First Merchants Corp. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>First Merchants Corp. has filed its Q1 2024 10-Q report detailing financial performance and position.</b>

AI Summary

FIRST MERCHANTS CORP (FRMEP) filed a Quarterly Report (10-Q) with the SEC on May 1, 2024. First Merchants Corp. filed its 10-Q report for the period ending March 31, 2024. The filing covers the first quarter of fiscal year 2024. Key financial data points such as common stock, preferred stock, and retained earnings are reported. The company's business address is 200 E JACKSON ST, MUNCIE, IN 47308-0792. The filing includes data for various financial instruments and accounts including deposit accounts, credit cards, and derivative hedging.

Why It Matters

For investors and stakeholders tracking FIRST MERCHANTS CORP, this filing contains several important signals. This 10-Q filing provides investors with the latest quarterly financial statements and disclosures for First Merchants Corp., enabling them to assess the company's performance and financial health. The detailed information on various financial accounts and equity components allows for a comprehensive understanding of the company's balance sheet and changes during the first quarter of 2024.

Risk Assessment

Risk Level: low — FIRST MERCHANTS CORP shows low risk based on this filing. The filing is a standard quarterly report (10-Q) and does not contain any immediately apparent unusual or high-risk information, indicating a routine disclosure.

Analyst Insight

Review the detailed financial statements and footnotes within the 10-Q to understand the specific drivers of the company's performance and any potential risks or opportunities.

Key Numbers

• 2024-03-31 — Report Period End Date (Conformed period of report)
• 2024-05-01 — Filing Date (Filed as of date)
• 2024-01-01 — Quarter Start Date (Reporting period start date)
• 2023-12-31 — Previous Year End Date (Data point for previous fiscal year end)

Key Players & Entities

• FIRST MERCHANTS CORP (company) — Filer name
• 200 E JACKSON ST (address) — Business address
• MUNCIE (location) — Business address city
• IN (location) — Business address state
• 47308-0792 (postal_code) — Business address zip
• 7657471500 (phone_number) — Business phone

FAQ

Industry Context

First Merchants Corp. operates within the National Commercial Banks industry (SIC 6021).

Regulatory Implications

The filing is made under the Securities Exchange Act of 1934, which governs the reporting requirements for public companies.

What Investors Should Do

1. Analyze the balance sheet for changes in assets, liabilities, and equity from the previous quarter.
2. Review any disclosed notes to the financial statements for specific details on accounting policies or significant transactions.
3. Compare key financial metrics with industry peers if available to gauge relative performance.

Key Dates

• 2024-03-31: Quarterly Period End — End of the reporting period for the 10-Q filing.
• 2024-05-01: Filing Date — Date the 10-Q report was officially filed with the SEC.

Year-Over-Year Comparison

This is the first 10-Q filing for the fiscal year 2024, providing updated financial information compared to the previous year's filings.

Key Financial Figures

• $0.125 — ange on which registered Common Stock, $0.125 stated value per share FRME The Nasdaq

Filing Documents

• frme-20240331.htm (10-Q) — 3292KB
• exhibit31110q2024q1.htm (EX-31.1) — 9KB
• exhibit31210q2024q1.htm (EX-31.2) — 10KB
• exhibit3210q2024q1.htm (EX-32) — 9KB
• 0000712534-24-000162.txt (&nbsp;) — 17083KB
• frme-20240331.xsd (EX-101.SCH) — 61KB
• frme-20240331_cal.xml (EX-101.CAL) — 138KB
• frme-20240331_def.xml (EX-101.DEF) — 543KB
• frme-20240331_lab.xml (EX-101.LAB) — 978KB
• frme-20240331_pre.xml (EX-101.PRE) — 753KB
• frme-20240331_htm.xml (XML) — 4086KB

Financial Information

Part I. Financial Information

Financial Statements

Item 1. Financial Statements: Consolidated Condensed Balance Sheets 4 Consolidated Condensed Statements of Income 5 Consolidated Condensed Statements of Comprehensive Income (Loss) 6 Consolidated Condensed Statements of Stockholders' Equity 7 Consolidated Condensed Statements of Cash Flows 8 Notes to Consolidated Condensed Financial Statements 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 38

