GlobeNewswire Inc | Apr 22, 2021 08:00AM EDT

April 22, 2021

MUNCIE, Ind., April 22, 2021 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported first quarter 2021 net income of $49.5 million compared to $34.3 million during the same period in 2020. Earnings per share for the period totaled $.91 per share compared to the first quarter of 2020 result of $.62 per share, an increase of $.29, or 47 percent.

Total assets equaled $14.6 billion as of quarter-end and loans totaled $9.3 billion. The Corporations loan portfolio increased by $711 million, or 8.3 percent, during the past twelve months. The increase was primarily due to Paycheck Protection Program (PPP) loans which accounted for $742 million of the quarter-end loan balance. Investments increased $1 billion, or 37.2 percent, during the year and now total $3.7 billion. Total deposits equaled $12.0 billion as of quarter-end and increased by $2.1 billion, or 21.1 percent over the same period in 2020.

On January 1, 2021, the Corporation adopted the current expected credit losses (CECL) model for calculating the allowance for credit losses. The impact of the adoption was an increase to Allowance for Credit Losses Loans of $74.1 million and the establishment of an Allowance for Credit Losses - Investments of $245,000. Net charge-offs totaled $3.6 million for the quarter and no provision expense was recorded. As a result, the quarter end Allowance for Credit Losses Loans balance was $201.1 million, or 2.16% of total loans. Non-accrual loans totaled $57.9 million as of quarter-end.

Mark Hardwick, Chief Executive Officer, stated, We have returned to the office and have reopened our lobbies to serve our customers in a more personal way. The vaccination progress and improved case numbers in our markets are cause for optimism. Our first quarter results were strong and Im especially pleased to have produced a return on assets of 1.39 percent, return on tangible common equity of 15.87 percent and efficiency ratio of 50.23 percent. The current balance sheet and financial performance positions First Merchants to capitalize on future growth opportunities.

Net-interest income totaling $100.4 million for the quarter, continued to grow with an increase of $6.6 million, or 7.0 percent compared to the first quarter of 2020. Net-interest margin on a tax equivalent basis, totaling 3.23 percent, declined by 23 basis points compared to the first quarter of 2020. Yield on earning assets for the first quarter totaled 3.52 percent and cost of supporting liabilities totaled 0.29 percent. Fair value accretion contributed less to margin as it accounted for 6 basis points in the first quarter of 2021, compared to 12 basis points in the first quarter of 2020. PPP loans contributed 13 basis points to margin during the first quarter of 2021 as unamortized SBA fees were recognized upon loan forgiveness.

Non-interest income totaled $24.1 million for the quarter, a $5.7 million decline from the first quarter of 2020. Customer-specific line items accounted for $2.8 million of the decrease driven by lower derivative hedge fees and the impact of the Durbin Amendment adoption on card payment fees. Additionally, gains on the sale of securities decreased by $2.8 million during the quarter. Non-interest expense totaled $66.1 million for the quarter and was stable compared to the 2020 first quarter expense total of $66.2 million.

The effective tax rate was 15.3 percent in the first quarter of 2021, compared to 9.2 percent in the first quarter of 2020. The CARES Act provided an opportunity to carry back net operating losses to pre-tax reform income tax rates in the first quarter of 2020. The result was a decline in income tax expense of $1.2 million and a lower-than-normal effective tax rate.

The loan-to-deposit ratio totals 78.0 percent and loan-to-asset ratio totals 63.7 percent. Additionally, the Corporations total risk-based capital ratio equaled 14.33 percent, the common equity tier 1 capital ratio equaled 11.99 percent, and the tangible common equity ratio totaled 8.78 percent. These ratios reflect the Corporations strong liquidity and capital positions.

CONFERENCE CALL

First Merchants Corporation will conduct a first quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, April 22, 2021.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's first quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until May 22, 2021. 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 10153171.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme210422.htmlduring the time of the call. A replay of the web cast will be available until April 22, 2022.

