2nd Quarter 2017
Earnings Highlights
July 27, 2017
Michael C. Rechin
President
Chief Executive Officer
Mark K. Hardwick
Executive Vice President
Chief Financial Officer
Chief Operating Officer
John J. Martin
Executive Vice President
Chief Credit Officer
This presentation 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 forward-looking statements include, but are not limited to, statements relating to
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 economic and business
conditions; the existence or exacerbation of general geopolitical instability and uncertainty; the ability of First Merchants to integrate recent
acquisitions and attract new customers; 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 undertakes no obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this
presentation or press release. In addition, the company’s past results of operations do not necessarily indicate its anticipated future results.
NON-GAAP FINANCIAL MEASURES
These slides contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of the
registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that
have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with
GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is
subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated
and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of
Regulation G, First Merchants Corporation has provided reconciliations within the slides, as necessary, of the non-GAAP financial measure to the
most directly comparable GAAP financial measure.
2
Forward-Looking Statements
3
2nd Quarter 2017 Financial Highlights
Earnings Per Share of $ .57, a 16.3% Increase over 2Q2016
$24.1 Million of Net Income, a 20.6% Increase over 2Q2016
Total Assets of $7.8 Billion Grew by 13.0% over 2Q2016
Organic Loan Growth of $114 Million, an 8.6% Annualized Growth Rate
Organic Deposit Growth of $129 Million, a 9.2% Annualized Growth Rate
4
2nd Quarter 2017 Performance Highlights
1.28% Return on Average Assets
9.82% Return on Average Equity
$16.97 Tangible Book Value Per Share, a 9.3% Increase over 2Q2016
53.61% Efficiency Ratio
Completed Acquisition of The Arlington Bank on May 19, 2017
Completed Acquisition of Independent Alliance Banks, Inc. on July 14, 2017
Mark K. Hardwick
Executive Vice President
Chief Operating Officer and
Chief Financial Officer
Total Assets
2015 2016 Q1-’17 Q2-’17
1. Investments $1,277 $1,305 $1,327 $1,343
2. Loans Held for Sale 10 3 1 4
3. Loans 4,694 5,140 5,275 5,613
4. Allowance (62) (66) (68) (70)
5. CDI & Goodwill 260 259 258 310
6. BOLI 201 202 203 200
7. Other 381 369 330 405
8. Total Assets $6,761 $7,212 $7,326 $7,805
Annualized Asset Growth 6.7% 16.4%*
6 *Annualized from 12.31.2016
Commercial &
Industrial
23.0%
Commercial
Real Estate
Owner-Occupied
10.3%
Commercial
Real Estate
Non-Owner
Occupied
25.7%
Construction Land
& Land
Development
7.9%
Agricultural
Land
2.6%
Agricultural
Production
1.3%
Public
Finance/Other
Commercial
4.9%
Residential
Mortgage
15.2%
Home
Equity
7.8%
Other
Consumer
1.3%
QTD Yield = 4.65%
YTD Yield = 4.64%
Total Loans = $5.6 Billion
Loan and Yield Detail
(as of 6/30/2017)
7
Mortgage-Backed
Securities
30%
Collateralized
Mortgage
Obligations
20%
U. S. Agencies
2%
Corporate
Obligations
2%
Corporate
Equities
1%
Tax-Exempt
Municipals
45%
Investment Portfolio
(as of 6/30/2017)
$1.3 Billion Portfolio
Modified duration of 4.7 years
Tax equivalent yield of 3.85%
