FIRST MERCHANTS CORP - FORM 8-K - EX-99.1 - 4TH QTR 2018 EARNINGS RELEASE

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8-K - 8-K 4TH QTR 2018 EARNINGS RELEASE - FIRST MERCHANTS CORP	a8-k4q18earningsrelease.htm

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

January 31, 2019

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 RECORD 2018 EARNINGS PER SHARE

First Merchants Corporation (NASDAQ - FRME) has reported fourth quarter 2018 net income of $41.7 million, an increase of 71 percent, compared to $24.4 million during the same period in 2017. Earnings per share for the period totaled a record $.85 per share, an increase of 73 percent, compared to the fourth quarter of 2017 result of $.49 per share. Net income for the year ended December 31, 2018 totaled $159.1 million, compared to $96.1 million during the same period in 2017. Year-to-date earnings per share was $3.22, a record level as we celebrated the Corporation’s 125th anniversary. The result was an increase of $1.10 per share, or 52 percent, over the same period in 2017.

Total assets equaled $9.9 billion as of year-end and loans totaled $7.2 billion. The Corporation’s loan portfolio increased by $471 million, or 7 percent, during the past twelve months. Total deposits equaled $7.8 billion as of year-end and increased by $582 million, or 8 percent.

Michael C. Rechin, President and Chief Executive Officer, stated, “I am proud of our team for running through the tape in 2018 by posting a strong and balanced organic growth quarter. Quality low cost funding, loan growth and sound asset quality all contributed prominently in our record quarter capping off our record year. Our teammates connect with the needs of the marketplace and our communities while our execution produces results and efficiency.” Rechin also added, “We look forward to 2019 and extending our franchise into Michigan through our merger with Monroe Bank & Trust. We look to continue their tradition of superior service to Monroe’s communities through the combination of their skilled bankers and First Merchants’ delivery capabilities.”

Net-interest income totaled $338.9 million for the year, an increase of $61.6 million, or 22 percent. Net-interest margin for the year totaled 4.00 percent, down 2 basis points and includes a reduction of 13 basis points related to tax reform. Yield on earning assets totaled 4.79 percent and the cost of supporting liabilities totaled .79 percent.

Non-interest income totaled $76.5 million for the year, a $5.5 million increase over 2017. Non-interest expense totaled $220 million up from the 2017 total of $205.6 million.

Tax expense for 2018 totaled $29 million, or just 15.4 percent of pre-tax net income. In addition to the lower statutory tax rate as a result of tax reform, tax expense for the fourth quarter and year were less than normal by $1.8 million due to an increase in the Bank’s Indiana state tax liability offset by the release of a valuation allowance on state deferred tax assets.

The Corporation’s 2018 provision expense totaled $7.2 million due to loan growth. Net charge-offs totaled $1.7 million for the year. The allowance for loan losses totaled $80.6 million as of December 31, 2018, up from $75 million at the end of 2017. Non-performing assets totaled $29.4 million as of year-end and the allowance is 1.11 percent of total loans.

As of December 31, 2018, the Corporation’s total risk-based capital ratio equaled 14.61 percent, common equity tier 1 capital ratio equaled 11.98 percent, and the tangible common equity ratio totaled 9.97 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, January 31, 2019.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's fourth quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until March 2, 2019. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529, Canada participants should dial 855-669-9658, or for International participants, dial +1 412-317-0088. The replay access code is 10127190.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme190131.html during the time of the call. A replay of the web cast will be available until January 31, 2020.

