FIRST MERCHANTS CORP - FORM 8-K - EX-99.1 - 2ND QTR 2016 EARNINGS RELEASE

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8-K - 8-K 2ND QTR 2016 EARNINGS RELEASE - FIRST MERCHANTS CORP	f8k2q2016earningsrelease.htm

N / E / W / S R / E / L / E / A / S / E

July 26, 2016

FOR IMMEDIATE RELEASE

For more information, contact:

David L. Ortega, First Vice President/Director of Investor Relations

765-378-8937

http://www.firstmerchants.com

SOURCE: First Merchants Corporation, Muncie, Indiana

FIRST MERCHANTS CORPORATION ANNOUNCES RECORD SECOND QUARTER 2016 RESULTS

First Merchants Corporation (NASDAQ - FRME) reported record second quarter 2016 net income of $20 million, an increase of 11.3 percent, compared to $18 million during the second quarter of 2015. Earnings per share for the period totaled a record $.49 per share, an increase of $.02 per share, or 4.3 percent, over the same period in 2015. Year-to-date net income totaled $37.7 million, compared to $34.1 million during the same period in 2015. Earnings per share for the six months ended June 30, 2016 totaled $.92 per share, an increase of $.02 per share, over same period in 2015.

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.

CONFERENCE CALL

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.

* * * *



CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	June 30,
	2016			2015
ASSETS
Cash and cash equivalents	$	120,471		$	105,928
Interest-bearing time deposits	62,533			26,669
Investment securities	1,297,801			1,212,516
Loans held for sale	18,854			8,295
Loans	4,791,429			4,238,205
Less: Allowance for loan losses	(62,186		)	(62,550		)
Net loans	4,729,243			4,175,655
Premises and equipment	95,170			84,841
Federal Reserve and Federal Home Loan Bank stock	18,096			34,630
Interest receivable	23,351			19,880
Core deposit intangibles and goodwill	260,821			220,196
Cash surrender value of life insurance	201,417			170,813
Other real estate owned	13,219			19,242
Tax asset, deferred and receivable	32,547			39,622
Other assets	32,895			22,021
TOTAL ASSETS	$	6,906,418		$	6,140,308
LIABILITIES
Deposits:
Noninterest-bearing	$	1,253,747		$	1,122,688
Interest-bearing	4,153,807			3,666,889
Total Deposits	5,407,554			4,789,577
Borrowings:
Federal funds purchased	20,000			40,748
Securities sold under repurchase agreements	140,777			137,240
Federal Home Loan Bank advances	268,579			247,687
Subordinated debentures and term loans	127,678			126,882
Total Borrowings	557,034			552,557
Interest payable	3,051			3,211
Other liabilities	51,229			45,008
Total Liabilities	6,018,868			5,390,353
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding - 125 shares	125			125
Common Stock, $.125 stated value:
Authorized -- 50,000,000 shares
Issued and outstanding - 40,772,896 and 37,824,649 shares	5,097			4,728
Additional paid-in capital	505,725			432,294
Retained earnings	369,568			319,298
Accumulated other comprehensive income (loss)	7,035			(6,490		)
Total Stockholders' Equity	887,550			749,955
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,906,418		$	6,140,308



CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended					Six Months Ended
(Dollars In Thousands, Except Per Share Amounts)	June 30,					June 30,
	2016		2015			2016		2015
INTEREST INCOME
Loans receivable:
Taxable	$	52,099	$	45,320		$	102,588	$	88,871
Tax-exempt	1,465		736			2,780		984
Investment securities:
Taxable	4,202		4,425			8,530		9,148
Tax-exempt	4,583		4,231			9,092		8,066
Deposits with financial institutions	122		31			228		68
Federal Reserve and Federal Home Loan Bank stock	233		459			713		1,009
Total Interest Income	62,704		55,202			123,931		108,146
INTEREST EXPENSE
Deposits	4,039		3,686			8,102		7,202
Federal funds purchased	7		19			35		42
Securities sold under repurchase agreements	92		90			192		168
Federal Home Loan Bank advances	818		706			1,614		1,397
Subordinated debentures and term loans	1,786		1,670			3,571		3,330
Total Interest Expense	6,742		6,171			13,514		12,139
NET INTEREST INCOME	55,962		49,031			110,417		96,007
Provision for loan losses	790		417			1,340		417
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	55,172		48,614			109,077		95,590
OTHER INCOME
Service charges on deposit accounts	4,416		4,090			8,561		7,638
Fiduciary activities	2,376		2,309			4,870		4,816
Other customer fees	4,695		4,602			9,754		8,269
Commission income			1,815					4,143
Earnings on cash surrender value of life insurance	1,297		640			2,773		1,387
Net gains and fees on sales of loans	1,717		1,781			3,177		3,270
Net realized gains (losses) on sales of available for sale securities	706		(93		)	1,703		932
Gain on sale of insurance subsidiary			8,265					8,265
Other income	1,178		697			1,384		785
Total Other Income	16,385		24,106			32,222		39,505
OTHER EXPENSES
Salaries and employee benefits	25,570		26,434			52,907		50,975
Net occupancy	4,059		3,503			8,081		7,293
Equipment	3,243		2,840			6,481		5,406
Marketing	851		951			1,588		1,731
Outside data processing fees	2,025		1,768			4,094		3,485
Printing and office supplies	369		303			733		667
Core deposit amortization	977		729			1,955		1,450
FDIC assessments	1,002		895			1,952		1,758
Other real estate owned and foreclosure expenses	915		845			1,666		1,241
Professional and other outside services	1,478		3,134			3,640		4,625
Other expenses	4,346		4,494			8,213		7,634
Total Other Expenses	44,835		45,896			91,310		86,265
INCOME BEFORE INCOME TAX	26,722		26,824			49,989		48,830
Income tax expense	6,716		8,856			12,290		14,690
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	20,006	$	17,968		$	37,699	$	34,140
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.50	$	0.47		$	0.93	$	0.90
Diluted Net Income Available to Common Stockholders	$	0.49	$	0.47		$	0.92	$	0.90
Cash Dividends Paid	$	0.14	$	0.11		$	0.25	$	0.19
Average Diluted Shares Outstanding (in thousands)	40,969		38,043			40,941		38,022



FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
NET CHARGE OFF'S	$	690		$	668		$	1,607		$	1,831

AVERAGE BALANCES:
Total Assets	$	6,857,839		$	6,060,477		$	6,800,577		$	5,941,437
Total Loans	4,739,079			4,151,860			4,704,323			4,044,931
Total Earning Assets	6,131,438			5,432,080			6,075,878			5,319,158
Total Deposits	5,440,148			4,797,086			5,368,719			4,701,642
Total Stockholders' Equity	876,116			746,181			868,884			740,378

FINANCIAL RATIOS:
Return on Average Assets	1.17		%	1.19		%	1.11		%	1.15		%
Return on Average Stockholders' Equity	9.13			9.63			8.68			9.22
Return on Average Common Stockholders' Equity	9.14			9.63			8.68			9.22
Average Earning Assets to Average Assets	89.41			89.63			89.34			89.53
Allowance for Loan Losses as % of Total Loans	1.29			1.47			1.29			1.47
Net Charge Off's as % of Average Loans (Annualized)	0.06			0.06			0.07			0.09
Average Stockholders' Equity to Average Assets	12.78			12.31			12.78			12.46
Tax Equivalent Yield on Earning Assets	4.30			4.26			4.29			4.25
Cost of Supporting Liabilities	0.44			0.45			0.44			0.46
Net Interest Margin (FTE) on Earning Assets	3.86			3.81			3.85			3.79
Tangible Common Book Value Per Share	$	15.53		$	14.15		$	15.53		$	14.15