Net unrealized gain of $35.2 Million
8
9
Total Liabilities and Capital
($ in Millions)
2015 2016 Q1-’17 Q2-’17
1. Customer Non-Maturity Deposits $4,096 $4,428 $4,426 $4,724
2. Customer Time Deposits 880 747 789 875
3. Brokered Deposits 314 381 420 418
4. Borrowings 446 572 587 581
5. Other Liabilities 51 60 53 49
6. Hybrid Capital 123 122 122 123
7. Common Equity 851 902 929 1,035
8. Total Liabilities and Capital $6,761 $7,212 $7,326 $7,805
Deposit Detail
(as of 6/30/2017) QTD Cost = .45%
YTD Cost = .42%
Total = $6.0 Billion
10
Demand Deposits
50%
Savings Deposits
28%
Certificates &
Time Deposits of
>$100,000
6%
Certificates &
Time Deposits of
<$100,000
9%
Brokered
Deposits
7%
11.22%
11.31%
11.49% 11.42% 11.39%
11.05% 11.10% 11.16% 11.11%
8.95%
9.17% 9.08% 9.26%
9.43% 9.48%
9.24%
9.50%
9.68%
14.92% 14.85% 14.94% 14.79% 14.67%
14.18% 14.21% 14.24%
14.01%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
12.00%
13.00%
14.00%
15.00%
16.00%
17.00%
18.00%
2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Total Risk-Based Capital Ratio (Target = 13.50%)
Common Equity Tier 1 Capital Ratio (Target = 10.00%)
Tangible Common Equity Ratio (TCE) (Target = 8.50%) 11
Capital Ratios
(Target)
(Target)
(Target)
12
Net Interest Margin
Q2 - '15 Q3 - '15 Q4 - '15 Q1 - '16 Q2 - '16 Q3 - '16 Q4 - '16 Q1 - '17 Q2 - '17
Net Interest Income - FTE
($millions) $ 51.7 $ 53.3 $ 53.2 $ 57.6 $ 59.2 $ 61.1 $ 62.1 $ 64.9 $ 67.2
Fair Value Accretion $ 2.2 $ 2.0 $ 1.9 $ 2.5 $ 3.2 $ 3.8 $ 2.9 $ 4.3 $ 2.3
Tax Equivalent Yield on Earning
Assets 4.26% 4.30% 4.20% 4.28% 4.30% 4.37% 4.32% 4.42% 4.44%
Cost of Supporting Liabilities 0.45% 0.45% 0.45% 0.45% 0.44% 0.43% 0.42% 0.44% 0.49%
Net Interest Margin 3.81% 3.85% 3.75% 3.83% 3.86% 3.94% 3.90% 3.98% 3.95%
3.81%
3.85%
3.75%
3.83% 3.86%
3.94% 3.90%
3.98% 3.95%
3.65%
3.71%
3.62% 3.66%
3.65%
3.70%
3.72% 3.72%
3.81%
2.80%
3.00%
3.20%
3.40%
3.60%
3.80%
4.00%
4.20%
$40
$44
$48
$52
$56
$60
$64
$68
Q2 - '15 Q3 - '15 Q4 - '15 Q1 - '16 Q2 - '16 Q3 - '16 Q4 - '16 Q1 - '17 Q2 - '17
Net Interest Income - FTE ($millions) Net Interest Margin Net Interest Margin - Adjusted for Fair Value Accretion
13
Non-Interest Income
–
–
–
–
–
–
–
–
–
2015 2016 Q1-’17 Q2-’17
1. Service Charges on Deposit Accounts $16.2 $17.8 $ 4.2 $ 4.4
2. Wealth Management Fees 11.3 12.6 3.4 3.4
3. Insurance Commission Income 4.1
4. Card Payment Fees 13.4 15.0 3.7 4.2
5. Cash Surrender Value of Life Ins 2.9 4.3 0.9 3.0
6. Gains on Sales Mortgage Loans 6.5 7.1 1.3 1.6
7. Securities Gains/Losses 2.7 3.4 0.6 0.6
8. Gain on Sale of Insurance Subsidiary 8.3
9. Gain on Cancellation of Trust Preferred Debt 1.3
10. Other 3.1 5.0 0.8 1.2
11. Total $69.8 $65.2 $14.9 $18.4
($ in Millions)
–
–
–
14
Non-Interest Expense
2015 2016 Q1-’17 Q2-’17
1. Salary & Benefits $101.9 $102.6 $ 25.7 $ 27.1
2. Premises & Equipment 25.5 29.5 7.0 6.9
3. Core Deposit Intangible 2.8 3.9 0.9 1.0
4. Professional & Other Outside Services 9.9 6.5 1.7 3.3
5. OREO/Credit-Related Expense 3.9 2.9 0.5 0.7
6. FDIC Expense 3.7 3.0 0.6 0.6
7. Outside Data Processing 7.1 9.2 2.6 3.1
8. Marketing 3.5 3.0 0.6 0.8
9. Other 16.5 16.7 3.5 3.8
10. Non-Interest Expense $174.8 $177.3 $43.1 $47.3
($ in Millions)
15
2015 2016 Q1-’17 Q2-’17
1. Net Interest Income $196.4 $226.5 $ 61.0 $ 63.1
2. Provision for Loan Losses (0.4) (5.7) (2.4) (2.9)
3. Net Interest Income after Provision 196.0 220.8 58.6 60.2
4. Non-Interest Income 69.8 65.2 14.9 18.4
