GlobeNewswire Inc | Jul 26, 2021 08:00AM EDT

July 26, 2021

MUNCIE, Ind., July 26, 2021 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) has reported second quarter 2021 net income of $55.6 million compared to $33 million during the same period in 2020. Earnings per share for the period totaled $1.03 per share compared to the second quarter of 2020 result of $.62 per share. Year-to-date net income totaled $105 million compared to $67.3 million during the six months ended June 30, 2020. Year-to-date earnings per share totaled $1.94 compared to $1.24 during the same period in 2020.

Total assets equaled $14.9 billion as of the quarter-ended June 30, 2021 and loans totaled $9.1 billion. The Corporation experienced organic loan growth of $289.6 million, or 3.4 percent during the last twelve months, offset by the forgiveness of Paycheck Protection Program (PPP) loans which accounted for a decline of $466.9 million. As a result, the loan portfolio decreased by $177.3 million, or 1.9 percent, during that period. Organic loan growth, on an annualized basis, was 6.7 percent in the second quarter 2021. Investments increased $1.4 billion, or 48.7 percent, during the last twelve months and now total $4.1 billion. Total deposits equaled $12.2 billion as of quarter-end and increased by $1.2 billion, or 11.3 percent, from the same period in 2020. The Corporations Allowance for Credit Losses Loans totaled $199.8 million as of quarter-end, or 2.19% of total loans. Net charge-offs for the quarter totaled $1.3 million and no provision expense was recorded. Provision expense taken during the three and six months ended June 30, 2020 of $21.9 million and $41.6 million, respectively, reflected our view of increased credit risk related to the COVID-19 pandemic. Non-accrual loans as of quarter-end totaled $57.6 million.

Mark Hardwick, Chief Executive Officer, stated, Our management team is pleased with our record setting second quarter net income. Its very satisfying to achieve great financial results while serving our clients and communities. Our healthy levels of loan growth, earning asset growth, credit quality, capital levels and efficiency will lead us into the future. I am proud of our teammates for staying focused on our goals and continuously finding ways to win for our stakeholders.

Net-interest income for the quarter totaled $104.3 million, an increase of $11.2 million from the second quarter of 2020, or 12.1 percent. Net interest margin, on a tax equivalent basis, totaling 3.22 percent, increased by 3 basis points compared to the second quarter of 2020. Yields on earning assets for the second quarter totaled 3.49 percent and cost of supporting liabilities totaled 27 basis points. Fair value accretion contributed less to margin as it accounted for 7 basis points in the second quarter of 2021, compared to 12 basis points in the second quarter of 2020. PPP loans contributed 15 basis points to margin during the second quarter of 2021, but subtracted 6 basis points from margin in the same quarter of 2020.

Non-interest income totaled $30.9 million for the quarter, a $4.4 million increase over the second quarter of 2020. Gains from the sale of mortgage loans were exceptionally strong and enhanced by a large portfolio mortgage loan sale contributing a gain of $2.9 million during the quarter. Fiduciary and wealth management fees increased $1.9 million over the second quarter of 2020, which was offset by a decline in card payment fees due to the adoption of the Durbin Amendment. Non-interest expense totaled $69.3 million for the quarter compared to $60 million in the second quarter of 2020 and $66.1 million in the first quarter of 2021. Total expenses in the second quarter of 2020 were unusually low and reflected a $2.3 million deferral of salary expense related to PPP loan originations, a $1.1 million reduction in bonus accruals and a $1.6 million decrease in processing fees related to termination of a debit card rewards program. Total expenses increased on a linked quarter basis primarily due to increased salaries and incentives.

The loan to deposit ratio now totals 74.9 percent and loan to asset ratio totals 61.3 percent. As of June 30, 2021, the Corporations total risk-based capital ratio equaled 14.23 percent, the common equity tier 1 capital ratio equaled 11.94 percent, and the tangible common equity ratio totaled 9.04 percent. These ratios continue to reflect the Corporations strong liquidity and capital positions.

