First Merchants Corporation Announces First Quarter 2021 Earnings per Share

MUNCIE, Ind., April 22, 2021 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported first quarter 2021 net income of $49.5 million compared to $34.3 million during the same period in 2020. Earnings per share for the period totaled $.91 per share compared to the first quarter of 2020 result of $.62 per share, an increase of $.29, or 47 percent.

Total assets equaled $14.6 billion as of quarter-end and loans totaled $9.3 billion. The Corporation’s loan portfolio increased by $711 million, or 8.3 percent, during the past twelve months. The increase was primarily due to Paycheck Protection Program (“PPP”) loans which accounted for $742 million of the quarter-end loan balance. Investments increased $1 billion, or 37.2 percent, during the year and now total $3.7 billion. Total deposits equaled $12.0 billion as of quarter-end and increased by $2.1 billion, or 21.1 percent over the same period in 2020.

On January 1, 2021, the Corporation adopted the current expected credit losses (“CECL”) model for calculating the allowance for credit losses. The impact of the adoption was an increase to Allowance for Credit Losses – Loans of $74.1 million and the establishment of an Allowance for Credit Losses - Investments of $245,000. Net charge-offs totaled $3.6 million for the quarter and no provision expense was recorded. As a result, the quarter end Allowance for Credit Losses – Loans balance was $201.1 million, or 2.16% of total loans. Non-accrual loans totaled $57.9 million as of quarter-end.

Mark Hardwick, Chief Executive Officer, stated, “We have returned to the office and have reopened our lobbies to serve our customers in a more personal way. The vaccination progress and improved case numbers in our markets are cause for optimism. Our first quarter results were strong and I’m especially pleased to have produced a return on assets of 1.39 percent, return on tangible common equity of 15.87 percent and efficiency ratio of 50.23 percent. The current balance sheet and financial performance positions First Merchants to capitalize on future growth opportunities.”

Net-interest income totaling $100.4 million for the quarter, continued to grow with an increase of $6.6 million, or 7.0 percent compared to the first quarter of 2020. Net-interest margin on a tax equivalent basis, totaling 3.23 percent, declined by 23 basis points compared to the first quarter of 2020. Yield on earning assets for the first quarter totaled 3.52 percent and cost of supporting liabilities totaled 0.29 percent. Fair value accretion contributed less to margin as it accounted for 6 basis points in the first quarter of 2021, compared to 12 basis points in the first quarter of 2020. PPP loans contributed 13 basis points to margin during the first quarter of 2021 as unamortized SBA fees were recognized upon loan forgiveness.

Non-interest income totaled $24.1 million for the quarter, a $5.7 million decline from the first quarter of 2020. Customer-specific line items accounted for $2.8 million of the decrease driven by lower derivative hedge fees and the impact of the Durbin Amendment adoption on card payment fees. Additionally, gains on the sale of securities decreased by $2.8 million during the quarter. Non-interest expense totaled $66.1 million for the quarter and was stable compared to the 2020 first quarter expense total of $66.2 million.

The effective tax rate was 15.3 percent in the first quarter of 2021, compared to 9.2 percent in the first quarter of 2020. The CARES Act provided an opportunity to carry back net operating losses to pre-tax reform income tax rates in the first quarter of 2020. The result was a decline in income tax expense of $1.2 million and a lower-than-normal effective tax rate.

The loan-to-deposit ratio totals 78.0 percent and loan-to-asset ratio totals 63.7 percent. Additionally, the Corporation’s total risk-based capital ratio equaled 14.33 percent, the common equity tier 1 capital ratio equaled 11.99 percent, and the tangible common equity ratio totaled 8.78 percent. These ratios reflect the Corporation’s strong liquidity and capital positions.

CONFERENCE CALL

First Merchants Corporation will conduct a first quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, April 22, 2021.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's first quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until May 22, 2021. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529, Canada participants should dial 855-669-9658, or for International participants, dial +1 412-317-0088. The replay access code is 10153171.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme210422.html during the time of the call. A replay of the web cast will be available until April 22, 2022.

