				11.58
Tax Equivalent Yield on Average Earning Assets		5.63				5.82				5.69				5.65				5.64
Interest Expense/Average Earning Assets		2.35				2.59				2.53				2.55				2.48
Net Interest Margin (FTE) on Average Earning Assets		3.28				3.23				3.16				3.10				3.16
Efficiency Ratio		48.48				53.76				53.84				59.21				63.26
Tangible Common Book Value Per Share	$	26.78			$	26.64			$	25.10			$	25.07			$	25.06

LOANS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
		2024				2024				2024				2024				2023
Commercial and industrial loans	$	4,114,292			$	4,041,217			$	3,949,817			$	3,722,365			$	3,670,948
Agricultural land, production and other loans to farmers		256,312				238,743				239,926				234,431				263,414
Real estate loans:
Construction		792,144				814,704				823,267				941,726				957,545
Commercial real estate, non-owner occupied		2,274,016				2,251,351				2,323,533				2,368,360				2,400,839
Commercial real estate, owner occupied		1,157,944				1,152,751				1,174,195				1,137,894				1,162,083
Residential		2,374,729				2,366,943				2,370,905				2,316,490				2,288,921
Home equity		659,811				641,188				631,104				618,258				617,571
Individuals' loans for household and other personal expenditures		166,028				158,480				162,089				161,459				168,388
Public finance and other commercial loans		1,059,083				981,431				964,814				964,599				956,318
Loans		12,854,359				12,646,808				12,639,650				12,465,582				12,486,027
Allowance for credit losses - loans		(192,757	)			(187,828	)			(189,537	)			(204,681	)			(204,934	)
NET LOANS	$	12,661,602			$	12,458,980			$	12,450,113			$	12,260,901			$	12,281,093

DEPOSITS
(Dollars In Thousands)	December 31,			September 30,			June 30,			March 31,			December 31,
	2024			2024			2024			2024			2023
Demand deposits	$	7,980,061		$	7,678,510		$	7,757,679		$	7,771,976		$	7,965,862
Savings deposits		4,522,758			4,302,236			4,339,161			4,679,593			4,516,433
Certificates and other time deposits of $100,000 or more		1,043,068			1,277,833			1,415,131			1,451,443			1,408,985
Other certificates and time deposits		692,068			802,949			889,949			901,280			849,906
Brokered certificates of deposits1		283,671			303,572			167,150			80,292			80,267
TOTAL DEPOSITS2	$	14,521,626		$	14,365,100		$	14,569,070		$	14,884,584		$	14,821,453

_{^{1 -} Total brokered deposits of $955.7 million, which includes brokered CD's of $283.7 million at December 31, 2024.
² - Total deposits at September 30, 2024 excluded $287.7 million of deposits reclassified to Deposits and other liabilities held for sale related to the Illinois branch sale. The sale of $267.4 million of deposits associated with the Illinois branch sale was subsequently completed on December 6, 2024.}