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 Corporations 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 companys 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) March 31, 2021 2020ASSETS Cash and cash equivalents $ 187,901 $ 127,731 Interest-bearing deposits 392,806 132,944 Investment securities, net of allowance for 3,700,857 2,697,954 credit losses of $245,000 and $0Loans held for sale 4,430 5,039 Loans 9,318,228 8,606,849 Less: Allowance for credit losses - loans (201,082 ) (99,454 )Net loans 9,117,146 8,507,395 Premises and equipment 109,432 114,045 Federal Home Loan Bank stock 28,736 28,736 Interest receivable 54,662 47,489 Goodwill and other intangibles 571,536 577,366 Cash surrender value of life insurance 293,766 289,574 Other real estate owned 604 7,972 Tax asset, deferred and receivable 40,163 9,497 Other assets 127,027 147,776 TOTAL ASSETS $ 14,629,066 $ 12,693,518 LIABILITIES Deposits: Noninterest-bearing $ 2,494,891 $ 1,688,205 Interest-bearing 9,456,889 8,182,279 Total Deposits 11,951,780 9,870,484 Borrowings: Federal funds purchased ? 47,000 Securities sold under repurchase agreements 185,721 183,317 Federal Home Loan Bank advances 359,337 480,995 Subordinated debentures and other borrowings 118,439 128,741 Total Borrowings 663,497 840,053 Interest payable 4,020 7,746 Other liabilities 203,913 197,275 Total Liabilities 12,823,210 10,915,558 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 - 53,953,723 and 6,744 6,719 53,754,137 sharesAdditional paid-in capital 1,007,300 1,000,942 Retained earnings 755,877 716,518 Accumulated other comprehensive income 35,810 53,656 Total Stockholders' Equity 1,805,856 1,777,960 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,629,066 $ 12,693,518

CONSOLIDATED STATEMENTS OF INCOME Three Months Ended(Dollars In Thousands, Except Per Share Amounts) March 31, 2021 2020INTEREST INCOME Loans receivable: Taxable $ 85,105 $ 96,652 Tax-exempt 5,339 5,315 Investment securities: Taxable 6,695 7,631 Tax-exempt 12,385 9,335 Deposits with financial institutions 114 575 Federal Home Loan Bank stock 178 299 Total Interest Income 109,816 119,807 INTEREST EXPENSE Deposits 6,200 21,748 Federal funds purchased 2 111 Securities sold under repurchase agreements 87 352 Federal Home Loan Bank advances 1,442 1,774 Subordinated debentures and other borrowings 1,657 1,945 Total Interest Expense 9,388 25,930 NET INTEREST INCOME 100,428 93,877 Provision for credit losses - loans ? 19,752 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 100,428 74,125 OTHER INCOME Service charges on deposit accounts 5,264 5,970 Fiduciary and wealth management fees 6,422 5,985 Card payment fees 4,367 5,907 Net gains and fees on sales of loans 3,986 3,363 Derivative hedge fees 317 1,939 Other customer fees 368 398 Earnings on cash surrender value of life insurance 1,336 1,360 Net realized gains on sales of available for sale 1,799 4,612 securitiesOther income 232 265 Total Other Income 24,091 29,799 OTHER EXPENSES Salaries and employee benefits 38,811 39,243 Net occupancy 6,491 5,801 Equipment 5,030 4,344 Marketing 1,124 1,443 Outside data processing fees 4,244 4,199 Printing and office supplies 283 387 Intangible asset amortization 1,357 1,514 FDIC assessments 1,368 1,523 Other real estate owned and foreclosure expenses 734 505 Professional and other outside services 2,543 2,258 Other expenses 4,113 4,954 Total Other Expenses 66,098 66,171 INCOME BEFORE INCOME TAX 58,421 37,753 Income tax expense 8,952 3,490 NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 49,469 $ 34,263 Per Share Data: Basic Net Income Available to Common Stockholders $ 0.92 $ 0.63 Diluted Net Income Available to Common Stockholders $ 0.91 $ 0.62 Cash Dividends Paid $ 0.26 $ 0.26 Average Diluted Shares Outstanding (in thousands) 54,134 54,918

