First Merchants Corporation NASDAQ: FRME INVESTOR UPDATE First Quarter 2022 First Merchants Corporation | 200 E. Jackson St., P.O. Box 792, Muncie, IN 47305 | 765.747.1500 Forward Looking Statement This presentation 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", "int ...

Financial Data and Key Metrics Changes - Net income for Q1 2022 totaled $48.6 million, or $0.91 per share, unchanged from Q1 2021. Excluding PPP income, earnings per share increased to $0.88 from $0.78, a growth of nearly 13% [7][26] - Return on assets was reported at 1.26%, and return on tangible common equity was 15%, indicating a high-performing business model [6] - Loan growth, excluding PPP, was 7.2%, while deposit growth was 5.4% for the quarter [7] Business Line Data and Key Metrics Changes - The consumer loan portfolio contracted by 1% in the quarter but increased by 2.5% year-over-year. The mortgage portfolio grew at an annualized rate of nearly 20% [11][12] - The commercial and industrial (C&I) segment saw a growth rate of 10% on an annualized basis, with total commercial growth muted by refinancings in the investment real estate segment [13][14] - Total non-PPP commercial loan portfolio grew at a 6% annualized rate during the quarter [13] Market Data and Key Metrics Changes - The consumer loan pipeline increased by 6% from the end of 2021 and over 25% from a year ago, indicating strong demand [11] - Revolver commitments increased by over $125 million, with utilization rates moving closer to 45%, up from 38% in Q1 2021 [16] Company Strategy and Development Direction - The company is focused on enhancing financial wellness in diverse communities, as reflected in their new tagline "helping you prosper" [8] - The acquisition of Level One is expected to drive growth, with integration planned for Q3 2022, and the company anticipates leveraging synergies between the two franchises [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic environment, noting strong credit profiles and liquidity among consumer clients [11][18] - The company expects net interest income to grow by 8% from the previous year, driven by anticipated Fed rate hikes [50] Other Important Information - The tangible common equity ratio declined to 8.31% due to unrealized losses on available-for-sale securities, but regulatory capital ratios remain strong [36] - Noninterest income totaled $25.9 million, with a decline in mortgage banking revenue offset by an increase in card payment income [34] Q&A Session Summary Question: Current commercial utilization rates - The current utilization rate is about 45%, up from 37% in Q1 2021 [48] Question: Expected rate hikes and impact on NII - The company models a total of 200 basis points in rate hikes for 2022, expecting net interest income to grow 8% as a result [50] Question: Expense expectations - Quarterly expenses are expected to trend between $73 million and $74 million, with potential increases due to salaries and Level One integration costs [52] Question: Loan growth guidance - The company aims for mid-to-high single-digit loan growth, with stable pipelines in both commercial and consumer segments [56] Question: Capital deployment and share repurchases - The company is not actively repurchasing shares and will assess capital levels post-integration with Level One [79]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 _______________________________ FORM 10-K [Mark One] ☒ ANNUAL REP ORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to_________ Commission file number 0-17071 FIRST MERCHANTS CORPORATION (Exact name of registrant as specified in its chart ...