5. Non-Interest Expense (174.8) (177.3) (43.1) (47.3)
6. Income before Income Taxes 91.0 108.7 30.4 31.3
7. Income Tax Expense (25.6) (27.6) (7.2) (7.2)
8. Net Income Avail. for Distribution $ 65.4 $ 81.1 $ 23.2 $24.1
9. EPS $ 1.72 $ 1.98 $ 0.56 $ 0.57
10. Efficiency Ratio 61.19% 56.51% 52.61% 53.61%
Earnings
($ in Millions)
2016 Q1 Q2 Q3 Q4 Total
1. Earnings Per Share $ .43 $ .49 $ .51 $ .55 $ 1.98
2. Dividends $ .11 $ .14 $ .14 $ .15 $ .54
3. Tangible Book Value $15.02 $15.53 $15.86 $15.85
2017 Q1 Q2 Q3 Q4 Total
1. Earnings Per Share $ .56 $ .57 – – $ 1.13
2. Dividends $ .15 .18 – – $ .33
3. Tangible Book Value $16.49 $16.97 – –
16
Per Share Results
$9.21 $9.64
$10.95
$12.17
$13.65
$14.68
$15.85
$16.97
Dividends and Tangible Book Value
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
.11
.01
.03
.05
.14
.15 1.79%
Forward
Dividend
Yield
29.2%
YTD Dividend
Payout Ratio
=
Quarterly Dividends Tangible Book Value
.08
17
.18
John J. Martin
Executive Vice President
and Chief Credit Officer
19
Loan Portfolio Trends
($ in Millions) FMB
2015 2016 Q1-'17 Q2-'17
1
Arlington Q2-'17 $
1
$ %
1. Commercial & Industrial 1,057$ 1,195$ 1,259$ 1,287$ 3$ 1,290$ 28$ 31$ 2.5%
2. Construction, Land and
Land Development 367 419 337 418 24 442 81 105 31.2%
3. CRE Non-Owner Occupied 1,090 1,272 1,423 1,385 59 1,444 (38) 21 1.5%
4. CRE Owner Occupied 554 531 549 552 25 577 3 28 5.1%
5. Agricultural Production 98 80 77 76 - 76 (1) (1) (1.3%)
6. Agricultural Land 158 149 146 147 - 147 1 1 0.7%
7. Residential Mortgage 786 739 738 749 99 848 11 110 14.9%
8. Home Equity 349 419 424 422 14 436 (2) 12 2.8%
9. Public Finance/Other
Commercial 160 258 244 274 - 274 30 30 12.3%
10. Other Consumer 75 78 78 79 - 79 1 1 1.3%
11. Total Loans 4,694$ 5,140$ 5,275$ 5,389$ 224$ 5,613$ 114$ 338$ 6.4%
12. Construction Concentration
2
50% 52% 41% 51%
13. Investment RE Concentration
2
197% 211% 215% 216%
1 Excludes acquired Arlington loans
2As a % of Risk Based Capital
Change
Linked Quarter
1 Excludes acquired Arlington Bank loans
2 As a % of Risk Based Capital
20
Asset Quality Summary
($ in Millions) FMB
2015 2016 Q1-'17 Q2-'17
1
Arlington Q2-'17 $
1
$ % 186.1
1. Non-Accrual Loans 31.4$ 30.0$ 27.9$ 26.1$ 1.3$ 27.4$ (1.8)$ (0.5)$ (1.8%)
2. Other Real Estate 17.3 9.0 8.3 11.9 - 11.9 3.6 3.6 43.4%
3. Renegotiated Loans 1.9 4.7 0.9 0.4 - 0.4 (0.5) (0.5) (55.6%)
4. 90+ Days Delinquent Loans 0.9 0.1 0.1 0.2 0.4 0.6 0.1 0.5 500.0%
5. Total NPAs & 90+ Days Delinquent 51.5$ 43.8$ 37.2$ 38.6$ 1.7$ 40.3$ 1.4$ 3.1$ 8.3%
6. Total NPAs & 90+ Days/Loans & ORE 1.1% 0.9% 0.7% 0.7% 0.8% 0.7%
7. Classified Assets 171.8$ 174.1$ 173.9$ 143.3$ 5.5$ 148.8$ (30.6)$ (25.1)$ (14.4%)
8. Criticized Assets (includes
Classified) 275.0$ 292.6$ 304.3$ 244.0$ 5.5$ 249.5$ (60.3)$ (54.8)$ (18.0%)
1 Excludes acquired Arlington loans
Change
Linked Quarter
1 Excludes acquired Arlington Bank loans
21
Non-Performing Asset Reconciliation
($ in Millions) FMB
Q3-'16 Q4-'16 Q1-'17 Q2-'17
1
Arlington Q2-'17186.1
1. Beginning Balance NPAs & 90+ Days Delinquent 51.5$ 49.9$ 43.8$ 37.2$ 37.2$
Non-Accrual
2. Add: New Non-Accruals 6.0 4.3 2.5 8.7 1.3$ 10.0
3. Less: To Accrual/Payoff/Renegotiated (3.2) (6.5) (2.6) (2.3) - (2.3)
4. Less: To OREO (0.4) (0.9) (0.5) (6.8) - (6.8)
5. Less: Charge-offs (1.9) (1.0) (1.5) (1.4) - (1.4)
6. Increase / (Decrease): Non-Accrual Loans 0.5 (4.1) (2.1) (1.8) 1.3 (0.5)
Other Real Estate Owned (ORE)
