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First Merchants Corporation Announces Fourth Quarter 2024 Earnings Per Share

1. Fourth quarter net income rose to $63.9 million, up 47% year-over-year. 2. Adjusted diluted earnings per share increased to $1.00 from $0.90 last quarter. 3. Total loans grew by $185.6 million, driven by commercial loan growth. 4. Nonperforming assets increased to 43 basis points from 35 the previous quarter. 5. The branch sale resulted in a $20 million gain and improved market focus.

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Why Very Bullish?

Strong earnings growth and loan growth signify robust financial health, similar to historical performance boosts during such earnings reports.

How important is it?

Earnings reports directly affect investor sentiment and stock price; higher earnings typically lead to increased market confidence.

Why Long Term?

Sustained financial improvements and strategic restructuring generally benefit long-term stock valuations, evidenced by previous consistent performances.

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MUNCIE, Ind., Jan. 30, 2025 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) Fourth Quarter 2024 Highlights: Net income available to common stockholders was $63.9 million and diluted earnings per common share totaled $1.10, compared to $48.7 million and $0.84 in the third quarter of 2024, and $42.0 million and $0.71 in the fourth quarter of 2023. Excluding the impact of the branch sale and repositioning of the available for sale securities portfolio, adjusted net income available to common stockholders1 was $58.1 million or $1.00 per share for the fourth quarter of 2024.Strong capital position with Common Equity Tier 1 Capital Ratio of 11.43% and Tangible Common Equity to Tangible Assets Ratio of 8.81%.Net interest margin was 3.28% compared to 3.23% on a linked quarter basis and 3.16% in the fourth quarter of 2023.Total loans grew $185.6 million, or 5.9% annualized, on a linked quarter basis, and $368.1 million, or 2.9% during the last twelve months.Total deposits increased $156.5 million, or 4.4% annualized, on a linked quarter basis, and declined $32.4 million, or 0.2%, during the last twelve months after normalizing for deposits sold during the fourth quarter.Nonperforming assets to total assets were 43 basis points compared to 35 basis points on a linked quarter basis.Adjusted efficiency ratio totaled 53.60%1 for the quarter.Completed the sale of five Illinois branches and certain loans and deposits to Old Second National Bank on December 6, 2024. "The fourth quarter was a strong finish to the year and showed the momentum we have built with healthy increases in core earnings, NIM and ROA," said Mark Hardwick, Chief Executive Officer of First Merchants Bank. "We restructured a portion of our securities portfolio and completed the Illinois branch sale to help prioritize our core markets. These actions and the completion of multiple technology initiatives in 2024 have positioned First Merchants to deliver strong results in 2025." Fourth Quarter Financial Results: First Merchants Corporation (the “Corporation”) reported fourth quarter 2024 net income available to common stockholders of $63.9 million compared to $42.0 million during the same period in 2023. Diluted earnings per common share for the period totaled $1.10 compared to the fourth quarter of 2023 result of $0.71. Excluding non-core income and expenses incurred in each period, adjusted net income available to common stockholders1 for the fourth quarter 2024 was $58.1 million, or $1.00 diluted earnings per common share compared to $53.4 million, or $0.90 in the same period in 2023. During the quarter, the Corporation completed the sale of five Illinois branches along with loans of $7.4 million and deposits of $267.4 million, generating a gain of $20.0 million recorded in non-interest income. The sale of these branches represents the Corporation’s exit from suburban Chicago markets. Total assets equaled $18.3 billion and loans totaled $12.9 billion as of quarter-end. During the past twelve months, total loans grew by $368.1 million, or 2.9%. On a linked quarter basis, loans grew $185.6 million, or 5.9% annualized, with growth primarily in commercial loans. Investments totaling $3.5 billion decreased $350.7 million, or 9.2%, during the last twelve months and decreased $201.5 million on a linked quarter basis. The decline during the quarter was partially due to the sale of $109.6 million of available for sale securities with a weighted average tax-equivalent yield of 2.31%, which resulted in a loss of $11.6 million. The remaining decline for the quarter was due to security paydowns and maturities, as well as a decline in valuation of securities reflecting the movement of interest rates. Sales of available for sale securities in 2024 totaled $268.5 million and resulted in a loss of $20.8 million. Total deposits