CONFERENCE CALL

First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 2:30 p.m. (ET) on Monday, July 26, 2021.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's second quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until August 26, 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 10157361.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme210726.html during the time of the call. A replay of the web cast will be available until July 26, 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) June 30, 2021 2020ASSETS Cash and cash equivalents $ 167,596 $ 229,759 Interest-bearing deposits 438,863 380,021 Investment securities, net of allowance for 4,148,314 2,789,379 credit losses of $245,000 and $0Loans held for sale 18,582 901 Loans 9,121,250 9,298,541 Less: Allowance for credit losses - loans (199,775 ) (121,119 )Net loans 8,921,475 9,177,422 Premises and equipment 103,822 112,548 Federal Home Loan Bank stock 28,736 28,736 Interest receivable 54,173 57,063 Goodwill and other intangibles 573,786 575,855 Cash surrender value of life insurance 294,462 290,715 Other real estate owned 601 7,367 Tax asset, deferred and receivable 36,924 13,126 Other assets 135,763 156,486 TOTAL ASSETS $ 14,923,097 $ 13,819,378 LIABILITIES Deposits: Noninterest-bearing $ 2,479,853 $ 2,260,351 Interest-bearing 9,723,547 8,705,637 Total Deposits 12,203,400 10,965,988 Borrowings: Securities sold under repurchase agreements 146,904 181,150 Federal Home Loan Bank advances 334,243 400,817 Subordinated debentures and other borrowings 118,498 285,197 Total Borrowings 599,645 867,164 Interest payable 2,929 5,587 Other liabilities 245,323 171,544 Total Liabilities 13,051,297 12,010,283 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 - 53,972,386 and 6,747 6,724 53,795,500 sharesAdditional paid-in capital 1,009,182 1,002,962 Retained earnings 795,666 735,439 Accumulated other comprehensive income 60,080 63,845 Total Stockholders' Equity 1,871,800 1,809,095 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,923,097 $ 13,819,378

CONSOLIDATED STATEMENTS Three Months Ended Six Months EndedOF INCOME(Dollars In Thousands,Except Per Share June 30, June 30,Amounts) 2021 2020 2021 2020INTEREST INCOME Loans receivable: Taxable $ 87,002 $ 87,312 $ 172,107 $ 183,964 Tax-exempt 5,545 5,359 10,884 10,674 Investment securities: Taxable 7,440 6,147 14,135 13,778 Tax-exempt 13,071 10,019 25,456 19,354 Deposits with financial 129 134 243 709 institutionsFederal Home Loan Bank 88 281 266 580 stockTotal Interest Income 113,275 109,252 223,091 229,059 INTEREST EXPENSE Deposits 5,823 12,707 12,023 34,455 Federal funds purchased 2 2 4 113 Securities sold under 75 92 162 444 repurchase agreementsFederal Home Loan Bank 1,452 1,794 2,894 3,568 advancesSubordinated debentures 1,659 1,639 3,316 3,584 and other borrowingsTotal Interest Expense 9,011 16,234 18,399 42,164 NET INTEREST INCOME 104,264 93,018 204,692 186,895 Provision for credit ? 21,895 ? 41,647 losses - loansNET INTEREST INCOMEAFTER PROVISION FOR 104,264 71,123 204,692 145,248 CREDIT LOSSESOTHER INCOME Service charges on 5,596 4,312 10,860 10,282 deposit accountsFiduciary and wealth 7,510 5,601 13,932 11,586 management feesCard payment fees 4,159 6,097 8,526 12,004 Net gains and fees on 8,325 3,674 12,311 7,037 sales of loansDerivative hedge fees 943 1,042 1,260 2,981 Other customer fees 368 333 736 731 Earnings on cashsurrender value of life 1,205 1,326 2,541 2,686 insuranceNet realized gains onsales of available for 1,761 3,068 3,560 7,680 sale securitiesOther income 1,017 1,028 1,249 1,293 Total Other Income 30,884 26,481 54,975 56,280 OTHER EXPENSES Salaries and employee 42,438 35,698 81,249 74,941 benefitsNet occupancy 5,615 5,447 12,106 11,248 Equipment 4,848 4,489 9,878 8,833 Marketing 1,122 2,092 2,246 3,535 Outside data processing 4,698 2,618 8,942 6,817 feesPrinting and office 313 279 596 666 suppliesIntangible asset 1,464 1,511 2,821 3,025 amortizationFDIC assessments 1,461 1,472 2,829 2,995 Other real estate ownedand foreclosure 178 684 912 1,189 expensesProfessional and other 2,976 1,553 5,519 3,811 outside servicesOther expenses 4,182 4,146 8,295 9,100 Total Other Expenses 69,295 59,989 135,393 126,160 INCOME BEFORE INCOME 65,853 37,615 124,274 75,368 TAXIncome tax expense 10,294 4,623 19,246 8,113 NET INCOME AVAILABLE TO $ 55,559 $ 32,992 $ 105,028 $ 67,255 COMMON STOCKHOLDERSPer Share Data: Basic Net IncomeAvailable to Common $ 1.03 $ 0.62 $ 1.95 $ 1.24 StockholdersDiluted Net IncomeAvailable to Common $ 1.03 $ 0.62 $ 1.94 $ 1.24 StockholdersCash Dividends Paid $ 0.29 $ 0.26 $ 0.55 $ 0.52 Average Diluted SharesOutstanding (in 54,184 53,943 54,159 54,430 thousands)

