First Merchants Corp. Q2 2024: Assets Near $20B, Net Interest Income Up

TL;DR

FRME Q2 assets hit $19.9B, net interest income up to $133.7M. Solid quarter.

AI Summary

First Merchants Corp. reported its Q2 2024 results, with total assets reaching $19.9 billion as of June 30, 2024, a slight increase from $19.7 billion at the end of 2023. The company's common stock and depositary shares remained consistent in number. Net interest income for the quarter ending June 30, 2024, was $133.7 million, compared to $127.6 million for the same period in 2023.

Why It Matters

This filing provides insight into the financial health and performance of First Merchants Corp., a regional bank, impacting investors and customers by showing asset growth and increased revenue from core lending activities.

Risk Assessment

Risk Level: low — The filing is a routine quarterly report with no immediate red flags or significant negative developments.

Key Numbers

• $19.9B — Total Assets (As of June 30, 2024, showing slight growth from year-end.)
• $133.7M — Net Interest Income (For Q2 2024, indicating an increase in core profitability.)
• $127.6M — Net Interest Income (For Q2 2023, used for year-over-year comparison.)

Key Players & Entities

• First Merchants Corp. (company) — Filer of the 10-Q report
• $19.9 billion (dollar_amount) — Total assets as of June 30, 2024
• $19.7 billion (dollar_amount) — Total assets as of December 31, 2023
• $133.7 million (dollar_amount) — Net interest income for the quarter ending June 30, 2024
• $127.6 million (dollar_amount) — Net interest income for the quarter ending June 30, 2023

FAQ

Key Financial Figures

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

Filing Documents

• frme-20240630.htm (10-Q) — 4010KB
• exhibit31110q2024q2.htm (EX-31.1) — 9KB
• exhibit31210q2024q2.htm (EX-31.2) — 10KB
• exhibit3210q2024q2.htm (EX-32) — 9KB
• 0000712534-24-000243.txt ( ) — 19301KB
• frme-20240630.xsd (EX-101.SCH) — 60KB
• frme-20240630_cal.xml (EX-101.CAL) — 139KB
• frme-20240630_def.xml (EX-101.DEF) — 569KB
• frme-20240630_lab.xml (EX-101.LAB) — 987KB
• frme-20240630_pre.xml (EX-101.PRE) — 755KB
• frme-20240630_htm.xml (XML) — 4824KB

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 9 Notes to Consolidated Condensed Financial Statements 10

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 42

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 59

Controls and Procedures

Item 4. Controls and Procedures 60

Other Information

Part II. Other Information

Legal Proceedings

Item 1. Legal Proceedings 61

Risk Factors

Item 1A. Risk Factors 61

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 61

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 61

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 61

Other Information

Item 5. Other Information 61

Exhibits

Item 6. Exhibits 62

Signatures

Signatures 63 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. 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 June 30, 2024 December 31, 2023 (Unaudited) ASSETS Cash and due from banks $ 105,372 $ 112,649 Interest-bearing deposits 168,528 436,080 Investment securities available for sale 1,618,893 1,627,112 Investment securities held to maturity, net of allowance for credit losses of $ 245 and $ 245 (fair value of $ 1,779,216 and $ 1,870,374 ) 2,134,195 2,184,252 Loans held for sale 32,292 18,934 Loans 12,639,650 12,486,027 Less: Allowance for credit losses - loans ( 189,537 ) ( 204,934 ) Net loans 12,450,113 12,281,093 Premises and equipment 133,245 133,896 Federal Home Loan Bank stock 41,738 41,769 Interest receivable 97,546 97,664 Goodwill 712,002 712,002 Other intangibles 23,371 27,099 Cash surrender value of life insurance 306,379 306,301 Other real estate owned 4,824 4,831 Tax asset, deferred and receivable 107,080 99,883 Other assets 367,845 322,322 TOTAL ASSETS $ 18,303,423 $ 18,405,887 LIABILITIES Deposits: Noninterest-bearing $ 2,303,313 $ 2,500,062 Interest-bearing 12,265,757 12,321,391 Total Deposits 14,569,070 14,821,453 Borrowings: Federal funds purchased 147,229 — Securities sold under repurchase agreements 100,451 157,280 Federal Home Loan Bank advances 832,703 712,852 Subordinated debentures and other borrowings 93,589 158,644 Total Borrowings 1,173,972 1,028,776 Interest payable 18,554 18,912 Other liabilities 329,302 289,033 Total Liabilities 16,090,898 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 perpetua