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	December 31, 2024									December 31, 2023
	Average Balance			Interest Income / Expense			Average Rate			Average Balance			Interest Income / Expense			Average Rate
ASSETS
Interest-bearing deposits	$	522,868		$	5,350		4.09	%		$	700,705		$	8,034		4.59	%
Federal Home Loan Bank stock		41,703			958		9.19				41,792			771		7.38
Investment Securities:(1)
Taxable		1,677,554			9,024		2.15				1,801,533			8,644		1.92
Tax-exempt(2)		2,089,397			16,144		3.09				2,282,233			17,495		3.07
Total Investment Securities		3,766,951			25,168		2.67				4,083,766			26,139		2.56
Loans held for sale		36,219			550		6.07				16,355			246		6.02
Loans:(3)
Commercial		8,753,723			156,414		7.15				8,533,233			159,190		7.46
Real estate mortgage		2,177,351			24,401		4.48				2,118,060			21,829		4.12
HELOC and installment		841,537			16,171		7.69				820,728			16,258		7.92
Tax-exempt(2)		948,846			11,418		4.81				908,075			10,376		4.57
Total Loans		12,757,676			208,954		6.55				12,396,451			207,899		6.71
Total Earning Assets		17,089,198			240,430		5.63	%			17,222,714			242,843		5.64	%
Total Non-Earning Assets		1,389,105									1,174,486
TOTAL ASSETS	$	18,478,303								$	18,397,200
LIABILITIES
Interest-Bearing Deposits:
Interest-bearing deposits	$	5,564,228		$	37,049		2.66	%		$	5,504,725		$	40,996		2.98	%
Money market deposits		3,189,334			25,463		3.19				3,096,085			27,909		3.61
Savings deposits		1,362,705			3,102		0.91				1,587,758			3,913		0.99
Certificates and other time deposits		2,313,284			24,221		4.19				2,225,528			23,837		4.28
Total Interest-Bearing Deposits		12,429,551			89,835		2.89				12,414,096			96,655		3.11
Borrowings		1,049,677			10,437		3.98				1,013,856			10,272		4.05
Total Interest-Bearing Liabilities		13,479,228			100,272		2.98				13,427,952			106,927		3.19
Noninterest-bearing deposits		2,358,743									2,586,484
Other liabilities		328,062									251,771
Total Liabilities		16,166,033									16,266,207
STOCKHOLDERS' EQUITY		2,312,270									2,130,993
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,478,303			100,272					$	18,397,200			106,927
Net Interest Income (FTE)				$	140,158								$	135,916
Net Interest Spread (FTE)(4)							2.65	%								2.45	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets							5.63	%								5.64	%
Interest Expense / Average Earning Assets							2.35	%								2.48	%
Net Interest Margin (FTE)(5)							3.28	%								3.16	%
(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. Annualized amounts are computed using a 30/360 day basis.
(2)Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2024 and 2023. These totals equal $5,788 and $5,853 for the three months ended December 31, 2024 and 2023, respectively.
(3)Non accruing loans have been included in the average balances.
(4)Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5)Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Twelve Months Ended
	December 31, 2024									December 31, 2023
	Average Balance			Interest Income / Expense			Average Rate			Average Balance			Interest Income / Expense			Average Rate
Assets:
Interest-bearing deposits	$	418,163		$	16,992		4.06	%		$	431,581		$	17,719		4.11	%
Federal Home Loan Bank stock		41,736			3,527		8.45				41,319			3,052		7.39
Investment Securities:(1)
Taxable		1,759,578			36,086		2.05				1,854,438			35,207		1.90
Tax-exempt(2)		2,200,466			67,705		3.08				2,366,475			73,566		3.11
Total Investment Securities		3,960,044			103,791		2.62				4,220,913			108,773		2.58
Loans held for sale		29,650			1,792		6.04				21,766			1,292		5.94
Loans:(3)
Commercial		8,687,638			641,393		7.38				8,519,706			603,611		7.08
Real estate mortgage		2,158,743			94,890		4.40				2,035,488			82,183		4.04
HELOC and installment		830,079			65,577		7.90				830,006			60,751		7.32
Tax-exempt(2)		928,214			43,370		4.67				891,008			40,448		4.54
Total Loans		12,634,324			847,022		6.70				12,297,974			788,285		6.41
Total Earning Assets		17,054,267			971,332		5.69	%			16,991,787			917,829		5.40	%
Total Non-Earning Assets		1,346,228									1,194,720
Total Assets	$	18,400,495								$	18,186,507
Liabilities:
Interest-Bearing deposits:
Interest-bearing deposits	$	5,506,492		$	157,984		2.87	%		$	5,435,733		$	138,012		2.54	%
Money market deposits		3,061,461			106,026		3.46				2,884,271			83,777		2.90
Savings deposits		1,463,707			14,587		1.00				1,694,230			14,606		0.86
Certificates and other time deposits		2,413,900			107,530		4.45				1,923,268			69,697		3.62
Total Interest-Bearing Deposits		12,445,560			386,127		3.10				11,937,502			306,092		2.56
Borrowings		1,005,017			40,765		4.06				1,111,472			42,394		3.81
Total Interest-Bearing Liabilities		13,450,577			426,892		3.17				13,048,974			348,486		2.67
Noninterest-bearing deposits		2,371,004									2,783,996
Other liabilities		326,423									226,275
Total Liabilities		16,148,004									16,059,245
Stockholders' Equity		2,252,491									2,127,262
Total Liabilities and Stockholders' Equity	$	18,400,495			426,892					$	18,186,507			348,486
Net Interest Income (FTE)				$	544,440								$	569,343
Net Interest Spread (FTE)(4)							2.52	%								2.73	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets							5.69	%								5.40	%
Interest Expense / Average Earning Assets							2.50	%								2.05	%
Net Interest Margin (FTE)(5)							3.19	%								3.35	%
(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. Annualized amounts are computed using a 30/360 day basis.
(2)Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2024 and 2023. These totals equal $23,326 and $23,943 for the years ended December 31, 2024 and 2023, 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.