FINANCIAL HIGHLIGHTS(Dollars in Three Months Ended Six Months Endedthousands) June 30, June 30, 2021 2020 2021 2020NET $ 1,307 $ 230 $ 4,928 $ 812 CHARGE-OFFS AVERAGE BALANCES:Total Assets $ 14,758,597 $ 13,655,322 $ 14,503,087 $ 13,114,280 Total Loans 9,282,524 9,180,610 9,259,600 8,853,591 Total Earning 13,558,956 12,187,442 13,292,617 11,739,936 AssetsTotal 12,125,153 10,789,909 11,848,075 10,338,091 DepositsTotalStockholders' 1,846,037 1,795,509 1,843,250 1,805,963 Equity FINANCIAL RATIOS:Return onAverage 1.51 % 0.97 % 1.45 % 1.03 %AssetsReturn onAverage 12.04 7.35 11.40 7.45 Stockholders'EquityReturn onAverageCommon 12.04 7.35 11.40 7.45 Stockholders'EquityAverageEarningAssets to 91.87 89.25 91.65 89.52 AverageAssetsAllowance forCredit Losses- Loans as % 2.19 1.30 2.19 1.30 of TotalLoansNetCharge-offsas % of 0.06 0.01 0.11 0.02 Average Loans(Annualized)AverageStockholders'Equity to 12.51 13.15 12.71 13.77 AverageAssetsTaxEquivalentYield on 3.49 3.72 3.51 4.04 AverageEarningAssetsInterestExpense/Average 0.27 0.53 0.28 0.72 EarningAssetsNet InterestMargin (FTE)on Average 3.22 3.19 3.23 3.32 EarningAssetsEfficiency 48.91 47.95 49.54 50.09 RatioTangibleCommon Book $ 24.15 $ 23.04 $ 24.15 $ 23.04 Value PerShare

NON-PERFORMING ASSETS(Dollars In June 30, March 31, December 31, September 30, June 30,Thousands) 2021 2021 2020 2020 2020Non-Accrual $ 57,556 $ 57,923 $ 61,471 $ 56,739 $ 50,102 LoansRenegotiated 629 655 3,240 2,677 1,086 LoansNon-Performing 58,185 58,578 64,711 59,416 51,188 Loans (NPL)Other RealEstate Owned 601 604 940 6,984 7,409 andRepossessionsNon-Performing 58,786 59,182 65,651 66,400 58,597 Assets (NPA)90+ Days 183 1,093 746 1,330 4,981 DelinquentNPAs & 90 Day $ 58,969 $ 60,275 $ 66,397 $ 67,730 $ 63,578 Delinquent Allowance forCredit Losses $ 199,775 $ 201,082 $ 130,648 $ 126,726 $ 121,119 - LoansQuarterly Net 1,307 3,621 560 6,937 230 Charge-offsNPAs / Actual 0.39 % 0.40 % 0.47 % 0.48 % 0.42 %Assets %NPAs & 90 Day/ Actual 0.40 % 0.41 % 0.47 % 0.49 % 0.46 %Assets %NPAs / ActualLoans and OREO 0.64 % 0.63 % 0.71 % 0.72 % 0.63 %%Allowance forCredit Losses- Loans / 2.19 % 2.16 % 1.41 % 1.37 % 1.30 %Actual Loans(%)NetCharge-offs as% of Average 0.06 % 0.16 % 0.02 % 0.30 % 0.01 %Loans(Annualized)