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 53

Controls and Procedures

Item 4. Controls and Procedures 54

Other Information

Part II. Other Information

Legal Proceedings

Item 1. Legal Proceedings 55

Risk Factors

Item 1A. Risk Factors 55

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 55

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 55

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 55

Other Information

Item 5. Other Information 55

Exhibits

Item 6. Exhibits 56

Signatures

Signatures 57 2 GLOSSARY OF DEFINED TERMS FIRST MERCHANTS CORPORATION ACL Allowance for Credit Losses ASC Accounting Standards Codification ASU Accounting Standards Update Bank First Merchants Bank, a wholly-owned subsidiary of the Corporation BTFP Bank Term Funding Program created by the Federal Reserve in March 2023 CECL FASB Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , adopted by the Corporation on January 1, 2021. CET1 Common Equity Tier 1 CODM Chief operating decision maker Corporation First Merchants Corporation CRE Commercial Real Estate EITF FASB's Emerging Issues Task Force ESPP Employee Stock Purchase Plan FASB Financial Accounting Standards Board FDIC Federal Deposit Insurance Corporation Federal Reserve Board of Governors of the Federal Reserve System FHLB Federal Home Loan Bank FOMC Federal Open Market Committee, the monetary policymaking body of the Federal Reserve System. FTE Fully taxable equivalent GAAP U.S. Generally Accepted Accounting Principles IRA Inflation Reduction Act of 2022 Level One Level One Bancorp, Inc., which was acquired by the Corporation on April 1, 2022. OREO Other real estate owned PPP Paycheck Protection Program, which was established by the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, and implemented by the U.S. Small Business Administration to provide small business loans. PCD Purchased credit deteriorated loans RSA Restricted Stock Awards SOFR Secured Overnight Financing Rate 3

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) CONSOLIDATED CONDENSED BALANCE SHEETS March 31, 2024 December 31, 2023 (Unaudited) ASSETS Cash and due from banks $ 100,514 $ 112,649 Interest-bearing deposits 410,497 436,080 Investment securities available for sale 1,620,213 1,627,112 Investment securities held to maturity, net of allowance for credit losses of $ 245 and $ 245 (fair value of $ 1,820,451 and $ 1,870,374 ) 2,163,361 2,184,252 Loans held for sale 15,118 18,934 Loans 12,465,582 12,486,027 Less: Allowance for credit losses - loans ( 204,681 ) ( 204,934 ) Net loans 12,260,901 12,281,093 Premises and equipment 132,706 133,896 Federal Home Loan Bank stock 41,758 41,769 Interest receivable 92,550 97,664 Goodwill 712,002 712,002 Other intangibles 25,142 27,099 Cash surrender value of life insurance 306,028 306,301 Other real estate owned 4,886 4,831 Tax asset, deferred and receivable 101,121 99,883 Other assets 331,006 322,322 TOTAL ASSETS $ 18,317,803 $ 18,405,887 LIABILITIES Deposits: Noninterest-bearing $ 2,338,364 $ 2,500,062 Interest-bearing 12,546,220 12,321,391 Total Deposits 14,884,584 14,821,453 Borrowings: Securities sold under repurchase agreements 130,264 157,280 Federal Home Loan Bank advances 612,778 712,852 Subordinated debentures and other borrowings 118,612 158,644 Total Borrowings 861,654 1,028,776 Interest payable 19,262 18,912 Other liabilities 327,500 289,033 Total Liabilities 16,093,000 16,158,174 COMMITMENTS AND CONTINGENT LIABILITIES STOCKHOLDERS' EQUITY Cumulative 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 S

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, 2024 2023 INTEREST INCOME Loans receivable: Taxable $ 198,023 $ 172,353 Tax exempt 8,190 7,709 Investment securities: Taxable 8,748 9,087 Tax exempt 13,611 16,070 Deposits with financial institutions 6,493 637 Federal Home Loan Bank stock 835 542 Total Interest Income 235,900 206,398 INTEREST EXPENSE Deposits 98,285 50,685 Federal funds purchased — 1,297 Securities sold under repurchase agreements 1,032 848 Federal Home Loan Bank advances 6,773 7,064 Subordinated debentures and other borrowings 2,747 2,385 Total Interest Expense 108,837 62,279 NET INTEREST INCOME 127,063 144,119 Provision for credit losses 2,000 — NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 125,063 144,119 NONINTEREST INCOME Service charges on deposit accounts 7,907 7,359 Fiduciary and wealth management fees 8,200 7,862 Card payment fees 4,500 5,172 Net gains and fees on sales of loans 3,254 2,399 Derivative hedge fees 263 1,148 Other customer fees 427 517 Increase in cash surrender value of life insurance 1,449 1,287 Gains on life insurance benefits 143 1 Net realized losses on sales of available for sale securities ( 2 ) ( 1,571 ) Other income 497 823 Total Noninterest Income 26,638 24,997 NONINTEREST EXPENSES Salaries and employee benefits 58,293 57,459 Net occupancy 7,312 7,259 Equipment 6,226 6,126 Marketing 1,198 1,309 Outside data processing fees 6,889 6,113 Printing and office supplies 353 383 Intangible asset amortization 1,957 2,197 FDIC assessments 4,287 1,396 Other real estate owned and foreclosure expenses 534 ( 18 ) Professional and other outside services 3,952 3,698 Other expenses 5,934 7,798 Total Noninterest Expenses 96,935 93,720 INCOME BEFORE INCOME TAX 54,766 75,396 Income tax expense 6,825 11,317 NET INCOME 47,941 64,079 Pre