Financial Data and Key Metrics Changes - The company achieved record net income exceeding $200 million for the first time, with EPS totaling a record $3.81 per share [7] - Year-to-date return on assets was 1.39% and return on tangible equity was 16.17% [6][26] - Total assets grew by $392 million during the quarter, representing a 10.4% annualized growth rate [23] Business Line Data and Key Metrics Changes - Total loan portfolio grew at an annualized rate exceeding 13% in Q4, with full-year growth of nearly 7% [10] - The non-PPP commercial loan portfolio grew more than 16% on an annualized basis in Q4, with full-year commercial growth approaching 10% [13] - Mortgage portfolio saw a growth of over 5% in Q4, with a strong pipeline for mortgage originations up over 20% from the end of 2020 [12] Market Data and Key Metrics Changes - The economic and business climate across all served markets is reported as very good, with businesses expanding to meet growing demand [18] - The company noted strong credit profiles and liquidity among consumer clients, contributing to increased home equity loan utilization [11] Company Strategy and Development Direction - The company is focused on cultural and digital investments, with a strong emphasis on community engagement and diversity [53][56] - The acquisition of Level One is expected to enhance market presence and growth potential in the Southeast Michigan marketplace [21][63] - The company aims to maintain a strong balance sheet while leveraging M&A as a core competency [62] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2022, expecting continued strong performance and growth despite potential challenges from supply chain issues [64] - The company anticipates net interest income to increase by 3% to 4% due to expected Fed rate hikes [68] Other Important Information - The efficiency ratio for the year was a strong 50.94%, indicating exceptional operating performance [26] - Total expenses for the quarter were $72.4 million, reflecting a 6% increase over the prior year due to higher salaries and employee benefits [40] Q&A Session Summary Question: Thoughts on loan growth in 2022 - Management expects mid to high single-digit loan growth primarily driven by the commercial segment [72] Question: Overall fee income growth expectations - The company anticipates a quarterly run rate on fee income to be $27.5 million, with expected declines in mortgage gains but growth in wealth management and interchange income [73] Question: Outlook on operating expenses - The expected run rate for expenses next year is around $73 million, with growth anticipated in the low to mid-single digits [76] Question: Provision outlook for credit - The plan is to grow into the allowance with minimal or no provision expense, given the current coverage and allowance status [84] Question: Status of Level One acquisition - The acquisition is expected to close in late Q1 or early Q2, pending regulatory approvals [85]

First Merchants Corporation NASDAQ: FRME INVESTOR UPDATE Fourth Quarter 2021 First Merchants Corporation | 200 E. Jackson St., P.O. Box 792, Muncie, IN 47305 | 765.747.1500 Forward Looking Statement This presentation 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", "in ...

Part I. [Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) This section provides the unaudited consolidated financial statements and management's discussion and analysis for First Merchants Corporation [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated condensed financial statements for First Merchants Corporation as of September 30, 2021, and for the three and nine months then ended, including balance sheets, statements of income, comprehensive income, stockholders' equity, and cash flows, along with accompanying notes detailing significant accounting policies, acquisitions, investment securities, loans, allowances, and derivatives [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity as of September 30, 2021, and December 31, 2020 Balance Sheet Summary (in thousands of USD) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$15,060,725** | **$14,067,210** | | Net Loans | $8,841,604 | $9,112,526 | | Total Investment Securities | $4,445,516 | $3,146,787 | | Goodwill | $545,385 | $543,918 | | **Total Liabilities** | **$13,192,635** | **$12,191,565** | | Total Deposits | $12,348,689 | $11,361,610 | | Total Borrowings | $636,296 | $684,912 | | **Total Stockholders' Equity** | **$1,868,090** | **$1,875,645** | - Total assets grew to **$15.1 billion** from **$14.1 billion**, primarily driven by an increase in total deposits, which rose by nearly **$1 billion** to **$12.3 billion**[9](index=9&type=chunk) [Consolidated Condensed Statements of Income](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Income) This section outlines the company's financial performance, including net interest income, credit loss provisions, and net income for the reported periods Income Statement Summary (in thousands of USD, except per share data) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $104,715 | $92,921 | $309,407 | $279,816 | | Provision for credit losses - loans | $0 | $12,544 | $0 | $54,191 | | **Net Income** | **$52,770** | **$36,210** | **$157,798** | **$103,465** | | Diluted EPS | $0.98 | $0.67 | $2.92 | $1.91 | - Net income for Q3 2021 increased significantly to **$52.8 million** from **$36.2 million** in Q3 2020, driven by higher net interest income