CONSOLIDATED BALANCE SHEETS(Dollars In June 30, March 31, December 31, September 30, June 30,Thousands) 2021 2021 2020 2020 2020ASSETS Cash and cash $ 167,596 $ 187,901 $ 192,896 $ 164,632 $ 229,759 equivalentsInterest-bearing 438,863 392,806 392,305 273,936 380,021 depositsInvestmentsecurities, net of 4,148,314 3,700,857 3,146,787 2,933,286 2,789,379 allowance forcredit lossesLoans held for sale 18,582 4,430 3,966 3,183 901 Loans 9,121,250 9,318,228 9,243,174 9,243,833 9,298,541 Less: Allowance forcredit losses - (199,775 ) (201,082 ) (130,648 ) (126,726 ) (121,119 )loansNet loans 8,921,475 9,117,146 9,112,526 9,117,107 9,177,422 Premises and 103,822 109,432 111,062 112,959 112,548 equipmentFederal Home Loan 28,736 28,736 28,736 28,736 28,736 Bank stockInterest receivable 54,173 54,662 53,948 52,992 57,063 Goodwill and other 573,786 571,536 572,893 574,369 575,855 intangiblesCash surrendervalue of life 294,462 293,766 292,745 291,543 290,715 insuranceOther real estate 601 604 940 6,942 7,367 ownedTax asset, deferred 36,924 40,163 12,340 21,762 13,126 and receivableOther assets 135,763 127,027 146,066 155,903 156,486 TOTAL ASSETS $ 14,923,097 $ 14,629,066 $ 14,067,210 $ 13,737,350 $ 13,819,378 LIABILITIES Deposits: Noninterest-bearing $ 2,479,853 $ 2,494,891 $ 2,298,138 $ 2,187,607 $ 2,260,351 Interest-bearing 9,723,547 9,456,889 9,063,472 8,718,546 8,705,637 Total Deposits 12,203,400 11,951,780 11,361,610 10,906,153 10,965,988 Borrowings: Federal funds ? ? ? 80,000 ? purchasedSecurities soldunder repurchase 146,904 185,721 177,102 187,732 181,150 agreementsFederal Home Loan 334,243 359,337 389,430 399,522 400,817 Bank advancesSubordinateddebentures and 118,498 118,439 118,380 118,320 285,197 other borrowingsTotal Borrowings 599,645 663,497 684,912 785,574 867,164 Interest payable 2,929 4,020 3,287 5,038 5,587 Other liabilities 245,323 203,913 141,756 206,929 171,544 Total Liabilities 13,051,297 12,823,210 12,191,565 11,903,694 12,010,283 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 6,747 6,744 6,740 6,736 6,724 outstandingAdditional paid-in 1,009,182 1,007,300 1,005,366 1,003,777 1,002,962 capitalRetained earnings 795,666 755,877 788,578 757,550 735,439 Accumulated othercomprehensive 60,080 35,810 74,836 65,468 63,845 incomeTotal Stockholders' 1,871,800 1,805,856 1,875,645 1,833,656 1,809,095 EquityTOTAL LIABILITIESAND STOCKHOLDERS' $ 14,923,097 $ 14,629,066 $ 14,067,210 $ 13,737,350 $ 13,819,378 EQUITY

