First Merchants (US:FRME)2022-05-09 16:00Loan Portfolio - As of March 31, 2022, the Corporation's total loan portfolio amounted to $9,356,241, an increase from $9,241,861 as of December 31, 2021, representing a growth of approximately 1.24%[61] - Commercial and industrial loans increased to $2,826,660 from $2,714,565, reflecting a growth of about 4.12%[61] - The balance of Paycheck Protection Program (PPP) loans decreased to $48.7 million from $106.6 million, indicating a reduction of approximately 54.25%[61] - The Corporation's residential loans rose to $1,226,695 from $1,159,127, marking an increase of about 5.82%[61] - The total amount of agricultural land, production, and other loans to farmers decreased to $209,077 from $246,442, a decline of approximately 15.16%[61] - The Corporation's commercial real estate loans (non-owner occupied) decreased slightly to $2,073,197 from $2,135,459, a decrease of about 2.91%[61] - The total amount of public finance and other commercial loans remained stable at $832,882, consistent with the previous reporting period[61] - Total loans amounted to $9.3 billion as of March 31, 2022, reflecting a significant increase from previous periods[69] - The Corporation's total loan balance increased by $107.1 million to $9.4 billion as of March 31, 2022, with PPP loans accounting for $48.7 million[219] Credit Quality - The Corporation continues to monitor credit quality indicators, including non-performing loans and net charge-offs, to assess the overall health of its loan portfolio[62] - Total past due loans increased to $51.6 million as of March 31, 2022, up by $16.9 million from $34.7 million on December 31, 2021[69] - 30-59 Days Past Due loans reached $28.6 million, an increase of $13.6 million from December 31, 2021[69] - The risk grading of commercial and industrial loans shows that pass loans accounted for $2,752,036, while special mention and substandard loans totaled $46,476 and $27,582, respectively[66] - Non-accrual loans totaled $42.7 million, a decrease of $364,000 from December 31, 2021, resulting in a coverage ratio of 459.0%[174] - Non-performing loans totaled $42.8 million at March 31, 2022, a decrease of $552,000 from December 31, 2021[209] - Non-performing assets (NPA) increased to $49.1 million at March 31, 2022, from $43.9 million at December 31, 2021[213] - Loans 90 days or more delinquent and still accruing rose to $2.1 million at March 31, 2022, compared to $963,000 at December 31, 2021[213] Allowance for Credit Losses - The allowance for credit losses on loans was $196.0 million, or 2.09% of total loans, compared to 2.11% at the end of 2021[174] - The allowance for credit losses totaled $196.0 million, representing an increase of $587,000 from December 31, 2021, and was 2.09% of total loans[219] - The allowance for credit losses increased to $195,984,000 as of March 31, 2022, up from $195,397,000 at the end of 2021, with a provision for credit losses of $7,571,000 during the first quarter of 2022[95] - The Corporation's expected credit loss calculation is performed quarterly, utilizing a Probability of Default / Loss Given Default methodology combined with economic forecast models[85] - The Corporation's commercial troubled debt restructured loans are individually evaluated for apparent loss, which may result in specific reserve allocations in the allowance for credit loss[79] Deposits and Borrowings - Total deposits as of March 31, 2022, were $12,905,953,000, up from $12,732,577,000 on December 31, 2021, marking an increase of 1.36%[139] - Total deposits increased by $173.4 million to $12.9 billion as of March 31, 2022, representing a 5.4% annualized growth[178] - The Corporation's total borrowings decreased by $36.9 million as of March 31, 2022, compared to December 31, 2021[179] - Total borrowings from the Federal Home Loan Bank (FHLB) were $309.0 million, with remaining borrowing capacity of $720.9 million as of March 31, 2022[226] Income and Expenses - Net interest income for Q1 2022 was $102.3 million, up from $100.4 million in Q1 2021[167] - Non-interest income totaled $25.9 million in Q1 2022, a 7.5% increase from $24.1 million in Q1 2021[191] - Non-interest expense for Q1 2022 was $72.3 million, representing a 9.4% increase from $66.1 million in Q1 2021[191] - Salaries and employee benefits increased by $3.7 million in Q1 2022, primarily due to merit increases and incentive expenses[191] - The effective tax rate for the three months ended March 31, 2022, was 13.0%, down from 15.3% in 2021, with actual tax expense recorded at $7,266,000 compared to $8,952,000 in 2021[154] Capital Ratios - The Corporation maintained all regulatory capital ratios in excess of the definition of "well-capitalized"[181] - Total risk-based capital to risk-weighted assets ratio for First Merchants Corporation was 13.85% as of March 31, 2022, exceeding the Basel III minimum requirement of 10.50%[199] - First Merchants Bank's Tier 1 capital to risk-weighted assets ratio was 11.20% as of March 31, 2022, above the required 8.50%[199] - Common equity tier 1 capital to risk-weighted assets ratio for First Merchants Corporation was 11.63% as of March 31, 2022, surpassing the minimum requirement of 7.00%[199] - The Corporation's capital ratios are assessed based on both the amount and composition of capital, focusing on CET1 as a key measure of capital adequacy[201] Investment Securities - The fair value of investment securities available for sale was $2,164,197,000 as of March 31, 2022, down from $2,344,551,000 on December 31, 2021, representing a decrease of 7.66%[139] - Total investment securities decreased by $35.1 million from December 31, 2021, with a net unrealized loss of $101.3 million as of March 31, 2022, primarily due to interest rate changes[239] - The fair value of U.S. Treasury securities was $1,959 as of March 31, 2022, compared to $999 as of December 31, 2021[128] - The fair value of state and municipal securities was $1,496,533 as of March 31, 2022, down from $1,576,532 as of December 31, 2021[128] Shareholder Information - Basic net income per share for the three months ended March 31, 2022, was $0.91, slightly down from $0.92 in 2021, with net income available to common stockholders at $48,586,000[157] - The diluted tangible net income available to common stockholders was $0.93 for the three months ended March 31, 2022, consistent with the previous year[206] - The Corporation recorded a one-time cumulative-effect adjustment to retained earnings of $68.0 million due to the adoption of the CECL model for calculating credit losses[193] - As of March 31, 2022, the Corporation had approximately 2.7 million shares available for repurchase under the stock repurchase program, valued at $74.5 million[194]