were $14.5 billion as of quarter-end and decreased by $299.8 million, or 2.0%, over the past twelve months. The decline was primarily due to the sale of the Illinois branches during the fourth quarter which included $267.4 million of deposits. Excluding this impact, deposits declined by $32.4 million in 2024. On a linked quarter basis, deposits grew by $156.5 million, or 4.4% annualized. The loan to deposit ratio increased slightly to 88.5% at period end from 88.0% in the prior quarter. The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $192.8 million as of quarter-end, or 1.50% of total loans, an increase of $4.9 million from prior quarter. Loan charge-offs, net of recoveries totaled $0.8 million and provision for loans of $5.7 million was recorded during the quarter. Reserves for unfunded commitments totaled $18.0 million declining during the quarter due to reserve release of $1.5 million. Net provision for the quarter totaled $4.2 million. Non-performing assets to total assets were 43 basis points for the fourth quarter of 2024, an increase of eight basis points compared to 35 basis points in the prior quarter. Net interest income totaled $134.4 million for the quarter, an increase of $3.3 million, or 2.5%, compared to the prior quarter and an increase of $4.3 million, or 3.3%, compared to the fourth quarter of 2023. Fully taxable equivalent net interest margin was 3.28%, an increase of five basis points compared to the third quarter of 2024, and an increase of 12 basis points compared to the fourth quarter of 2023. The increase in net interest margin compared to the third quarter was due to lower funding costs and a more favorable earning asset and funding mix. Noninterest income totaled $42.7 million for the quarter, an increase of $17.9 million compared to the third quarter of 2024 and an increase of $16.3 million compared to the fourth quarter of 2023. When excluding non-core income from each period, noninterest income totaled $34.4 million for the quarter, an increase of $0.4 million compared to third quarter of 2024, and an increase of $5.6 million compared to the fourth quarter of 2023. The increase in core noninterest income over the fourth quarter of 2023 was primarily due to an increase in gains on sales of loans and CRA investment income. Noninterest expense totaled $96.3 million for the quarter, an increase of $1.7 million from the third quarter of 2024 and a decrease of $11.8 million from the fourth quarter of 2023. The increase in the linked quarter was from higher marketing costs and other one-time operating expenses. The decrease from the fourth quarter of 2023 was due to one-time charges incurred in the prior year which included an FDIC special assessment, early retirement and severance costs, and a lease termination. The Corporation’s total risk-based capital ratio totaled 13.31%, common equity tier 1 capital ratio totaled 11.43%, and the tangible common equity ratio totaled 8.81%. These ratios continue to reflect the Corporation’s strong liquidity and capital positions. 1 See “Non-GAAP Financial Information” for reconciliation CONFERENCE CALL First Merchants Corporation will conduct a fourth quarter earnings conference call and webcast at 11:30 a.m. (ET) on Thursday, January 30, 2025. To access via phone, participants will need to register using the following link where they will be provided a phone number and access code: (https://register.vevent.com/register/BIc49ad0293a7844dca2e7171f51e600dd95f36e86b6) To view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/9t5v76m2) during the time of the call. A replay of the webcast will be available until January 30, 2026. Detailed financial results are reported on the attached pages. About First Merchants Corporation First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank. The Bank also operates as First Merchants Private Wealth Advisors (as a division of First Merchants Bank). First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company’s Internet web page (http://www.firstmerchants.com). FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation. Forward-Looking Statements This release 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”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, “would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These statements include statements about First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity (including the ability to grow and maintain core deposits and retain large, uninsured deposits), credit and interest rate risks associated with the First Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, First Merchants’ past results of operations do not necessarily indicate its anticipated future results. CONSOLIDATED BALANCE SHEETS   (Dollars In Thousands)December 31,  2024   2023 ASSETS   Cash and due from banks$87,616  $112,649 Interest-bearing deposits 298,891   436,080 Investment securities, net of allowance for credit