First Merchants Corporation Announces First Quarter 2020 Earnings Per Share
First Merchants Corporation (NASDAQ - FRME) has reported first quarter 2020 net income of $34.3 million compared to $38.8 million during the same period in 2019. Earnings per share for the period totaled $.62 per share compared to the first quarter of 2019 result of $.78 per share.
Total assets equaled $12.7 billion as of quarter-end and loans totaled $8.6 billion. The Corporation’s loan portfolio increased by $1.3 billion, or 17.9 percent, during the past twelve months. Total deposits equaled $9.9 billion as of quarter-end and increased by $1.8 billion, or 22.6 percent over the same period in 2019. Of the increases, our acquisition of Monroe Bank & Trust (“MBT”), which closed on September 1, 2019, accounted for $733 million of loan growth and $1.1 billion of deposit growth. The resulting loan-to-deposit ratio of 87.2 percent and loan-to-asset ratio of 67.8 percent provides for fortress balance sheet levels of liquidity.
The Corporation’s provision for loan losses totaled $19.8 million and net charge-offs for the quarter totaled just $582,000. The allowance for loan losses totaled $99.5 million as of March 31, 2020, up from $80.9 million as of March 31, 2019. The increase of $18.6 million, or 22.9 percent, primarily reflects our view of increased credit risk related to the COVID-19 pandemic. Non-accrual loans totaled just $15.6 million as of quarter-end and the allowance plus fair value marks on acquired loans totals 1.54 percent of total loans. As of March 31, 2020, the Corporation’s total risk-based capital ratio equaled 13.80 percent, the common equity tier 1 capital ratio equaled 11.58 percent, and the tangible common equity ratio totaled 9.91 percent, providing fortress balance sheet levels of capital.
Michael C. Rechin, President and Chief Executive Officer, stated, “It’s humbling to lead an organization that has such a positive impact on our communities. The resiliency of our employees and our customers is a testament to the strength of the human spirit. The transformation of our business to remote work, drive-up consumer business and serving our customers through the processing of loan modifications and Paycheck Protection Program loans in the thousands is spectacular.” Rechin also added, “Our profitability levels were negatively impacted by margin compression and provision for loan losses; however, the strength of our fee income businesses provided a positive contribution to earnings. We believe our pre-tax, pre-provision earnings remain best-in-class.”
Net-interest income totaled $93.9 million for the quarter, an increase of $9 million, or 10.6 percent compared to the first quarter of 2019. Net-interest margin on a tax equivalent basis, totaling 3.46 percent, declined by 38 basis points compared to the first quarter of 2019. Yields on earning assets declined by 51 basis points and totaled 4.38 percent. The cost of supporting liabilities decreased by 13 basis points and totaled .92 percent. Fair value accretion had a favorable impact on net interest margin of 12 basis points in the first quarter of 2020, compared to 9 basis points in the first quarter of 2019. Non-interest income totaled $29.8 million for the quarter, an $11.1 million increase from the first quarter of 2019. Gains on the sale of securities increased by $3.5 million as we took advantage of rebalancing opportunities within the investment portfolio. Additionally, gains from the sale of loans increased by $2.1 million driven by lower mortgage loan interest rates. Derivative hedge fees increased by $1.2 million as borrowers chose to lock in long-term interest rates. In addition to the highlighted items above, most line items increased due to the MBT acquisition in September 2019. Non-interest expense totaled $66.2 million in the first quarter of 2020, compared to $56.6 million in the same period of 2019. Of the $9.6 million increase, nearly all can be attributed to the acquisition of MBT in September 2019. The effective tax rate was 9.2 percent in the first quarter of 2020, compared to 15.2 percent in the first quarter of 2019. $1.2 million of the decline is attributable to the CARES Act providing the opportunity to carryback net operating losses to pre-tax reform income tax rates.
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.
FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.
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.
SOURCE: First Merchants Corporation, Muncie, Indiana