FINANCIAL HIGHLIGHTS (Dollars in thousands) Three Months Ended March 31, 2021 2020NET CHARGE-OFFS $ 3,621 $ 582 AVERAGE BALANCES: Total Assets $ 14,244,739 $ 12,573,238 Total Loans 9,236,421 8,526,571 Total Earning Assets 13,023,318 11,292,430 Total Deposits 11,567,918 9,886,273 Total Stockholders' Equity 1,840,432 1,816,418 FINANCIAL RATIOS: Return on Average Assets 1.39 % 1.09 %Return on Average Stockholders' Equity 10.75 7.55 Return on Average Common Stockholders' Equity 10.75 7.55 Average Earning Assets to Average Assets 91.43 89.81 Allowance for Credit Losses - Loans as % of 2.16 1.15 Total LoansNet Charge-offs as % of Average Loans 0.16 0.03 (Annualized)Average Stockholders' Equity to Average 12.92 14.45 AssetsTax Equivalent Yield on Average Earning 3.52 4.38 AssetsInterest Expense/Average Earning Assets 0.29 0.92 Net Interest Margin (FTE) on Average Earning 3.23 3.46 AssetsEfficiency Ratio 50.23 52.17 Tangible Common Book Value Per Share $ 22.98 $ 22.46

NON-PERFORMING ASSETS(Dollars In March 31, December 31, September June 30, March 31,Thousands) 30, 2021 2020 2020 2020 2020Non-Accrual $ 57,923 $ 61,471 $ 56,739 $ 50,102 $ 15,649 LoansRenegotiated 655 3,240 2,677 1,086 665 LoansNon-Performing 58,578 64,711 59,416 51,188 16,314 Loans (NPL)Other RealEstate Owned 604 940 6,984 7,409 8,017 andRepossessionsNon-Performing 59,182 65,651 66,400 58,597 24,331 Assets (NPA)90+ Days 1,093 746 1,330 4,981 312 DelinquentNPAs & 90 Day $ 60,275 $ 66,397 $ 67,730 $ 63,578 $ 24,643 Delinquent Allowance forCredit Losses $ 201,082 $ 130,648 $ 126,726 $ 121,119 $ 99,454 - LoansQuarterly Net 3,621 560 6,937 230 582 Charge-offsNPAs / Actual 0.40 % 0.47 % 0.48 % 0.42 % 0.19 %Assets %NPAs & 90 Day/ Actual 0.41 % 0.47 % 0.49 % 0.46 % 0.19 %Assets %NPAs / ActualLoans and OREO 0.63 % 0.71 % 0.72 % 0.63 % 0.28 %%Allowance forCredit Losses- Loans / 2.16 % 1.41 % 1.37 % 1.30 % 1.15 %Actual Loans(%)NetCharge-offs as% of Average 0.16 % 0.02 % 0.30 % 0.01 % 0.03 %Loans(Annualized)

CONSOLIDATED BALANCE SHEETS(Dollars In March 31, December 31, September 30, June 30, March 31,Thousands) 2021 2020 2020 2020 2020ASSETS Cash and cash $ 187,901 $ 192,896 $ 164,632 $ 229,759 $ 127,731 equivalentsInterest-bearing 392,806 392,305 273,936 380,021 132,944 depositsInvestmentsecurities, net of 3,700,857 3,146,787 2,933,286 2,789,379 2,697,954 allowance forcredit lossesLoans held for sale 4,430 3,966 3,183 901 5,039 Loans 9,318,228 9,243,174 9,243,833 9,298,541 8,606,849 Less: Allowance forcredit losses - (201,082 ) (130,648 ) (126,726 ) (121,119 ) (99,454 )loansNet loans 9,117,146 9,112,526 9,117,107 9,177,422 8,507,395 Premises and 109,432 111,062 112,959 112,548 114,045 equipmentFederal Home Loan 28,736 28,736 28,736 28,736 28,736 Bank stockInterest receivable 54,662 53,948 52,992 57,063 47,489 Goodwill and other 571,536 572,893 574,369 575,855 577,366 intangiblesCash surrendervalue of life 293,766 292,745 291,543 290,715 289,574 insuranceOther real estate 604 940 6,942 7,367 7,972 ownedTax asset, deferred 40,163 12,340 21,762 13,126 9,497 and receivableOther assets 127,027 146,066 155,903 156,486 147,776 TOTAL ASSETS $ 14,629,066 $ 14,067,210 $ 13,737,350 $ 13,819,378 $ 12,693,518 LIABILITIES Deposits: Noninterest-bearing $ 2,494,891 $ 2,298,138 $ 2,187,607 $ 2,260,351 $ 1,688,205 Interest-bearing 9,456,889 9,063,472 8,718,546 8,705,637 8,182,279 Total Deposits 11,951,780 11,361,610 10,906,153 10,965,988 9,870,484 Borrowings: Federal funds ? ? 80,000 ? 47,000 purchasedSecurities soldunder repurchase 185,721 177,102 187,732 181,150 183,317 agreementsFederal Home Loan 359,337 389,430 399,522 400,817 480,995 Bank advancesSubordinateddebentures and 118,439 118,380 118,320 285,197 128,741 other borrowingsTotal Borrowings 663,497 684,912 785,574 867,164 840,053 Interest payable 4,020 3,287 5,038 5,587 7,746 Other liabilities 203,913 141,756 206,929 171,544 197,275 Total Liabilities 12,823,210 12,191,565 11,903,694 12,010,283 10,915,558 STOCKHOLDERS' EQUITYCumulativePreferred Stock,$1,000 par value, $1,000 liquidationvalue:Authorized -- 600 sharesIssued and 125 125 125 125 125 outstandingCommon Stock, $.125 stated value:Authorized -- 100,000,000 sharesIssued and 6,744 6,740 6,736 6,724 6,719 outstandingAdditional paid-in 1,007,300 1,005,366 1,003,777 1,002,962 1,000,942 capitalRetained earnings 755,877 788,578 757,550 735,439 716,518 Accumulated othercomprehensive 35,810 74,836 65,468 63,845 53,656 incomeTotal Stockholders' 1,805,856 1,875,645 1,833,656 1,809,095 1,777,960 EquityTOTAL LIABILITIESAND STOCKHOLDERS' $ 14,629,066 $ 14,067,210 $ 13,737,350 $ 13,819,378 $ 12,693,518 EQUITY