losses of $245,000 and $245,000 3,460,695   3,811,364 Loans held for sale 18,663   18,934 Loans 12,854,359   12,486,027 Less: Allowance for credit losses - loans (192,757)  (204,934)Net loans 12,661,602   12,281,093 Premises and equipment 129,743   133,896 Federal Home Loan Bank stock 41,690   41,769 Interest receivable 91,829   97,664 Goodwill and other intangibles 731,830   739,101 Cash surrender value of life insurance 304,906   306,301 Other real estate owned 4,948   4,831 Tax asset, deferred and receivable 92,387   99,883 Other assets 387,169   322,322 TOTAL ASSETS$18,311,969  $18,405,887 LIABILITIES   Deposits:   Noninterest-bearing$2,325,579  $2,500,062 Interest-bearing 12,196,047   12,321,391 Total Deposits 14,521,626   14,821,453 Borrowings:   Federal funds purchased 99,226   — Securities sold under repurchase agreements 142,876   157,280 Federal Home Loan Bank advances 822,554   712,852 Subordinated debentures and other borrowings 93,529   158,644 Total Borrowings 1,158,185   1,028,776 Interest payable 16,102   18,912 Other liabilities 311,073   289,033 Total Liabilities 16,006,986   16,158,174 STOCKHOLDERS' EQUITY   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 Stock, $.125 stated value:   Authorized -- 100,000,000 shares   Issued and outstanding - 57,974,535 and 59,424,122 shares 7,247   7,428 Additional paid-in capital 1,188,768   1,236,506 Retained earnings 1,272,528   1,154,624 Accumulated other comprehensive loss (188,685)  (175,970)Total Stockholders' Equity 2,304,983   2,247,713 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$18,311,969  $18,405,887   CONSOLIDATED STATEMENTS OF INCOMEThree Months Ended Twelve Months Ended(Dollars In Thousands, Except Per Share Amounts)December 31, December 31,  2024   2023   2024   2023 INTEREST INCOME       Loans:       Taxable$197,536  $197,523  $803,652  $747,837 Tax-exempt 9,020   8,197   34,262   31,954 Investment securities:       Taxable 9,024   8,644   36,086   35,207 Tax-exempt 12,754   13,821   53,487   58,117 Deposits with financial institutions 5,350   8,034   16,992   17,719 Federal Home Loan Bank stock 958   771   3,527   3,052 Total Interest Income 234,642   236,990   948,006   893,886 INTEREST EXPENSE       Deposits 89,835   96,655   386,127   306,092 Federal funds purchased 26   1   481   1,421 Securities sold under repurchase agreements 680   827   3,057   3,451 Federal Home Loan Bank advances 8,171   6,431   29,886   27,206 Subordinated debentures and other borrowings 1,560   3,013   7,341   10,316 Total Interest Expense 100,272   106,927   426,892   348,486 NET INTEREST INCOME 134,370   130,063   521,114   545,400 Provision for credit losses 4,200   1,500   35,700   3,500 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 130,170   128,563   485,414   541,900 NONINTEREST INCOME       Service charges on deposit accounts 8,124   7,690   32,606   30,837 Fiduciary and wealth management fees 8,665   8,187   34,215   30,840 Card payment fees 4,957   4,437   19,317   18,862 Net gains and fees on sales of loans 5,681   4,111   20,840   15,659 Derivative hedge fees 1,594   1,049   3,082   3,385 Other customer fees 316   237   1,547   1,880 Earnings on cash surrender value of life insurance 2,188   3,202   8,464   8,347 Net realized losses on sales of available for sale securities (11,592)  (2,317)  (20,757)  (6,930)Gain on branch sale 19,983   —   19,983   — Other income (loss) 2,826   (152)  6,283   2,722 Total Noninterest Income 42,742   26,444   125,580   105,602 NONINTEREST EXPENSES       Salaries and employee benefits 55,437   60,967   221,167   228,745 Net occupancy 7,335   9,089   28,387   29,859 Equipment 7,028   6,108   26,802   24,113 Marketing 2,582   2,647   7,389   7,427 Outside data processing fees 6,029   5,875   27,140   25,165 Printing and office supplies 377   402   1,462   1,552 Intangible asset amortization 1,771   2,182   7,271   8,743 FDIC assessments 3,744   7,557   15,029   14,674 Other real estate owned and foreclosure expenses 227   1,743   2,076   3,318 Professional and other outside services 3,777   3,981   14,586   16,172 Other expenses 7,982   7,552   27,957   28,502 Total Noninterest Expenses 96,289   108,103   379,266   388,270 INCOME BEFORE INCOME TAX 76,623   46,904   231,728   259,232 Income tax expense 12,274   4,425   30,326   35,446 NET INCOME 64,349   42,479   201,402   223,786 Preferred stock dividends 469   469   1,875   1,875 NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$63,880  $42,010  $199,527  $221,911 Per Share Data:       Basic Net Income Available to Common Stockholders$1.10  $0.71  $3.42  $3.74 Diluted Net Income Available to Common Stockholders$1.10  $0.71  $3.41  $3.73 Cash Dividends Paid to Common Stockholders$0.35  $0.34  $1.39  $1.34 Average Diluted Common Shares Outstanding (in thousands) 58,247   59,556   58,533   59,489   FINANCIAL HIGHLIGHTS       (Dollars in thousands)Three Months Ended Twelve Months Ended December 