First Merchants Turns in Record Year

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Muncie-based First Merchants Corp. (Nasdaq: FRME) is reporting record full-year net income of $60.2 million in 2014, compared to $42.2 million the previous year. Chief Executive Officer Michael Rechin says several acquisitions provided a boost in First Merchants' "best growth markets." January 27, 2015

News Release

MUNCIE, Ind. - First Merchants Corporation (NASDAQ - FRME) has recorded 2014 record net income of $60.2 million, an increase of $18 million over 2013 net income of $42.2 million. Earnings per share totaled $1.65, an increase of $.24 and 17 percent over 2013 earnings per share of $1.41.

Net income in the 4th quarter of 2014 totaled $15.3 million compared to $11.2 million in the 4th quarter of 2013. Earnings per share for the 4th quarter of 2014 increased by 21 percent totaling $.41, compared to $.34 per share in the 4th quarter of 2013.

Michael C. Rechin, President and Chief Executive Officer, stated, "Our 4th quarter results capped off a very productive and profitable 2014 for First Merchants. Our goal is to improve operating leverage independent of the interest rate environment.

Our 2014 results evidence our commitment to execute on organic growth while adding franchise additive acquisitions. During 2014, we fully incorporated Citizens Financial Bank and its attractive marketplace into our company. In 2015, we expect similar strong results through the integration of Community Bank of Noblesville, having closed the transaction in November 2014. The recent announcing of the agreement to acquire Cooper State Bank in Columbus, Ohio, complements our prior acquisitions in fortifying our best growth markets. Our management is focused on achieving additional prudent growth and our overall 2015 plan."

Total assets equaled $5.8 billion as of year-end and total loans were $3.9 billion, an increase of $292 million, or 8 percent over the same period in 2013. Of the increase, $147 million was the result of organic growth and $145 million resulted from the acquisition of Community Bank of Noblesville in November of 2014. Total deposits equaled $4.6 billion as of year-end and increased by $409 million or 9.7 percent as Community Bank of Noblesville accounted for $228 million. Borrowings declined by $111 million during the year and tangible equity increased by $77 million or 17.6 percent. Tangible book value per share increased by $1.48, or 12.2 percent, to $13.65 per share as of year-end 2014 up from $12.17 as of year-end 2013.

Net-interest income totaled $187 million in 2014 and net-interest margin totaled 3.91 percent as yields on earning assets totaled 4.35 percent offset by the cost of supporting liabilities which totaled .44 percent. When normalized for fair value accretion income of $8.9 million in 2014 and $2.2 million in 2013, net interest margin totaled 3.73 percent in 2014 compared to 3.94 percent in 2013.

Non-interest income totaled $65.7 million in 2014 compared to $54.8 million in 2013. Non-interest expense totaled $168.6 million in 2014 compared to $143.2 million in 2013. The significant variances in both non-interest income and non-interest expenses are primarily due to the acquisition of Citizens Financial Bank in November of 2013.

Provision expense totaled $2.6 million in 2014 and net charge-offs totaled $6.5 million. In 2013, provision expense totaled $6.6 million and net charge-offs totaled $8.1 million. The December 31, 2014 allowance for loan losses totaled $64 million and our remaining fair value mark totals $43.2 million including $8.8 million related to Community Bank of Noblesville loans.

The December 31, 2013 allowance for loan losses totaled $67.9 million and our remaining fair value mark totaled $46.1 million. Non-performing assets declined from $81.7 million in 2013 to $70.1 million including the fourth quarter addition of $12.4 million related to Community Bank of Noblesville.

As of December 31, 2014, the Corporation's total risk-based capital equaled 15.34 percent, Tier 1 common risk-based capital equaled 12.63 percent and tangible common equity ratio totaled 9.16 percent.

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation is comprised of First Merchants Bank, N.A., which also operates as Lafayette Bank & Trust, Commerce National Bank, and First Merchants Trust Company as divisions of First Merchants Bank, N.A. First Merchants Corporation also operates First Merchants Insurance Group, a full-service property casualty, personal lines, and healthcare insurance agency.

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).

Source: First Merchants Corp.