and a zero provision for credit losses, compared to a **$12.5 million** provision in the prior-year quarter[10](index=10&type=chunk) [Consolidated Condensed Statements of Cash Flows](index=9&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2021 Cash Flow Summary for Nine Months Ended Sep 30 (in thousands of USD) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $161,527 | $144,330 | | Net cash used in investing activities | ($1,059,258) | ($1,179,456) | | Net cash provided by financing activities | $874,096 | $1,022,557 | | **Net Change in Cash and Cash Equivalents** | **($23,635)** | **($12,569)** | - For the first nine months of 2021, the company saw a significant use of cash in investing activities, primarily for the purchase of securities (**$1.825 billion**), which was largely funded by cash from financing activities, including a net increase in deposits of nearly **$1 billion**[18](index=18&type=chunk) [Notes to Consolidated Condensed Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) The notes provide detailed explanations of the financial statements, highlighting the adoption of the CECL accounting standard, the acquisition of Hoosier Trust Company, the composition and decrease of the loan portfolio due to PPP loans, the allowance for credit losses, and details on derivatives, fair value measurements, and share-based compensation - The Corporation adopted the CECL (Current Expected Credit Losses) standard on January 1, 2021, replacing the previous "incurred loss" model, which resulted in a one-time cumulative-effect adjustment to retained earnings of **$68.0 million**, net of tax[21](index=21&type=chunk)[22](index=22&type=chunk) Impact of CECL Adoption on Jan 1, 2021 (in thousands of USD) | Balance Sheet Item | Impact of Adoption | | :--- | :--- | | Allowance for credit losses - Loans | +$74,055 | | Allowance for credit losses on unfunded loan commitments | +$20,500 | | Tax asset, deferred and receivable | +$21,984 | | Retained Earnings | -$68,040 | - On April 1, 2021, the Bank acquired Hoosier Trust Company for **$3.225 million** in cash, resulting in **$1.467 million** of goodwill and a **$2.247 million** customer relationship intangible asset[49](index=49&type=chunk)[51](index=51&type=chunk) - As of September 30, 2021, the loan portfolio totaled **$9.04 billion**, a decrease from **$9.24 billion** at year-end 2020, primarily driven by the forgiveness of Paycheck Protection Program (PPP) loans, which fell from **$667.1 million** to **$198.1 million**[73](index=73&type=chunk) [Management's Discussion and Analysis (MD&A)](index=42&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results of operations, highlighting the impact of the COVID-19 pandemic, the Paycheck Protection Program (PPP), and the adoption of the CECL accounting standard, covering the increase in net income, changes in the balance sheet, capital adequacy, loan quality, liquidity, and interest rate sensitivity [COVID-19 Update](index=47&type=section&id=COVID-19%20Update) This section details the impact of the COVID-19 pandemic on the company's operations, including its participation in the Paycheck Protection Program and loan modifications - The Bank actively participated in all phases of the Paycheck Protection Program (PPP), holding approximately 1,600 PPP loans totaling **$198.1 million**, net of deferred fees, as of September 30, 2021[191](index=191&type=chunk) - The company recognized **$7.4 million** and **$23.2 million** in PPP loan-related deferred processing fee income during the three and nine months ended September 30, 2021, respectively[191](index=191&type=chunk) - The company offered short-term loan modifications to borrowers affected by COVID-19, with loan balances of **$15.4 million** remaining in deferral as of September 30, 2021[192](index=192&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) This section summarizes the company's financial performance, highlighting key changes in assets, liabilities, and equity Q3 2021 Performance Highlights (in millions of USD, except per share data) | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Net Income | $52.8 million | $36.2 million | | Diluted EPS | $0.98 | $0.67 | - Total assets increased by **$993.5 million** (7.1%) to **$15.1 billion** from December 31, 2020, primarily due to growth in deposits and investment securities[197](index=197&type=chunk) - Total deposits grew by **$987.1 million** since year-end 2020, driven by increases in demand and savings accounts, partially attributed to PPP loan proceeds and consumer Economic Impact Payments[205](index=205&type=chunk) [Net Interest Income](index=50&type=section&id=Net%20Interest%20Income) This section analyzes the components of net interest income and net interest margin, including the impact of interest costs and asset yields - Net interest margin (NIM) on a tax equivalent basis increased by **5 basis points** to **3.20%** for Q3 2021 compared to **3.15%** in Q3 2020[212](index=212&type=chunk) - The increase in NIM was driven by a **22 basis point** decrease in interest costs, which offset a **12 basis point** decline in asset yields[213](index=213&type=chunk)[215](index=215&type=chunk) - Fair value accretion income on purchased loans contributed **4 basis points** to NIM in Q3 2021, down from **10 basis points** in Q3 2020[214](index=214&type=chunk) [Loan Quality and Provision for Credit Losses on