31, December 31,  2024   2023   2024   2023 NET CHARGE-OFFS$771  $3,148  $49,377  $25,643         AVERAGE BALANCES:       Total Assets$18,478,303  $18,397,200  $18,400,495  $18,186,507 Total Loans 12,757,676   12,396,451   12,634,324   12,297,974 Total Earning Assets 17,089,198   17,222,714   17,054,267   16,991,787 Total Deposits 14,788,294   15,000,580   14,816,564   14,721,498 Total Stockholders' Equity 2,312,270   2,130,993   2,252,491   2,127,262         FINANCIAL RATIOS:       Return on Average Assets 1.39%  0.92%  1.09%  1.23%Return on Average Stockholders' Equity 11.05   7.89   8.86   10.43 Return on Tangible Common Stockholders' Equity 16.75   12.75   13.71   16.76 Average Earning Assets to Average Assets 92.48   93.62   92.68   93.43 Allowance for Credit Losses - Loans as % of Total Loans 1.50   1.64   1.50   1.64 Net Charge-offs as % of Average Loans (Annualized) 0.02   0.10   0.39   0.21 Average Stockholders' Equity to Average Assets 12.51   11.58   12.24   11.70 Tax Equivalent Yield on Average Earning Assets 5.63   5.64   5.69   5.40 Interest Expense/Average Earning Assets 2.35   2.48   2.50   2.05 Net Interest Margin (FTE) on Average Earning Assets 3.28   3.16   3.19   3.35 Efficiency Ratio 48.48   63.26   53.55   55.17 Tangible Common Book Value Per Share$26.78  $25.06  $26.78  $25.06   NONPERFORMING ASSETS         (Dollars In Thousands)December 31, September 30, June 30, March 31, December 31,  2024   2024   2024   2024   2023 Nonaccrual Loans$73,773  $59,088  $61,906  $62,478  $53,580 Other Real Estate Owned and Repossessions 4,948   5,247   4,824   4,886   4,831 Nonperforming Assets (NPA) 78,721   64,335   66,730   67,364   58,411 90+ Days Delinquent 5,902   14,105   1,686   2,838   172 NPAs & 90 Day Delinquent$84,623  $78,440  $68,416  $70,202  $58,583           Allowance for Credit Losses - Loans$192,757  $187,828  $189,537  $204,681  $204,934 Quarterly Net Charge-offs 771   6,709   39,644   2,253   3,148 NPAs / Actual Assets % 0.43%  0.35%  0.36%  0.37%  0.32%NPAs & 90 Day / Actual Assets % 0.46%  0.43%  0.37%  0.38%  0.32%NPAs / Actual Loans and OREO % 0.61%  0.51%  0.53%  0.54%  0.47%Allowance for Credit Losses - Loans / Actual Loans (%) 1.50%  1.48%  1.50%  1.64%  1.64%Net Charge-offs as % of Average Loans (Annualized) 0.02%  0.21%  1.26%  0.07%  0.10%  CONSOLIDATED BALANCE SHEETS         (Dollars In Thousands)December 31, September 30, June 30, March 31, December 31,  2024   2024   2024   2024   2023 ASSETS         Cash and due from banks$87,616  $84,719  $105,372  $100,514  $112,649 Interest-bearing deposits 298,891   359,126   168,528   410,497   436,080 Investment securities, net of allowance for credit losses 3,460,695   3,662,145   3,753,088   3,783,574   3,811,364 Loans held for sale 18,663   40,652   32,292   15,118   18,934 Loans 12,854,359   12,646,808   12,639,650   12,465,582   12,486,027 Less: Allowance for credit losses - loans (192,757)  (187,828)  (189,537)  (204,681)  (204,934)Net loans 12,661,602   12,458,980   12,450,113   12,260,901   12,281,093 Premises and equipment 129,743   129,582   133,245   132,706   133,896 Federal Home Loan Bank stock 41,690   41,716   41,738   41,758   41,769 Interest receivable 91,829   92,055   97,546   92,550   97,664 Goodwill and other intangibles 731,830   733,601   735,373   737,144   739,101 Cash surrender value of life insurance 304,906   304,613   306,379   306,028   306,301 Other real estate owned 4,948   5,247   4,824   4,886   4,831 Tax asset, deferred and receivable 92,387   86,732   107,080   101,121   99,883 Other assets 387,169   348,384   367,845   331,006   322,322 TOTAL ASSETS$18,311,969  $18,347,552  $18,303,423  $18,317,803  $18,405,887 LIABILITIES         Deposits:         Noninterest-bearing$2,325,579  $2,334,197  $2,303,313  $2,338,364  $2,500,062 Interest-bearing 12,196,047   12,030,903   12,265,757   12,546,220   12,321,391 Total Deposits 14,521,626   14,365,100   14,569,070   14,884,584   14,821,453 Borrowings:         Federal funds purchased 99,226   30,000   147,229   —   — Securities sold under repurchase agreements 142,876   124,894   100,451   130,264   157,280 Federal Home Loan Bank advances 822,554   832,629   832,703   612,778   712,852 Subordinated debentures and other borrowings 93,529   93,562   93,589   118,612   158,644 Total Borrowings 1,158,185   1,081,085   1,173,972   861,654   1,028,776 Deposits and other liabilities held for sale —   288,476   —   —   — Interest payable 16,102   18,089   18,554   19,262   18,912 Other liabilities 311,073   292,429   329,302   327,500   289,033 Total Liabilities 16,006,986   16,045,179   16,090,898   16,093,000   16,158,174 STOCKHOLDERS' EQUITY         Preferred Stock, $1,000 par value, $1,000 liquidation value:         Authorized -- 600 cumulative shares         Issued and outstanding - 125 cumulative shares 125   125   125   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   25,000   25,000   25,000 Common