NON-PERFORMING ASSETS
(Dollars In Thousands)	June 30,			March 31,			December 31,			September 30,			June 30,
	2016			2016			2015			2015			2015
Non-Accrual Loans	$	33,565		$	36,719		$	31,389		$	32,597		$	37,713
Renegotiated Loans	4,299			1,015			1,923			3,823			885
Non-Performing Loans (NPL)	37,864			37,734			33,312			36,420			38,598
Other Real Estate Owned	13,219			15,626			17,257			14,809			19,242
Non-Performing Assets (NPA)	51,083			53,360			50,569			51,229			57,840
90+ Days Delinquent	362			963			907			1,947			632
NPAs & 90 Day Delinquent	$	51,445		$	54,323		$	51,476		$	53,176		$	58,472

Loan Loss Reserve	$	62,186		$	62,086		$	62,453		$	62,861		$	62,550
Quarterly Net Charge-off's	690			917			408			(311		)	668
NPAs / Actual Assets %	0.74		%	0.78		%	0.75		%	0.83		%	0.94		%
NPAs & 90 Day / Actual Assets %	0.74		%	0.80		%	0.76		%	0.86		%	0.95		%
NPAs / Actual Loans and OREO %	1.06		%	1.13		%	1.07		%	1.18		%	1.36		%
Loan Loss Reserves / Actual Loans (%)	1.29		%	1.32		%	1.33		%	1.45		%	1.47		%
Net Charge Off's as % of Average Loans (Annualized)	0.06		%	0.08		%	0.04		%	(0.03		)%	0.06		%



CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	June 30,			March 31,			December 31,			September 30,			June 30,
	2016			2016			2015			2015			2015
ASSETS
Cash and cash equivalents	$	120,471		$	85,738		$	102,170		$	84,677		$	105,928
Interest-bearing time deposits	62,533			77,453			32,315			27,111			26,669
Investment securities	1,297,801			1,270,777			1,276,999			1,208,793			1,212,516
Loans held for sale	18,854			3,628			9,894			1,943			8,295
Loans	4,791,429			4,709,907			4,693,822			4,321,715			4,238,205
Less: Allowance for loan losses	(62,186		)	(62,086		)	(62,453		)	(62,861		)	(62,550		)
Net loans	4,729,243			4,647,821			4,631,369			4,258,854			4,175,655
Premises and equipment	95,170			96,494			97,648			83,457			84,841
Federal Reserve and Federal Home Loan Bank stock	18,096			37,553			37,633			34,498			34,630
Interest receivable	23,351			22,836			24,415			22,048			19,880
Core deposit intangibles and goodwill	260,821			261,799			259,764			219,503			220,196
Cash surrender value of life insurance	201,417			200,549			200,539			171,530			170,813
Other real estate owned	13,219			15,626			17,257			14,809			19,242
Tax asset, deferred and receivable	32,547			47,982			46,977			38,339			39,622
Other assets	32,895			30,283			24,023			24,235			22,021
TOTAL ASSETS	$	6,906,418		$	6,798,539		$	6,761,003		$	6,189,797		$	6,140,308
LIABILITIES
Deposits:
Noninterest-bearing	$	1,253,747		$	1,282,462		$	1,266,027		$	1,110,905		$	1,122,688
Interest-bearing	4,153,807			4,028,608			4,023,620			3,703,684			3,666,889
Total Deposits	5,407,554			5,311,070			5,289,647			4,814,589			4,789,577
Borrowings:
Federal funds purchased	20,000			602			49,721			52,896			40,748
Securities sold under repurchase agreements	140,777			150,134			155,325			153,822			137,240
Federal Home Loan Bank advances	268,579			263,588			235,652			237,856			247,687
Subordinated debentures and term loans	127,678			127,523			127,846			121,936			126,882
Total Borrowings	557,034			541,847			568,544			566,510			552,557
Interest payable	3,051			3,910			3,092			3,710			3,211
Other liabilities	51,229			74,449			49,211			38,004			45,008
Total Liabilities	6,018,868			5,931,276			5,910,494			5,422,813			5,390,353
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding	125			125			125			125			125
Common Stock, $.125 stated value:
Authorized -- 50,000,000 shares
Issued and outstanding	5,097			5,094			5,083			4,734			4,728
Additional paid-in capital	505,725			504,661			504,530			433,577			432,294
Retained earnings	369,568			355,317			342,133			332,162			319,298
Accumulated other comprehensive income (loss)	7,035			2,066			(1,362		)	(3,614		)	(6,490		)
Total Stockholders' Equity	887,550			867,263			850,509			766,984			749,955
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,906,418		$	6,798,539		$	6,761,003		$	6,189,797		$	6,140,308



CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	June 30,			March 31,			December 31,			September 30,			June 30,
	2016			2016			2015			2015			2015
INTEREST INCOME
Loans receivable:
Taxable	$	52,099		$	50,489		$	45,897		$	46,037		$	45,320
Tax-exempt	1,465			1,315			1,285			1,190			736
Investment securities:
Taxable	4,202			4,328			4,363			4,374			4,425
Tax-exempt	4,583			4,509			4,444			4,412			4,231
Deposits with financial institutions	122			106			67			25			31
Federal Reserve and Federal Home Loan Bank stock	233			480			458			500			459
Total Interest Income	62,704			61,227			56,514			56,538			55,202
INTEREST EXPENSE
Deposits	4,039			4,063			3,938			3,715			3,686
Federal funds purchased	7			28			5			27			19
Securities sold under repurchase agreements	92			100			104			96			90
Federal Home Loan Bank advances	818			796			728			711			706
Subordinated debentures and term loans	1,786			1,785			1,665			1,666			1,670
Total Interest Expense	6,742			6,772			6,440			6,215			6,171
NET INTEREST INCOME	55,962			54,455			50,074			50,323			49,031
Provision for loan losses	790			550									417
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	55,172			53,905			50,074			50,323			48,614
OTHER INCOME
Service charges on deposit accounts	4,416			4,145			4,118			4,445			4,090
Fiduciary activities	2,376			2,494			2,138			2,242			2,309
Other customer fees	4,695			5,059			4,534			4,156			4,602
Commission income										4			1,815
Earnings on cash surrender value of life insurance	1,297			1,476			822			710			640
Net gains and fees on sales of loans	1,717			1,460			1,308			1,905			1,781
Net realized gains (losses) on sales of available for sale securities	706			997			623			1,115			(93		)
Gain on sale of insurance subsidiary													8,265
Other income	1,178			206			488			1,755			697
Total Other Income	16,385			15,837			14,031			16,332			24,106
OTHER EXPENSES
Salaries and employee benefits	25,570			27,337			25,796			25,137			26,434
Net occupancy	4,059			4,022			3,649			3,726			3,503
Equipment	3,243			3,238			2,683			2,698			2,840
Marketing	851			737			915			847			951
Outside data processing fees	2,025			2,069			1,632			1,992			1,768
Printing and office supplies	369			364			343			343			303
Core deposit amortization	977			978			692			693			729
FDIC assessments	1,002			950			939			958			895
Other real estate owned and foreclosure expenses	915			751			1,040			1,675			845
Professional and other outside services	1,478			2,162			3,544			1,686			3,134
Other expenses	4,346			3,867			4,277			3,276			4,494
Total Other Expenses	44,835			46,475			45,510			43,031			45,896
INCOME BEFORE INCOME TAX	26,722			23,267			18,595			23,624			26,824
Income tax expense	6,716			5,574			4,418			6,557			8,856
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	20,006		$	17,693		$	14,177		$	17,067		$	17,968

Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.50		$	0.43		$	0.37		$	0.46		$	0.47
Diluted Net Income Available to Common Stockholders	$	0.49		$	0.43		$	0.37		$	0.45		$	0.47
Cash Dividends Paid	$	0.14		$	0.11		$	0.11		$	0.11		$	0.11
Average Diluted Shares Outstanding (in thousands)	40,969			40,917			38,191			38,118			38,043
FINANCIAL RATIOS:
Return on Average Assets	1.17		%	1.05		%	0.90		%	1.11		%	1.19		%
Return on Average Stockholders' Equity	9.13			8.21			7.32			8.99			9.63
Return on Average Common Stockholders' Equity	9.14			8.21			7.32			8.99			9.63
Average Earning Assets to Average Assets	89.41			89.28			90.11			89.99			89.63
Allowance for Loan Losses as % of Total Loans	1.29			1.32			1.33			1.45			1.47
Net Charge Off's as % of Average Loans (Annualized)	0.06			0.08			0.04			(0.03		)	0.06
Average Stockholders' Equity to Average Assets	12.78			12.78			12.29			12.34			12.31
Tax Equivalent Yield on Earning Assets	4.30			4.28			4.20			4.30			4.26
Cost of Supporting Liabilities	0.44			0.45			0.45			0.45			0.45
Net Interest Margin (FTE) on Earning Assets	3.86			3.83			3.75			3.85			3.81
Tangible Common Book Value Per Share	$	15.53		$	15.02		$	14.68		$	14.59		$	14.15