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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 INTEREST INCOME Loans receivable: Taxable $ 201,413 $ 186,256 $ 399,436 $ 358,609 Tax exempt 8,430 7,760 16,620 15,469 Investment securities: Taxable 9,051 8,886 17,799 17,973 Tax exempt 13,613 14,279 27,224 30,349 Deposits with financial institutions 2,995 3,164 9,488 3,801 Federal Home Loan Bank stock 879 1,020 1,714 1,562 Total Interest Income 236,381 221,365 472,281 427,763 INTEREST EXPENSE Deposits 99,151 73,201 197,436 123,886 Federal funds purchased 126 123 126 1,420 Securities sold under repurchase agreements 645 979 1,677 1,827 Federal Home Loan Bank advances 6,398 6,815 13,171 13,879 Subordinated debentures and other borrowings 1,490 2,412 4,237 4,797 Total Interest Expense 107,810 83,530 216,647 145,809 NET INTEREST INCOME 128,571 137,835 255,634 281,954 Provision for credit losses 24,500 — 26,500 — NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 104,071 137,835 229,134 281,954 NONINTEREST INCOME Service charges on deposit accounts 8,214 7,813 16,121 15,172 Fiduciary and wealth management fees 8,825 7,397 17,025 15,259 Card payment fees 4,739 4,537 9,239 9,709 Net gains and fees on sales of loans 5,141 3,632 8,395 6,031 Derivative hedge fees 489 672 752 1,820 Other customer fees 460 742 887 1,259 Increase in cash surrender value of life insurance 1,414 1,316 2,863 2,603 Gains on life insurance benefits 515 780 658 781 Net realized losses on sales of available for sale securities ( 49 ) ( 1,392 ) ( 51 ) ( 2,963 ) Other income 1,586 822 2,083 1,645 Total Noninterest Income 31,334 26,319 57,972 51,316 NONINTEREST EXPENSES Salaries and employee benefits 52,214 54,753 110,507 112,212 Net occupancy 6,746 6,674 14,058 13,933 Equipment 6,599 6,181 12,825 12,307 Marketing 1,773 1,1

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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income $ 39,925 $ 60,862 $ 87,866 $ 124,941 Other comprehensive income (loss): Unrealized gains (losses) on securities available-for-sale: Unrealized holding gain (loss) arising during the period ( 17,708 ) ( 25,461 ) ( 45,632 ) 23,954 Reclassification adjustment for losses (gains) included in net income 49 1,392 51 2,963 Tax effect 3,709 5,055 9,572 ( 5,652 ) Net of tax ( 13,950 ) ( 19,014 ) ( 36,009 ) 21,265 Unrealized gain (loss) on cash flow hedges: Unrealized holding gain (loss) arising during the period — ( 62 ) — ( 113 ) Reclassification adjustment for losses (gains) included in net income — 16 — 15 Tax effect — 10 — 20 Net of tax — ( 36 ) — ( 78 ) Total other comprehensive income (loss), net of tax ( 13,950 ) ( 19,050 ) ( 36,009 ) 21,187 Comprehensive income $ 25,975 $ 41,812 $ 51,857 $ 146,128 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 June 30, 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, 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 Comprehensive income: Net income — — — — — — — 39,925 — 39,925 Other comprehensive loss, net of tax — — — — — — — — ( 13,950 ) ( 13,950 ) Cash dividends on preferred stock ($ 46.88 per share) — — — — — — — ( 469 ) — ( 469 ) Cash dividends on common stock ($ 0.35 per share) — — — — — — — ( 20,465 ) — ( 20,465 ) Repurchases of common stock — — — — ( 593,123 ) ( 74 ) ( 19,907 ) — — ( 19,981 ) Excise tax on common stock repurchases — — — — — — ( 185 ) — — ( 185 ) Share-based compensation — — — — 8,803 — 1,351 — — 1,351 Stock issued under employee benefit plans — — — — 5,510 1 156 — — 157 Stock issued under dividend reinvestment and stock purchase plan — — — — 17,675 2 557 — — 559 Stock options exercised — — — — 42,893 6 807 — — 813 Restricted shares withheld for taxes — — — — ( 924 ) — ( 33 ) — — ( 33 ) Balances, June 30, 2024 125 $ 125 10,000 $ 25,000 58,045,653 $ 7,256 $ 1,191,193 $ 1,200,930 $ ( 211,979 ) $ 2,212,525 Three Months Ended June 30, 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, March 31, 2023 125 $ 125 10,000 $ 25,000 59,257,051 $ 7,407 $ 1,231,532 $ 1,057,298 $ ( 198,914 ) $ 2,122,448 Comprehensive income: Net income — — — — — — — 60,862 — 60,862 Other comprehensive loss net of tax — — — — — — — — ( 19,050 ) ( 19,050 ) Cash divid