CONSOLIDATEDSTATEMENTS OF INCOME(Dollars InThousands, March 31, December September June 30, March 31,Except Per Share 31, 30,Amounts) 2021 2020 2020 2020 2020INTEREST INCOME Loans receivable:Taxable $ 85,105 $ 90,138 $ 84,162 $ 87,312 $ 96,652 Tax-exempt 5,339 5,414 5,395 5,359 5,315 Investment securities:Taxable 6,695 5,263 5,399 6,147 7,631 Tax-exempt 12,385 12,056 10,931 10,019 9,335 Deposits withfinancial 114 139 90 134 575 institutionsFederal Home 178 214 248 281 299 Loan Bank stockTotal Interest 109,816 113,224 106,225 109,252 119,807 IncomeINTEREST EXPENSE Deposits 6,200 7,509 9,776 12,707 21,748 Federal funds 2 2 5 2 111 purchasedSecurities soldunder repurchase 87 77 83 92 352 agreementsFederal HomeLoan Bank 1,442 1,656 1,749 1,794 1,774 advancesSubordinateddebentures and 1,657 1,669 1,691 1,639 1,945 other borrowingsTotal Interest 9,388 10,913 13,304 16,234 25,930 ExpenseNET INTEREST 100,428 102,311 92,921 93,018 93,877 INCOMEProvision forcredit losses - ? 4,482 12,544 21,895 19,752 loansNET INTERESTINCOME AFTER 100,428 97,829 80,377 71,123 74,125 PROVISION FORCREDIT LOSSESOTHER INCOME Service chargeson deposit 5,264 5,508 5,209 4,312 5,970 accountsFiduciary andwealth 6,422 6,251 5,910 5,601 5,985 management feesCard payment 4,367 3,502 3,996 6,097 5,907 feesNet gains andfees on sales of 3,986 5,393 5,841 3,674 3,363 loansDerivative hedge 317 2,281 1,715 1,042 1,939 feesOther customer 368 394 372 333 398 feesEarnings on cashsurrender value 1,336 1,283 1,171 1,326 1,360 of lifeinsuranceNet realizedgains on sales 1,799 2,398 1,817 3,068 4,612 of available forsale securitiesOther income 232 473 132 1,028 265 Total Other 24,091 27,483 26,163 26,481 29,799 IncomeOTHER EXPENSES Salaries andemployee 38,811 41,809 39,187 35,698 39,243 benefitsNet occupancy 6,491 9,653 5,855 5,447 5,801 Equipment 5,030 5,555 4,956 4,489 4,344 Marketing 1,124 1,763 1,311 2,092 1,443 Outside data 4,244 3,839 3,776 2,618 4,199 processing feesPrinting and 283 307 331 279 387 office suppliesIntangible asset 1,357 1,476 1,486 1,511 1,514 amortizationFDIC assessments 1,368 1,560 1,249 1,472 1,523 Other realestate owned and 734 (1,576 ) 717 684 505 foreclosureexpensesProfessional andother outside 2,543 2,836 2,254 1,553 2,258 servicesOther expenses 4,113 5,314 3,587 4,146 4,954 Total Other 66,098 72,536 64,709 59,989 66,171 ExpensesINCOME BEFORE 58,421 52,776 41,831 37,615 37,753 INCOME TAXIncome tax 8,952 7,641 5,621 4,623 3,490 expenseNET INCOMEAVAILABLE TO $ 49,469 $ 45,135 $ 36,210 $ 32,992 $ 34,263 COMMONSTOCKHOLDERS Per Share Data: Basic Net IncomeAvailable to $ 0.92 $ 0.83 $ 0.67 $ 0.62 $ 0.63 CommonStockholdersDiluted NetIncome Available $ 0.91 $ 0.83 $ 0.67 $ 0.62 $ 0.62 to CommonStockholdersCash Dividends $ 0.26 $ 0.26 $ 0.26 $ 0.26 $ 0.26 PaidAverage DilutedShares 54,134 54,050 53,971 53,943 54,918 Outstanding (inthousands)FINANCIAL RATIOS:Return on 1.39 % 1.29 % 1.06 % 0.97 % 1.09 %Average AssetsReturn onAverage 10.75 9.72 7.91 7.35 7.55 Stockholders'EquityReturn onAverage Common 10.75 9.72 7.91 7.35 7.55 Stockholders'EquityAverage EarningAssets to 91.43 90.66 90.34 89.25 89.81 Average AssetsAllowance forCredit Losses - 2.16 1.41 1.37 1.30 1.15 Loans as % ofTotal LoansNet Charge-offsas % of Average 0.16 0.02 0.30 0.01 0.03 Loans(Annualized)AverageStockholders' 12.92 13.29 13.41 13.15 14.45 Equity toAverage AssetsTax EquivalentYield on Average 3.52 3.72 3.58 3.72 4.38 Earning AssetsInterest Expense/Average Earning 0.29 0.34 0.43 0.53 0.92 AssetsNet InterestMargin (FTE) on 3.23 3.38 3.15 3.19 3.46 Average EarningAssetsEfficiency Ratio 50.23 55.01 51.40 47.95 52.17 Tangible CommonBook Value Per $ 22.98 $ 24.27 $ 23.48 $ 23.04 $ 22.46 Share

