FIRST MERCHANTS CORP - FORM 8-K - EX-99.1 - 3RD QTR 2018 EARNINGS RELEASE

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8-K - 8-K 3RD QTR 2018 EARNINGS RELEASE - FIRST MERCHANTS CORP	a8-k3q18earningsrelease.htm

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

October 24, 2018

FOR IMMEDIATE RELEASE

For more information, contact:

Nicole M. Weaver, Vice President and Director of Corporate Administration

765-521-7619

http://www.firstmerchants.com

SOURCE: First Merchants Corporation, Muncie, Indiana

FIRST MERCHANTS CORPORATION ANNOUNCES 66 PERCENT INCREASE IN THIRD QUARTER 2018 EARNINGS PER SHARE

First Merchants Corporation (NASDAQ - FRME) has reported third quarter 2018 net income of $41.1 million, an increase of 69 percent, compared to $24.4 million during the same period in 2017. Earnings per share for the period totaled $.83, an increase of 66 percent, compared to the third quarter of 2017 result of $.50 per share. Net income for the nine months ended September 30, 2018 totaled $117.4 million, compared to $71.7 million during the same period in 2017. Year-to-date earnings per share totaled $2.37, an increase of $.74 per share, or 45 percent, over the same period in 2017. The increase in net income was driven by several key factors including the two fully integrated acquisitions in 2017, strong organic growth throughout 2017 and 2018, and the impact of tax reform.

Michael C. Rechin, President and Chief Executive Officer, stated, “Deposit betas, deposit growth and flattening yield curves seem to be a primary focus of investors this quarter. First Merchants continues to perform well delivering strong net interest income and net interest margin coupled with high, single-digit organic balance sheet growth. Our highly efficient business model continues to drive performance and returns at levels produced by the best banks in the industry.”

Rechin continued, “On October 10^th we announced the signing of a definitive agreement to merge Monroe Bank and Trust (MBT) into First Merchants. Currently we are working closely with the MBT executives to sustain their performance momentum and the community leadership they enjoy throughout their marketplace.”

The combination would assure First Merchants will cross the $10 billion asset threshold early in 2019. The opportunity is accretive to earnings in the first full year of the merger through the revenue added and resultant scale benefits achieved through the anticipated mid-2019 integration. Management has been planning and investing to meet the required regulatory expectations of crossing the threshold and are excited with the Monroe acquisition as a means to build value in our franchise.

First Merchants’ total assets equaled $9.8 billion as of quarter-end and loans totaled $7.1 billion. The loan portfolio increased by $605 million, or 9.3 percent, during the past twelve months. Total deposits equaled $7.6 billion as of quarter-end and increased by $722 million, or 10.4 percent, compared to the same period in 2017.

Net-interest income totaled $86.5 million for the quarter, an increase of $12.1 million, or 16.2 percent. Net-interest margin totaling 4.05 percent on a fully tax-equivalent basis, increased by 2 basis points and included a reduction of 13 basis points related to tax reform. Yields on earning assets totaled 4.88 percent and the cost of supporting liabilities totaled .83 percent.

Non-interest income totaled $19.5 million for the quarter, an $859,000 increase over the third quarter of 2017. Gains from the sale of securities, growth in service charges, interchange income and improved fiduciary and wealth management fees off-set declines in earnings on cash surrender value and gains on the sales of loans. Non-interest expense totaled $55 million, down from the 2017 total of $58.7 million due to the completion of all integration activities in 2017.

Tax expense for the third quarter of 2018 totaled $8.5 million, or 17.1 percent of pre-tax net income. Tax expense in the prior year totaled $7.9 million, or 24.6 percent. The improvement in tax expense was due to a decline in the federal statutory tax rate from 35 percent to 21 percent. Our effective rate is 3.9 percentage points lower than the statutory rate primarily due to approximately $11.2 million of tax free loan, securities and life insurance income in the quarter.