ADJUSTED NET INCOME AND DILUTED EARNINGS PER COMMON SHARE - NON-GAAP
(Dollars In Thousands, Except Per Share Amounts)	Three Months Ended																				Twelve Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
		2024				2024				2024				2024				2023				2024				2023
Net Income Available to Common Stockholders - GAAP	$	63,880			$	48,719			$	39,456			$	47,472			$	42,010			$	199,527			$	221,911
Adjustments:
PPP loan income		—				—				—				—				(7	)			—				(49	)
Net realized losses on sales of available for sale securities		11,592				9,114				49				2				2,317				20,757				6,930
Gain on branch sale		(19,983	)			—				—				—				—				(19,983	)			—
Non-core expenses1,2,3		762				—				—				3,481				12,682				4,243				12,682
Tax on adjustments		1,851				(2,220	)			(12	)			(848	)			(3,652	)			(1,229	)			(4,767	)
Adjusted Net Income Available to Common Stockholders - Non-GAAP	$	58,102			$	55,613			$	39,493			$	50,107			$	53,350			$	203,315			$	236,707
Average Diluted Common Shares Outstanding (in thousands)		58,247				58,289				58,328				59,273				59,556				58,533				59,489
Diluted Earnings Per Common Share - GAAP	$	1.10			$	0.84			$	0.68			$	0.80			$	0.71			$	3.41			$	3.73
Adjustments:
PPP loan income		—				—				—				—				—				—				—
Net realized losses on sales of available for sale securities		0.20				0.15				—				—				0.04				0.35				0.12
Gain on branch sale		(0.34	)			—				—				—				—				(0.34	)			—
Non-core expenses1,2,3		0.01				—				—				0.06				0.21				0.07				0.21
Tax on adjustments		0.03				(0.04	)			—				(0.01	)			(0.06	)			(0.02	)			(0.08	)
Adjusted Diluted Earnings Per Common Share - Non-GAAP	$	1.00			$	0.95			$	0.68			$	0.85			$	0.90			$	3.47			$	3.98

_{¹ - Non-core expenses in 4Q24 included $0.8 million of costs directly related to the branch sale.
² - Non-core expenses in 1Q24 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.
³ - Non-core expenses in 4Q23 included $6.3 million from early retirement and severance costs, $4.3 million from the FDIC special assessment, and $2.1 million from a lease termination.}

NET INTEREST MARGIN ("NIM"), ADJUSTED
(Dollars in Thousands)
	Three Months Ended																				Twelve Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
		2024				2024				2024				2024				2023				2024				2023
Net Interest Income (GAAP)	$	134,370			$	131,110			$	128,571			$	127,063			$	130,063			$	521,114			$	545,400
Fully Taxable Equivalent ("FTE") Adjustment		5,788				5,883				5,859				5,795				5,853				23,326				23,943
Net Interest Income (FTE) (non-GAAP)	$	140,158			$	136,993			$	134,430			$	132,858			$	135,916			$	544,440			$	569,343
Average Earning Assets (GAAP)	$	17,089,198			$	16,990,358			$	17,013,984			$	17,123,851			$	17,222,714			$	17,054,267			$	16,991,787
Net Interest Margin (GAAP)		3.15	%			3.09	%			3.02	%			2.97	%			3.02	%			3.06	%			3.21	%
Net Interest Margin (FTE) (non-GAAP)		3.28	%			3.23	%			3.16	%			3.10	%			3.16	%			3.19	%			3.35	%