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 First Merchants Private Wealth Advisors (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)	December 31,
	2018			2017
ASSETS
Cash and cash equivalents	$	139,247		$	154,905
Interest-bearing time deposits	36,963			35,027
Investment securities	1,632,582			1,560,602
Loans held for sale	4,778			7,216
Loans	7,224,467			6,751,199
Less: Allowance for loan losses	(80,552		)	(75,032		)
Net loans	7,143,915			6,676,167
Premises and equipment	93,420			95,852
Federal Home Loan Bank stock	24,588			23,825
Interest receivable	40,881			37,130
Goodwill and other intangibles	469,784			476,503
Cash surrender value of life insurance	224,939			223,557
Other real estate owned	2,179			10,373
Tax asset, deferred and receivable	23,668			23,983
Other assets	47,772			42,338
TOTAL ASSETS	$	9,884,716		$	9,367,478
LIABILITIES
Deposits:
Noninterest-bearing	$	1,447,907		$	1,761,553
Interest-bearing	6,306,686			5,410,977
Total Deposits	7,754,593			7,172,530
Borrowings:
Federal funds purchased	104,000			144,038
Securities sold under repurchase agreements	113,512			136,623
Federal Home Loan Bank advances	314,986			414,377
Subordinated debentures and term loans	138,463			139,349
Total Borrowings	670,961			834,387
Interest payable	5,607			4,390
Other liabilities	45,295			52,708
Total Liabilities	8,476,456			8,064,015
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 - 49,349,800 and 49,158,238 shares	6,169			6,145
Additional paid-in capital	840,052			834,870
Retained earnings	583,336			465,231
Accumulated other comprehensive loss	(21,422		)	(2,908		)
Total Stockholders' Equity	1,408,260			1,303,463
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,884,716		$	9,367,478



CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended				Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts)	December 31,				December 31,
	2018		2017		2018		2017
INTEREST INCOME
Loans receivable:
Taxable	$	91,092	$	76,470	$	342,501	$	263,704
Tax-exempt	3,873		3,018		14,862		10,694
Investment securities:
Taxable	5,553		4,477		21,597		17,489
Tax-exempt	6,644		5,830		25,509		21,379
Deposits with financial institutions	1,207		294		2,241		736
Federal Home Loan Bank stock	284		259		1,234		894
Total Interest Income	108,653		90,348		407,944		314,896
INTEREST EXPENSE
Deposits	16,690		7,835		51,542		23,806
Federal funds purchased	48		55		718		561
Securities sold under repurchase agreements	243		146		762		477
Federal Home Loan Bank advances	1,691		1,577		7,832		5,196
Subordinated debentures and term loans	2,097		1,970		8,233		7,572
Total Interest Expense	20,769		11,583		69,087		37,612
NET INTEREST INCOME	87,884		78,765		338,857		277,284
Provision for loan losses	1,664		1,800		7,227		9,143
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	86,220		76,965		331,630		268,141
OTHER INCOME
Service charges on deposit accounts	5,516		5,066		20,950		18,722
Fiduciary and wealth management fees	3,842		4,126		14,906		14,682
Other customer fees	4,904		4,565		19,895		17,863
Earnings on cash surrender value of life insurance	1,074		1,133		4,218		6,577
Net gains and fees on sales of loans	1,767		2,355		7,029		7,564
Net realized gains on sales of available for sale securities	253		1,134		4,269		2,631
Other income	1,824		682		5,192		2,970
Total Other Income	19,180		19,061		76,459		71,009
OTHER EXPENSES
Salaries and employee benefits	34,350		33,760		131,704		119,812
Net occupancy	4,737		4,424		18,341		16,976
Equipment	3,627		3,898		14,334		13,090
Marketing	1,107		1,361		4,681		3,739
Outside data processing fees	3,367		3,378		13,215		12,242
Printing and office supplies	433		378		1,425		1,283
Intangible asset amortization	1,625		2,055		6,719		5,647
FDIC assessments	634		711		2,920		2,564
Other real estate owned and foreclosure expenses	251		311		1,470		1,903
Professional and other outside services	3,002		1,914		8,176		12,757
Other expenses	4,605		4,243		16,966		15,543
Total Other Expenses	57,738		56,433		219,951		205,556
INCOME BEFORE INCOME TAX	47,662		39,593		188,138		133,594
Income tax expense	5,949		15,210		28,999		37,524
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	41,713	$	24,383	$	159,139	$	96,070
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.85	$	0.49	$	3.23	$	2.13
Diluted Net Income Available to Common Stockholders	$	0.85	$	0.49	$	3.22	$	2.12
Cash Dividends Paid	$	0.22	$	0.18	$	0.84	$	0.69
Average Diluted Shares Outstanding (in thousands)	49,511		49,379		49,471		45,403



FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2018			2017			2018			2017
NET CHARGE-OFFS	$	(482	)	$	122		$	1,707		$	148

AVERAGE BALANCES:
Total Assets	$	9,923,001		$	9,174,237		$	9,689,057		$	8,196,229
Total Loans	7,102,552			6,575,055			6,997,771			5,881,284
Total Earning Assets	8,971,432			8,139,993			8,736,367			7,335,702
Total Deposits	7,875,998			7,142,375			7,569,482			6,368,751
Total Stockholders' Equity	1,379,453			1,294,810			1,343,861			1,110,524

FINANCIAL RATIOS:
Return on Average Assets	1.68		%	1.06		%	1.64		%	1.17		%
Return on Average Stockholders' Equity	12.10			7.53			11.84			8.65
Return on Average Common Stockholders' Equity	12.10			7.53			11.84			8.65
Average Earning Assets to Average Assets	90.41			88.73			90.17			89.50
Allowance for Loan Losses as % of Total Loans	1.11			1.11			1.11			1.11
Net Charge-offs as % of Average Loans (Annualized)	(0.03		)	0.01			0.02			—
Average Stockholders' Equity to Average Assets	13.90			14.11			13.87			13.55
Tax Equivalent Yield on Average Earning Assets	4.97			4.67			4.79			4.53
Interest Expense/Average Earning Assets	0.93			0.57			0.79			0.51
Net Interest Margin (FTE) on Average Earning Assets	4.04			4.10			4.00			4.02
Efficiency Ratio	50.97			53.29			50.21			54.56
Tangible Common Book Value Per Share	$	19.12		$	16.96		$	19.12		$	16.96



NON-PERFORMING ASSETS
(Dollars In Thousands)	December 31,			September 30,			June 30,			March 31,			December 31,
	2018			2018			2018			2018			2017
Non-Accrual Loans	$	26,148		$	20,421		$	20,143		$	27,497		$	28,724
Renegotiated Loans	1,103			968			544			579			1,013
Non-Performing Loans (NPL)	27,251			21,389			20,687			28,076			29,737
Other Real Estate Owned	2,179			8,859			9,071			9,698			10,373
Non-Performing Assets (NPA)	29,430			30,248			29,758			37,774			40,110
90+ Days Delinquent	1,855			50			184			738			924
NPAs & 90 Day Delinquent	$	31,285		$	30,298		$	29,942		$	38,512		$	41,034

Allowance for Loan Losses	$	80,552		$	78,406		$	77,543		$	76,420		$	75,032
Quarterly Net Charge-offs	(482		)	537			540			1,112			122
NPAs / Actual Assets %	0.30		%	0.31		%	0.31		%	0.40		%	0.43		%
NPAs & 90 Day / Actual Assets %	0.32		%	0.31		%	0.31		%	0.41		%	0.44		%
NPAs / Actual Loans and OREO %	0.41		%	0.43		%	0.42		%	0.55		%	0.59		%
Allowance for Loan Losses / Actual Loans (%)	1.11		%	1.11		%	1.09		%	1.11		%	1.11		%
Net Charge-offs as % of Average Loans (Annualized)	(0.03		)%	0.03		%	0.03		%	0.07		%	0.01		%



CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	December 31,			September 30,			June 30,			March 31,			December 31,
	2018			2018			2018			2018			2017
ASSETS
Cash and cash equivalents	$	139,247		$	142,501		$	133,893		$	128,828		$	154,905
Interest-bearing time deposits	36,963			66,763			36,599			24,233			35,027
Investment securities	1,632,582			1,625,251			1,619,683			1,543,820			1,560,602
Loans held for sale	4,778			3,022			2,046			4,469			7,216
Loans	7,224,467			7,088,071			7,081,059			6,901,696			6,751,199
Less: Allowance for loan losses	(80,552		)	(78,406		)	(77,543		)	(76,420		)	(75,032		)
Net loans	7,143,915			7,009,665			7,003,516			6,825,276			6,676,167
Premises and equipment	93,420			93,728			94,397			94,741			95,852
Federal Home Loan Bank stock	24,588			24,588			24,588			24,588			23,825
Interest receivable	40,881			38,531			38,530			35,223			37,130
Goodwill and other intangibles	469,784			471,409			473,059			474,777			476,503
Cash surrender value of life insurance	224,939			223,865			222,905			221,949			223,557
Other real estate owned	2,179			8,859			9,071			9,698			10,373
Tax asset, deferred and receivable	23,668			25,933			24,619			24,177			23,983
Other assets	47,772			53,167			51,809			61,017			42,338
TOTAL ASSETS	$	9,884,716		$	9,787,282		$	9,734,715		$	9,472,796		$	9,367,478
LIABILITIES
Deposits:
Noninterest-bearing	$	1,447,907		$	1,464,190		$	1,571,194		$	1,698,958		$	1,761,553
Interest-bearing	6,306,686			6,168,962			5,932,621			5,628,677			5,410,977
Total Deposits	7,754,593			7,633,152			7,503,815			7,327,635			7,172,530
Borrowings:
Federal funds purchased	104,000			90,000			109,000			50,000			144,038
Securities sold under repurchase agreements	113,512			118,824			122,513			138,910			136,623
Federal Home Loan Bank advances	314,986			385,458			469,261			449,419			414,377
Subordinated debentures and term loans	138,463			138,408			138,352			138,297			139,349
Total Borrowings	670,961			732,690			839,126			776,626			834,387
Interest payable	5,607			5,920			4,807			5,376			4,390
Other liabilities	45,295			54,094			46,639			50,086			52,708
Total Liabilities	8,476,456			8,425,856			8,394,387			8,159,723			8,064,015
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	6,169			6,163			6,160			6,155			6,145
Additional paid-in capital	840,052			837,996			836,549			834,894			834,870
Retained earnings	583,336			552,551			522,362			493,624			465,231
Accumulated other comprehensive loss	(21,422		)	(35,409		)	(24,868		)	(21,725		)	(2,908		)
Total Stockholders' Equity	1,408,260			1,361,426			1,340,328			1,313,073			1,303,463
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,884,716		$	9,787,282		$	9,734,715		$	9,472,796		$	9,367,478



CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	December 31,			September 30,			June 30,			March 31,			December 31,
	2018			2018			2018			2018			2017
INTEREST INCOME
Loans receivable:
Taxable	$	91,092		$	88,479		$	84,663		$	78,267		$	76,470
Tax-exempt	3,873			3,761			3,632			3,596			3,018
Investment securities:
Taxable	5,553			5,514			5,434			5,096			4,477
Tax-exempt	6,644			6,493			6,246			6,126			5,830
Deposits with financial institutions	1,207			270			633			131			294
Federal Home Loan Bank stock	284			283			263			404			259
Total Interest Income	108,653			104,800			100,871			93,620			90,348
INTEREST EXPENSE
Deposits	16,690			13,685			12,165			9,002			7,835
Federal funds purchased	48			229			61			380			55
Securities sold under repurchase agreements	243			174			172			173			146
Federal Home Loan Bank advances	1,691			2,137			1,845			2,159			1,577
Subordinated debentures and term loans	2,097			2,089			2,057			1,990			1,970
Total Interest Expense	20,769			18,314			16,300			13,704			11,583
NET INTEREST INCOME	87,884			86,486			84,571			79,916			78,765
Provision for loan losses	1,664			1,400			1,663			2,500			1,800
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	86,220			85,086			82,908			77,416			76,965
OTHER INCOME
Service charges on deposit accounts	5,516			5,619			5,038			4,777			5,066
Fiduciary and wealth management fees	3,842			3,673			3,595			3,796			4,126
Other customer fees	4,904			5,038			4,917			5,036			4,565
Earnings on cash surrender value of life insurance	1,074			961			1,007			1,176			1,133
Net gains and fees on sales of loans	1,767			1,841			1,600			1,821			2,355
Net realized gains on sales of available for sale securities	253			1,285			1,122			1,609			1,134
Other income	1,824			1,110			912			1,346			682
Total Other Income	19,180			19,527			18,191			19,561			19,061
OTHER EXPENSES
Salaries and employee benefits	34,350			32,936			32,192			32,226			33,760
Net occupancy	4,737			4,586			4,348			4,670			4,424
Equipment	3,627			3,483			3,556			3,668			3,898
Marketing	1,107			1,216			1,474			884			1,361
Outside data processing fees	3,367			3,422			3,462			2,964			3,378
Printing and office supplies	433			334			324			334			378
Intangible asset amortization	1,625			1,650			1,718			1,726			2,055
FDIC assessments	634			856			711			719			711
Other real estate owned and foreclosure expenses	251			455			362			402			311
Professional and other outside services	3,002			1,844			1,789			1,541			1,914
Other expenses	4,605			4,240			3,568			4,553			4,243
Total Other Expenses	57,738			55,022			53,504			53,687			56,433
INCOME BEFORE INCOME TAX	47,662			49,591			47,595			43,290			39,593
Income tax expense	5,949			8,478			7,961			6,611			15,210
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	41,713		$	41,113		$	39,634		$	36,679		$	24,383

Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.85		$	0.83		$	0.80		$	0.75		$	0.49
Diluted Net Income Available to Common Stockholders	$	0.85		$	0.83		$	0.80		$	0.74		$	0.49
Cash Dividends Paid	$	0.22		$	0.22		$	0.22		$	0.18		$	0.18
Average Diluted Shares Outstanding (in thousands)	49,511			49,492			49,451			49,428			49,379
FINANCIAL RATIOS:
Return on Average Assets	1.68		%	1.69		%	1.63		%	1.57		%	1.06		%
Return on Average Stockholders' Equity	12.10			12.10			11.94			11.21			7.53
Return on Average Common Stockholders' Equity	12.10			12.10			11.95			11.21			7.53
Average Earning Assets to Average Assets	90.41			90.30			90.14			89.78			88.73
Allowance for Loan Losses as % of Total Loans	1.11			1.11			1.09			1.11			1.11
Net Charge-offs as % of Average Loans (Annualized)	(0.03		)	0.03			0.03			0.07			0.01
Average Stockholders' Equity to Average Assets	13.90			13.93			13.69			13.96			14.11
Tax Equivalent Yield on Average Earning Assets	4.97			4.88			4.74			4.57			4.67
Interest Expense/Average Earning Assets	0.93			0.83			0.75			0.65			0.57
Net Interest Margin (FTE) on Average Earning Assets	4.04			4.05			3.99			3.92			4.10
Efficiency Ratio	50.97			49.25			49.32			51.33			53.29
Tangible Common Book Value Per Share	$	19.12		$	18.16		$	17.71		$	17.14		$	16.96