The allowance for loan losses totaled $78.4 million as of September 30, 2018, up from $73.4 million during the same period in 2017. Non-accrual loans totaled $20.4 million as of quarter-end and the allowance is 1.11 percent of total loans and 1.28 percent of non-purchased loans. The Corporation’s total risk-based capital ratio equaled 14.25 percent, common equity tier 1 capital ratio equaled 11.64 percent, and the tangible common equity ratio totaled 9.55 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 2:30 p.m. (ET) on Wednesday, October 24, 2018.

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 24, 2018. 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 access code is 10124461.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme181024.html during the time of the call. A replay of the web cast will be available until October 24, 2019.

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 has one full-service bank charter, First Merchants Bank. The Bank also operates as Lafayette Bank & Trust and First Merchants Private Wealth Advisors (each 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.

Forward-Looking Statements

This release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These statements include statements of First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity, credit and interest rate risks associated with the First Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, First Merchants’ past results of operations do not necessarily indicate its anticipated future results.

* * * *



CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	September 30,
	2018			2017
ASSETS
Cash and cash equivalents	$	142,501		$	146,607
Interest-bearing time deposits	66,763			72,950
Investment securities	1,625,251			1,468,887
Loans held for sale	3,022			4,514
Loans	7,088,071			6,483,448
Less: Allowance for loan losses	(78,406		)	(73,354		)
Net loans	7,009,665			6,410,094
Premises and equipment	93,728			102,485
Federal Home Loan Bank stock	24,588			23,825
Interest receivable	38,531			32,366
Goodwill and other intangibles	471,409			478,558
Cash surrender value of life insurance	223,865			222,437
Other real estate owned	8,859			11,912
Tax asset, deferred and receivable	25,933			36,024
Other assets	53,167			38,744
TOTAL ASSETS	$	9,787,282		$	9,049,403
LIABILITIES
Deposits:
Noninterest-bearing	$	1,464,190		$	1,662,814
Interest-bearing	6,168,962			5,248,205
Total Deposits	7,633,152			6,911,019
Borrowings:
Federal funds purchased	90,000			100,000
Securities sold under repurchase agreements	118,824			142,107
Federal Home Loan Bank advances	385,458			406,820
Subordinated debentures and term loans	138,408			139,686
Total Borrowings	732,690			788,613
Interest payable	5,920			4,956
Other liabilities	54,094			61,695
Total Liabilities	8,425,856			7,766,283
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 -- 100,000,000 shares
Issued and outstanding - 49,304,542 and 43,140,594 shares	6,163			6,143
Additional paid-in capital	837,996			833,451
Retained earnings	552,551			449,759
Accumulated other comprehensive loss	(35,409		)	(6,358		)
Total Stockholders' Equity	1,361,426			1,283,120
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,787,282		$	9,049,403



CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended				Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts)	September 30,				September 30,
	2018		2017		2018		2017
INTEREST INCOME
Loans receivable:
Taxable	$	88,479	$	71,491	$	251,409	$	187,234
Tax-exempt	3,761		2,851		10,989		7,676
Investment securities:
Taxable	5,514		4,524		16,044		13,012
Tax-exempt	6,493		5,455		18,865		15,549
Deposits with financial institutions	270		284		1,034		442
Federal Home Loan Bank stock	283		242		950		635
Total Interest Income	104,800		84,847		299,291		224,548
INTEREST EXPENSE
Deposits	13,685		6,710		34,852		15,971
Federal funds purchased	229		175		670		506
Securities sold under repurchase agreements	174		133		519		331
Federal Home Loan Bank advances	2,137		1,464		6,141		3,619
Subordinated debentures and term loans	2,089		1,945		6,136		5,602
Total Interest Expense	18,314		10,427		48,318		26,029
NET INTEREST INCOME	86,486		74,420		250,973		198,519
Provision for loan losses	1,400		2,083		5,563		7,343
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	85,086		72,337		245,410		191,176
OTHER INCOME
Service charges on deposit accounts	5,619		5,044		15,434		13,656
Fiduciary and wealth management fees	3,673		3,783		11,064		10,556
Other customer fees	5,038		4,553		14,991		13,298
Earnings on cash surrender value of life insurance	961		1,575		3,144		5,444
Net gains and fees on sales of loans	1,841		2,317		5,262		5,209
Net realized gains on sales of available for sale securities	1,285		332		4,016		1,497
Other income	1,110		1,064		3,368		2,288
Total Other Income	19,527		18,668		57,279		51,948
OTHER EXPENSES
Salaries and employee benefits	32,936		33,244		97,354		86,052
Net occupancy	4,586		4,371		13,604		12,552
Equipment	3,483		3,478		10,707		9,192
Marketing	1,216		1,021		3,574		2,378
Outside data processing fees	3,422		3,162		9,848		8,864
Printing and office supplies	334		366		992		905
Intangible asset amortization	1,650		1,698		5,094		3,592
FDIC assessments	856		704		2,286		1,853
Other real estate owned and foreclosure expenses	455		330		1,219		1,592
Professional and other outside services	1,844		5,843		5,174		10,843
Other expenses	4,240		4,491		12,361		11,300
Total Other Expenses	55,022		58,708		162,213		149,123
INCOME BEFORE INCOME TAX	49,591		32,297		140,476		94,001
Income tax expense	8,478		7,939		23,050		22,314
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	41,113	$	24,358	$	117,426	$	71,687
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.83	$	0.50	$	2.38	$	1.64
Diluted Net Income Available to Common Stockholders	$	0.83	$	0.50	$	2.37	$	1.63
Cash Dividends Paid	$	0.22	$	0.18	$	0.62	$	0.51
Average Diluted Shares Outstanding (in thousands)	49,492		48,644		49,458		44,063



FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
NET CHARGE-OFFS	$	537		$	(800	)	$	2,189		$	26

AVERAGE BALANCES:
Total Assets	$	9,756,680		$	8,793,666		$	9,610,219		$	7,866,643
Total Loans	7,099,694			6,312,810			6,962,460			5,647,486
Total Earning Assets	8,810,758			7,840,403			8,657,152			7,064,659
Total Deposits	7,603,625			6,790,053			7,466,187			6,108,042
Total Stockholders' Equity	1,358,904			1,244,472			1,331,867			1,048,420

FINANCIAL RATIOS:
Return on Average Assets	1.69		%	1.11		%	1.63		%	1.22		%
Return on Average Stockholders' Equity	12.10			7.83			11.76			9.12
Return on Average Common Stockholders' Equity	12.10			7.83			11.76			9.12
Average Earning Assets to Average Assets	90.30			89.16			90.08			89.81
Allowance for Loan Losses as % of Total Loans	1.11			1.13			1.11			1.13
Net Charge-offs as % of Average Loans (Annualized)	0.03			(0.05		)	0.04			—
Average Stockholders' Equity to Average Assets	13.93			14.15			13.86			13.33
Tax Equivalent Yield on Average Earning Assets	4.88			4.56			4.73			4.47
Interest Expense/Average Earning Assets	0.83			0.53			0.74			0.49
Net Interest Margin (FTE) on Average Earning Assets	4.05			4.03			3.99			3.98
Efficiency Ratio	49.25			58.30			49.94			55.05
Tangible Common Book Value Per Share	$	18.16		$	16.62		$	18.16		$	16.62



NON-PERFORMING ASSETS
(Dollars In Thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
	2018			2018			2018			2017			2017
Non-Accrual Loans	$	20,421		$	20,143		$	27,497		$	28,724		$	32,253
Renegotiated Loans	968			544			579			1,013			626
Non-Performing Loans (NPL)	21,389			20,687			28,076			29,737			32,879
Other Real Estate Owned	8,859			9,071			9,698			10,373			11,912
Non-Performing Assets (NPA)	30,248			29,758			37,774			40,110			44,791
90+ Days Delinquent	50			184			738			924			425
NPAs & 90 Day Delinquent	$	30,298		$	29,942		$	38,512		$	41,034		$	45,216

