First Merchants Corporation Announces Third Quarter 2021 Earnings Per Share

MUNCIE, Ind., Oct. 26, 2021 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported third quarter 2021 net income of $52.8 million compared to $36.2 million during the same period in 2020, an increase of 45.7 percent. Earnings per share for the period totaled $.98 per share compared to the third quarter of 2020 result of $.67 per share. Year-to-date net income totaled $157.8 million compared to $103.5 million during the nine months ended September 30, 2020, an increase of 52.5 percent. Year-to-date earnings per share totaled $2.92 compared to $1.91 during the same period in 2020.

Total assets equaled $15.1 billion as of September 30, 2021 and loans totaled $9.0 billion. The Corporation experienced organic loan growth of $503.9 million, or 6.0 percent during the last twelve months, offset by the forgiveness of Paycheck Protection Program (“PPP”) loans which accounted for a decline of $703.3 million. As a result, the loan portfolio decreased by $199.5 million, or 2.2 percent, during that period. Organic loan growth, on an annualized basis, was 5.8 percent in the third quarter 2021. Investments increased $1.5 billion, or 51.6 percent, during the last twelve months and now total $4.4 billion. Total deposits equaled $12.3 billion as of quarter-end and increased by $1.4 billion, or 13.2 percent, from the same period in 2020.

The Corporation’s Allowance for Credit Losses – Loans totaled $200.0 million as of quarter-end, or 2.21 percent of total loans. Net recoveries for the quarter totaled $0.2 million and no provision expense was recorded. Provision expense taken during the three and nine months ended September 30, 2020 of $12.5 million and $54.2 million, respectively, reflected our view of increased credit risk related to the COVID-19 pandemic. Non-accrual loans totaled $51.5 million as of quarter-end.

Mark Hardwick, Chief Executive Officer, stated, “We are having a record year powered by strong balance sheet growth and high levels of profitability. We remain optimistic about the remainder of 2021 and our ability to deliver high levels of performance in 2022.”

Net-interest income for the quarter totaled $104.7 million, an increase of $11.8 million from the third quarter of 2020, or 12.7 percent. Net interest margin, on a tax equivalent basis, totaling 3.20 percent, increased by 5 basis points compared to the third quarter of 2020. Yields on earning assets for the third quarter totaled 3.46 percent and cost of supporting liabilities totaled 26 basis points. Fair value accretion contributed less to margin as it accounted for 4 basis points in the third quarter of 2021, compared to 10 basis points in the third quarter of 2020. PPP loans contributed 17 basis points to margin during the third quarter of 2021 but subtracted 7 basis points from margin in the same quarter of 2020.

Non-interest income totaled $28.5 million for the quarter, a $2.3 million increase over the third quarter of 2020. Increases in service charges on deposit accounts, fiduciary and wealth management fees and earnings on cash surrender value of life insurance were somewhat offset by a decline in gains on the sale of mortgage loans. Non-interest expense totaled $71.4 million for the quarter compared to $64.7 million in the third quarter of 2020, an increase primarily due to higher salaries and employee benefits.

The loan to deposit ratio now totals 73.3 percent and the loan to asset ratio totals 60.1 percent. As of September 30, 2021, the Corporation’s total risk-based capital ratio equaled 14.02 percent, the common equity tier 1 capital ratio equaled 11.75 percent, and the tangible common equity ratio totaled 8.94 percent. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

CONFERENCE CALL

First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 2:30 p.m. (ET) on Tuesday, October 26, 2021.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's third quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until November 26, 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 10160141.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme211021.html during the time of the call. A replay of the web cast will be available until October 26, 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)	September 30,
	2021				2020
ASSETS
Cash and cash equivalents	$	169,261			$	164,632
Interest-bearing deposits	369,447				273,936
Investment securities, net of allowance for credit losses of $245,000 and $0	4,445,516				2,933,286
Loans held for sale	5,990				3,183
Loans	9,041,576				9,243,833
Less: Allowance for credit losses - loans	(199,972		)		(126,726		)
Net loans	8,841,604				9,117,107
Premises and equipment	104,814				112,959
Federal Home Loan Bank stock	28,736				28,736
Interest receivable	53,079				52,992
Goodwill and other intangibles	572,323				574,369
Cash surrender value of life insurance	291,825				291,543
Other real estate owned	698				6,942
Tax asset, deferred and receivable	39,504				21,762
Other assets	137,928				155,903
TOTAL ASSETS	$	15,060,725			$	13,737,350
LIABILITIES
Deposits:
Noninterest-bearing	$	2,554,323			$	2,187,607
Interest-bearing	9,794,366				8,718,546
Total Deposits	12,348,689				10,906,153
Borrowings:
Federal funds purchased	—				80,000
Securities sold under repurchase agreements	183,589				187,732
Federal Home Loan Bank advances	334,149				399,522
Subordinated debentures and other borrowings	118,558				118,320
Total Borrowings	636,296				785,574
Interest payable	3,736				5,038
Other liabilities	203,914				206,929
Total Liabilities	13,192,635				11,903,694
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 - 53,510,745 and 53,891,733 shares	6,689				6,736
Additional paid-in capital	988,659				1,003,777
Retained earnings	832,728				757,550
Accumulated other comprehensive income	39,889				65,468
Total Stockholders' Equity	1,868,090				1,833,656
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	15,060,725			$	13,737,350

CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended								Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts)	September 30,								September 30,
	2021				2020				2021				2020
INTEREST INCOME
Loans receivable:
Taxable	$	85,319			$	84,162			$	257,426			$	268,126
Tax-exempt	5,591				5,395				16,475				16,069
Investment securities:
Taxable	7,788				5,399				21,923				19,177
Tax-exempt	14,464				10,931				39,920				30,285
Deposits with financial institutions	218				90				461				799
Federal Home Loan Bank stock	168				248				434				828
Total Interest Income	113,548				106,225				336,639				335,284
INTEREST EXPENSE
Deposits	5,707				9,776				17,730				44,231
Federal funds purchased	—				5				4				118
Securities sold under repurchase agreements	77				83				239				527
Federal Home Loan Bank advances	1,389				1,749				4,283				5,317
Subordinated debentures and other borrowings	1,660				1,691				4,976				5,275
Total Interest Expense	8,833				13,304				27,232				55,468
NET INTEREST INCOME	104,715				92,921				309,407				279,816
Provision for credit losses - loans	—				12,544				—				54,191
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	104,715				80,377				309,407				225,625
OTHER INCOME
Service charges on deposit accounts	6,249				5,209				17,109				15,491
Fiduciary and wealth management fees	7,352				5,910				21,284				17,496
Card payment fees	4,156				3,996				12,682				16,000
Net gains and fees on sales of loans	3,955				5,841				16,266				12,878
Derivative hedge fees	1,028				1,715				2,288				4,696
Other customer fees	393				372				1,129				1,103
Earnings on cash surrender value of life insurance	2,468				1,171				5,009				3,857
Net realized gains on sales of available for sale securities	1,756				1,817				5,316				9,497
Other income	1,144				132				2,393				1,425
Total Other Income	28,501				26,163				83,476				82,443
OTHER EXPENSES
Salaries and employee benefits	43,314				39,187				124,563				114,128
Net occupancy	5,576				5,855				17,682				17,103
Equipment	4,529				4,956				14,407				13,789
Marketing	1,676				1,311				3,922				4,846
Outside data processing fees	4,794				3,776				13,736				10,593
Printing and office supplies	265				331				861				997
Intangible asset amortization	1,463				1,486				4,284				4,511
FDIC assessments	1,552				1,249				4,381				4,244
Other real estate owned and foreclosure expenses	(91		)		717				821				1,906
Professional and other outside services	2,767				2,254				8,286				6,065
Other expenses	5,539				3,587				13,834				12,687
Total Other Expenses	71,384				64,709				206,777				190,869
INCOME BEFORE INCOME TAX	61,832				41,831				186,106				117,199
Income tax expense	9,062				5,621				28,308				13,734
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	52,770			$	36,210			$	157,798			$	103,465
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.98			$	0.67			$	2.93			$	1.91
Diluted Net Income Available to Common Stockholders	$	0.98			$	0.67			$	2.92			$	1.91
Cash Dividends Paid	$	0.29			$	0.26			$	0.84			$	0.78
Average Diluted Shares Outstanding (in thousands)	53,960				53,971				54,093				54,278

FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2021				2020				2021				2020
NET CHARGE-OFFS	$	(197	)		$	6,937			$	4,731			$	7,749
AVERAGE BALANCES:
Total Assets	$	15,006,087			$	13,660,818			$	14,672,596			$	13,297,789
Total Loans	9,089,648				9,252,839				9,202,327				8,987,645
Total Earning Assets	13,741,196				12,341,257				13,419,310				11,941,839
Total Deposits	12,350,336				10,944,721				12,017,335				10,541,777
Total Stockholders' Equity	1,889,037				1,831,300				1,858,680				1,814,471
FINANCIAL RATIOS:
Return on Average Assets	1.41		%		1.06		%		1.43		%		1.04		%
Return on Average Stockholders' Equity	11.17				7.91				11.32				7.60
Return on Average Common Stockholders' Equity	11.17				7.91				11.32				7.60
Average Earning Assets to Average Assets	91.57				90.34				91.46				89.80
Allowance for Credit Losses - Loans as % of Total Loans	2.21				1.37				2.21				1.37
Net Charge-offs as % of Average Loans (Annualized)	(0.01		)		0.30				0.07				0.11
Average Stockholders' Equity to Average Assets	12.59				13.41				12.67				13.64
Tax Equivalent Yield on Average Earning Assets	3.46				3.58				3.49				3.88
Interest Expense/Average Earning Assets	0.26				0.43				0.27				0.62
Net Interest Margin (FTE) on Average Earning Assets	3.20				3.15				3.22				3.26
Efficiency Ratio	51.18				51.40				50.10				50.52
Tangible Common Book Value Per Share	$	24.31			$	23.48			$	24.31			$	23.48

NON-PERFORMING ASSETS
(Dollars In Thousands)	September 30,				June 30,				March 31,				December 31,				September 30,
	2021				2021				2021				2020				2020
Non-Accrual Loans	$	51,502			$	57,556			$	57,923			$	61,471			$	56,739
Renegotiated Loans	439				629				655				3,240				2,677
Non-Performing Loans (NPL)	51,941				58,185				58,578				64,711				59,416
Other Real Estate Owned and Repossessions	698				601				604				940				6,984
Non-Performing Assets (NPA)	52,639				58,786				59,182				65,651				66,400
90+ Days Delinquent	157				183				1,093				746				1,330
NPAs & 90 Day Delinquent	$	52,796			$	58,969			$	60,275			$	66,397			$	67,730
Allowance for Credit Losses - Loans	$	199,972			$	199,775			$	201,082			$	130,648			$	126,726
Quarterly Net Charge-offs	(197		)		1,307				3,621				560				6,937
NPAs / Actual Assets %	0.35		%		0.39		%		0.40		%		0.47		%		0.48		%
NPAs & 90 Day / Actual Assets %	0.35		%		0.40		%		0.41		%		0.47		%		0.49		%
NPAs / Actual Loans and OREO %	0.58		%		0.64		%		0.63		%		0.71		%		0.72		%
Allowance for Credit Losses - Loans / Actual Loans (%)	2.21		%		2.19		%		2.16		%		1.41		%		1.37		%
Net Charge-offs as % of Average Loans (Annualized)	(0.01		)%		0.06		%		0.16		%		0.02		%		0.30		%

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	September 30,				June 30,				March 31,				December 31,				September 30,
	2021				2021				2021				2020				2020
ASSETS
Cash and cash equivalents	$	169,261			$	167,596			$	187,901			$	192,896			$	164,632
Interest-bearing deposits	369,447				438,863				392,806				392,305				273,936
Investment securities, net of allowance for credit losses	4,445,516				4,148,314				3,700,857				3,146,787				2,933,286
Loans held for sale	5,990				18,582				4,430				3,966				3,183
Loans	9,041,576				9,121,250				9,318,228				9,243,174				9,243,833
Less: Allowance for credit losses - loans	(199,972		)		(199,775		)		(201,082		)		(130,648		)		(126,726		)
Net loans	8,841,604				8,921,475				9,117,146				9,112,526				9,117,107
Premises and equipment	104,814				103,822				109,432				111,062				112,959
Federal Home Loan Bank stock	28,736				28,736				28,736				28,736				28,736
Interest receivable	53,079				54,173				54,662				53,948				52,992
Goodwill and other intangibles	572,323				573,786				571,536				572,893				574,369
Cash surrender value of life insurance	291,825				294,462				293,766				292,745				291,543
Other real estate owned	698				601				604				940				6,942
Tax asset, deferred and receivable	39,504				36,924				40,163				12,340				21,762
Other assets	137,928				135,763				127,027				146,066				155,903
TOTAL ASSETS	$	15,060,725			$	14,923,097			$	14,629,066			$	14,067,210			$	13,737,350
LIABILITIES
Deposits:
Noninterest-bearing	$	2,554,323			$	2,479,853			$	2,494,891			$	2,298,138			$	2,187,607
Interest-bearing	9,794,366				9,723,547				9,456,889				9,063,472				8,718,546
Total Deposits	12,348,689				12,203,400				11,951,780				11,361,610				10,906,153
Borrowings:
Federal funds purchased	—				—				—				—				80,000
Securities sold under repurchase agreements	183,589				146,904				185,721				177,102				187,732
Federal Home Loan Bank advances	334,149				334,243				359,337				389,430				399,522
Subordinated debentures and other borrowings	118,558				118,498				118,439				118,380				118,320
Total Borrowings	636,296				599,645				663,497				684,912				785,574
Interest payable	3,736				2,929				4,020				3,287				5,038
Other liabilities	203,914				245,323				203,913				141,756				206,929
Total Liabilities	13,192,635				13,051,297				12,823,210				12,191,565				11,903,694
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	6,689				6,747				6,744				6,740				6,736
Additional paid-in capital	988,659				1,009,182				1,007,300				1,005,366				1,003,777
Retained earnings	832,728				795,666				755,877				788,578				757,550
Accumulated other comprehensive income	39,889				60,080				35,810				74,836				65,468
Total Stockholders' Equity	1,868,090				1,871,800				1,805,856				1,875,645				1,833,656
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	15,060,725			$	14,923,097			$	14,629,066			$	14,067,210			$	13,737,350

CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	September 30				June 30				March 31,				December 31,				September 30,
	2021				2021				2021				2020				2020
INTEREST INCOME
Loans receivable:
Taxable	$	85,319			$	87,002			$	85,105			$	90,138			$	84,162
Tax-exempt	5,591				5,545				5,339				5,414				5,395
Investment securities:
Taxable	7,788				7,440				6,695				5,263				5,399
Tax-exempt	14,464				13,071				12,385				12,056				10,931
Deposits with financial institutions	218				129				114				139				90
Federal Home Loan Bank stock	168				88				178				214				248
Total Interest Income	113,548				113,275				109,816				113,224				106,225
INTEREST EXPENSE
Deposits	5,707				5,823				6,200				7,509				9,776
Federal funds purchased	—				2				2				2				5
Securities sold under repurchase agreements	77				75				87				77				83
Federal Home Loan Bank advances	1,389				1,452				1,442				1,656				1,749
Subordinated debentures and other borrowings	1,660				1,659				1,657				1,669				1,691
Total Interest Expense	8,833				9,011				9,388				10,913				13,304
NET INTEREST INCOME	104,715				104,264				100,428				102,311				92,921
Provision for credit losses - loans	—				—				—				4,482				12,544
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	104,715				104,264				100,428				97,829				80,377
OTHER INCOME
Service charges on deposit accounts	6,249				5,596				5,264				5,508				5,209
Fiduciary and wealth management fees	7,352				7,510				6,422				6,251				5,910
Card payment fees	4,156				4,159				4,367				3,502				3,996
Net gains and fees on sales of loans	3,955				8,325				3,986				5,393				5,841
Derivative hedge fees	1,028				943				317				2,281				1,715
Other customer fees	393				368				368				394				372
Earnings on cash surrender value of life insurance	2,468				1,205				1,336				1,283				1,171
Net realized gains on sales of available for sale securities	1,756				1,761				1,799				2,398				1,817
Other income	1,144				1,017				232				473				132
Total Other Income	28,501				30,884				24,091				27,483				26,163
OTHER EXPENSES
Salaries and employee benefits	43,314				42,438				38,811				41,809				39,187
Net occupancy	5,576				5,615				6,491				9,653				5,855
Equipment	4,529				4,848				5,030				5,555				4,956
Marketing	1,676				1,122				1,124				1,763				1,311
Outside data processing fees	4,794				4,698				4,244				3,839				3,776
Printing and office supplies	265				313				283				307				331
Intangible asset amortization	1,463				1,464				1,357				1,476				1,486
FDIC assessments	1,552				1,461				1,368				1,560				1,249
Other real estate owned and foreclosure expenses	(91		)		178				734				(1,576		)		717
Professional and other outside services	2,767				2,976				2,543				2,836				2,254
Other expenses	5,539				4,182				4,113				5,314				3,587
Total Other Expenses	71,384				69,295				66,098				72,536				64,709
INCOME BEFORE INCOME TAX	61,832				65,853				58,421				52,776				41,831
Income tax expense	9,062				10,294				8,952				7,641				5,621
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	52,770			$	55,559			$	49,469			$	45,135			$	36,210
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.98			$	1.03			$	0.92			$	0.83			$	0.67
Diluted Net Income Available to Common Stockholders	$	0.98			$	1.03			$	0.91			$	0.83			$	0.67
Cash Dividends Paid	$	0.29			$	0.29			$	0.26			$	0.26			$	0.26
Average Diluted Shares Outstanding (in thousands)	53,960				54,184				54,134				54,050				53,971
FINANCIAL RATIOS:
Return on Average Assets	1.41		%		1.51		%		1.39		%		1.29		%		1.06		%
Return on Average Stockholders' Equity	11.17				12.04				10.75				9.72				7.91
Return on Average Common Stockholders' Equity	11.17				12.04				10.75				9.72				7.91
Average Earning Assets to Average Assets	91.57				91.87				91.43				90.66				90.34
Allowance for Credit Losses - Loans as % of Total Loans	2.21				2.19				2.16				1.41				1.37
Net Charge-offs as % of Average Loans (Annualized)	(0.01		)		0.06				0.16				0.02				0.30
Average Stockholders' Equity to Average Assets	12.59				12.51				12.92				13.29				13.41
Tax Equivalent Yield on Average Earning Assets	3.46				3.49				3.52				3.72				3.58
Interest Expense/Average Earning Assets	0.26				0.27				0.29				0.34				0.43
Net Interest Margin (FTE) on Average Earning Assets	3.20				3.22				3.23				3.38				3.15
Efficiency Ratio	51.18				48.91				50.23				55.01				51.40
Tangible Common Book Value Per Share	$	24.31			$	24.15			$	22.98			$	24.27			$	23.48