CONSOLIDATEDSTATEMENTS OF INCOME(Dollars InThousands, June 30 March 31, December September June 30,Except Per Share 31, 30,Amounts) 2021 2021 2020 2020 2020INTEREST INCOME Loans receivable:Taxable $ 87,002 $ 85,105 $ 90,138 $ 84,162 $ 87,312 Tax-exempt 5,545 5,339 5,414 5,395 5,359 Investment securities:Taxable 7,440 6,695 5,263 5,399 6,147 Tax-exempt 13,071 12,385 12,056 10,931 10,019 Deposits withfinancial 129 114 139 90 134 institutionsFederal Home 88 178 214 248 281 Loan Bank stockTotal Interest 113,275 109,816 113,224 106,225 109,252 IncomeINTEREST EXPENSE Deposits 5,823 6,200 7,509 9,776 12,707 Federal funds 2 2 2 5 2 purchasedSecurities soldunder repurchase 75 87 77 83 92 agreementsFederal HomeLoan Bank 1,452 1,442 1,656 1,749 1,794 advancesSubordinateddebentures and 1,659 1,657 1,669 1,691 1,639 other borrowingsTotal Interest 9,011 9,388 10,913 13,304 16,234 ExpenseNET INTEREST 104,264 100,428 102,311 92,921 93,018 INCOMEProvision forcredit losses - ? ? 4,482 12,544 21,895 loansNET INTERESTINCOME AFTER 104,264 100,428 97,829 80,377 71,123 PROVISION FORCREDIT LOSSESOTHER INCOME Service chargeson deposit 5,596 5,264 5,508 5,209 4,312 accountsFiduciary andwealth 7,510 6,422 6,251 5,910 5,601 management feesCard payment 4,159 4,367 3,502 3,996 6,097 feesNet gains andfees on sales of 8,325 3,986 5,393 5,841 3,674 loansDerivative hedge 943 317 2,281 1,715 1,042 feesOther customer 368 368 394 372 333 feesEarnings on cashsurrender value 1,205 1,336 1,283 1,171 1,326 of lifeinsuranceNet realizedgains on sales 1,761 1,799 2,398 1,817 3,068 of available forsale securitiesOther income 1,017 232 473 132 1,028 Total Other 30,884 24,091 27,483 26,163 26,481 IncomeOTHER EXPENSES Salaries andemployee 42,438 38,811 41,809 39,187 35,698 benefitsNet occupancy 5,615 6,491 9,653 5,855 5,447 Equipment 4,848 5,030 5,555 4,956 4,489 Marketing 1,122 1,124 1,763 1,311 2,092 Outside data 4,698 4,244 3,839 3,776 2,618 processing feesPrinting and 313 283 307 331 279 office suppliesIntangible asset 1,464 1,357 1,476 1,486 1,511 amortizationFDIC assessments 1,461 1,368 1,560 1,249 1,472 Other realestate owned and 178 734 (1,576 ) 717 684 foreclosureexpensesProfessional andother outside 2,976 2,543 2,836 2,254 1,553 servicesOther expenses 4,182 4,113 5,314 3,587 4,146 Total Other 69,295 66,098 72,536 64,709 59,989 ExpensesINCOME BEFORE 65,853 58,421 52,776 41,831 37,615 INCOME TAXIncome tax 10,294 8,952 7,641 5,621 4,623 expenseNET INCOMEAVAILABLE TO $ 55,559 $ 49,469 $ 45,135 $ 36,210 $ 32,992 COMMONSTOCKHOLDERS Per Share Data: Basic Net IncomeAvailable to $ 1.03 $ 0.92 $ 0.83 $ 0.67 $ 0.62 CommonStockholdersDiluted NetIncome Available $ 1.03 $ 0.91 $ 0.83 $ 0.67 $ 0.62 to CommonStockholdersCash Dividends $ 0.29 $ 0.26 $ 0.26 $ 0.26 $ 0.26 PaidAverage DilutedShares 54,184 54,134 54,050 53,971 53,943 Outstanding (inthousands)FINANCIAL RATIOS:Return on 1.51 % 1.39 % 1.29 % 1.06 % 0.97 %Average AssetsReturn onAverage 12.04 10.75 9.72 7.91 7.35 Stockholders'EquityReturn onAverage Common 12.04 10.75 9.72 7.91 7.35 Stockholders'EquityAverage EarningAssets to 91.87 91.43 90.66 90.34 89.25 Average AssetsAllowance forCredit Losses - 2.19 2.16 1.41 1.37 1.30 Loans as % ofTotal LoansNet Charge-offsas % of Average 0.06 0.16 0.02 0.30 0.01 Loans(Annualized)AverageStockholders' 12.51 12.92 13.29 13.41 13.15 Equity toAverage AssetsTax EquivalentYield on Average 3.49 3.52 3.72 3.58 3.72 Earning AssetsInterest Expense/Average Earning 0.27 0.29 0.34 0.43 0.53 AssetsNet InterestMargin (FTE) on 3.22 3.23 3.38 3.15 3.19 Average EarningAssetsEfficiency Ratio 48.91 50.23 55.01 51.40 47.95 Tangible CommonBook Value Per $ 24.15 $ 22.98 $ 24.27 $ 23.48 $ 23.04 Share

