FIRST MERCHANTS CORP - FORM 8-K - EX-99.1 - 3RD QTR 2016 EARNINGS RELEASE

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8-K - 8-K 3RD QTR 2016 EARNINGS RELEASE - FIRST MERCHANTS CORP	f8k3q2016earningsrelease.htm

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

October 25, 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 THIRD QUARTER 2016 RESULTS

First Merchants Corporation (NASDAQ - FRME) reported record third quarter 2016 net income of $21.1 million, compared to $17.1 million during the third quarter of 2015. Earnings per share for the period totaled a record $.51 per share, an increase of $.06 per share, or 13.3 percent, over the same period in 2015. Year-to-date net income totaled a record $58.8 million, compared to $51.2 million during the same period in 2015. Earnings per share for the nine months ended September 30, 2016 totaled a record $1.43 per share, an increase of $.08 per share or 5.9 percent, 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 two acquisitions and several major organizational initiatives in 2015 and the first quarter of 2016. We are pleased to show two consecutive quarters of clean, high-performance results while demonstrating the strength of our core franchise by delivering organic growth, profitability and efficiency. Our results reflect a growing company with a 1.22 percent return on assets and a 55.12 percent efficiency ratio. As we focus on the road ahead, our healthy economic markets should allow for strong organic growth and continued high-performance.”

Total assets and total loans climbed to new heights reaching $7 billion and $5 billion, respectively, as of September 30, 2016, compared to $6.2 billion and $4.3 billion, as of September 30, 2015 representing increases of 13.5 and 15.1 percent, respectively. Total deposits equaled $5.4 billion as of quarter-end and tangible common equity increased to record levels totaling $647 million or $15.86 per share.

Net-interest income totaled a record $57.7 million for the quarter and reported net-interest margin increased by 9 basis points over the third quarter of 2015, totaling 3.94 percent. Yields on earning assets totaled 4.37 percent and the cost of supporting liabilities totaled .43 percent. When adjusted for fair value accretion, net-interest margin totaled 3.70 percent for the quarter, 1 basis point less than the third quarter of 2015.

Non-interest income totaled $16.9 million for the quarter, up $529,000 from the third quarter of 2015 total of $16.3 million. Non-interest expense totaled $44.1 million for the quarter, an increase of $1.1 million from the third quarter of 2015.

The Corporation’s provision expense totaled $1.9 million during the quarter to account for net charge-offs of $630,000 and loan growth of $182.4 million. Non-performing loans now total $38 million, the allowance for loan losses totaled $63.5 million and the remaining fair value marks totaled $37.9 million. The allowance is 1.28 percent of total loans and 1.50 percent of non-purchased loans.

As of September 30, 2016, the Corporation’s total risk-based capital ratio equaled 14.18 percent, the common equity tier 1 capital ratio equaled 11.05 percent, and the tangible common equity ratio totaled 9.48 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 2:30 p.m. (ET) on Tuesday, October 25, 2016.

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 25, 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 10092820.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme161025.html during the time of the call. A replay of the web cast will be available until October 25, 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)	September 30,
	2016			2015
ASSETS
Cash and cash equivalents	$	99,602		$	84,677
Interest-bearing time deposits	33,803			27,111
Investment securities	1,300,428			1,208,793
Loans held for sale	1,482			1,943
Loans	4,973,844			4,321,715
Less: Allowance for loan losses	(63,456		)	(62,861		)
Net loans	4,910,388			4,258,854
Premises and equipment	95,540			83,457
Federal Reserve and Federal Home Loan Bank stock	18,044			34,498
Interest receivable	23,652			22,048
Core deposit intangibles and goodwill	259,844			219,503
Cash surrender value of life insurance	201,856			171,530
Other real estate owned	10,242			14,809
Tax asset, deferred and receivable	31,779			38,339
Other assets	35,692			24,235
TOTAL ASSETS	$	7,022,352		$	6,189,797
LIABILITIES
Deposits:
Noninterest-bearing	$	1,307,886		$	1,110,905
Interest-bearing	4,136,354			3,703,684
Total Deposits	5,444,240			4,814,589
Borrowings:
Federal funds purchased	58,358			52,896
Securities sold under repurchase agreements	138,671			153,822
Federal Home Loan Bank advances	297,022			237,856
Subordinated debentures and term loans	128,288			121,936
Total Borrowings	622,339			566,510
Interest payable	3,733			3,710
Other liabilities	51,175			38,004
Total Liabilities	6,121,487			5,422,813
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 - 40,799,025 and 37,873,921 shares	5,100			4,734
Additional paid-in capital	506,848			433,577
Retained earnings	384,868			332,162
Accumulated other comprehensive income (loss)	3,924			(3,614		)
Total Stockholders' Equity	900,865			766,984
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,022,352		$	6,189,797



CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended				Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts)	September 30,				September 30,
	2016		2015		2016		2015
INTEREST INCOME
Loans receivable:
Taxable	$	53,819	$	46,037	$	156,407	$	134,908
Tax-exempt	1,649		1,190		4,429		2,174
Investment securities:
Taxable	3,992		4,374		12,522		13,522
Tax-exempt	4,668		4,412		13,760		12,478
Deposits with financial institutions	55		25		283		93
Federal Reserve and Federal Home Loan Bank stock	193		500		906		1,509
Total Interest Income	64,376		56,538		188,307		164,684
INTEREST EXPENSE
Deposits	3,926		3,715		12,028		10,917
Federal funds purchased	27		27		62		69
Securities sold under repurchase agreements	91		96		283		264
Federal Home Loan Bank advances	853		711		2,467		2,108
Subordinated debentures and term loans	1,797		1,666		5,368		4,996
Total Interest Expense	6,694		6,215		20,208		18,354
NET INTEREST INCOME	57,682		50,323		168,099		146,330
Provision for loan losses	1,900				3,240		417
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	55,782		50,323		164,859		145,913
OTHER INCOME
Service charges on deposit accounts	4,667		4,445		13,228		12,083
Fiduciary activities	2,448		2,242		7,318		7,058
Other customer fees	4,777		4,156		14,531		12,425
Commission income			4				4,147
Earnings on cash surrender value of life insurance	614		710		3,387		2,097
Net gains and fees on sales of loans	1,989		1,905		5,166		5,175
Net realized gains on sales of available for sale securities	839		1,115		2,542		2,047
Gain on sale of insurance subsidiary							8,265
Other income	1,527		1,755		2,911		2,540
Total Other Income	16,861		16,332		49,083		55,837
OTHER EXPENSES
Salaries and employee benefits	26,651		25,137		79,558		76,112
Net occupancy	4,348		3,726		12,429		11,019
Equipment	2,947		2,698		9,428		8,104
Marketing	630		847		2,218		2,578
Outside data processing fees	2,382		1,992		6,476		5,477
Printing and office supplies	314		343		1,047		1,010
Core deposit amortization	978		693		2,933		2,143
FDIC assessments	534		958		2,486		2,716
Other real estate owned and foreclosure expenses	637		1,675		2,303		2,917
Professional and other outside services	1,242		1,686		4,882		6,311
Other expenses	3,452		3,276		11,665		10,909
Total Other Expenses	44,115		43,031		135,425		129,296
INCOME BEFORE INCOME TAX	28,528		23,624		78,517		72,454
Income tax expense	7,469		6,557		19,759		21,247
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	21,059	$	17,067	$	58,758	$	51,207
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.51	$	0.46	$	1.44	$	1.36
Diluted Net Income Available to Common Stockholders	$	0.51	$	0.45	$	1.43	$	1.35
Cash Dividends Paid	$	0.14	$	0.11	$	0.39	$	0.30
Average Diluted Shares Outstanding (in thousands)	41,026		38,118		40,970		38,054



FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
NET CHARGE OFF'S	$	630		$	(311	)	$	2,237		$	1,520

AVERAGE BALANCES:
Total Assets	$	6,907,303		$	6,153,949		$	6,836,412		$	6,013,053
Total Loans	4,836,923			4,273,475			4,748,846			4,121,949
Total Earning Assets	6,198,206			5,538,202			6,116,952			5,392,975
Total Deposits	5,428,453			4,824,683			5,388,775			4,743,106
Total Stockholders' Equity	896,934			759,144			878,302			746,702