Stock, $.125 stated value:         Authorized -- 100,000,000 shares         Issued and outstanding 7,247   7,265   7,256   7,321   7,428 Additional paid-in capital 1,188,768   1,192,683   1,191,193   1,208,447   1,236,506 Retained earnings 1,272,528   1,229,125   1,200,930   1,181,939   1,154,624 Accumulated other comprehensive loss (188,685)  (151,825)  (211,979)  (198,029)  (175,970)Total Stockholders' Equity 2,304,983   2,302,373   2,212,525   2,224,803   2,247,713 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$18,311,969  $18,347,552  $18,303,423  $18,317,803  $18,405,887            CONSOLIDATED STATEMENTS OF INCOME         (Dollars In Thousands, Except Per Share Amounts)December 31, September 30, June 30, March 31, December 31,  2024   2024   2024   2024   2023 INTEREST INCOME         Loans:         Taxable$197,536  $206,680  $201,413  $198,023  $197,523 Tax-exempt 9,020   8,622   8,430   8,190   8,197 Investment securities:         Taxable 9,024   9,263   9,051   8,748   8,644 Tax-exempt 12,754   13,509   13,613   13,611   13,821 Deposits with financial institutions 5,350   2,154   2,995   6,493   8,034 Federal Home Loan Bank stock 958   855   879   835   771 Total Interest Income 234,642   241,083   236,381   235,900   236,990 INTEREST EXPENSE         Deposits 89,835   98,856   99,151   98,285   96,655 Federal funds purchased 26   329   126   —   1 Securities sold under repurchase agreements 680   700   645   1,032   827 Federal Home Loan Bank advances 8,171   8,544   6,398   6,773   6,431 Subordinated debentures and other borrowings 1,560   1,544   1,490   2,747   3,013 Total Interest Expense 100,272   109,973   107,810   108,837   106,927 NET INTEREST INCOME 134,370   131,110   128,571   127,063   130,063 Provision for credit losses 4,200   5,000   24,500   2,000   1,500 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 130,170   126,110   104,071   125,063   128,563 NONINTEREST INCOME         Service charges on deposit accounts 8,124   8,361   8,214   7,907   7,690 Fiduciary and wealth management fees 8,665   8,525   8,825   8,200   8,187 Card payment fees 4,957   5,121   4,739   4,500   4,437 Net gains and fees on sales of loans 5,681   6,764   5,141   3,254   4,111 Derivative hedge fees 1,594   736   489   263   1,049 Other customer fees 316   344   460   427   237 Earnings on cash surrender value of life insurance 2,188   2,755   1,929   1,592   3,202 Net realized losses on sales of available for sale securities (11,592)  (9,114)  (49)  (2)  (2,317)Gain on branch sale 19,983   —   —   —   — Other income (loss) 2,826   1,374   1,586   497   (152)Total Noninterest Income 42,742   24,866   31,334   26,638   26,444 NONINTEREST EXPENSES         Salaries and employee benefits 55,437   55,223   52,214   58,293   60,967 Net occupancy 7,335   6,994   6,746   7,312   9,089 Equipment 7,028   6,949   6,599   6,226   6,108 Marketing 2,582   1,836   1,773   1,198   2,647 Outside data processing fees 6,029   7,150   7,072   6,889   5,875 Printing and office supplies 377   378   354   353   402 Intangible asset amortization 1,771   1,772   1,771   1,957   2,182 FDIC assessments 3,744   3,720   3,278   4,287   7,557 Other real estate owned and foreclosure expenses 227   942   373   534   1,743 Professional and other outside services 3,777   3,035   3,822   3,952   3,981 Other expenses 7,982   6,630   7,411   5,934   7,552 Total Noninterest Expenses 96,289   94,629   91,413   96,935   108,103 INCOME BEFORE INCOME TAX 76,623   56,347   43,992   54,766   46,904 Income tax expense 12,274   7,160   4,067   6,825   4,425 NET INCOME 64,349   49,187   39,925   47,941   42,479 Preferred stock dividends 469   468   469   469   469 NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$63,880  $48,719  $39,456  $47,472  $42,010 Per Share Data:         Basic Net Income Available to Common Stockholders$1.10  $0.84  $0.68  $0.80  $0.71 Diluted Net Income Available to Common Stockholders$1.10  $0.84  $0.68  $0.80  $0.71 Cash Dividends Paid to Common Stockholders$0.35  $0.35  $0.35  $0.34  $0.34 Average Diluted Common Shares Outstanding (in thousands) 58,247   58,289   58,328   59,273   59,556 FINANCIAL RATIOS:         Return on Average Assets 1.39%  1.07%  0.87%  1.04%  0.92%Return on Average Stockholders' Equity 11.05   8.66   7.16   8.47   7.89 Return on Tangible Common Stockholders' Equity 16.75   13.39   11.29   13.21   12.75 Average Earning Assets to Average Assets 92.48   92.54   92.81   92.91   93.62 Allowance for Credit Losses - Loans as % of Total Loans 1.50   1.48   1.50   1.64   1.64 Net Charge-offs as % of Average Loans (Annualized) 0.02   0.21   1.26   0.07   0.10 Average Stockholders' Equity to Average Assets 12.51   12.26   12.02   12.17   11.58 Tax Equivalent Yield on Average Earning Assets 5.63   5.82   5.69   5.65   5.64 Interest Expense/Average Earning Assets 2.35   2.59   2.53   2.55   2.48 Net Interest Margin (FTE) on Average Earning Assets 3.28   3.23   