Allowance for Loan Losses	$	78,406		$	77,543		$	76,420		$	75,032		$	73,354
Quarterly Net Charge-offs	537			540			1,112			122			(800		)
NPAs / Actual Assets %	0.31		%	0.31		%	0.40		%	0.43		%	0.49		%
NPAs & 90 Day / Actual Assets %	0.31		%	0.31		%	0.41		%	0.44		%	0.50		%
NPAs / Actual Loans and OREO %	0.43		%	0.42		%	0.55		%	0.59		%	0.69		%
Allowance for Loan Losses / Actual Loans (%)	1.11		%	1.09		%	1.11		%	1.11		%	1.13		%
Net Charge-offs as % of Average Loans (Annualized)	0.03		%	0.03		%	0.07		%	0.01		%	(0.05		)%



CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
	2018			2018			2018			2017			2017
ASSETS
Cash and cash equivalents	$	142,501		$	133,893		$	128,828		$	154,905		$	146,607
Interest-bearing time deposits	66,763			36,599			24,233			35,027			72,950
Investment securities	1,625,251			1,619,683			1,543,820			1,560,602			1,468,887
Loans held for sale	3,022			2,046			4,469			7,216			4,514
Loans	7,088,071			7,081,059			6,901,696			6,751,199			6,483,448
Less: Allowance for loan losses	(78,406		)	(77,543		)	(76,420		)	(75,032		)	(73,354		)
Net loans	7,009,665			7,003,516			6,825,276			6,676,167			6,410,094
Premises and equipment	93,728			94,397			94,741			95,852			102,485
Federal Home Loan Bank stock	24,588			24,588			24,588			23,825			23,825
Interest receivable	38,531			38,530			35,223			37,130			32,366
Goodwill and other intangibles	471,409			473,059			474,777			476,503			478,558
Cash surrender value of life insurance	223,865			222,905			221,949			223,557			222,437
Other real estate owned	8,859			9,071			9,698			10,373			11,912
Tax asset, deferred and receivable	25,933			24,619			24,177			23,983			36,024
Other assets	53,167			51,809			61,017			42,338			38,744
TOTAL ASSETS	$	9,787,282		$	9,734,715		$	9,472,796		$	9,367,478		$	9,049,403
LIABILITIES
Deposits:
Noninterest-bearing	$	1,464,190		$	1,571,194		$	1,698,958		$	1,761,553		$	1,662,814
Interest-bearing	6,168,962			5,932,621			5,628,677			5,410,977			5,248,205
Total Deposits	7,633,152			7,503,815			7,327,635			7,172,530			6,911,019
Borrowings:
Federal funds purchased	90,000			109,000			50,000			144,038			100,000
Securities sold under repurchase agreements	118,824			122,513			138,910			136,623			142,107
Federal Home Loan Bank advances	385,458			469,261			449,419			414,377			406,820
Subordinated debentures and term loans	138,408			138,352			138,297			139,349			139,686
Total Borrowings	732,690			839,126			776,626			834,387			788,613
Interest payable	5,920			4,807			5,376			4,390			4,956
Other liabilities	54,094			46,639			50,086			52,708			61,695
Total Liabilities	8,425,856			8,394,387			8,159,723			8,064,015			7,766,283
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 -- 100,000,000 shares
Issued and outstanding	6,163			6,160			6,155			6,145			6,143
Additional paid-in capital	837,996			836,549			834,894			834,870			833,451
Retained earnings	552,551			522,362			493,624			465,231			449,759
Accumulated other comprehensive loss	(35,409		)	(24,868		)	(21,725		)	(2,908		)	(6,358		)
Total Stockholders' Equity	1,361,426			1,340,328			1,313,073			1,303,463			1,283,120
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,787,282		$	9,734,715		$	9,472,796		$	9,367,478		$	9,049,403



CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	September 30,			June 30,			March 31,			December 31,			September 30,
	2018			2018			2018			2017			2017
INTEREST INCOME
Loans receivable:
Taxable	$	88,479		$	84,663		$	78,267		$	76,470		$	71,491
Tax-exempt	3,761			3,632			3,596			3,018			2,851
Investment securities:
Taxable	5,514			5,434			5,096			4,477			4,524
Tax-exempt	6,493			6,246			6,126			5,830			5,455
Deposits with financial institutions	270			633			131			294			284
Federal Home Loan Bank stock	283			263			404			259			242
Total Interest Income	104,800			100,871			93,620			90,348			84,847
INTEREST EXPENSE
Deposits	13,685			12,165			9,002			7,835			6,710
Federal funds purchased	229			61			380			55			175
Securities sold under repurchase agreements	174			172			173			146			133
Federal Home Loan Bank advances	2,137			1,845			2,159			1,577			1,464
Subordinated debentures and term loans	2,089			2,057			1,990			1,970			1,945
Total Interest Expense	18,314			16,300			13,704			11,583			10,427
NET INTEREST INCOME	86,486			84,571			79,916			78,765			74,420
Provision for loan losses	1,400			1,663			2,500			1,800			2,083
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	85,086			82,908			77,416			76,965			72,337
OTHER INCOME
Service charges on deposit accounts	5,619			5,038			4,777			5,066			5,044
Fiduciary and wealth management fees	3,673			3,595			3,796			4,126			3,783
Other customer fees	5,038			4,917			5,036			4,565			4,553
Earnings on cash surrender value of life insurance	961			1,007			1,176			1,133			1,575
Net gains and fees on sales of loans	1,841			1,600			1,821			2,355			2,317
Net realized gains on sales of available for sale securities	1,285			1,122			1,609			1,134			332
Other income	1,110			912			1,346			682			1,064
Total Other Income	19,527			18,191			19,561			19,061			18,668
OTHER EXPENSES
Salaries and employee benefits	32,936			32,192			32,226			33,760			33,244
Net occupancy	4,586			4,348			4,670			4,424			4,371
Equipment	3,483			3,556			3,668			3,898			3,478
Marketing	1,216			1,474			884			1,361			1,021
Outside data processing fees	3,422			3,462			2,964			3,378			3,162
Printing and office supplies	334			324			334			378			366
Intangible asset amortization	1,650			1,718			1,726			2,055			1,698
FDIC assessments	856			711			719			711			704
Other real estate owned and foreclosure expenses	455			362			402			311			330
Professional and other outside services	1,844			1,789			1,541			1,914			5,843
Other expenses	4,240			3,568			4,553			4,243			4,491
Total Other Expenses	55,022			53,504			53,687			56,433			58,708
INCOME BEFORE INCOME TAX	49,591			47,595			43,290			39,593			32,297
Income tax expense	8,478			7,961			6,611			15,210			7,939
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	41,113		$	39,634		$	36,679		$	24,383		$	24,358

Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.83		$	0.80		$	0.75		$	0.49		$	0.50
Diluted Net Income Available to Common Stockholders	$	0.83		$	0.80		$	0.74		$	0.49		$	0.50
Cash Dividends Paid	$	0.22		$	0.22		$	0.18		$	0.18		$	0.18
Average Diluted Shares Outstanding (in thousands)	49,492			49,451			49,428			49,379			48,644
FINANCIAL RATIOS:
Return on Average Assets	1.69		%	1.63		%	1.57		%	1.06		%	1.11		%
Return on Average Stockholders' Equity	12.10			11.94			11.21			7.53			7.83
Return on Average Common Stockholders' Equity	12.10			11.95			11.21			7.53			7.83
Average Earning Assets to Average Assets	90.30			90.14			89.78			88.73			89.16
Allowance for Loan Losses as % of Total Loans	1.11			1.09			1.11			1.11			1.13
Net Charge-offs as % of Average Loans (Annualized)	0.03			0.03			0.07			0.01			(0.05		)
Average Stockholders' Equity to Average Assets	13.93			13.69			13.96			14.11			14.15
Tax Equivalent Yield on Average Earning Assets	4.88			4.74			4.57			4.67			4.56
Interest Expense/Average Earning Assets	0.83			0.75			0.65			0.57			0.53
Net Interest Margin (FTE) on Average Earning Assets	4.05			3.99			3.92			4.10			4.03
Efficiency Ratio	49.25			49.32			51.33			53.29			58.30
Tangible Common Book Value Per Share	$	18.16		$	17.71		$	17.14		$	16.96		$	16.62



