Michael C. Rechin, President and Chief Executive Officer, stated, “The third quarter of 2015 was another successful quarter including strong performance in organically growing loans, deposits, fees and clients. Our loan volume coupled with a modestly increased margin produced a 3 percent quarterly lift in net interest income. Asset quality improvement continues as acquired loan portfolios and our own are performing in line with our expectations. During the quarter we were also able to complete the enhancement of our on-line banking platform bringing new functionality to our consumer and commercial clients.”
Net-interest income totaled $50.3 million for the quarter as reported net-interest margin, totaling 3.85 percent, increased by 4 basis points over the second quarter of 2015. Yields on earning assets totaled 4.30 percent and the cost of supporting liabilities totaled .45 percent. When adjusted for fair value accretion, core net-interest margin totaled 3.71 percent for the quarter, 6 basis points more than the second quarter of 2015 total of 3.65 percent. When compared to the third quarter of 2014, core net-interest margin is unchanged.
Year-to-date non-interest income totaled $57.8 million compared to $50 million in 2014. Of the increase, our gain on the sale of our insurance subsidiary, First Merchants Insurance Group, totaled $8.3 million. Non-interest income totaled $16.9 million for the quarter, a $1.5 million decrease from the third quarter of 2014 total of $18.4 million. The absence of insurance commission income related to the second quarter sale totaled $1.7 million.
Year-to-date non-interest expense totaled $131.2 million compared to $126.9 million in 2014. The increase of $4.3 million includes non-recurring acquisition and divestiture expenses totaling $3.7 million and on-line banking implementation expenses of $578,000. Non-interest expense totaled $43.6 million for the quarter, an increase of $1 million over the third quarter of 2014. Of the increase, $676,000 is related to non-recurring acquisition expenses.
The Corporation did not record any provision expense in the third quarter due to net recoveries for the period of $311,000 and improvements in non-performing loans now totaling $36.4 million. Year-to-date provision expense totaled just $417,000 versus $1.5 million of net charge-offs. The allowance for loan losses totaled $62.9 million, or 1.45 percent of total loans and 1.70 percent of non-purchased loans.
As of September 30, 2015, the Corporation’s total risk-based capital equaled 14.85 percent, common equity tier 1 risk-based capital equaled 11.31 percent, and tangible common equity ratio totaled 9.25 percent.
First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, October 22, 2015.
To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's third quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until November 22, 2015. 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 10072689.
In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme151022.html during the time of the call. A replay of the web cast will be available until October 22, 2016.
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, 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’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.