LOANS (Dollars In March 31, December 31, September 30, June 30, March 31,Thousands) 2021 2020 2020 2020 2020Commercialand $ 2,876,212 $ 2,776,699 $ 2,875,331 $ 2,898,329 $ 2,199,226 industrialloansAgriculturalland,production 245,631 281,884 301,192 316,815 315,950 and otherloans tofarmersReal estate loans:Construction 541,224 484,723 622,084 640,560 643,674 Commercialreal estate, 2,178,832 2,220,949 2,098,589 2,097,767 2,118,148 non-owneroccupiedCommercialreal estate, 950,038 958,501 931,815 919,254 921,491 owneroccupiedResidential 1,239,925 1,234,741 1,146,406 1,145,187 1,121,556 Home equity 482,229 508,259 527,458 532,314 570,398 Individuals'loans forhousehold 126,387 129,479 125,411 123,611 129,765 and otherpersonalexpendituresPublicfinance andother 677,750 647,939 615,547 624,704 586,641 commercialloansLoans 9,318,228 9,243,174 9,243,833 9,298,541 8,606,849 Allowancefor credit (201,082 ) (130,648 ) (126,726 ) (121,119 ) (99,454 ) losses -loansNET LOANS $ 9,117,146 $ 9,112,526 $ 9,117,107 $ 9,177,422 $ 8,507,395

DEPOSITS (Dollars In March 31, December 31, September 30, June 30, March 31,Thousands) 2021 2020 2020 2020 2020Demand $ 7,245,850 $ 6,821,152 $ 6,279,554 $ 6,288,360 $ 5,293,200 depositsSavings 3,857,624 3,661,713 3,518,286 3,278,156 2,962,821 depositsCertificatesand othertime 332,745 346,194 467,610 607,474 694,062 deposits of$100,000 ormoreOthercertificates 449,655 459,168 542,919 669,119 717,723 and timedepositsBrokered 65,906 73,383 97,784 122,879 202,678 depositsTOTAL $ 11,951,780 $ 11,361,610 $ 10,906,153 $ 10,965,988 $ 9,870,484 DEPOSITS