FINANCIAL RATIOS:
Return on Average Assets	1.22		%	1.11		%	1.15		%	1.14		%
Return on Average Stockholders' Equity	9.39			8.99			8.92			9.14
Return on Average Common Stockholders' Equity	9.39			8.99			8.92			9.15
Average Earning Assets to Average Assets	89.73			89.99			89.48			89.69
Allowance for Loan Losses as % of Total Loans	1.28			1.45			1.28			1.45
Net Charge Off's as % of Average Loans (Annualized)	0.05			(0.03		)	0.06			0.05
Average Stockholders' Equity to Average Assets	12.99			12.34			12.85			12.42
Tax Equivalent Yield on Earning Assets	4.37			4.30			4.32			4.27
Cost of Supporting Liabilities	0.43			0.45			0.44			0.45
Net Interest Margin (FTE) on Earning Assets	3.94			3.85			3.88			3.82
Tangible Common Book Value Per Share	$	15.86		$	14.59		$	15.86		$	14.59



NON-PERFORMING ASSETS
(Dollars In Thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
	2016			2016			2016			2015			2015
Non-Accrual Loans	$	34,105		$	33,565		$	36,719		$	31,389		$	32,597
Renegotiated Loans	3,940			4,299			1,015			1,923			3,823
Non-Performing Loans (NPL)	38,045			37,864			37,734			33,312			36,420
Other Real Estate Owned	10,242			13,219			15,626			17,257			14,809
Non-Performing Assets (NPA)	48,287			51,083			53,360			50,569			51,229
90+ Days Delinquent	1,625			362			963			907			1,947
NPAs & 90 Day Delinquent	$	49,912		$	51,445		$	54,323		$	51,476		$	53,176

Loan Loss Reserve	$	63,456		$	62,186		$	62,086		$	62,453		$	62,861
Quarterly Net Charge-off's	630			690			917			408			(311		)
NPAs / Actual Assets %	0.69		%	0.74		%	0.78		%	0.75		%	0.83		%
NPAs & 90 Day / Actual Assets %	0.71		%	0.74		%	0.80		%	0.76		%	0.86		%
NPAs / Actual Loans and OREO %	0.97		%	1.06		%	1.13		%	1.07		%	1.18		%
Loan Loss Reserves / Actual Loans (%)	1.28		%	1.29		%	1.32		%	1.33		%	1.45		%
Net Charge Off's as % of Average Loans (Annualized)	0.05		%	0.06		%	0.08		%	0.04		%	(0.03		)%



CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
	2016			2016			2016			2015			2015
ASSETS
Cash and cash equivalents	$	99,602		$	120,471		$	85,738		$	102,170		$	84,677
Interest-bearing time deposits	33,803			62,533			77,453			32,315			27,111
Investment securities	1,300,428			1,297,801			1,270,777			1,276,999			1,208,793
Loans held for sale	1,482			18,854			3,628			9,894			1,943
Loans	4,973,844			4,791,429			4,709,907			4,693,822			4,321,715
Less: Allowance for loan losses	(63,456		)	(62,186		)	(62,086		)	(62,453		)	(62,861		)
Net loans	4,910,388			4,729,243			4,647,821			4,631,369			4,258,854
Premises and equipment	95,540			95,170			96,494			97,648			83,457
Federal Reserve and Federal Home Loan Bank stock	18,044			18,096			37,553			37,633			34,498
Interest receivable	23,652			23,351			22,836			24,415			22,048
Core deposit intangibles and goodwill	259,844			260,821			261,799			259,764			219,503
Cash surrender value of life insurance	201,856			201,417			200,549			200,539			171,530
Other real estate owned	10,242			13,219			15,626			17,257			14,809
Tax asset, deferred and receivable	31,779			32,547			47,982			46,977			38,339
Other assets	35,692			32,895			30,283			24,023			24,235
TOTAL ASSETS	$	7,022,352		$	6,906,418		$	6,798,539		$	6,761,003		$	6,189,797
LIABILITIES
Deposits:
Noninterest-bearing	$	1,307,886		$	1,253,747		$	1,282,462		$	1,266,027		$	1,110,905
Interest-bearing	4,136,354			4,153,807			4,028,608			4,023,620			3,703,684
Total Deposits	5,444,240			5,407,554			5,311,070			5,289,647			4,814,589
Borrowings:
Federal funds purchased	58,358			20,000			602			49,721			52,896
Securities sold under repurchase agreements	138,671			140,777			150,134			155,325			153,822
Federal Home Loan Bank advances	297,022			268,579			263,588			235,652			237,856
Subordinated debentures and term loans	128,288			127,678			127,523			127,846			121,936
Total Borrowings	622,339			557,034			541,847			568,544			566,510
Interest payable	3,733			3,051			3,910			3,092			3,710
Other liabilities	51,175			51,229			74,449			49,211			38,004
Total Liabilities	6,121,487			6,018,868			5,931,276			5,910,494			5,422,813
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	5,100			5,097			5,094			5,083			4,734
Additional paid-in capital	506,848			505,725			504,661			504,530			433,577
Retained earnings	384,868			369,568			355,317			342,133			332,162
Accumulated other comprehensive income (loss)	3,924			7,035			2,066			(1,362		)	(3,614		)
Total Stockholders' Equity	900,865			887,550			867,263			850,509			766,984
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,022,352		$	6,906,418		$	6,798,539		$	6,761,003		$	6,189,797



CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	September 30,			June 30,			March 31,			December 31,			September 30,
	2016			2016			2016			2015			2015
INTEREST INCOME
Loans receivable:
Taxable	$	53,819		$	52,099		$	50,489		$	45,897		$	46,037
Tax-exempt	1,649			1,465			1,315			1,285			1,190
Investment securities:
Taxable	3,992			4,202			4,328			4,363			4,374
Tax-exempt	4,668			4,583			4,509			4,444			4,412
Deposits with financial institutions	55			122			106			67			25
Federal Reserve and Federal Home Loan Bank stock	193			233			480			458			500
Total Interest Income	64,376			62,704			61,227			56,514			56,538
INTEREST EXPENSE
Deposits	3,926			4,039			4,063			3,938			3,715
Federal funds purchased	27			7			28			5			27
Securities sold under repurchase agreements	91			92			100			104			96
Federal Home Loan Bank advances	853			818			796			728			711
Subordinated debentures and term loans	1,797			1,786			1,785			1,665			1,666
Total Interest Expense	6,694			6,742			6,772			6,440			6,215
NET INTEREST INCOME	57,682			55,962			54,455			50,074			50,323
Provision for loan losses	1,900			790			550
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	55,782			55,172			53,905			50,074			50,323
OTHER INCOME
Service charges on deposit accounts	4,667			4,416			4,145			4,118			4,445
Fiduciary activities	2,448			2,376			2,494			2,138			2,242
Other customer fees	4,777			4,695			5,059			4,534			4,156
Commission income													4
Earnings on cash surrender value of life insurance	614			1,297			1,476			822			710
Net gains and fees on sales of loans	1,989			1,717			1,460			1,308			1,905
Net realized gains on sales of available for sale securities	839			706			997			623			1,115
Other income	1,527			1,178			206			488			1,755
Total Other Income	16,861			16,385			15,837			14,031			16,332
OTHER EXPENSES
Salaries and employee benefits	26,651			25,570			27,337			25,796			25,137
Net occupancy	4,348			4,059			4,022			3,649			3,726
Equipment	2,947			3,243			3,238			2,683			2,698
Marketing	630			851			737			915			847
Outside data processing fees	2,382			2,025			2,069			1,632			1,992
Printing and office supplies	314			369			364			343			343
Core deposit amortization	978			977			978			692			693
FDIC assessments	534			1,002			950			939			958
Other real estate owned and foreclosure expenses	637			915			751			1,040			1,675
Professional and other outside services	1,242			1,478			2,162			3,544			1,686
Other expenses	3,452			4,346			3,867			4,277			3,276
Total Other Expenses	44,115			44,835			46,475			45,510			43,031
INCOME BEFORE INCOME TAX	28,528			26,722			23,267			18,595			23,624
Income tax expense	7,469			6,716			5,574			4,418			6,557
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	21,059		$	20,006		$	17,693		$	14,177		$	17,067

Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.51		$	0.50		$	0.43		$	0.37		$	0.46
Diluted Net Income Available to Common Stockholders	$	0.51		$	0.49		$	0.43		$	0.37		$	0.45
Cash Dividends Paid	$	0.14		$	0.14		$	0.11		$	0.11		$	0.11
Average Diluted Shares Outstanding (in thousands)	41,026			40,969			40,917			38,191			38,118
FINANCIAL RATIOS:
Return on Average Assets	1.22		%	1.17		%	1.05		%	0.90		%	1.11		%
Return on Average Stockholders' Equity	9.39			9.13			8.21			7.32			8.99
Return on Average Common Stockholders' Equity	9.39			9.14			8.21			7.32			8.99
Average Earning Assets to Average Assets	89.73			89.41			89.28			90.11			89.99
Allowance for Loan Losses as % of Total Loans	1.28			1.29			1.32			1.33			1.45
Net Charge Off's as % of Average Loans (Annualized)	0.05			0.06			0.08			0.04			(0.03		)
Average Stockholders' Equity to Average Assets	12.99			12.78			12.78			12.29			12.34
Tax Equivalent Yield on Earning Assets	4.37			4.30			4.28			4.20			4.30
Cost of Supporting Liabilities	0.43			0.44			0.45			0.45			0.45
Net Interest Margin (FTE) on Earning Assets	3.94			3.86			3.83			3.75			3.85
Tangible Common Book Value Per Share	$	15.86		$	15.53		$	15.02		$	14.68		$	14.59



LOANS
(Dollars In Thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
	2016			2016			2016			2015			2015
Commercial and industrial loans	$	1,146,538		$	1,084,890		$	1,060,559		$	1,057,075		$	999,195
Agricultural production financing and other loans to farmers	93,169			95,131			92,137			97,711			91,354
Real estate loans:
Construction	368,241			352,980			391,621			366,704			298,250
Commercial and farmland	1,941,739			1,869,703			1,806,395			1,802,921			1,695,703
Residential	739,855			758,870			769,592			786,105			677,767
Home Equity	398,837			374,159			353,946			348,613			318,949
Individuals' loans for household and other personal expenditures	76,497			75,205			73,622			74,717			71,893
Lease financing receivables, net of unearned income	380			388			461			588			614
Other commercial loans	208,588			180,103			161,574			159,388			167,990
Loans	4,973,844			4,791,429			4,709,907			4,693,822			4,321,715
Allowance for loan losses	(63,456		)	(62,186		)	(62,086		)	(62,453		)	(62,861		)
NET LOANS	$	4,910,388		$	4,729,243		$	4,647,821		$	4,631,369		$	4,258,854



DEPOSITS
(Dollars In Thousands)	September 30,		June 30,		March 31,		December 31,		September 30,
	2016		2016		2016		2015		2015
Demand deposits	$	2,745,028	$	2,717,500	$	2,590,603	$	2,576,283	$	2,244,848
Savings deposits	1,545,372		1,551,210		1,549,304		1,518,722		1,460,244
Certificates and other time deposits of $100,000 or more	296,838		301,695		304,559		323,698		286,988
Other certificates and time deposits	498,203		517,720		536,120		556,476		499,286
Brokered deposits	358,799		319,429		330,484		314,468		323,223
TOTAL DEPOSITS	$	5,444,240	$	5,407,554	$	5,311,070	$	5,289,647	$	4,814,589