3.16   3.10   3.16 Efficiency Ratio 48.48   53.76   53.84   59.21   63.26 Tangible Common Book Value Per Share$26.78  $26.64  $25.10  $25.07  $25.06  LOANS         (Dollars In Thousands)December 31, September 30, June 30, March 31, December 31,  2024   2024   2024   2024   2023 Commercial and industrial loans$4,114,292  $4,041,217  $3,949,817  $3,722,365  $3,670,948 Agricultural land, production and other loans to farmers 256,312   238,743   239,926   234,431   263,414 Real estate loans:         Construction 792,144   814,704   823,267   941,726   957,545 Commercial real estate, non-owner occupied 2,274,016   2,251,351   2,323,533   2,368,360   2,400,839 Commercial real estate, owner occupied 1,157,944   1,152,751   1,174,195   1,137,894   1,162,083 Residential 2,374,729   2,366,943   2,370,905   2,316,490   2,288,921 Home equity 659,811   641,188   631,104   618,258   617,571 Individuals' loans for household and other personal expenditures 166,028   158,480   162,089   161,459   168,388 Public finance and other commercial loans 1,059,083   981,431   964,814   964,599   956,318 Loans 12,854,359   12,646,808   12,639,650   12,465,582   12,486,027 Allowance for credit losses - loans (192,757)  (187,828)  (189,537)  (204,681)  (204,934)NET LOANS$12,661,602  $12,458,980  $12,450,113  $12,260,901  $12,281,093   DEPOSITS         (Dollars In Thousands)December 31, September 30, June 30, March 31, December 31, 2024 2024 2024 2024 2023Demand deposits$7,980,061 $7,678,510 $7,757,679 $7,771,976 $7,965,862Savings deposits 4,522,758  4,302,236  4,339,161  4,679,593  4,516,433Certificates and other time deposits of $100,000 or more 1,043,068  1,277,833  1,415,131  1,451,443  1,408,985Other certificates and time deposits 692,068  802,949  889,949  901,280  849,906Brokered certificates of deposits1 283,671  303,572  167,150  80,292  80,267TOTAL DEPOSITS2$14,521,626 $14,365,100 $14,569,070 $14,884,584 $14,821,453 1 - Total brokered deposits of $955.7 million, which includes brokered CD's of $283.7 million at December 31, 2024.2 - Total deposits at September 30, 2024 excluded $287.7 million of deposits reclassified to Deposits and other liabilities held for sale related to the Illinois branch sale. The sale of $267.4 million of deposits associated with the Illinois branch sale was subsequently completed on December 6, 2024. CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS      (Dollars in Thousands)            For the Three Months Ended December 31, 2024 December 31, 2023 Average Balance InterestIncome /Expense AverageRate Average Balance InterestIncome /Expense AverageRateASSETS           Interest-bearing deposits$522,868 $5,350 4.09% $700,705 $8,034 4.59%Federal Home Loan Bank stock 41,703  958 9.19   41,792  771 7.38 Investment Securities:(1)           Taxable 1,677,554  9,024 2.15   1,801,533  8,644 1.92 Tax-exempt(2) 2,089,397  16,144 3.09   2,282,233  17,495 3.07 Total Investment Securities 3,766,951  25,168 2.67   4,083,766  26,139 2.56 Loans held for sale 36,219  550 6.07   16,355  246 6.02 Loans:(3)           Commercial 8,753,723  156,414 7.15   8,533,233  159,190 7.46 Real estate mortgage 2,177,351  24,401 4.48   2,118,060  21,829 4.12 HELOC and installment 841,537  16,171 7.69   820,728  16,258 7.92 Tax-exempt(2) 948,846  11,418 4.81   908,075  10,376 4.57 Total Loans 12,757,676  208,954 6.55   12,396,451  207,899 6.71 Total Earning Assets 17,089,198  240,430 5.63%  17,222,714  242,843 5.64%Total Non-Earning Assets 1,389,105      1,174,486    TOTAL ASSETS$18,478,303     $18,397,200    LIABILITIES           Interest-Bearing Deposits:           Interest-bearing deposits$5,564,228 $37,049 2.66% $5,504,725 $40,996 2.98%Money market deposits 3,189,334  25,463 3.19   3,096,085  27,909 3.61 Savings deposits 1,362,705  3,102 0.91   1,587,758  3,913 0.99 Certificates and other time deposits 2,313,284  24,221 4.19   2,225,528  23,837 4.28 Total Interest-Bearing Deposits 12,429,551  89,835 2.89   12,414,096  96,655 3.11 Borrowings 1,049,677  10,437 3.98   1,013,856  10,272 4.05 Total Interest-Bearing Liabilities 13,479,228  100,272 2.98   13,427,952  106,927 3.19 Noninterest-bearing deposits 2,358,743      2,586,484    Other liabilities 328,062      251,771    Total Liabilities 16,166,033      16,266,207    STOCKHOLDERS' EQUITY 2,312,270      2,130,993    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$18,478,303  100,272   $18,397,200  106,927  Net Interest Income (FTE)  $140,158     $135,916  Net Interest Spread (FTE)(4)    2.65%     2.45%            Net Interest Margin (FTE):           Interest Income (FTE) / Average Earning Assets    5.63%     5.64%Interest Expense / Average Earning Assets    2.35%     2.48%Net Interest Margin (FTE)(5)    3.28%     3.16%            (1)Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed using a 30/360 day basis.(2)Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2024 and 2023. These totals equal $5,788 and $5,853 for the three months ended December 31, 2024 and 2023, respectively.