RETURN ON TANGIBLE COMMON EQUITY - NON-GAAP
(Dollars In Thousands)	Three Months Ended																				Twelve Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
		2024				2024				2024				2024				2023				2024				2023
Total Average Stockholders' Equity (GAAP)	$	2,312,270			$	2,251,547			$	2,203,361			$	2,242,139			$	2,130,993			$	2,252,491			$	2,127,262
Less: Average Preferred Stock		(25,125	)			(25,125	)			(25,125	)			(25,125	)			(25,125	)			(25,125	)			(25,125	)
Less: Average Intangible Assets, Net of Tax		(728,218	)			(729,581	)			(730,980	)			(732,432	)			(734,007	)			(730,295	)			(736,601	)
Average Tangible Common Equity, Net of Tax (Non-GAAP)	$	1,558,927			$	1,496,841			$	1,447,256			$	1,484,582			$	1,371,861			$	1,497,071			$	1,365,536
Net Income Available to Common Stockholders (GAAP)	$	63,880			$	48,719			$	39,456			$	47,472			$	42,010			$	199,527			$	221,911
Plus: Intangible Asset Amortization, Net of Tax		1,399				1,399				1,399				1,546				1,724				5,744				6,906
Tangible Net Income (Non-GAAP)	$	65,279			$	50,118			$	40,855			$	49,018			$	43,734			$	205,271			$	228,817
Return on Tangible Common Equity (Non-GAAP)		16.75	%			13.39	%			11.29	%			13.21	%			12.75	%			13.71	%			16.76	%

EFFICIENCY RATIO - NON-GAAP
(Dollars In Thousands)	Three Months Ended																				Twelve Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
		2024				2024				2024				2024				2023				2024				2023
Non Interest Expense (GAAP)	$	96,289			$	94,629			$	91,413			$	96,935			$	108,103			$	379,266			$	388,270
Less: Intangible Asset Amortization		(1,771	)			(1,772	)			(1,771	)			(1,957	)			(2,182	)			(7,271	)			(8,743	)
Less: OREO and Foreclosure Expenses		(227	)			(942	)			(373	)			(534	)			(1,743	)			(2,076	)			(3,318	)
Adjusted Non Interest Expense (Non-GAAP)	$	94,291			$	91,915			$	89,269			$	94,444			$	104,178			$	369,919			$	376,209
Net Interest Income (GAAP)	$	134,370			$	131,110			$	128,571			$	127,063			$	130,063			$	521,114			$	545,400
Plus: Fully Taxable Equivalent Adjustment		5,788				5,883				5,859				5,795				5,853				23,326				23,943
Net Interest Income on a Fully Taxable Equivalent Basis (Non-GAAP)	$	140,158			$	136,993			$	134,430			$	132,858			$	135,916			$	544,440			$	569,343
Non Interest Income (GAAP)	$	42,742			$	24,866			$	31,334			$	26,638			$	26,444			$	125,580			$	105,602
Less: Investment Securities (Gains) Losses		11,592				9,114				49				2				2,317				20,757				6,930
Adjusted Non Interest Income (Non-GAAP)	$	54,334			$	33,980			$	31,383			$	26,640			$	28,761			$	146,337			$	112,532
Adjusted Revenue (Non-GAAP)	$	194,492			$	170,973			$	165,813			$	159,498			$	164,677			$	690,777			$	681,875
Efficiency Ratio (Non-GAAP)		48.48	%			53.76	%			53.84	%			59.21	%			63.26	%			53.55	%			55.17	%
Adjusted Non Interest Expense (Non-GAAP)	$	94,291			$	91,915			$	89,269			$	94,444			$	104,178			$	369,919			$	376,209
Less: Acquisition-related Expenses		—				—				—				—				—				—				—
Less: Non-core Expenses1,2,3		(762	)			—				—				(3,481	)			(12,682	)			(4,243	)			(12,682	)
Adjusted Non Interest Expense Excluding Non-core Expenses (Non-GAAP)	$	93,529			$	91,915			$	89,269			$	90,963			$	91,496			$	365,676			$	363,527
Adjusted Revenue (Non-GAAP)	$	194,492			$	170,973			$	165,813			$	159,498			$	164,677			$	690,777			$	681,875
Less: Gain on Branch Sale		(19,983	)			—				—				—				—				(19,983	)			—
Adjusted Revenue Excluding Gain on Branch Sale (Non-GAAP)	$	174,509			$	170,973			$	165,813			$	159,498			$	164,677			$	670,794			$	681,875
Adjusted Efficiency Ratio (Non-GAAP)		53.60	%			53.76	%			53.84	%			57.03	%			55.56	%			54.51	%			53.31	%

_{¹ - Non-core expenses in 4Q24 included $0.8 million of costs directly related to the branch sale.
² - Non-core expenses in 1Q24 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.
³ - Non-core expenses in 4Q23 included $6.3 million from early retirement and severance costs, $4.3 million from the FDIC special assessment, and $2.1 million from a lease termination.}

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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