NET INTEREST INCOME
(Dollars in Thousands)	For the Three Months Ended
	September 30, 2016							September 30, 2015
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	54,120		$	55	0.40	%	$	34,343		$	25	0.29	%
Federal Reserve and Federal Home Loan Bank stock	18,095			193		4.24		34,627			500		5.78
Investment Securities: ⁽¹⁾
Taxable	729,223			3,992		2.18		692,583			4,374		2.53
Tax-Exempt ⁽²⁾	559,845			7,182		5.10		503,174			6,787		5.40
Total Investment Securities	1,289,068			11,174		3.45		1,195,757			11,161		3.73
Loans held for sale	742			73		39.14		2,163			125		23.12
Loans: ⁽³⁾
Commercial	3,556,187			41,653		4.66		3,247,336			36,582		4.51
Real Estate Mortgage	567,015			6,521		4.58		447,733			4,803		4.29
Installment	493,807			5,572		4.49		403,399			4,526		4.49
Tax-Exempt ⁽²⁾	219,172			2,537		4.60		172,844			1,832		4.24
Total Loans	4,836,923			56,356		4.64		4,273,475			47,868		4.48
Total Earning Assets	6,198,206			67,778		4.37		5,538,202			59,554		4.30
Net unrealized gain on securities available for sale	11,738							10,379
Allowance for loan losses	(62,453		)					(62,521		)
Cash and cash equivalents	102,023							93,542
Premises and equipment	95,541							84,880
Other assets	562,248							489,467
Total Assets	$	6,907,303						$	6,153,949
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	1,454,992		$	669	0.18	%	$	1,112,161		$	359	0.13	%
Money market deposits	793,173			384		0.19		837,963			448		0.21
Savings deposits	754,401			171		0.09		628,020			155		0.10
Certificates and other time deposits	1,128,595			2,702		0.95		1,122,964			2,753		0.98
Total Interest-bearing Deposits	4,131,161			3,926		0.38		3,701,108			3,715		0.40
Borrowings	521,125			2,768		2.11		523,814			2,500		1.91
Total Interest-bearing Liabilities	4,652,286			6,694		0.57		4,224,922			6,215		0.59
Noninterest-bearing deposits	1,297,292							1,123,575
Other liabilities	60,791							46,308
Total Liabilities	6,010,369							5,394,805
Stockholders' Equity	896,934							759,144
Total Liabilities and Stockholders' Equity	$	6,907,303		6,694		0.43		$	6,153,949		6,215		0.45
Net Interest Income				$	61,084						$	53,339
Net Interest Margin						3.94	%						3.85	%


⁽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 $3,402 and $3,016 for the three months ended September 30, 2016 and 2015, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.



NET INTEREST INCOME
(Dollars in Thousands)	For the Nine Months Ended
	September 30, 2016							September 30, 2015
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	76,440		$	283	0.49	%	$	50,327		$	93	0.25	%
Federal Reserve and Federal Home Loan Bank stock	26,359			906		4.59		38,367			1,509		5.24
Investment Securities: ⁽¹⁾
Taxable	725,311			12,522		2.31		708,328			13,522		2.55
Tax-Exempt ⁽²⁾	539,996			21,169		5.24		474,004			19,197		5.40
Total Investment Securities	1,265,307			33,691		3.56		1,182,332			32,719		3.69
Loans held for sale	3,541			291		10.98		4,364			380		11.61
Loans: ⁽³⁾
Commercial	3,502,715			121,017		4.62		3,161,385			106,412		4.49
Real Estate Mortgage	570,330			19,032		4.46		454,288			14,614		4.29
Installment	473,645			16,067		4.53		397,981			13,502		4.52
Tax-Exempt ⁽²⁾	198,615			6,814		4.58		103,931			3,344		4.29
Total Loans	4,748,846			163,221		4.59		4,121,949			138,252		4.47
Total Earning Assets	6,116,952			198,101		4.32	%	5,392,975			172,573		4.27	%
Net unrealized gain on securities available for sale	10,892							12,463
Allowance for loan losses	(62,633		)					(62,940		)
Cash and cash equivalents	102,767							96,671
Premises and equipment	96,284							82,342
Other assets	572,150							491,542
Total Assets	$	6,836,412						$	6,013,053
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	1,395,036		$	1,850	0.18	%	$	1,077,463		$	894	0.11	%
Money market deposits	835,968			1,377		0.22		838,552			1,305		0.21
Savings deposits	720,375			455		0.08		604,436			481		0.11
Certificates and other time deposits	1,157,992			8,346		0.96		1,132,497			8,237		0.97
Total Interest-bearing Deposits	4,109,371			12,028		0.39		3,652,948			10,917		0.40
Borrowings	506,077			8,180		2.16		478,030			7,437		2.07
Total Interest-bearing Liabilities	4,615,448			20,208		0.58		4,130,978			18,354		0.59
Noninterest-bearing deposits	1,279,404							1,090,158
Other liabilities	63,258							45,215
Total Liabilities	5,958,110							5,266,351
Stockholders' Equity	878,302							746,702
Total Liabilities and Stockholders' Equity	$	6,836,412		20,208		0.44		$	6,013,053		18,354		0.45
Net Interest Income				$	177,893						$	154,219
Net Interest Margin						3.88	%						3.82	%


⁽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 $9,794 and $7,889 for the nine months ended September 30, 2016 and 2015, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.

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