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| 8-K - FIRST MERCHANTS CORPORATION - 2ND QTR 2012 EARNING SLIDES - FIRST MERCHANTS CORP | earningslides07262012.htm |
1
First Merchants Corporation
2nd Quarter 2012
Earnings Call
2nd Quarter 2012
Earnings Call
July 26, 2012
2
Michael C. Rechin
President
and Chief Executive Officer
3
The Corporation may make forward-looking statements about
its relative business outlook. These forward-looking statements
and all other statements made during this meeting that do not
concern historical facts are subject to risks and uncertainties
that may materially affect actual results.
Specific forward-looking statements include, but are not limited
Specific forward-looking statements include, but are not limited
to, any indications regarding the financial services industry, the
economy and future growth of the balance sheet or income
statement.
Please refer to our press releases, Form 10-Qs and 10-Ks
Please refer to our press releases, Form 10-Qs and 10-Ks
concerning factors that could cause actual results to differ
materially from any forward-looking statements.
4
§ EPS
§ $.28 2nd Quarter EPS (56% year-over-year growth)
§ $.74 YTD EPS (111% year-over-year growth)
§ Quarterly Dividend increased from $.01 to $.03
§ Core Revenue Growth
§ $52.1M 2nd Qtr Revenue (10% YOY growth)
§ $39.5M 2nd Qtr Net Interest Income (6% YOY growth)
§ $12.7M 2nd Qtr Non-Interest Income (24% YOY growth)
§ 4.11% Net Interest Margin
§ Company Well Positioned for Growth
§ Strong Core Deposit Funding Base
§ SCB Integration Complete
§ Total Risk Based Capital 16.75%
§ Balanced Risk Profile
§ Engaged Energetic Winning Workforce
5
Mark K. Hardwick
Executive Vice President
and Chief Financial Officer
6
2010
2011 Q1-’12 Q2-’12
1. Investments
$ 827 $ 946 $ 960 $ 944
2. Loans Held for Sale 21 18 22 15
3. Loans 2,836 2,713 2,793 2,798
4. Allowance (83) (71) (70) (70)
5. CD&I & Goodwill 154 150 150 150
6. BOLI 97 124 123 124
7. Other 319 293 258 271
8. Total Assets $4,171 $4,173 $4,236 $4,232
($ in Millions)
7
(as of 06/30/2012)
QTD Yield = 5.22%
YTD Yield = 5.19%
Total = $2.8B
8
(as of 06/30/2012)
§ $944 Million Balance
§ Average duration - 3.8 years
§ Tax equivalent yield of 3.79%
§ Net unrealized gain of $32.4
million
million
9
2010
2011 Q1-’12 Q2-’12
1. Customer Non-Maturity Deposits
$2,127 $2,196 $2,273 $2,343
2. Customer Time Deposits 996 816 836 808
3. Brokered Deposits 146 123 170 138
4. Borrowings 277 378 287 263
5. Other Liabilities 28 34 31 33
6. Hybrid Capital 142 111 111 111
7. Preferred Stock (CPP) 68 ― ― ―
8. Preferred Stock (SBLF) ― 91 91 91
9. Common Equity
387 424 437 445
10. Total Liabilities and Capital $4,171 $4,173 $4,236 $4,232
($ in Millions)
10
(as of 06/30/2012)
QTD Cost = .60%
11
2010
2011 Q1-’12 Q2-’12
1. Total Risk-Based
Capital Ratio 15.74% 16.54% 16.39% 16.75%
2. Tier 1 Risk-Based
Capital Ratio 12.82% 13.92% 14.14% 14.49%
3. Leverage Ratio 9.50% 10.17% 10.61% 10.73%
4. Tier 1 Common Risk-
Based Capital Ratio 7.64% 8.83% 9.20% 9.54%
5. TCE/TCA 5.86% 6.84% 7.07% 7.27%
12
Q2-’10 Q3-’10 Q4-’10 Q1-’11 Q2-’11 Q3-’11 Q4-’11 Q1-’12 Q2-’12
Net Interest Income - FTE
($millions) $ 37.7 $ 37.2 $ 36.7 $ 36.9 $ 37.3 $ 37.3 $ 37.6 $ 37.6 $ 39.5
Tax Equivalent Yield on Earning Assets
5.38% 5.38% 5.13% 5.11% 5.04% 5.01% 4.83% 4.74% 4.75%
Cost of Supporting
Liabilities 1.48% 1.45% 1.30% 1.16% 1.05% 0.99% 0.84% 0.78% 0.64%
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13
2010 2011 Q1-’12 Q2-’12
1. Service Charges on Deposit Accounts $13.3 $12.0 $2.8 $ 2.9
2. Trust
Fees 7.7 7.7 2.0 1.9
3. Insurance Commission Income 6.2 5.7 1.7 1.5
4. Electronic Card Fees
6.1 6.5 1.7 2.1
5. Cash Surrender Value of Life Ins 2.1 2.6 1.4 0.7
6. Gains on Sales Mortgage Loans 6.8 7.4 2.0 2.3
7. Securities Gains/Losses
1.9 2.0 0.8 0.5
8. Gain on FDIC Acquisition ― ― 9.1 ―
9. Other
4.4 5.2 1.2 1.3
10. Total $48.5 $49.1 $22.7 $13.2
11. Adjusted Non-Interest Income1 $46.6 $47.1 $12.8 $12.7
1Adjusted for Bond Gains & Losses and Gain on FDIC-Modified Whole-Bank Transaction
($ in Millions)
14
($ in Millions)
2010
2011 Q1-’12 Q2-’12
1. Salary & Benefits $
73.3 $74.7 $19.4 $19.6
2. Premises & Equipment 17.2 16.9 4.4 4.1
3. Core Deposit Intangible 4.7 3.5 0.5 0.5
4. Professional Services
1.4 2.2 0.7 0.5
5. OREO/Credit-Related Expense 14.6 10.6 2.2 2.1
6. FDIC Expense 8.1 5.5 1.1 0.9
7. Outside Data Processing 5.1 5.7 1.4 1.5
8. Marketing 2.0 2.0 0.4 0.6
9. Other 15.9 14.8 3.9 4.4
10. Total $142.3 $135.9 $34.0 $34.2
15
2010 2011 Q1-’12 Q2-’12
1. Net Interest Income-FTE $149.4
$149.1 $37.6 $39.5
2. Non Interest
Income1 46.6 47.1 12.8 12.7
3. Non Interest Expense (142.3)
(135.9) (34.0) (34.2)
4. Pre-Tax Pre-Provision Earnings $ 53.7 $ 60.3
$16.4 $18.0
5. Provision
(46.5) (22.6) (4.9) (4.5)
6. Adjustments1 1.9 2.0 9.9 0.5
7. Taxes - FTE (2.3)
(14.4) (7.1) (4.8)
8. Gain /(Loss) on CPP/Trust Preferred 10.1 (12.3)
― ―
9. Preferred Stock Dividend
(5.2) (4.0) (1.1) (1.1)
10. Net Income Avail. for Distribution $ 11.7 $ 9.0 $13.2 $ 8.1
11. EPS $ 0.48
$0.34 $0.46 $0.28
1Adjusted for Bond Gains & Losses and Gain on FDIC-Modified Whole-Bank Transaction