LOANS
(Dollars In Thousands)	September 30,				June 30,				March 31,				December 31,				September 30,
	2021				2021				2021				2020				2020
Commercial and industrial loans	$	2,573,615			$	2,671,076			$	2,876,212			$	2,776,699			$	2,875,331
Agricultural land, production and other loans to farmers	240,686				235,020				245,631				281,884				301,192
Real estate loans:
Construction	521,889				491,200				541,224				484,723				622,084
Commercial real estate, non-owner occupied	2,150,387				2,263,497				2,178,832				2,220,949				2,098,589
Commercial real estate, owner occupied	952,441				953,501				950,038				958,501				931,815
Residential	1,154,373				1,127,442				1,239,925				1,234,741				1,146,406
Home equity	531,307				489,997				482,229				508,259				527,458
Individuals' loans for household and other personal expenditures	135,093				130,819				126,387				129,479				125,411
Public finance and other commercial loans	781,785				758,698				677,750				647,939				615,547
Loans	9,041,576				9,121,250				9,318,228				9,243,174				9,243,833
Allowance for credit losses - loans	(199,972		)		(199,775		)		(201,082		)		(130,648		)		(126,726		)
NET LOANS	$	8,841,604			$	8,921,475			$	9,117,146			$	9,112,526			$	9,117,107

DEPOSITS
(Dollars In Thousands)	September 30,				June 30,				March 31,				December 31,				September 30,
	2021				2021				2021				2020				2020
Demand deposits	$	7,317,399			$	7,261,603			$	7,245,850			$	6,821,152			$	6,279,554
Savings deposits	4,301,483				4,157,552				3,857,624				3,661,713				3,518,286
Certificates and other time deposits of $100,000 or more	283,396				304,394				332,745				346,194				467,610
Other certificates and time deposits	404,010				423,922				449,655				459,168				542,919
Brokered deposits	42,401				55,929				65,906				73,383				97,784
TOTAL DEPOSITS	$	12,348,689			$	12,203,400			$	11,951,780			$	11,361,610			$	10,906,153