LOANS
(Dollars In Thousands)	June 30,			March 31,			December 31,			September 30,			June 30,
	2016			2016			2015			2015			2015
Commercial and industrial loans	$	1,084,890		$	1,060,559		$	1,057,075		$	999,195		$	984,223
Agricultural production financing and other loans to farmers	95,131			92,137			97,711			91,354			93,695
Real estate loans:
Construction	352,980			391,621			366,704			298,250			256,082
Commercial and farmland	1,869,703			1,806,395			1,802,921			1,695,703			1,705,647
Residential	758,870			769,592			786,105			677,767			689,621
Home Equity	374,159			353,946			348,613			318,949			302,403
Individuals' loans for household and other personal expenditures	75,205			73,622			74,717			71,893			62,785
Lease financing receivables, net of unearned income	388			461			588			614			742
Other commercial loans	180,103			161,574			159,388			167,990			143,007
Loans	4,791,429			4,709,907			4,693,822			4,321,715			4,238,205
Allowance for loan losses	(62,186		)	(62,086		)	(62,453		)	(62,861		)	(62,550		)
NET LOANS	$	4,729,243		$	4,647,821		$	4,631,369		$	4,258,854		$	4,175,655



DEPOSITS
(Dollars In Thousands)	June 30,		March 31,		December 31,		September 30,		June 30,
	2016		2016		2015		2015		2015
Demand deposits	$	2,717,500	$	2,590,603	$	2,576,283	$	2,244,848	$	2,211,154
Savings deposits	1,551,210		1,549,304		1,518,722		1,460,244		1,439,255
Certificates and other time deposits of $100,000 or more	301,695		304,559		323,698		286,988		295,159
Other certificates and time deposits	517,720		536,120		556,476		499,286		517,153
Brokered deposits	319,429		330,484		314,468		323,223		326,856
TOTAL DEPOSITS	$	5,407,554	$	5,311,070	$	5,289,647	$	4,814,589	$	4,789,577



NET INTEREST INCOME
(Dollars in Thousands)	For the Three Months Ended
	June 30, 2016							June 30, 2015
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	99,735		$	122	0.49	%	$	59,979		$	31	0.21	%
Federal Reserve and Federal Home Loan Bank stock	23,442			233		3.98		39,195			459		4.68
Investment Securities: ⁽¹⁾
Taxable	730,179			4,202		2.30		696,505			4,425		2.54
Tax-Exempt ⁽²⁾	539,004			7,050		5.23		484,541			6,510		5.37
Total Investment Securities	1,269,183			11,252		3.55		1,181,046			10,935		3.70
Loans held for sale	3,664			96		10.48		6,033			146		9.68
Loans: ⁽³⁾
Commercial	3,501,919			40,501		4.63		3,193,314			35,660		4.47
Real Estate Mortgage	568,746			6,116		4.30		455,470			4,962		4.36
Installment	470,254			5,386		4.58		396,378			4,552		4.59
Tax-Exempt ⁽²⁾	194,496			2,254		4.64		100,665			1,132		4.49
Total Loans	4,739,079			54,353		4.59		4,151,860			46,452		4.48
Total Earning Assets	6,131,439			65,960		4.30		5,432,080			57,877		4.26
Net unrealized gain on securities available for sale	10,924							12,575
Allowance for loan losses	(62,235		)					(62,881		)
Cash and cash equivalents	104,372							97,738
Premises and equipment	96,620							84,359
Other assets	576,719							496,606
Total Assets	$	6,857,839						$	6,060,477
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	1,429,191		$	637	0.18	%	$	1,088,896		$	283	0.10	%
Money market deposits	849,270			502		0.24		853,776			446		0.21
Savings deposits	717,044			149		0.08		612,920			166		0.11
Certificates and other time deposits	1,159,247			2,751		0.95		1,148,463			2,791		0.97
Total Interest-bearing Deposits	4,154,752			4,039		0.39		3,704,055			3,686		0.40
Borrowings	476,852			2,703		2.27		471,467			2,485		2.11
Total Interest-bearing Liabilities	4,631,604			6,742		0.58		4,175,522			6,171		0.59
Noninterest-bearing deposits	1,285,396							1,093,031
Other liabilities	64,723							45,743
Total Liabilities	5,981,723							5,314,296
Stockholders' Equity	876,116							746,181
Total Liabilities and Stockholders' Equity	$	6,857,839		6,742		0.44		$	6,060,477		6,171		0.45
Net Interest Income				$	59,218						$	51,706
Net Interest Margin						3.86	%						3.81	%