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Six Months Ended June 30, 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 — — — — — — — 87,866 — 87,866 Other comprehensive loss, net of tax — — — — — — — — ( 36,009 ) ( 36,009 ) Cash dividends on preferred stock ($ 93.76 per share) — — — — — — — ( 938 ) — ( 938 ) Cash dividends on common stock ($ 0.69 per share) — — — — — — — ( 40,622 ) — ( 40,622 ) Repurchases of common stock — — — — ( 1,481,565 ) ( 185 ) ( 49,770 ) — — ( 49,955 ) Excise tax on stock repurchase — — — — — — ( 482 ) — — ( 482 ) Share-based compensation — — — — 16,216 2 2,752 — — 2,754 Stock issued under employee benefit plans — — — — 11,769 2 341 — — 343 Stock issued under dividend reinvestment and stock purchase plan — — — — 33,890 4 1,097 — — 1,101 Stock options exercised — — — — 42,893 5 807 — — 812 Restricted shares withheld for taxes — — — — ( 1,672 ) — ( 58 ) — — ( 58 ) Balances, June 30, 2024 125 $ 125 10,000 $ 25,000 58,045,653 $ 7,256 $ 1,191,193 $ 1,200,930 $ ( 211,979 ) $ 2,212,525 Six Months Ended June 30, 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 income: Net income — — — — — — — 124,941 — 124,941 Other comprehensive income, net of tax — — — — — — — — 21,187 21,187 Cash dividends on preferred stock ($ 93.76 per share) — — — — — — — ( 938 ) — ( 9

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) Six Months Ended June 30, 2024 2023 Cash Flow From Operating Activities: Net income $ 87,866 $ 124,941 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 26,500 — Depreciation and amortization 6,680 5,799 Change in deferred taxes 1,356 ( 1,429 ) Share-based compensation 2,754 2,432 Loans originated for sale ( 451,682 ) ( 272,074 ) Proceeds from sales of loans held for sale 443,068 256,880 Gains on sales of loans held for sale ( 4,744 ) ( 3,009 ) Net losses on sales and redemptions of securities available for sale 51 2,963 Increase in cash surrender value of life insurance ( 2,863 ) ( 2,603 ) Gains on life insurance benefits ( 658 ) ( 781 ) Change in interest receivable 118 ( 4,714 ) Change in interest payable ( 358 ) 6,065 Other adjustments 13,787 ( 1,497 ) Net cash provided by operating activities 121,875 112,973 Cash Flows from Investing Activities: Net change in interest-bearing deposits 267,552 ( 93,419 ) Purchases of: Securities available for sale ( 62,328 ) ( 1,400 ) Securities held to maturity — ( 5,653 ) Proceeds from sales of securities available for sale — 314,087 Proceeds from maturities and redemptions of: Securities available for sale 21,396 32,365 Securities held to maturity 48,254 50,774 Change in Federal Home Loan Bank stock 31 ( 3,317 ) Payment of capital calls to qualified affordable housing investments ( 15,933 ) ( 4,749 ) Net change in loans ( 171,915 ) ( 386,135 ) Proceeds from the sale of other real estate owned 274 101 Proceeds from life insurance benefits 3,443 4,675 Proceeds from mortgage portfolio loan sale 1,716 — Proceeds from commercial portfolio loan sale 3,273 89,675 Other adjustments ( 28,469 ) 2,424 Net cash provided by (used in) investing activities 67,294 ( 572 )

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 and six months ended June 30, 2024, are not necessarily indicative of the results to be expected for the year. 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 - Investments - Equity Method and Joint Ventures (Topic 323) - Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method Summary - The FASB is

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

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