LOANS (Dollars In June 30, March 31, December 31, September 30, June 30,Thousands) 2021 2021 2020 2020 2020Commercialand $ 2,671,076 $ 2,876,212 $ 2,776,699 $ 2,875,331 $ 2,898,329 industrialloansAgriculturalland,production 235,020 245,631 281,884 301,192 316,815 and otherloans tofarmersReal estate loans:Construction 491,200 541,224 484,723 622,084 640,560 Commercialreal estate, 2,263,497 2,178,832 2,220,949 2,098,589 2,097,767 non-owneroccupiedCommercialreal estate, 953,501 950,038 958,501 931,815 919,254 owneroccupiedResidential 1,127,442 1,239,925 1,234,741 1,146,406 1,145,187 Home equity 489,997 482,229 508,259 527,458 532,314 Individuals'loans forhousehold 130,819 126,387 129,479 125,411 123,611 and otherpersonalexpendituresPublicfinance andother 758,698 677,750 647,939 615,547 624,704 commercialloansLoans 9,121,250 9,318,228 9,243,174 9,243,833 9,298,541 Allowancefor credit (199,775 ) (201,082 ) (130,648 ) (126,726 ) (121,119 )losses -loansNET LOANS $ 8,921,475 $ 9,117,146 $ 9,112,526 $ 9,117,107 $ 9,177,422

DEPOSITS (Dollars In June 30, March 31, December 31, September 30, June 30,Thousands) 2021 2021 2020 2020 2020Demand $ 7,261,603 $ 7,245,850 $ 6,821,152 $ 6,279,554 $ 6,288,360 depositsSavings 4,157,552 3,857,624 3,661,713 3,518,286 3,278,156 depositsCertificatesand othertime 304,394 332,745 346,194 467,610 607,474 deposits of$100,000 ormoreOthercertificates 423,922 449,655 459,168 542,919 669,119 and timedepositsBrokered 55,929 65,906 73,383 97,784 122,879 depositsTOTAL $ 12,203,400 $ 11,951,780 $ 11,361,610 $ 10,906,153 $ 10,965,988 DEPOSITS

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS(Dollars in Thousands) For the Three Months Ended June 30, 2021 June 30, 2020 Interest Average Interest Average Average Balance Income / Rate Average Balance Income / Rate Expense ExpenseAssets: Interest-bearing $ 545,752 $ 129 0.09 % $ 378,489 $ 134 0.14 %depositsFederal Home Loan 28,736 88 1.22 28,736 281 3.91 Bank stockInvestment Securities: ^(1)Taxable 1,732,367 7,440 1.72 1,282,080 6,147 1.92 Tax-Exempt ^(2) 1,969,577 16,546 3.36 1,317,527 12,682 3.85 Total Investment 3,701,944 23,986 2.59 2,599,607 18,829 2.90 SecuritiesLoans held for sale 25,039 237 3.79 12,630 131 4.15 Loans: ^(3) Commercial 6,953,227 70,886 4.08 6,890,010 69,463 4.03 Real Estate 912,662 9,488 4.16 887,257 10,122 4.56 MortgageInstallment 659,515 6,391 3.88 724,165 7,596 4.20 Tax-Exempt ^(2) 732,081 7,019 3.84 666,548 6,784 4.07 Total Loans 9,282,524 94,021 4.05 9,180,610 94,096 4.10 Total Earning 13,558,956 118,224 3.49 % 12,187,442 113,340 3.72 %AssetsNet unrealized gain(loss) on 44,250 56,807 securitiesavailable for saleAllowance for (201,051 ) (106,858 ) credit lossesCash and cash 171,489 303,491 equivalentsPremises and 107,369 113,528 equipmentOther assets 1,077,584 1,100,912 Total Assets $ 14,758,597 $ 13,655,322 Liabilities: Interest-bearing deposits:Interest-bearing $ 4,745,181 $ 3,560 0.30 % $ 3,951,819 $ 4,186 0.42 %depositsMoney market 2,337,143 796 0.14 1,673,104 1,696 0.41 depositsSavingsdeposits 1,740,233 462 0.11 1,521,312 596 0.16 Certificates and 812,370 1,005 0.49 1,498,002 6,229 1.66 other time depositsTotalInterest-bearing 9,634,927 5,823 0.24 8,644,237 12,707 0.59 DepositsBorrowings 644,702 3,188 1.98 909,258 3,527 1.55 TotalInterest-bearing 10,279,629 9,011 0.35 9,553,495 16,234 0.68 LiabilitiesNoninterest-bearing 2,490,226 2,145,672 depositsOther liabilities 142,705 160,646 Total Liabilities 12,912,560 11,859,813 Stockholders' 1,846,037 1,795,509 EquityTotal Liabilitiesand Stockholders' $ 14,758,597 9,011 $ 13,655,322 16,234 EquityNet Interest Income $ 109,213 $ 97,106 (FTE)Net Interest Spread 3.14 % 3.04 %(FTE) ^(4) Net Interest Margin (FTE):Interest Income(FTE) / Average 3.49 % 3.72 %Earning AssetsInterest Expense /Average Earning 0.27 % 0.53 %AssetsNet Interest Margin 3.22 % 3.19 %(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 $4,949 and $4,088 for the three months ended June 30, 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.