LOANS
(Dollars In Thousands)	December 31,			September 30,			June 30,			March 31,			December 31,
	2018			2018			2018			2018			2017
Commercial and industrial loans	$	1,726,664		$	1,655,569		$	1,657,591		$	1,554,169		$	1,493,493
Agricultural production financing and other loans to farmers	92,404			88,504			89,093			98,315			121,757
Real estate loans:
Construction	545,729			668,608			714,866			590,093			612,219
Commercial and farmland	2,832,102			2,699,629			2,652,782			2,713,994			2,562,691
Residential	966,421			965,893			965,720			948,644			962,765
Home equity	528,157			517,303			518,699			510,545			514,021
Individuals' loans for household and other personal expenditures	99,788			98,709			92,809			88,235			86,935
Lease financing receivables, net of unearned income	1,600			1,830			1,945			2,193			2,527
Other commercial loans	431,602			392,026			387,554			395,508			394,791
Loans	7,224,467			7,088,071			7,081,059			6,901,696			6,751,199
Allowance for loan losses	(80,552		)	(78,406		)	(77,543		)	(76,420		)	(75,032		)
NET LOANS	$	7,143,915		$	7,009,665		$	7,003,516		$	6,825,276		$	6,676,167



DEPOSITS
(Dollars In Thousands)	December 31,		September 30,		June 30,		March 31,		December 31,
	2018		2018		2018		2018		2017
Demand deposits	$	3,985,178	$	3,870,816	$	3,933,233	$	3,740,395	$	3,746,654
Savings deposits	2,282,701		2,212,675		2,099,771		2,109,071		1,994,366
Certificates and other time deposits of $100,000 or more	593,592		602,002		555,910		552,643		468,895
Other certificates and time deposits	646,682		625,341		602,239		584,377		581,894
Brokered deposits	246,440		322,318		312,662		341,149		380,721
TOTAL DEPOSITS	$	7,754,593	$	7,633,152	$	7,503,815	$	7,327,635	$	7,172,530



CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	December 31, 2018							December 31, 2017
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	210,121		$	1,207	2.30	%	$	87,172		$	294	1.35	%
Federal Home Loan Bank stock	24,588			284		4.62		23,825			259		4.35
Investment Securities: ⁽¹⁾
Taxable	843,514			5,553		2.63		755,341			4,477		2.37
Tax-Exempt ⁽²⁾	790,657			8,410		4.25		698,600			8,969		5.14
Total Investment Securities	1,634,171			13,963		3.42		1,453,941			13,446		3.70
Loans held for sale	15,142			177		4.68		13,657			216		6.33
Loans: ⁽³⁾
Commercial	5,224,202			73,416		5.62		4,806,978			60,015		4.99
Real Estate Mortgage	739,325			8,375		4.53		737,668			8,320		4.51
Installment	649,717			9,124		5.62		617,591			7,919		5.13
Tax-Exempt ⁽²⁾	474,166			4,903		4.14		399,161			4,643		4.65
Total Loans	7,102,552			95,995		5.41		6,575,055			81,113		4.93
Total Earning Assets	8,971,432			111,449		4.97		8,139,993			95,112		4.67
Net unrealized gain (loss) on securities available for sale	(24,206		)					4,131
Allowance for loan losses	(78,926		)					(73,675		)
Cash and cash equivalents	140,065							182,970
Premises and equipment	93,589							102,605
Other assets	821,047							818,213
Total Assets	$	9,923,001						$	9,174,237
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	2,563,703		$	5,565	0.87	%	$	1,970,916		$	2,185	0.44	%
Money market deposits	1,157,022			2,450		0.85		1,071,037			1,101		0.41
Savings deposits	1,134,559			2,016		0.71		922,052			214		0.09
Certificates and other time deposits	1,542,222			6,659		1.73		1,458,365			4,335		1.19
Total Interest-bearing Deposits	6,397,506			16,690		1.04		5,422,370			7,835		0.58
Borrowings	611,255			4,079		2.67		678,242			3,748		2.21
Total Interest-bearing Liabilities	7,008,761			20,769		1.19		6,100,612			11,583		0.76
Noninterest-bearing deposits	1,478,492							1,720,005
Other liabilities	56,295							58,810
Total Liabilities	8,543,548							7,879,427
Stockholders' Equity	1,379,453							1,294,810
Total Liabilities and Stockholders' Equity	$	9,923,001		20,769				$	9,174,237		11,583
Net Interest Income (FTE)				$	90,680						$	83,529
Net Interest Spread (FTE) ⁽⁴⁾						3.78	%						3.91	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets						4.97	%						4.67	%
Interest Expense / Average Earning Assets						0.93	%						0.57	%
Net Interest Margin (FTE) ⁽⁵⁾						4.04	%						4.10	%