($ in Millions)
16
1
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2010
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Q1
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Q2
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Q3
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Q4
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Total
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1. Actual
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$ .01
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$ .35
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$ .02
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$ .10
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$ .48
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2. Core
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$ .01
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($ .05)
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$ .02
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$ .10
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$ .08
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2011
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Q1
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Q2
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Q3
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Q4
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Total
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3. Actual
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$ .17
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$ .18
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($ .25)
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$ .24
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$ .34
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4. Core
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$ .17
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$ .18
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$ .21
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$ .24
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$ .80
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2012
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Q1
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Q2
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Q3
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Q4
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Total
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5. Actual
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$ .46
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$ .28
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-
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-
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$ .74
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6. Core
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$ .25
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$ .28
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-
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-
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$ .53
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1Adjusted for gains and losses on CPP/Trust Preferred refinance and repayment net of taxes (Line 8 on slide 15)
2Adjusted for Gain on FDIC-Modified Whole-Bank Transaction
2
1
17
John J. Martin
Senior Vice President
and Chief Credit Officer
18
($ in Millions)
19
§ Allowance coverage of non-accruals
increases to 111.1%
increases to 111.1%
§ Allowance remains strong at 2.49% of
total loans
total loans
§ Provision and charge-offs continue to
decline
decline
20
($ in Millions)
21
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2Q-’11
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3Q-’11
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4Q-’11
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1Q-’12
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2Q-’12
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$ Δ
1Q to 2Q
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Core Loan Portfolio
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2,724.0
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2,712.9
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2,713.4
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2,793.0
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2,797.6
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4.6
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Held for Sale
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4.9
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12.3
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17.9
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22.1
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15.3
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(6.8)
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Loan Growth:
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2Q-’11
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3Q-’11