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 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)	March 31,
	2021				2020
ASSETS
Cash and cash equivalents	$	187,901			$	127,731
Interest-bearing deposits	392,806				132,944
Investment securities, net of allowance for credit losses of $245,000 and $0	3,700,857				2,697,954
Loans held for sale	4,430				5,039
Loans	9,318,228				8,606,849
Less: Allowance for credit losses - loans	(201,082		)		(99,454		)
Net loans	9,117,146				8,507,395
Premises and equipment	109,432				114,045
Federal Home Loan Bank stock	28,736				28,736
Interest receivable	54,662				47,489
Goodwill and other intangibles	571,536				577,366
Cash surrender value of life insurance	293,766				289,574
Other real estate owned	604				7,972
Tax asset, deferred and receivable	40,163				9,497
Other assets	127,027				147,776
TOTAL ASSETS	$	14,629,066			$	12,693,518
LIABILITIES
Deposits:
Noninterest-bearing	$	2,494,891			$	1,688,205
Interest-bearing	9,456,889				8,182,279
Total Deposits	11,951,780				9,870,484
Borrowings:
Federal funds purchased	—				47,000
Securities sold under repurchase agreements	185,721				183,317
Federal Home Loan Bank advances	359,337				480,995
Subordinated debentures and other borrowings	118,439				128,741
Total Borrowings	663,497				840,053
Interest payable	4,020				7,746
Other liabilities	203,913				197,275
Total Liabilities	12,823,210				10,915,558
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 - 53,953,723 and 53,754,137 shares	6,744				6,719
Additional paid-in capital	1,007,300				1,000,942
Retained earnings	755,877				716,518
Accumulated other comprehensive income	35,810				53,656
Total Stockholders' Equity	1,805,856				1,777,960
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	14,629,066			$	12,693,518

CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended
(Dollars In Thousands, Except Per Share Amounts)	March 31,
	2021				2020
INTEREST INCOME
Loans receivable:
Taxable	$	85,105			$	96,652
Tax-exempt	5,339				5,315
Investment securities:
Taxable	6,695				7,631
Tax-exempt	12,385				9,335
Deposits with financial institutions	114				575
Federal Home Loan Bank stock	178				299
Total Interest Income	109,816				119,807
INTEREST EXPENSE
Deposits	6,200				21,748
Federal funds purchased	2				111
Securities sold under repurchase agreements	87				352
Federal Home Loan Bank advances	1,442				1,774
Subordinated debentures and other borrowings	1,657				1,945
Total Interest Expense	9,388				25,930
NET INTEREST INCOME	100,428				93,877
Provision for credit losses - loans	—				19,752
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	100,428				74,125
OTHER INCOME
Service charges on deposit accounts	5,264				5,970
Fiduciary and wealth management fees	6,422				5,985
Card payment fees	4,367				5,907
Net gains and fees on sales of loans	3,986				3,363
Derivative hedge fees	317				1,939
Other customer fees	368				398
Earnings on cash surrender value of life insurance	1,336				1,360
Net realized gains on sales of available for sale securities	1,799				4,612
Other income	232				265
Total Other Income	24,091				29,799
OTHER EXPENSES
Salaries and employee benefits	38,811				39,243
Net occupancy	6,491				5,801
Equipment	5,030				4,344
Marketing	1,124				1,443
Outside data processing fees	4,244				4,199
Printing and office supplies	283				387
Intangible asset amortization	1,357				1,514
FDIC assessments	1,368				1,523
Other real estate owned and foreclosure expenses	734				505
Professional and other outside services	2,543				2,258
Other expenses	4,113				4,954
Total Other Expenses	66,098				66,171
INCOME BEFORE INCOME TAX	58,421				37,753
Income tax expense	8,952				3,490
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	49,469			$	34,263
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.92			$	0.63
Diluted Net Income Available to Common Stockholders	$	0.91			$	0.62
Cash Dividends Paid	$	0.26			$	0.26
Average Diluted Shares Outstanding (in thousands)	54,134				54,918

FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended
	March 31,
	2021				2020
NET CHARGE-OFFS	$	3,621			$	582
AVERAGE BALANCES:
Total Assets	$	14,244,739			$	12,573,238
Total Loans	9,236,421				8,526,571
Total Earning Assets	13,023,318				11,292,430
Total Deposits	11,567,918				9,886,273
Total Stockholders' Equity	1,840,432				1,816,418
FINANCIAL RATIOS:
Return on Average Assets	1.39		%		1.09		%
Return on Average Stockholders' Equity	10.75				7.55
Return on Average Common Stockholders' Equity	10.75				7.55
Average Earning Assets to Average Assets	91.43				89.81
Allowance for Credit Losses - Loans as % of Total Loans	2.16				1.15
Net Charge-offs as % of Average Loans (Annualized)	0.16				0.03
Average Stockholders' Equity to Average Assets	12.92				14.45
Tax Equivalent Yield on Average Earning Assets	3.52				4.38
Interest Expense/Average Earning Assets	0.29				0.92
Net Interest Margin (FTE) on Average Earning Assets	3.23				3.46
Efficiency Ratio	50.23				52.17
Tangible Common Book Value Per Share	$	22.98			$	22.46

NON-PERFORMING ASSETS
(Dollars In Thousands)	March 31,				December 31,				September 30,				June 30,				March 31,
	2021				2020				2020				2020				2020
Non-Accrual Loans	$	57,923			$	61,471			$	56,739			$	50,102			$	15,649
Renegotiated Loans	655				3,240				2,677				1,086				665
Non-Performing Loans (NPL)	58,578				64,711				59,416				51,188				16,314
Other Real Estate Owned and Repossessions	604				940				6,984				7,409				8,017
Non-Performing Assets (NPA)	59,182				65,651				66,400				58,597				24,331
90+ Days Delinquent	1,093				746				1,330				4,981				312
NPAs & 90 Day Delinquent	$	60,275			$	66,397			$	67,730			$	63,578			$	24,643
Allowance for Credit Losses - Loans	$	201,082			$	130,648			$	126,726			$	121,119			$	99,454
Quarterly Net Charge-offs	3,621				560				6,937				230				582
NPAs / Actual Assets %	0.40		%		0.47		%		0.48		%		0.42		%		0.19		%
NPAs & 90 Day / Actual Assets %	0.41		%		0.47		%		0.49		%		0.46		%		0.19		%
NPAs / Actual Loans and OREO %	0.63		%		0.71		%		0.72		%		0.63		%		0.28		%
Allowance for Credit Losses - Loans / Actual Loans (%)	2.16		%		1.41		%		1.37		%		1.30		%		1.15		%
Net Charge-offs as % of Average Loans (Annualized)	0.16		%		0.02		%		0.30		%		0.01		%		0.03		%