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS(Dollars in Thousands) For the Three Months Ended March 31, 2021 March 31, 2020 Interest Average Interest Average Average Balance Income / Rate Average Balance Income / Rate Expense ExpenseAssets: Interest-bearing $ 441,254 $ 114 0.10 % $ 159,859 $ 575 1.44 %depositsFederal Home Loan 28,736 178 2.48 28,737 299 4.16 Bank stockInvestment Securities: ^(1)Taxable 1,494,008 6,695 1.79 1,368,546 7,631 2.23 Tax-Exempt ^(2) 1,822,899 15,677 3.44 1,208,717 11,816 3.91 Total Investment 3,316,907 22,372 2.70 2,577,263 19,447 3.02 SecuritiesLoans held for sale 16,139 156 3.87 17,217 193 4.48 Loans: ^(3) Commercial 6,876,818 69,174 4.02 6,235,336 76,952 4.94 Real Estate 975,262 9,286 3.81 870,654 10,402 4.78 MortgageInstallment 674,307 6,489 3.85 759,614 9,105 4.79 Tax-Exempt ^(2) 693,895 6,758 3.90 643,750 6,728 4.18 Total Loans 9,236,421 91,863 3.98 8,526,571 103,380 4.85 Total Earning 13,023,318 114,527 3.52 % 11,292,430 123,701 4.38 %AssetsNet unrealized gain(loss) on 55,658 48,656 securitiesavailable for saleAllowance for (204,353 ) (81,160 ) credit lossesCash and cash 165,774 159,757 equivalentsPremises and 110,992 113,812 equipmentOther assets 1,093,350 1,039,743 Total Assets $ 14,244,739 $ 12,573,238 Liabilities: Interest-bearing deposits:Interest-bearing $ 4,616,988 $ 3,709 0.32 % $ 3,589,240 $ 8,276 0.92 %depositsMoney market 2,086,322 835 0.16 1,535,844 3,783 0.99 depositsSavingsdeposits 1,660,528 476 0.11 1,425,054 1,827 0.51 Certificates and 859,334 1,180 0.55 1,666,642 7,862 1.89 other time depositsTotalInterest-bearing 9,223,172 6,200 0.27 8,216,780 21,748 1.06 DepositsBorrowings 675,117 3,188 1.89 748,185 4,182 2.24 TotalInterest-bearing 9,898,289 9,388 0.38 8,964,965 25,930 1.16 LiabilitiesNoninterest-bearing 2,344,746 1,669,493 depositsOther liabilities 161,272 122,362 Total Liabilities 12,404,307 10,756,820 Stockholders' 1,840,432 1,816,418 EquityTotal Liabilitiesand Stockholders' $ 14,244,739 9,388 $ 12,573,238 25,930 Equity Net Interest $ 105,139 $ 97,771 Income (FTE) Net Interest 3.14 % 3.22 %Spread (FTE) ^(4) Net Interest Margin (FTE):Interest Income(FTE) / Average 3.52 % 4.38 %Earning AssetsInterest Expense /Average Earning 0.29 % 0.92 %Assets Net Interest 3.23 % 3.46 %Margin (FTE) ^(5) ^(1) Average balance of securities is computed based on the average of thehistorical amortized cost balances without the effects of the fair valueadjustments. Annualized amounts are computed using a 30/360 day basis.^(2) Tax-exempt securities and loans are presented on a fully taxableequivalent basis, using a marginal tax rate of 21 percent for 2021 and 2020.These totals equal $4,711 and $3,894 for the three months ended March 31, 2021and 2020, respectively.^(3) Non accruing loans have been included in the average balances.^(4) Net Interest Spread (FTE) is interest income expressed as a percentage ofaverage earning assets minus interest expense expressed as a percentage ofaverage interest-bearing liabilities.^(5) Net Interest Margin (FTE) is interest income expressed as a percentage ofaverage earning assets minus interest expense expressed as a percentage ofaverage earning assets.

For more information, contact:Nicole M. Weaver, Vice President and Director of Corporate Administration765-521-7619 http://www.firstmerchants.com