Loans](index=59&type=section&id=Loan%20Quality%20and%20Provision%20for%20Credit%20Losses%20on%20Loans) This section assesses the quality of the loan portfolio, including non-performing loans and the allowance for credit losses, and discusses the provision for credit losses - Non-performing loans totaled **$51.9 million** at September 30, 2021, a decrease of **$12.8 million** from year-end 2020[253](index=253&type=chunk) - The allowance for credit losses was **$200.0 million**, or **2.21%** of total loans, at September 30, 2021, with the ratio being **2.26%** excluding PPP loans[264](index=264&type=chunk) - No provision for credit losses was recorded in the first nine months of 2021, compared to a **$54.2 million** provision in the same period of 2020, which was taken due to increased credit risk related to the COVID-19 pandemic[265](index=265&type=chunk) [Capital](index=55&type=section&id=Capital) This section reviews the company's capital adequacy, including key regulatory capital ratios and share repurchase activities - The Corporation and the Bank maintained capital ratios in excess of the "well-capitalized" regulatory requirements as of September 30, 2021[240](index=240&type=chunk)[243](index=243&type=chunk) Key Capital Ratios (Corporation) | Ratio | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | CET1 Capital Ratio | 11.75% | 12.02% | | Tier 1 Capital Ratio | 12.17% | 12.48% | | Total Risk-Based Capital Ratio | 14.02% | 14.36% | | Tangible Common Equity to Tangible Assets (non-GAAP) | 8.94% | 9.65% | - Under a new stock repurchase program approved in January 2021, the Corporation repurchased **529,498 shares** for **$20.8 million** during the first nine months of 2021[237](index=237&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to the 'Liquidity' and 'Interest Sensitivity and Disclosure About Market Risk' sections within the Management's Discussion and Analysis for detailed disclosures, showing that as of September 30, 2021, a hypothetical immediate 200 basis point increase in interest rates would increase net interest income by 1.9% over a twelve-month horizon, while a 100 basis point decrease would reduce it by 0.3% Net Interest Income Sensitivity Analysis | Interest Rate Scenario | Change from Base Case (Sep 30, 2021) | Change from Base Case (Dec 31, 2020) | | :--- | :--- | :--- | | Rising 200 basis points | +1.9% | +5.9% | | Falling 100 basis points | -0.3% | +0.7% | [Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of the end of the reporting period, concluding that these controls and procedures are effective, with no material changes to internal control over financial reporting identified during the last fiscal quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by the report[292](index=292&type=chunk) - There were no changes in internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting[293](index=293&type=chunk) Part II. [Other Information](index=61&type=section&id=Part%20II.%20Other%20Information) This section provides additional information including legal proceedings, risk factors, equity security sales, and exhibits [Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) The Corporation states that there are no pending material legal proceedings, other than litigation incidental to the ordinary course of business, that would have a material adverse effect on its financial position or results of operations - The Corporation is not a party to any material legal proceedings outside of routine litigation incidental to its ordinary business[295](index=295&type=chunk) [Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes to the risk factors disclosed in the 2020 Form 10-K were reported[297](index=297&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Corporation's purchases of its own equity securities during the third quarter of 2021, with a total of 529,498 shares repurchased as part of a publicly announced program Issuer Purchases of Equity Securities (Q3 2021) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as part of Program | | :--- | :--- | :--- | :--- | | July 2021 | 235,079 | $39.67 | 235,079 | | August 2021 | 59,037 | $41.56 | 21,300 | | September 2021 | 273,119 | $38.92 | 273,119 | | **Total Q3** | **567,235** | **N/A** | **529,498** | - The repurchases were made under a program approved on January 27, 2021, authorizing up to **3,333,000 shares** or a total investment of **$100 million**[299](index=299&type=chunk) [Exhibits](index=62&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002 and Inline XBRL documents - Exhibits filed with the report include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, as well as XBRL data files[302](index=302&type=chunk)

First Merchants Corporation (NASDAQ:FRME) Q3 2021 Earnings Conference Call October 26, 2021 2:30 PM ET Company Participants Mark Hardwick - Chief Executive Officer Mike Stewart - President Michele Kawiecki - Chief Financial Officer John Martin - Chief Credit Officer Conference Call Participants Daniel Tamayo - Raymond James Terry McEvoy - Stephens Damon DelMonte - KBW Scott Siefers - Piper Sandler Brian Martin - Janney Montgomery Operator Good afternoon and welcome to the First Merchants Corporation 3Q 2021 ...

First Merchants Corporation NASDAQ: FRME INVESTOR UPDATE Third Quarter 2021 First Merchants Corporation | 200 E. Jackson St., P.O. Box 792, Muncie, IN 47305 | 765.747.1500 Forward Looking Statement This presentation 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", "int ...