⁽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 $2,796 and $4,764 for the three months ended December 31, 2018 and 2017, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.
⁽⁴⁾ Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
⁽⁵⁾ Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.



CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Twelve Months Ended
	December 31, 2018							December 31, 2017
	Average Balance			Interest Income / Expense		Average Rate		Average Balance			Interest Income / Expense		Average Rate
Assets:
Interest-bearing time deposits	$	110,232		$	2,241	2.03	%	$	75,417		$	736	0.98	%
Federal Home Loan Bank stock	24,538			1,234		5.03		20,921			894		4.27
Investment Securities: ⁽¹⁾
Taxable	841,203			21,597		2.57		726,004			17,489		2.41
Tax-Exempt ⁽²⁾	762,623			32,290		4.23		632,076			32,891		5.20
Total Investment Securities	1,603,826			53,887		3.36		1,358,080			50,380		3.71
Loans held for sale	11,425			540		4.73		7,707			462		5.99
Loans: ⁽³⁾
Commercial	5,143,576			274,302		5.33		4,267,651			204,771		4.80
Real Estate Mortgage	733,709			33,549		4.57		679,284			30,267		4.46
Installment	640,310			34,110		5.33		573,100			28,204		4.92
Tax-Exempt ⁽²⁾	468,751			18,813		4.01		353,542			16,452		4.65
Total Loans	6,997,771			361,314		5.16		5,881,284			280,156		4.76
Total Earning Assets	8,736,367			418,676		4.79		7,335,702			332,166		4.53
Net unrealized gain on securities available for sale	(14,790		)					4,360
Allowance for loan losses	(77,444		)					(70,380		)
Cash and cash equivalents	131,925							142,503
Premises and equipment	94,567							97,446
Other assets	818,432							686,598
Total Assets	$	9,689,057						$	8,196,229
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	2,319,081		$	17,577	0.76	%	$	1,730,272		$	5,817	0.34	%
Money market deposits	1,097,762			6,721		0.61		938,959			2,788		0.30
Savings deposits	1,065,031			5,230		0.49		844,825			734		0.09
Certificates and other time deposits	1,514,271			22,014		1.45		1,339,866			14,467		1.08
Total Interest-bearing Deposits	5,996,145			51,542		0.86		4,853,922			23,806		0.49
Borrowings	718,061			17,545		2.44		664,045			13,806		2.08
Total Interest-bearing Liabilities	6,714,206			69,087		1.03		5,517,967			37,612		0.68
Noninterest-bearing deposits	1,573,337							1,514,829
Other liabilities	57,653							52,909
Total Liabilities	8,345,196							7,085,705
Stockholders' Equity	1,343,861							1,110,524
Total Liabilities and Stockholders' Equity	$	9,689,057		69,087				$	8,196,229		37,612
Net Interest Income (FTE)				$	349,589						$	294,554
Net Interest Spread (FTE) ⁽⁴⁾						3.76	%						3.85	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets						4.79	%						4.53	%
Interest Expense / Average Earning Assets						0.79	%						0.51	%
Net Interest Margin (FTE) ⁽⁵⁾						4.00	%						4.02	%

⁽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 $10,732 and $17,270 for the twelve months ended December 31, 2018 and 2017, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.
⁽⁴⁾Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
⁽⁵⁾ Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

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