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4Q-’11
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1Q-’12
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2Q-’12
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$ Δ
1Q to 2Q
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Commercial/Industrial
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546.7
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525.7
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540.0
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550.5
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567.9
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17.4
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Ag Production
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99.4
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106.8
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104.5
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97.2
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106.1
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9.0
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Investment RE
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425.9
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425.4
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423.6
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456.7
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462.3
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5.6
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Loan Declines:
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2Q-’11
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3Q-’11
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4Q-’11
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1Q-’12
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2Q-’12
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$ Δ
1Q to 2Q
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1-4 Family (excludes held for sale)
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495.2
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495.9
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481.5
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498.4
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480.9
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(17.5)
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Owner occupied CRE
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442.1
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468.6
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464.7
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466.3
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453.1
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(13.2)
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Farm RE
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132.5
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128.8
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131.4
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130.1
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126.8
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(3.3)
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($ in Millions)
22
§ Core loan portfolio growth led by C & I, IRE and Ag production
§ Renegotiated “A/B” note strategy improving asset quality
§ Focus on progress of agriculture production portfolio
§ OREO and other credit related expenses trending lower
23
Michael C. Rechin
President
and Chief Executive Officer
24
Increasing Core EPS - $.28, linked qtr 12% and year over year 56%
Increasing Tangible Book Value - $297M, year over year 18%
Increasing Dividend - $.01 to $.03
Growing Revenue - $52.1M, year over year 10%
Growing Loans - $2.8B, year over year 3%
Growing Deposits - $3.3B, year over year 5%
Growing Net Income - $8.1M, year over year 79%
Growing Pipeline - Robust Commercial and Mortgage Pipelines
Investing in Customers - Product Offerings and Platforms
Investing in Employees - Hiring, Training, Development = Engagement
Investing in Facilities - Consolidations and Upgrades
25
§ Continue to grow revenue by intensifying revenue-generating
activity:
§ sustain market coverage tactics to accelerate Commercial
banking opportunities…convert pipeline
§ bear fruits of new retail checking account packaging
§ continue to make additional investments in business
banking professionals in key markets
§ Implementing systems and processes to improve efficiency:
§ announced three banking center consolidations
§ invested in consumer collections, human resources
and finance systems
§ continue to leverage back-office infrastructure
§ Evaluating non-organic growth opportunities
“Growth and Top-Tier
Performance”
Performance”
26
§ First Merchants Corporation common stock is traded
on the NASDAQ Global Select Market under the
symbol FRME.
§ Additional information can be found at
www.firstmerchants.com
§ Investor inquiries:
David L. Ortega, Investor Relations
Telephone: 765.378.8937
dortega@firstmerchants.com