(3)Non accruing loans have been included in the average balances.(4)Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.(5)Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.              CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS      (Dollars in Thousands)            For the Twelve Months Ended December 31, 2024 December 31, 2023 Average Balance InterestIncome /Expense AverageRate Average Balance InterestIncome /Expense AverageRateAssets:           Interest-bearing deposits$418,163 $16,992 4.06% $431,581 $17,719 4.11%Federal Home Loan Bank stock 41,736  3,527 8.45   41,319  3,052 7.39 Investment Securities:(1)           Taxable 1,759,578  36,086 2.05   1,854,438  35,207 1.90 Tax-exempt(2) 2,200,466  67,705 3.08   2,366,475  73,566 3.11 Total Investment Securities 3,960,044  103,791 2.62   4,220,913  108,773 2.58 Loans held for sale 29,650  1,792 6.04   21,766  1,292 5.94 Loans:(3)           Commercial 8,687,638  641,393 7.38   8,519,706  603,611 7.08 Real estate mortgage 2,158,743  94,890 4.40   2,035,488  82,183 4.04 HELOC and installment 830,079  65,577 7.90   830,006  60,751 7.32 Tax-exempt(2) 928,214  43,370 4.67   891,008  40,448 4.54 Total Loans 12,634,324  847,022 6.70   12,297,974  788,285 6.41 Total Earning Assets 17,054,267  971,332 5.69%  16,991,787  917,829 5.40%Total Non-Earning Assets 1,346,228      1,194,720    Total Assets$18,400,495     $18,186,507    Liabilities:           Interest-Bearing deposits:           Interest-bearing deposits$5,506,492 $157,984 2.87% $5,435,733 $138,012 2.54%Money market deposits 3,061,461  106,026 3.46   2,884,271  83,777 2.90 Savings deposits 1,463,707  14,587 1.00   1,694,230  14,606 0.86 Certificates and other time deposits 2,413,900  107,530 4.45   1,923,268  69,697 3.62 Total Interest-Bearing Deposits 12,445,560  386,127 3.10   11,937,502  306,092 2.56 Borrowings 1,005,017  40,765 4.06   1,111,472  42,394 3.81 Total Interest-Bearing Liabilities 13,450,577  426,892 3.17   13,048,974  348,486 2.67 Noninterest-bearing deposits 2,371,004      2,783,996    Other liabilities 326,423      226,275    Total Liabilities 16,148,004      16,059,245    Stockholders' Equity 2,252,491      2,127,262    Total Liabilities and Stockholders' Equity$18,400,495  426,892   $18,186,507  348,486  Net Interest Income (FTE)  $544,440     $569,343  Net Interest Spread (FTE)(4)    2.52%     2.73%            Net Interest Margin (FTE):           Interest Income (FTE) / Average Earning Assets    5.69%     5.40%Interest Expense / Average Earning Assets    2.50%     2.05%Net Interest Margin (FTE)(5)    3.19%     3.35%            (1)Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed using a 30/360 day basis.(2)Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2024 and 2023. These totals equal $23,326 and $23,943 for the years ended December 31, 2024 and 2023, respectively.(3)Non accruing loans have been included in the average balances.           (4)Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.(5)Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.  ADJUSTED NET INCOME AND DILUTED EARNINGS PER COMMON SHARE - NON-GAAP(Dollars In Thousands, Except Per Share Amounts)Three Months Ended Twelve Months Ended December 31, September 30, June 30, March 31, December 31, December 31, December 31,  2024   2024   2024   2024   2023   2024   2023 Net Income Available to Common Stockholders - GAAP$63,880  $48,719  $39,456  $47,472  $42,010  $199,527  $221,911 Adjustments:             PPP loan income —   —   —   —   (7)  —   (49)Net realized losses on sales of available for sale securities 11,592   9,114   49   2   2,317   20,757   6,930 Gain on branch sale (19,983)  —   —   —   —   (19,983)  — Non-core expenses1,2,3 762   —   —   3,481   12,682   4,243   12,682 Tax on adjustments 1,851   (2,220)  (12)  (848)  (3,652)  (1,229)  (4,767)Adjusted Net Income Available to Common Stockholders - Non-GAAP$58,102  $55,613  $39,493  $50,107  $53,350  $203,315  $236,707               Average Diluted Common Shares Outstanding (in thousands) 58,247   58,289   58,328   59,273   59,556   58,533   59,489               Diluted Earnings Per Common Share - GAAP$1.10  $0.84  $0.68  $0.80  $0.71  $3.41  $3.73 Adjustments:             PPP loan income —   —   —   —   —   —   — Net realized losses on sales of available for sale securities 0.20   0.15   —   —   0.04   0.35   0.12 Gain on branch sale (0.34)  —   —   —   —   (0.34)  — Non-core expenses1,2,3 0.01   —   —   0.06   0.21   0.07   0.21 Tax on adjustments 0.03   (0.04)  —   (0.01)  (0.06)  (0.02)  (0.08)Adjusted Diluted Earnings Per Common Share - Non-GAAP$1.00  $0.95  $0.68  $0.85  $0.90  $3.47  $3.98  1 - Non-core expenses in 4Q24 included $0.8 million of costs directly related to the branch sale.2 - Non-core expenses in 1Q24 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.3 - Non-core expenses in 4Q23 included $6.3 million from