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended March 31, 2024 2023 Net income $ 47,941 $ 64,079 Other comprehensive income (loss): Unrealized gains (losses) on securities available-for-sale: Unrealized holding gain (loss) arising during the period ( 27,925 ) 49,415 Reclassification adjustment for losses (gains) included in net income 2 1,571 Tax effect 5,864 ( 10,707 ) Net of tax ( 22,059 ) 40,279 Unrealized gain (loss) on cash flow hedges: Unrealized holding gain (loss) arising during the period — ( 51 ) Reclassification adjustment for losses (gains) included in net income — ( 1 ) Tax effect — 10 Net of tax — ( 42 ) Total other comprehensive income (loss), net of tax ( 22,059 ) 40,237 Comprehensive income $ 25,882 $ 104,316 See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 6

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) Three Months Ended March 31, 2024 Cumulative Preferred Stock Non-Cumulative Preferred Stock Common Stock Additional Accumulated Other Shares Amount Shares Amount Shares Amount Paid in Capital Retained Earnings Comprehensive Loss Total Balances, December 31, 2023 125 $ 125 10,000 $ 25,000 59,424,122 $ 7,428 $ 1,236,506 $ 1,154,624 $ ( 175,970 ) $ 2,247,713 Comprehensive income: Net income — — — — — — — 47,941 — 47,941 Other comprehensive loss, net of tax — — — — — — — — ( 22,059 ) ( 22,059 ) Cash dividends on preferred stock ($ 46.88 per share) — — — — — — — ( 469 ) — ( 469 ) Cash dividends on common stock ($ 0.34 per share) — — — — — — — ( 20,157 ) — ( 20,157 ) Repurchases of common stock — — — — ( 888,442 ) ( 111 ) ( 29,863 ) — — ( 29,974 ) Excise tax on stock repurchase — — — — — — ( 297 ) — — ( 297 ) Share-based compensation — — — — 7,413 1 1,401 — — 1,402 Stock issued under employee benefit plans — — — — 6,259 1 185 — — 186 Stock issued under dividend reinvestment and stock purchase plan — — — — 16,215 2 540 — — 542 Restricted shares withheld for taxes — — — — ( 748 ) — ( 25 ) — — ( 25 ) Balances, March 31, 2024 125 $ 125 10,000 $ 25,000 58,564,819 $ 7,321 $ 1,208,447 $ 1,181,939 $ ( 198,029 ) $ 2,224,803 Three Months Ended March 31, 2023 Cumulative Preferred Stock Non-Cumulative Preferred Stock Common Stock Additional Accumulated Other Shares Amount Shares Amount Shares Amount Paid in Capital Retained Earnings Comprehensive Loss Total Balances, December 31, 2022 125 $ 125 10,000 $ 25,000 59,170,583 $ 7,396 $ 1,228,626 $ 1,012,774 $ ( 239,151 ) 2,034,770 Comprehensive loss: Net income — — — — — — — 64,079 — 64,079 Other comprehensive loss, net of tax — — — — — — — — 40,237 40,237 Cash dividends on preferred stock ($ 46.88 per share) — — — — — — — (