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	September 30, 2021											September 30, 2020
	Average Balance				Interest Income / Expense				Average Rate			Average Balance				Interest Income / Expense				Average Rate
Assets:
Interest-bearing deposits	$	539,377			$	218			0.16	%		$	301,529			$	90			0.12	%
Federal Home Loan Bank stock	28,736				168				2.34			28,736				248				3.45
Investment Securities: (1)
Taxable	1,843,026				7,788				1.69			1,258,690				5,399				1.72
Tax-Exempt (2)	2,240,409				18,309				3.27			1,499,463				13,837				3.69
Total Investment Securities	4,083,435				26,097				2.56			2,758,153				19,236				2.79
Loans held for sale	17,426				158				3.63			24,705				257				4.16
Loans: (3)
Commercial	6,745,303				70,442				4.18			6,965,837				66,826				3.84
Real Estate Mortgage	886,469				8,142				3.67			887,661				9,996				4.50
Installment	690,093				6,576				3.81			693,363				7,083				4.09
Tax-Exempt (2)	750,357				7,078				3.77			681,273				6,829				4.01
Total Loans	9,089,648				92,396				4.07			9,252,839				90,991				3.93
Total Earning Assets	13,741,196				118,879				3.46	%		12,341,257				110,565				3.58	%
Total Non-Earning Assets	1,264,891											1,319,561
Total Assets	$	15,006,087										$	13,660,818
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	4,799,624			$	3,606			0.30	%		$	4,098,017			$	3,890			0.38	%
Money market deposits	2,459,205				764				0.12			1,813,392				1,167				0.26
Savings deposits	1,788,281				486				0.11			1,574,700				583				0.15
Certificates and other time deposits	758,565				851				0.45			1,267,152				4,136				1.31
Total Interest-bearing Deposits	9,805,675				5,707				0.23			8,753,261				9,776				0.45
Borrowings	619,768				3,126				2.02			733,757				3,528				1.92
Total Interest-bearing Liabilities	10,425,443				8,833				0.34			9,487,018				13,304				0.56
Noninterest-bearing deposits	2,544,661											2,191,460
Other liabilities	146,946											151,040
Total Liabilities	13,117,050											11,829,518
Stockholders' Equity	1,889,037											1,831,300
Total Liabilities and Stockholders' Equity	$	15,006,087			8,833							$	13,660,818			13,304
Net Interest Income (FTE)					$	110,046										$	97,261
Net Interest Spread (FTE) (4)									3.12	%										3.02	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets									3.46	%										3.58	%
Interest Expense / Average Earning Assets									0.26	%										0.43	%
Net Interest Margin (FTE) (5)									3.20	%										3.15	%
(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 $5,331 and $4,340 for the three months ended September 30, 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.

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Nine Months Ended
	September 30, 2021											September 30, 2020
	Average Balance				Interest Income / Expense				Average Rate			Average Balance				Interest Income / Expense				Average Rate
Assets:
Interest-bearing deposits	$	509,153			$	461			0.12	%		$	280,038			$	799			0.38	%
Federal Home Loan Bank stock	28,736				434				2.01			28,736				828				3.84
Investment Securities: (1)
Taxable	1,689,697				21,923				1.73			1,302,943				19,177				1.96
Tax-Exempt (2)	1,989,397				50,532				3.39			1,342,477				38,335				3.81
Total Investment Securities	3,679,094				72,455				2.63			2,645,420				57,512				2.90
Loans held for sale	19,360				551				3.79			17,175				581				4.51
Loans: (3)
Commercial	6,857,968				210,502				4.09			6,698,042				213,241				4.24
Real Estate Mortgage	924,652				26,917				3.88			882,911				30,520				4.61
Installment	674,696				19,456				3.84			725,596				23,784				4.37
Tax-Exempt (2)	725,651				20,854				3.83			663,921				20,341				4.09
Total Loans	9,202,327				278,280				4.03			8,987,645				288,467				4.28
Total Earning Assets	13,419,310				351,630				3.49	%		11,941,839				347,606				3.88	%
Total Non-Earning Assets	1,253,286											1,355,950
Total Assets	$	14,672,596										$	13,297,789
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	4,721,267			$	10,875			0.31	%		$	3,880,489			$	16,351			0.56	%
Money market deposits	2,295,589				2,395				0.14			1,674,622				6,647				0.53
Savings deposits	1,730,149				1,424				0.11			1,507,269				3,007				0.27
Certificates and other time deposits	809,721				3,036				0.50			1,476,499				18,226				1.65
Total Interest-bearing Deposits	9,556,726				17,730				0.25			8,538,879				44,231				0.69
Borrowings	646,326				9,502				1.96			796,836				11,237				1.88
Total Interest-bearing Liabilities	10,203,052				27,232				0.36			9,335,715				55,468				0.79
Noninterest-bearing deposits	2,460,609											2,002,898
Other liabilities	150,255											144,705
Total Liabilities	12,813,916											11,483,318
Stockholders' Equity	1,858,680											1,814,471
Total Liabilities and Stockholders' Equity	$	14,672,596			27,232							$	13,297,789			55,468
Net Interest Income (FTE)					$	324,398										$	292,138
Net Interest Spread (FTE) (4)									3.13	%										3.09	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets									3.49	%										3.88	%
Interest Expense / Average Earning Assets									0.27	%										0.62	%
Net Interest Margin (FTE) (5)									3.22	%										3.26	%
(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 $14,991 and $12,322 for the nine months ended September 30, 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