Financial Adjustments and Standards - The Corporation recorded a one-time cumulative-effect adjustment to retained earnings of $68.0 million as of January 1, 2021, due to the adoption of the CECL model[37]. - The Corporation adopted the CECL standard on January 1, 2021, allowing it to utilize the new model for the entire year of 2021[36]. - The Corporation's financial statements are prepared under the incurred loss model for 2020, while the CECL model was adopted for 2021[36]. - The Corporation's implementation of ASU No. 2019-12 regarding income taxes did not have a significant effect on its consolidated financial statements[42]. - The Corporation is assessing the impact of ASU 2020-04 on its transition away from LIBOR for its loans and financial instruments[44]. - The allowance for credit losses increased by 57% from December 31, 2020, amounting to $74.1 million, covering expected credit losses over the life of the loan portfolio[37]. - The allowance for credit losses decreased to $199,775 thousand as of June 30, 2021, from $201,082 thousand as of March 31, 2021, reflecting a reduction of approximately 1.0%[105]. - The provision for credit losses for the three months ended June 30, 2021, was a negative $1,898 thousand, indicating a reversal compared to the previous quarter[105]. Loan Portfolio and Performance - The Corporation's loan portfolio totaled $9.121 billion as of June 30, 2021, with a decrease from $9.243 billion as of December 31, 2020[71]. - Paycheck Protection Program (PPP) loans amounted to $415.8 million as of June 30, 2021, down from $667.1 million at the end of 2020[71]. - Total past due loans decreased by $4.4 million to $68.4 million as of June 30, 2021, from $72.8 million on December 31, 2020[78]. - Non-accrual loans increased to $57.6 million as of June 30, 2021, compared to $31.3 million on December 31, 2020[80]. - The total loans outstanding were $9.121 billion as of June 30, 2021, compared to $9.243 billion on December 31, 2020[78]. - The Corporation's modifications in response to COVID-19 included short-term payment deferrals and fee waivers for borrowers[83]. - The total number of troubled debt restructured loans that defaulted during the three months ended June 30, 2021 was 4, with a recorded balance of $358 million[90]. - The Corporation's loan portfolio is pooled into ten segments with similar risk characteristics for the calculation of expected credit losses[94]. Investment Securities - As of June 30, 2021, the total available for sale investment securities amounted to $2,426,900, with gross unrealized gains of $100,325 and gross unrealized losses of $7,889[53]. - The total held to maturity investment securities as of June 30, 2021, was $1,760,847, with an allowance for credit losses of $245,000 recorded on state and municipal securities[55]. - The fair value of investment securities available for sale reported at less than historical cost was $523,718, representing 21.6% of the Corporation's investments available for sale[63]. - The Corporation's investment securities available for sale experienced gross unrealized losses of $7,889 as of June 30, 2021, compared to $349 as of December 31, 2020[63]. - The total investment securities available for sale amounted to $2.334 billion in amortized cost and $2.427 billion in fair value as of June 30, 2021[66]. - The total fair value of investment securities available for sale was $2,426,900 million as of June 30, 2021, compared to $1,919,119 million on December 31, 2020, reflecting a growth of approximately 26.4%[159]. Acquisitions and Goodwill - The Corporation acquired 100% of Hoosier Trust Company for $3,225,000 in cash on April 1, 2021, with approximately $290 million in assets under management[49]. - Of the total purchase price for Hoosier, $2,247,000 was allocated to a customer relationship intangible, amortized over 10 years, and $1,467,000 to goodwill, which is tax-deductible[51]. - The Corporation recorded $1,467,000 of goodwill from the Hoosier acquisition on April 1, 2021, increasing the total goodwill balance to $545.4 million as of June 30, 2021[116][117]. - A customer relationship intangible of $2,247,000 was recognized from the Hoosier acquisition, contributing to a total core deposit and other intangibles balance of $28.4 million as of June 30, 2021[118][119]. Financial Performance - The Corporation reported a net income of $55.6 million for Q2 2021, up from $33.0 million in Q2 2020, with diluted earnings per share increasing to $1.03 from $0.62[194]. - For the six months ended June 30, 2021, net income available to common stockholders was $105.0 million, with a diluted net income per share of $1.94, compared to $67.3 million and $1.24 per share for the same period in 2020[176]. - Non-interest income reached $30.9 million for the quarter ended June 30, 2021, a $4.4 million increase or 16.6% from the second quarter of 2020[221]. - The effective tax rate for the three months ended June 