⁽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 utilizing 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 35 percent for 2016 and 2015. These totals equal $3,256 and $2,675 for the three months ended June 30, 2016 and 2015, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.



NET INTEREST INCOME
(Dollars in Thousands)	For the Six Months Ended
	June 30, 2016							June 30, 2015
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	87,722		$	228	0.52	%	$	58,452		$	68	0.23	%
Federal Reserve and Federal Home Loan Bank stock	30,537			713		4.67		40,267			1,009		5.01
Investment Securities: ⁽¹⁾
Taxable	723,333			8,530		2.36		716,331			9,148		2.55
Tax-Exempt ⁽²⁾	529,963			13,987		5.28		459,177			12,409		5.40
Total Investment Securities	1,253,296			22,517		3.59		1,175,508			21,557		3.67
Loans held for sale	4,956			218		8.80		5,483			256		9.34
Loans: ⁽³⁾
Commercial	3,475,684			79,365		4.57		3,117,698			69,830		4.48
Real Estate Mortgage	572,006			12,510		4.37		457,620			9,811		4.29
Installment	463,454			10,495		4.53		395,227			8,975		4.54
Tax-Exempt ⁽²⁾	188,223			4,277		4.54		68,903			1,513		4.39
Total Loans	4,704,323			106,865		4.54		4,044,931			90,385		4.47
Total Earning Assets	6,075,878			130,323		4.29	%	5,319,158			113,019		4.25	%
Net unrealized gain on securities available for sale	10,464							13,522
Allowance for loan losses	(62,724		)					(63,154		)
Cash and cash equivalents	103,143							98,262
Premises and equipment	96,659							81,052
Other assets	577,157							492,597
Total Assets	$	6,800,577						$	5,941,437
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	1,364,729		$	1,181	0.17	%	$	1,059,826		$	534	0.10	%
Money market deposits	857,601			993		0.23		838,852			858		0.20
Savings deposits	703,174			284		0.08		592,449			326		0.11
Certificates and other time deposits	1,172,852			5,644		0.96		1,137,342			5,484		0.96
Total Interest-bearing Deposits	4,098,356			8,102		0.40		3,628,469			7,202		0.40
Borrowings	498,470			5,412		2.17		454,758			4,937		2.17
Total Interest-bearing Liabilities	4,596,826			13,514		0.59		4,083,227			12,139		0.59
Noninterest-bearing deposits	1,270,363							1,073,173
Other liabilities	64,504							44,659
Total Liabilities	5,931,693							5,201,059
Stockholders' Equity	868,884							740,378
Total Liabilities and Stockholders' Equity	$	6,800,577		13,514		0.44		$	5,941,437		12,139		0.46
Net Interest Income				$	116,809						$	100,880
Net Interest Margin						3.85	%						3.79	%


⁽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 utilizing 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 35 percent for 2016 and 2015. These totals equal $6,392 and $4,873 for the six months ended June 30, 2016 and 2015, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.

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