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	March 31,				December 31,				September 30,				June 30,				March 31,
	2021				2020				2020				2020				2020
ASSETS
Cash and cash equivalents	$	187,901			$	192,896			$	164,632			$	229,759			$	127,731
Interest-bearing deposits	392,806				392,305				273,936				380,021				132,944
Investment securities, net of allowance for credit losses	3,700,857				3,146,787				2,933,286				2,789,379				2,697,954
Loans held for sale	4,430				3,966				3,183				901				5,039
Loans	9,318,228				9,243,174				9,243,833				9,298,541				8,606,849
Less: Allowance for credit losses - loans	(201,082		)		(130,648		)		(126,726		)		(121,119		)		(99,454		)
Net loans	9,117,146				9,112,526				9,117,107				9,177,422				8,507,395
Premises and equipment	109,432				111,062				112,959				112,548				114,045
Federal Home Loan Bank stock	28,736				28,736				28,736				28,736				28,736
Interest receivable	54,662				53,948				52,992				57,063				47,489
Goodwill and other intangibles	571,536				572,893				574,369				575,855				577,366
Cash surrender value of life insurance	293,766				292,745				291,543				290,715				289,574
Other real estate owned	604				940				6,942				7,367				7,972
Tax asset, deferred and receivable	40,163				12,340				21,762				13,126				9,497
Other assets	127,027				146,066				155,903				156,486				147,776
TOTAL ASSETS	$	14,629,066			$	14,067,210			$	13,737,350			$	13,819,378			$	12,693,518
LIABILITIES
Deposits:
Noninterest-bearing	$	2,494,891			$	2,298,138			$	2,187,607			$	2,260,351			$	1,688,205
Interest-bearing	9,456,889				9,063,472				8,718,546				8,705,637				8,182,279
Total Deposits	11,951,780				11,361,610				10,906,153				10,965,988				9,870,484
Borrowings:
Federal funds purchased	—				—				80,000				—				47,000
Securities sold under repurchase agreements	185,721				177,102				187,732				181,150				183,317
Federal Home Loan Bank advances	359,337				389,430				399,522				400,817				480,995
Subordinated debentures and other borrowings	118,439				118,380				118,320				285,197				128,741
Total Borrowings	663,497				684,912				785,574				867,164				840,053
Interest payable	4,020				3,287				5,038				5,587				7,746
Other liabilities	203,913				141,756				206,929				171,544				197,275
Total Liabilities	12,823,210				12,191,565				11,903,694				12,010,283				10,915,558
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	6,744				6,740				6,736				6,724				6,719
Additional paid-in capital	1,007,300				1,005,366				1,003,777				1,002,962				1,000,942
Retained earnings	755,877				788,578				757,550				735,439				716,518
Accumulated other comprehensive income	35,810				74,836				65,468				63,845				53,656
Total Stockholders' Equity	1,805,856				1,875,645				1,833,656				1,809,095				1,777,960
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	14,629,066			$	14,067,210			$	13,737,350			$	13,819,378			$	12,693,518

CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	March 31,				December 31,				September 30,				June 30,				March 31,
	2021				2020				2020				2020				2020
INTEREST INCOME
Loans receivable:
Taxable	$	85,105			$	90,138			$	84,162			$	87,312			$	96,652
Tax-exempt	5,339				5,414				5,395				5,359				5,315
Investment securities:
Taxable	6,695				5,263				5,399				6,147				7,631
Tax-exempt	12,385				12,056				10,931				10,019				9,335
Deposits with financial institutions	114				139				90				134				575
Federal Home Loan Bank stock	178				214				248				281				299
Total Interest Income	109,816				113,224				106,225				109,252				119,807
INTEREST EXPENSE
Deposits	6,200				7,509				9,776				12,707				21,748
Federal funds purchased	2				2				5				2				111
Securities sold under repurchase agreements	87				77				83				92				352
Federal Home Loan Bank advances	1,442				1,656				1,749				1,794				1,774
Subordinated debentures and other borrowings	1,657				1,669				1,691				1,639				1,945
Total Interest Expense	9,388				10,913				13,304				16,234				25,930
NET INTEREST INCOME	100,428				102,311				92,921				93,018				93,877
Provision for credit losses - loans	—				4,482				12,544				21,895				19,752
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	100,428				97,829				80,377				71,123				74,125
OTHER INCOME
Service charges on deposit accounts	5,264				5,508				5,209				4,312				5,970
Fiduciary and wealth management fees	6,422				6,251				5,910				5,601				5,985
Card payment fees	4,367				3,502				3,996				6,097				5,907
Net gains and fees on sales of loans	3,986				5,393				5,841				3,674				3,363
Derivative hedge fees	317				2,281				1,715				1,042				1,939
Other customer fees	368				394				372				333				398
Earnings on cash surrender value of life insurance	1,336				1,283				1,171				1,326				1,360
Net realized gains on sales of available for sale securities	1,799				2,398				1,817				3,068				4,612
Other income	232				473				132				1,028				265
Total Other Income	24,091				27,483				26,163				26,481				29,799
OTHER EXPENSES
Salaries and employee benefits	38,811				41,809				39,187				35,698				39,243
Net occupancy	6,491				9,653				5,855				5,447				5,801
Equipment	5,030				5,555				4,956				4,489				4,344
Marketing	1,124				1,763				1,311				2,092				1,443
Outside data processing fees	4,244				3,839				3,776				2,618				4,199
Printing and office supplies	283				307				331				279				387
Intangible asset amortization	1,357				1,476				1,486				1,511				1,514
FDIC assessments	1,368				1,560				1,249				1,472				1,523
Other real estate owned and foreclosure expenses	734				(1,576		)		717				684				505
Professional and other outside services	2,543				2,836				2,254				1,553				2,258
Other expenses	4,113				5,314				3,587				4,146				4,954
Total Other Expenses	66,098				72,536				64,709				59,989				66,171
INCOME BEFORE INCOME TAX	58,421				52,776				41,831				37,615				37,753
Income tax expense	8,952				7,641				5,621				4,623				3,490
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	49,469			$	45,135			$	36,210			$	32,992			$	34,263
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.92			$	0.83			$	0.67			$	0.62			$	0.63
Diluted Net Income Available to Common Stockholders	$	0.91			$	0.83			$	0.67			$	0.62			$	0.62
Cash Dividends Paid	$	0.26			$	0.26			$	0.26			$	0.26			$	0.26
Average Diluted Shares Outstanding (in thousands)	54,134				54,050				53,971				53,943				54,918
FINANCIAL RATIOS:
Return on Average Assets	1.39		%		1.29		%		1.06		%		0.97		%		1.09		%
Return on Average Stockholders' Equity	10.75				9.72				7.91				7.35				7.55
Return on Average Common Stockholders' Equity	10.75				9.72				7.91				7.35				7.55
Average Earning Assets to Average Assets	91.43				90.66				90.34				89.25				89.81
Allowance for Credit Losses - Loans as % of Total Loans	2.16				1.41				1.37				1.30				1.15
Net Charge-offs as % of Average Loans (Annualized)	0.16				0.02				0.30				0.01				0.03
Average Stockholders' Equity to Average Assets	12.92				13.29				13.41				13.15				14.45
Tax Equivalent Yield on Average Earning Assets	3.52				3.72				3.58				3.72				4.38
Interest Expense/Average Earning Assets	0.29				0.34				0.43				0.53				0.92
Net Interest Margin (FTE) on Average Earning Assets	3.23				3.38				3.15				3.19				3.46
Efficiency Ratio	50.23				55.01				51.40				47.95				52.17
Tangible Common Book Value Per Share	$	22.98			$	24.27			$	23.48			$	23.04			$	22.46

LOANS
(Dollars In Thousands)	March 31,					December 31,					September 30,					June 30,					March 31,
	2021					2020					2020					2020					2020
Commercial and industrial loans	$	2,876,212				$	2,776,699				$	2,875,331				$	2,898,329				$	2,199,226
Agricultural land, production and other loans to farmers	245,631					281,884					301,192					316,815					315,950
Real estate loans:
Construction	541,224					484,723					622,084					640,560					643,674
Commercial real estate, non-owner occupied	2,178,832					2,220,949					2,098,589					2,097,767					2,118,148
Commercial real estate, owner occupied	950,038					958,501					931,815					919,254					921,491
Residential	1,239,925					1,234,741					1,146,406					1,145,187					1,121,556
Home equity	482,229					508,259					527,458					532,314					570,398
Individuals' loans for household and other personal expenditures	126,387					129,479					125,411					123,611					129,765
Public finance and other commercial loans	677,750					647,939					615,547					624,704					586,641
Loans	9,318,228					9,243,174					9,243,833					9,298,541					8,606,849
Allowance for credit losses - loans	(201,082		)			(130,648		)			(126,726		)			(121,119		)			(99,454		)
NET LOANS	$	9,117,146				$	9,112,526				$	9,117,107				$	9,177,422				$	8,507,395