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS(Dollars in Thousands) For the Six Months Ended June 30, 2021 June 30, 2020 Interest Average Interest Average Average Balance Income / Rate Average Balance Income / Rate Expense ExpenseAssets: Interest-bearing $ 493,791 $ 243 0.10 % $ 269,174 $ 709 0.53 %depositsFederal Home Loan 28,736 266 1.85 28,736 580 4.04 Bank stockInvestment Securities: ^(1)Taxable 1,613,847 14,135 1.75 1,325,313 13,778 2.08 Tax-Exempt ^(2) 1,896,643 32,223 3.40 1,263,122 24,499 3.88 Total Investment 3,510,490 46,358 2.64 2,588,435 38,277 2.96 SecuritiesLoans held for sale 20,572 393 3.82 14,924 324 4.34 Loans: ^(3) Commercial 6,915,234 140,060 4.05 6,562,673 146,415 4.46 Real Estate 943,830 18,774 3.98 878,956 20,524 4.67 MortgageInstallment 666,870 12,880 3.86 741,889 16,701 4.50 Tax-Exempt ^(2) 713,094 13,777 3.86 655,149 13,511 4.12 Total Loans 9,259,600 185,884 4.01 8,853,591 197,475 4.46 Total Earning 13,292,617 232,751 3.51 % 11,739,936 237,041 4.04 %AssetsNet unrealized gainon securities 49,922 52,732 available for saleAllowance for (202,693 ) (94,009 ) credit lossesCash and cash 168,647 231,624 equivalentsPremises and 109,170 113,670 equipmentOther assets 1,085,424 1,070,327 Total Assets $ 14,503,087 $ 13,114,280 Liabilities: Interest-bearing deposits:Interest-bearing $ 4,681,439 $ 7,269 0.31 % $ 3,770,530 $ 12,461 0.66 %depositsMoney market 2,212,425 1,631 0.15 1,604,474 5,479 0.68 depositsSavingsdeposits 1,700,601 938 0.11 1,473,183 2,424 0.33 Certificates and 835,722 2,185 0.52 1,582,322 14,091 1.78 other time depositsTotalInterest-bearing 9,430,187 12,023 0.25 8,430,509 34,455 0.82 DepositsBorrowings 659,826 6,376 1.93 828,721 7,709 1.86 TotalInterest-bearing 10,090,013 18,399 0.36 9,259,230 42,164 0.91 LiabilitiesNoninterest-bearing 2,417,888 1,907,582 depositsOther liabilities 151,936 141,505 Total Liabilities 12,659,837 11,308,317 Stockholders' 1,843,250 1,805,963 EquityTotal Liabilitiesand Stockholders' $ 14,503,087 18,399 $ 13,114,280 42,164 EquityNet Interest Income $ 214,352 $ 194,877 (FTE)Net Interest Spread 3.15 % 3.13 %(FTE) ^(4) Net Interest Margin (FTE):Interest Income(FTE) / Average 3.51 % 4.04 %Earning AssetsInterest Expense /Average Earning 0.28 % 0.72 %AssetsNet Interest Margin 3.23 % 3.32 %(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 $9,660 and $7,982 for the six months ended June 30, 2021 and2020, respectively.^(3) Non accruingloans have been included in theaverage 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