LOANS
(Dollars In Thousands)	Septenber 30,			June 30,			March 31,			December 31,			September 30,
	2018			2018			2018			2017			2017
Commercial and industrial loans	$	1,655,569		$	1,657,591		$	1,554,169		$	1,493,493		$	1,436,092
Agricultural production financing and other loans to farmers	88,504			89,093			98,315			121,757			117,751
Real estate loans:
Construction	668,608			714,866			590,093			612,219			498,862
Commercial and farmland	2,699,629			2,652,782			2,713,994			2,562,691			2,571,253
Residential	965,893			965,720			948,644			962,765			938,437
Home equity	517,303			518,699			510,545			514,021			502,240
Individuals' loans for household and other personal expenditures	98,709			92,809			88,235			86,935			86,406
Lease financing receivables, net of unearned income	1,830			1,945			2,193			2,527			3,877
Other commercial loans	392,026			387,554			395,508			394,791			328,530
Loans	7,088,071			7,081,059			6,901,696			6,751,199			6,483,448
Allowance for loan losses	(78,406		)	(77,543		)	(76,420		)	(75,032		)	(73,354		)
NET LOANS	$	7,009,665		$	7,003,516		$	6,825,276		$	6,676,167		$	6,410,094



DEPOSITS
(Dollars In Thousands)	September 30,		June 30,		March 31,		December 31,		September 30,
	2018		2018		2018		2017		2017
Demand deposits	$	3,870,816	$	3,933,233	$	3,740,395	$	3,746,654	$	3,562,718
Savings deposits	2,212,675		2,099,771		2,109,071		1,994,366		1,884,705
Certificates and other time deposits of $100,000 or more	602,002		555,910		552,643		468,895		503,668
Other certificates and time deposits	625,341		602,239		584,377		581,894		585,042
Brokered deposits	322,318		312,662		341,149		380,721		374,886
TOTAL DEPOSITS	$	7,633,152	$	7,503,815	$	7,327,635	$	7,172,530	$	6,911,019



CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	September 30, 2018							September 30, 2017
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	52,027		$	270	2.08	%	$	139,905		$	284	0.81	%
Federal Home Loan Bank stock	24,588			283		4.60		23,146			242		4.18
Investment Securities: ⁽¹⁾
Taxable	857,507			5,514		2.57		718,965			4,524		2.52
Tax-Exempt ⁽²⁾	776,942			8,219		4.23		645,577			8,392		5.20
Total Investment Securities	1,634,449			13,733		3.36		1,364,542			12,916		3.79
Loans held for sale	11,038			142		5.15		8,117			136		6.70
Loans: ⁽³⁾
Commercial	5,226,284			71,223		5.45		4,556,653			55,266		4.85
Real Estate Mortgage	739,356			8,383		4.54		785,317			8,596		4.38
Installment	655,738			8,731		5.33		595,164			7,494		5.04
Tax-Exempt ⁽²⁾	467,278			4,761		4.08		367,559			4,385		4.77
Total Loans	7,099,694			93,240		5.25		6,312,810			75,877		4.81
Total Earning Assets	8,810,758			107,526		4.88		7,840,403			89,319		4.56
Net unrealized gain (loss) on securities available for sale	(15,245		)					7,733
Allowance for loan losses	(77,763		)					(71,753		)
Cash and cash equivalents	128,557							129,058
Premises and equipment	94,422							101,979
Other assets	815,951							786,246
Total Assets	$	9,756,680						$	8,793,666
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	2,399,477		$	4,909	0.82	%	$	1,834,965		$	1,706	0.37	%
Money market deposits	1,062,154			1,551		0.58		990,682			747		0.30
Savings deposits	1,081,369			1,500		0.55		887,201			203		0.09
Certificates and other time deposits	1,536,697			5,725		1.49		1,450,448			4,054		1.12
Total Interest-bearing Deposits	6,079,697			13,685		0.90		5,163,296			6,710		0.52
Borrowings	741,092			4,629		2.50		694,203			3,717		2.14
Total Interest-bearing Liabilities	6,820,789			18,314		1.07		5,857,499			10,427		0.71
Noninterest-bearing deposits	1,523,928							1,626,757
Other liabilities	53,059							64,938
Total Liabilities	8,397,776							7,549,194
Stockholders' Equity	1,358,904							1,244,472
Total Liabilities and Stockholders' Equity	$	9,756,680		18,314				$	8,793,666		10,427
Net Interest Income (FTE)				$	89,212						$	78,892
Net Interest Spread (FTE)						3.81	%						3.85	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets						4.88	%						4.56	%
Interest Expense / Average Earning Assets						0.83	%						0.53	%
Net Interest Margin (FTE)						4.05	%						4.03	%

