Michael C. Rechin, President and Chief Executive Officer, stated, “First Merchants focused its 2016 plan on proving our progress after completing several major organizational initiatives. Our accomplishments included closing two and integrating three whole bank acquisitions, divesting our insurance business and completing an on-line banking system upgrade. We are pleased our second quarter 2016 earnings produced such strong and clean results without any non-core extraordinary items. The result is a growing company with a 1.17 percent return on assets, a 57.33 percent efficiency ratio, healthy credit metrics, strong and stable margins, record levels of performance and focus on the road ahead.”
Total assets reached a record $6.9 billion as of quarter-end and loans totaled $4.8 billion, compared to $6.1 billion and $4.2 billion, as of June 30, 2015, representing increases of 12.5 and 13.1 percent, respectively. Total deposits reached $5.4 billion as of June 30, 2016, representing a 12.9 percent increase. Tangible common equity also increased to $633 million, or $15.53 per share.
Net-interest income totaled a record $56 million for the quarter and reported net-interest margin, of 3.86 percent, increased by 5 basis points over the second quarter of 2015 total of 3.81 percent. Yields on earning assets totaled 4.30 percent and the cost of supporting liabilities totaled .44 percent. When adjusted for fair value accretion, net-interest margin totaled 3.65 percent for the quarter, equaling the second quarter of 2015.
Non-interest income totaled $16.4 million for the quarter, down $7.7 million from the second quarter of 2015 total of $24.1 million. The gain on the sale of our insurance subsidiary in the second quarter of 2015 totaled $8.3 million and the loss of $1.8 million in commission income related to the business accounted for all of the decline.
Non-interest expense totaled $44.8 million for the quarter, a decrease of $1.1 million from the second quarter of 2015. The second quarter 2016 non-interest expense has no extraordinary items and is indicative of our core run rate.
The Corporation’s provision expense totaled $790,000 during the quarter as net charge offs totaled $690,000. Non-performing loans now total $37.9 million, the allowance for loan losses totaled $62.2 million and our remaining fair value marks totaled $42.3 million. The allowance is 1.29 percent of total loans and 1.56 percent of non-purchased loans.
As of June 30, 2016, the Corporation’s total risk-based capital ratio equaled 14.67 percent, common equity tier 1 capital ratio equaled 11.39 percent, and the tangible common equity ratio totaled 9.52 percent.
First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 2:30 p.m. (ET) on Tuesday, July 26, 2016.
To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's second quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until August 26, 2016. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529 or for International participants, dial +1 412-317-0088. The replay passcode is 10087049.
In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme160726.html during the time of the call. A replay of the web cast will be available until July 26, 2017.
During the call, Forward-Looking Statements about the relative business outlook may be made. These Forward-Looking Statements and all other statements made during the call 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 to, any indications regarding the Financial Services industry, the economy and future growth of the balance sheet or income statement.
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 is comprised of First Merchants Bank, which also operates as Lafayette Bank & Trust, and First Merchants Private Wealth Advisors which operates 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.