30, 2021, was 15.6%, up from 12.3% in 2020[173]. - The Corporation maintained all regulatory capital ratios in excess of the "well-capitalized" definition[206]. Deposits and Borrowings - Total deposits increased to $12,203,400 million by June 30, 2021, compared to $11,361,610 million at the end of 2020, showing a growth of approximately 7.4%[159]. - The total borrowings, including securities sold under repurchase agreements, amounted to $146,904 million as of June 30, 2021, compared to $177,102 million at the end of 2020, indicating a reduction in leverage[160]. - Loan commitments to extend credit increased to $3,884.9 million as of June 30, 2021, up from $3,443.5 million at December 31, 2020, representing a growth of approximately 12.8%[114]. Employee Compensation and Stock Options - Share-based compensation for the three months ended June 30, 2021, was $1,208,000, slightly down from $1,214,000 in the same period of 2020[166]. - The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2021, was $559,000, compared to $197,000 in 2020[171]. - As of June 30, 2021, unrecognized compensation expense related to RSAs was $7.5 million, expected to be recognized over a weighted-average period of 1.79 years[169]. - The Corporation's stock options outstanding as of June 30, 2021, totaled 28,500 shares, with a weighted-average exercise price of $17.14[170]. COVID-19 Impact - The Corporation continues to support customers affected by COVID-19 by providing assistance and originating loans under the PPP[187]. - As of June 30, 2021, $40.3 million in loan balances remained in deferral due to COVID-19 related modifications[190].

Financial Data and Key Metrics Changes - The company reported a record-setting second quarter net income of $55.6 million, with earnings per share of $1.03, marking a 12% increase from the first quarter and a 49% increase when annualized [6][18] - Year-to-date earnings per share reached $1.94, a $0.70 increase over the same period last year [20] - Return on assets was 1.45% and return on tangible common equity was 16.82% [5] Business Line Data and Key Metrics Changes - Core loan growth for the quarter was 6.7%, with private wealth and consumer groups growing at 4% and 5% respectively [7][9] - Non-PPP commercial loans grew 14% on an annualized basis, driven by strong demand for financing new plant and equipment [12] - Organic growth for the second quarter, after adjusting for PPP loans and a $76 million mortgage portfolio sale, was 10% [14] Market Data and Key Metrics Changes - Overall deposit balances grew around 8%, with commercial deposits increasing nearly 30% [15] - The cost of deposits declined to 19 basis points, a 2-basis point decline from the prior quarter [28] - The company experienced a strong economic environment in its markets, contributing to business activity and loan growth [17] Company Strategy and Development Direction - The company aims to maintain a balanced approach to meet customer needs while ensuring the health of its workforce [48] - There is a focus on organic growth and capital deployment, including share repurchase and potential acquisitions [70] - The company is committed to maintaining a tangible common equity ratio of around 9% while achieving strong returns on tangible equity [70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current business climate and the ability to deliver strong results moving forward [49] - The company anticipates continued growth in net interest income despite modest pressure on core net interest margin due to excess liquidity [55] - Management highlighted the importance of monitoring economic indicators such as unemployment rates to guide future provisions [59] Other Important Information - The efficiency ratio for the quarter was an outstanding 48.91% [18] - The company reported a net unrealized gain of $131.7 million at the end of Q2, up from $85.3 million in Q1 [22] - The loan yield for the second quarter was 4.05%, with a core loan yield of 3.78% excluding PPP loans [24] Q&A Session Summary Question: What is the current utilization rate and typical levels? - The current utilization rate is around 38%, which is an improvement from previous lows during the pandemic [52] Question: Is the loan growth coming from delayed projects or new growth? - The growth is attributed to both new projects and ongoing activity in commercial real estate, particularly in multifamily and industrial sectors [53] Question: What is the outlook for core net interest margin? - Core net interest margin is expected to face modest pressure but net interest income is anticipated to continue growing [55] Question: What is the outlook for expenses and salary levels? - The company expects to maintain expenses in the range of $68 million to $70 million per quarter [58] Question: What is the trend for loan forgiveness? - The company expects most forgiveness to occur by the end of the year, with significant progress already made [68]