DEPOSITS
(Dollars In Thousands)	March 31,				December 31,				September 30,				June 30,				March 31,
	2021				2020				2020				2020				2020
Demand deposits	$	7,245,850			$	6,821,152			$	6,279,554			$	6,288,360			$	5,293,200
Savings deposits	3,857,624				3,661,713				3,518,286				3,278,156				2,962,821
Certificates and other time deposits of $100,000 or more	332,745				346,194				467,610				607,474				694,062
Other certificates and time deposits	449,655				459,168				542,919				669,119				717,723
Brokered deposits	65,906				73,383				97,784				122,879				202,678
TOTAL DEPOSITS	$	11,951,780			$	11,361,610			$	10,906,153			$	10,965,988			$	9,870,484

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	March 31, 2021											March 31, 2020
	Average Balance				Interest  Income / Expense				Average Rate			Average Balance				Interest  Income / Expense				Average Rate
Assets:
Interest-bearing deposits	$	441,254			$	114			0.10	%		$	159,859			$	575			1.44	%
Federal Home Loan Bank stock	28,736				178				2.48			28,737				299				4.16
Investment Securities: (1)
Taxable	1,494,008				6,695				1.79			1,368,546				7,631				2.23
Tax-Exempt (2)	1,822,899				15,677				3.44			1,208,717				11,816				3.91
Total Investment Securities	3,316,907				22,372				2.70			2,577,263				19,447				3.02
Loans held for sale	16,139				156				3.87			17,217				193				4.48
Loans: (3)
Commercial	6,876,818				69,174				4.02			6,235,336				76,952				4.94
Real Estate Mortgage	975,262				9,286				3.81			870,654				10,402				4.78
Installment	674,307				6,489				3.85			759,614				9,105				4.79
Tax-Exempt (2)	693,895				6,758				3.90			643,750				6,728				4.18
Total Loans	9,236,421				91,863				3.98			8,526,571				103,380				4.85
Total Earning Assets	13,023,318				114,527				3.52	%		11,292,430				123,701				4.38	%
Net unrealized gain (loss) on securities available for sale	55,658											48,656
Allowance for credit losses	(204,353		)									(81,160		)
Cash and cash equivalents	165,774											159,757
Premises and equipment	110,992											113,812
Other assets	1,093,350											1,039,743
Total Assets	$	14,244,739										$	12,573,238
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	4,616,988			$	3,709			0.32	%		$	3,589,240			$	8,276			0.92	%
Money market deposits	2,086,322				835				0.16			1,535,844				3,783				0.99
Savings deposits	1,660,528				476				0.11			1,425,054				1,827				0.51
Certificates and other time deposits	859,334				1,180				0.55			1,666,642				7,862				1.89
Total Interest-bearing Deposits	9,223,172				6,200				0.27			8,216,780				21,748				1.06
Borrowings	675,117				3,188				1.89			748,185				4,182				2.24
Total Interest-bearing Liabilities	9,898,289				9,388				0.38			8,964,965				25,930				1.16
Noninterest-bearing deposits	2,344,746											1,669,493
Other liabilities	161,272											122,362
Total Liabilities	12,404,307											10,756,820
Stockholders' Equity	1,840,432											1,816,418
Total Liabilities and Stockholders' Equity	$	14,244,739			9,388							$	12,573,238			25,930
Net Interest Income (FTE)					$	105,139										$	97,771
Net Interest Spread (FTE) (4)									3.14	%										3.22	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets									3.52	%										4.38	%
Interest Expense / Average Earning Assets									0.29	%										0.92	%
Net Interest Margin (FTE) (5)									3.23	%										3.46	%
(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 2021 and 2020. These totals equal $4,711 and $3,894 for the three months ended March 31, 2021 and 2020, 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.

For more information, contact:
Nicole M. Weaver, Vice President and Director of Corporate Administration
765-521-7619
http://www.firstmerchants.com