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 2024 2023 Cash Flow From Operating Activities: Net income $ 47,941 $ 64,079 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 2,000 — Depreciation and amortization 3,194 2,964 Change in deferred taxes ( 2,260 ) ( 3,395 ) Share-based compensation 1,402 1,197 Loans originated for sale ( 182,793 ) ( 74,212 ) Proceeds from sales of loans held for sale 188,347 74,746 Gains on sales of loans held for sale ( 1,738 ) ( 848 ) Net losses on sales and redemptions of securities available for sale 2 1,571 Increase in cash surrender value of life insurance ( 1,449 ) ( 1,287 ) Gains on life insurance benefits ( 143 ) ( 1 ) Change in interest receivable 5,114 ( 445 ) Change in interest payable 350 4,449 Other adjustments ( 1,119 ) 18,791 Net cash provided by operating activities 58,848 87,609 Cash Flows from Investing Activities: Net change in interest-bearing deposits 25,583 ( 226,634 ) Purchases of: Securities available for sale ( 32,231 ) ( 1,400 ) Proceeds from sales of securities available for sale — 213,232 Proceeds from maturities and redemptions of: Securities available for sale 9,415 17,814 Securities held to maturity 20,006 22,987 Change in Federal Home Loan Bank stock 11 ( 3,353 ) Payment of capital calls to qualified affordable housing investments ( 7,975 ) ( 4,171 ) Net change in loans 56,511 ( 238,872 ) Proceeds from the sale of other real estate owned 78 46 Proceeds from life insurance benefits 1,865 509 Proceeds from commercial portfolio loan sale 3,273 — Other adjustments 6,344 ( 7,284 ) Net cash provided (used) in investing activities 82,880 ( 227,126 ) Cash Flows from Financing Activities: Net change in : Demand and savings deposits ( 30,726 ) ( 184,063 ) Certifi

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) (Unaudited) NOTE 1 GENERAL Financial Statement Preparation The Consolidated Condensed Balance Sheet of the Corporation as of December 31, 2023, has been derived from the audited consolidated balance sheet of the Corporation as of that date. Certain information and note disclosures normally included in the Corporation's annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the year. Reclassifications have been made to prior financial statements to conform to the current financial statement presentation. These reclassifications had no effect on net income. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses and fair value of financial instruments. Significant Accounting Policies The significant accounting policies followed by the Corporation and its wholly-owned subsidiaries for interim financial reporting are consistent with the accounting policies followed for annual financial reporting. All adjustments, which are of a normal recurring nature and are in the opinion of management necessary for a fair statement of the results for the periods reported, have been included in the accompanying Consolidated Condensed Financial Statements. Recent Accounting Changes Adopted in 2024 FASB Accounting Standards Updates - No. 2023-02 - Investmen

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) (Unaudited) Clarify that if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit or loss. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity's consolidated financial statements. Require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures in Topic 280. ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , applies to all public entities that are required to report segment information in accordance with Topic 280. All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. This ASU is not expected to have a material impact on the Corporation's financial statements and disclosures as the Corporation has one operating segment. FASB Accounting Standards Update - No. 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures Summary - The FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures in the fourth quarter of 2023. This ASU is intended to enhanc

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) (Unaudited) The following table summarizes the amortized cost, gross unrealized gains and losses, approximate fair value and allowance for credit losses on investment securities held to maturity as of March 31, 2024 and December 31, 2023. Amortized Cost Allowance for Credit Losses Net Carrying Amount Gross Unrealized Gains Gross Unrealized Losses Fair Value Held to maturity at March 31, 2024 U.S. Government-sponsored agency securities $ 370,310 $ — $ 370,310 $ — $ 66,154 $ 304,156 U.S. Government-sponsored mortgage-backed securities 693,948 — 693,948 — 106,317 587,631 Foreign investment 1,500 — 1,500 — 22 1,478 Total held to maturity $ 2,163,606 $ 245 $ 2,163,361 $ 691 $ 343,846 $ 1,820,451 Amortized Cost Allowance for Credit Losses Net Carrying Amount Gross Unrealized Gains Gross Unrealized Losses Fair Value Held to maturity at December 31, 2023 U.S. Government-sponsored agency securities $ 374,002 $ — $ 374,002 $ — $ 64,159 $ 309,843 U.S. Government-sponsored mortgage-backed securities 709,794 — 709,794 — 99,448 610,346 Foreign investment 1,500 — 1,500 — 28 1,472 Total held to maturity $ 2,184,497 $ 245 $ 2,184,252 $ 1,625 $ 315,748 $ 1,870,374 Accrued interest on investment securities available for sale and held to maturity at March 31, 2024 and December 31, 2023 of $ 22.6 million and $ 25.2 million, respectively, are included in the Interest Receivable line on the Corporation's Consolidated Condensed Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of available for sale and held to maturity securities presented above. In determining the allowance for credit losses on investment securities available for sale that are in an unrealized loss position, the Co

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