⁽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.
⁽²⁾Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent and 35 percent for 2018 and 2017, respectively. These totals equal $2,726 and $4,472 for the three months ended September 30, 2018 and 2017, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.



CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Nine Months Ended
	September 30, 2018							September 30, 2017
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	76,570		$	1,034	1.80	%	$	71,456		$	442	0.82	%
Federal Reserve and Federal Home Loan Bank stock	24,521			950		5.17		19,941			635		4.25
Investment Securities: ⁽¹⁾
Taxable	840,425			16,044		2.55		716,118			13,012		2.42
Tax-Exempt ⁽²⁾	753,176			23,880		4.23		609,658			23,922		5.23
Total Investment Securities	1,593,601			39,924		3.34		1,325,776			36,934		3.71
Loans held for sale	9,520			363		5.08		4,875			245		6.70
Loans: ⁽³⁾
Commercial	5,116,405			200,886		5.24		4,085,901			144,759		4.72
Real Estate Mortgage	732,469			25,174		4.58		660,435			21,946		4.43
Installment	637,140			24,986		5.23		558,106			20,284		4.85
Tax-Exempt ⁽²⁾	466,926			13,910		3.97		338,169			11,809		4.66
Total Loans	6,962,460			265,319		5.08		5,647,486			199,043		4.70
Total Earning Assets	8,657,152			307,227		4.73		7,064,659			237,054		4.47
Net unrealized gain on securities available for sale	(11,616		)					4,437
Allowance for loan losses	(76,944		)					(69,269		)
Cash and cash equivalents	129,181							128,866
Premises and equipment	94,897							95,707
Other assets	817,549							642,243
Total Assets	$	9,610,219						$	7,866,643
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	2,236,644		$	12,013	0.72	%	$	1,649,175		$	3,632	0.29	%
Money market deposits	1,077,792			4,270		0.53		894,450			1,688		0.25
Savings deposits	1,041,600			3,214		0.41		818,800			520		0.08
Certificates and other time deposits	1,504,851			15,355		1.36		1,299,932			10,131		1.04
Total Interest-bearing Deposits	5,860,887			34,852		0.79		4,662,357			15,971		0.46
Borrowings	754,054			13,466		2.38		659,260			10,058		2.03
Total Interest-bearing Liabilities	6,614,941			48,318		0.97		5,321,617			26,029		0.65
Noninterest-bearing deposits	1,605,300							1,445,685
Other liabilities	58,111							50,921
Total Liabilities	8,278,352							6,818,223
Stockholders' Equity	1,331,867							1,048,420
Total Liabilities and Stockholders' Equity	$	9,610,219		48,318				$	7,866,643		26,029
Net Interest Income (FTE)				$	258,909						$	211,025
Net Interest Spread (FTE)						3.76	%						3.82	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets						4.73	%						4.47	%
Interest Expense / Average Earning Assets						0.74	%						0.49	%
Net Interest Margin (FTE)						3.99	%						3.98	%

⁽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.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent and 35 percent for 2018 and 2017, respectively. These totals equal $7,936 and $12,506 for the nine months ended September 30, 2018 and 2017, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.

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