early retirement and severance costs, $4.3 million from the FDIC special assessment, and $2.1 million from a lease termination. NET INTEREST MARGIN ("NIM"), ADJUSTED        (Dollars in Thousands)         Three Months Ended Twelve Months Ended December 31, September 30, June 30, March 31, December 31, December 31, December 31,  2024   2024   2024   2024   2023   2024   2023 Net Interest Income (GAAP)$134,370  $131,110  $128,571  $127,063  $130,063  $521,114  $545,400 Fully Taxable Equivalent ("FTE") Adjustment 5,788   5,883   5,859   5,795   5,853   23,326   23,943 Net Interest Income (FTE) (non-GAAP)$140,158  $136,993  $134,430  $132,858  $135,916  $544,440  $569,343               Average Earning Assets (GAAP)$17,089,198  $16,990,358  $17,013,984  $17,123,851  $17,222,714  $17,054,267  $16,991,787 Net Interest Margin (GAAP) 3.15%  3.09%  3.02%  2.97%  3.02%  3.06%  3.21%Net Interest Margin (FTE) (non-GAAP) 3.28%  3.23%  3.16%  3.10%  3.16%  3.19%  3.35%  RETURN ON TANGIBLE COMMON EQUITY - NON-GAAP(Dollars In Thousands)Three Months Ended Twelve Months Ended December 31, September 30, June 30, March 31, December 31, December 31, December 31,  2024   2024   2024   2024   2023   2024   2023 Total Average Stockholders' Equity (GAAP)$2,312,270  $2,251,547  $2,203,361  $2,242,139  $2,130,993  $2,252,491  $2,127,262 Less: Average Preferred Stock (25,125)  (25,125)  (25,125)  (25,125)  (25,125)  (25,125)  (25,125)Less: Average Intangible Assets, Net of Tax (728,218)  (729,581)  (730,980)  (732,432)  (734,007)  (730,295)  (736,601)Average Tangible Common Equity, Net of Tax (Non-GAAP)$1,558,927  $1,496,841  $1,447,256  $1,484,582  $1,371,861  $1,497,071  $1,365,536               Net Income Available to Common Stockholders (GAAP)$63,880  $48,719  $39,456  $47,472  $42,010  $199,527  $221,911 Plus: Intangible Asset Amortization, Net of Tax 1,399   1,399   1,399   1,546   1,724   5,744   6,906 Tangible Net Income (Non-GAAP)$65,279  $50,118  $40,855  $49,018  $43,734  $205,271  $228,817               Return on Tangible Common Equity (Non-GAAP) 16.75%  13.39%  11.29%  13.21%  12.75%  13.71%  16.76%  EFFICIENCY RATIO - NON-GAAP             (Dollars In Thousands)Three Months Ended Twelve Months Ended December 31, September 30, June 30, March 31, December 31, December 31, December 31,  2024   2024   2024   2024   2023   2024   2023 Non Interest Expense (GAAP)$96,289  $94,629  $91,413  $96,935  $108,103  $379,266  $388,270 Less: Intangible Asset Amortization (1,771)  (1,772)  (1,771)  (1,957)  (2,182)  (7,271)  (8,743)Less: OREO and Foreclosure Expenses (227)  (942)  (373)  (534)  (1,743)  (2,076)  (3,318)Adjusted Non Interest Expense (Non-GAAP)$94,291  $91,915  $89,269  $94,444  $104,178  $369,919  $376,209               Net Interest Income (GAAP)$134,370  $131,110  $128,571  $127,063  $130,063  $521,114  $545,400 Plus: Fully Taxable Equivalent Adjustment 5,788   5,883   5,859   5,795   5,853   23,326   23,943 Net Interest Income on a Fully Taxable Equivalent Basis (Non-GAAP)$140,158  $136,993  $134,430  $132,858  $135,916  $544,440  $569,343               Non Interest Income (GAAP)$42,742  $24,866  $31,334  $26,638  $26,444  $125,580  $105,602 Less: Investment Securities (Gains) Losses 11,592   9,114   49   2   2,317   20,757   6,930 Adjusted Non Interest Income (Non-GAAP)$54,334  $33,980  $31,383  $26,640  $28,761  $146,337  $112,532 Adjusted Revenue (Non-GAAP)$194,492  $170,973  $165,813  $159,498  $164,677  $690,777  $681,875 Efficiency Ratio (Non-GAAP) 48.48%  53.76%  53.84%  59.21%  63.26%  53.55%  55.17%              Adjusted Non Interest Expense (Non-GAAP)$94,291  $91,915  $89,269  $94,444  $104,178  $369,919  $376,209 Less: Acquisition-related Expenses —   —   —   —   —   —   — Less: Non-core Expenses1,2,3 (762)  —   —   (3,481)  (12,682)  (4,243)  (12,682)Adjusted Non Interest Expense Excluding Non-core Expenses (Non-GAAP)$93,529  $91,915  $89,269  $90,963  $91,496  $365,676  $363,527               Adjusted Revenue (Non-GAAP)$194,492  $170,973  $165,813  $159,498  $164,677  $690,777  $681,875 Less: Gain on Branch Sale (19,983)  —   —   —   —   (19,983)  — Adjusted Revenue Excluding Gain on Branch Sale (Non-GAAP)$174,509  $170,973  $165,813  $159,498  $164,677  $670,794  $681,875 Adjusted Efficiency Ratio (Non-GAAP) 53.60%  53.76%  53.84%  57.03%  55.56%  54.51%  53.31% 1 - Non-core expenses in 4Q24 included $0.8 million of costs directly related to the branch sale.2 - Non-core expenses in 1Q24 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.3 - Non-core expenses in 4Q23 included $6.3 million from early retirement and severance costs, $4.3 million from the FDIC special assessment, and $2.1 million from a lease termination. For more information, contact:Nicole M. Weaver, Vice President and Director of Corporate Administration765-521-7619http://www.firstmerchants.com SOURCE: First Merchants Corporation, Muncie, Indiana

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