7. Add: New ORE Properties 0.4 0.9 0.5 6.8 - 6.8
8. Less: ORE Sold (3.1) (1.5) (1.0) (2.8) - (2.8)
9. Less: ORE Losses (write-downs) (0.3) (0.6) (0.2) (0.4) - (0.4)
10. Increase / (Decrease): ORE (3.0) (1.2) (0.7) 3.6 0.0 3.6
11. Increase / (Decrease): 90+ Days Delinquent 1.2 (1.5) 0.0 0.1 0.4 0.5
12. Increase / (Decrease): Renegotiated Loans (0.3) 0.7 (3.8) (0.5) 0.0 (0.5)
13. Total NPAs & 90+ Days Delinquent Change (1.6) (6.1) (6.6) 1.4 1.7 3.1
14. Ending Balance NPAs & 90+ Days Delinquent 49.9$ 43.8$ 37.2$ 38.6$ 1.7$ 40.3$
1 Excludes acquired Arlington loans
1 Excludes acquired Arlington Bank loans
22
ALLL and Fair Value Summary
($ in Millions) Q3-'16 Q4-'16 Q1-'17 Q2-'17
1. Beginning Allowance for Loan Losses (ALLL) 62.2$ 63.5$ 66.0$ 68.2$
2. Net Charge-offs (Recoveries) 0.6 (0.1) 0.2 0.6
3. Provision Expense 1.9 2.4 2.4 2.9
4. Ending Allowance for Loan Losses (ALLL) 63.5 66.0 68.2 70.5
5. Fair Value Adjustment (FVA) 37.9 34.9 30.6 29.7
6. Total ALLL plus FVA 101.4 100.9 98.8 100.2
7. Purchased Loans plus FVA 771.6 700.4 639.3 792.6
8. Specific Reserves 1.6 0.9 1.2 1.2
9. ALLL/Non-Accrual Loans 186.1% 220.1% 244.4% 257.7%
10. ALLL/Non-Purchased Loans 1.50% 1.47% 1.46% 1.45%
11. ALLL/Loans 1.28% 1.28% 1.29% 1.25%
12. ALLL & FVA/Total Loan Balances plus FVA1 2.02% 1.95% 1.86% 1.77%
1 Management uses this Non-GAAP measure to demonstrate coverage and credit risk
23
Asset Quality & Portfolio Summary
Strong organic quarterly loan growth of $114 million led by Construction,
C&I and Public Finance. With Arlington Bank, loans grew $338 million.
Construction and CRE portfolios are 51% and 216% of risk-based capital,
respectively; well beneath regulatory guidelines.
Total Criticized loans decreased $60.3 million this quarter with Classified
dropping by $31 million.
Provision expense of $2.9 million for growth in loan portfolio.
ALLL to Loans of 1.25% and to Non-Purchased Loans of 1.45%.
Michael C. Rechin
President and Chief
Executive Officer
25
FMC Strategy and Tactics Overview
Looking Forward . . .
Drive to gain the synergies and market expansion the Arlington Bank and Independent
Alliance Bank acquisitions offer.
Win in all our Markets in all Businesses; Lending, Deposit Gathering, Payments, and Private
Wealth Management; be the service-driven alternative to super-regional bank competitors
Continue Implementation of Workflow Technologies and Automation Agents for Back-Office
Efficiency and Operating Leverage
Expand Specialty Finance Business in Asset Based Lending, Sponsor Finance, and Public
Finance
Persistently Focus on Banking Center Optimization in Alignment with Digital
Channels Migration
Prepare to Successfully Cross the $10 Billion Asset Level
“Responsive, Knowledgeable, High-Performing”
26
Contact Information
First Merchants Corporation common stock is
traded on the NASDAQ Global Select Market
under the symbol FRME.
Additional information can be found at
www.FIRSTMERCHANTS.COM
Investor inquiries:
David L. Ortega
Investor Relations
Telephone: 765.378.8937
dortega@firstmerchants.com
Appendix
28
Appendix – Non-GAAP Reconciliation
CAPITAL RATIOS (dollars in thousands):
2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Total Risk-Based Capital Ratio
Total Stockholders' Equity (GAAP) 749,955 766,984 850,509 867,263 887,550 900,865 901,657 929,470 1,035,116
Adjust for Accumulated Other Comprehensive (Income) Loss a 6,490 3,614 1,362 (2,066) (7,035) (3,924) 13,581 3,722 (1,384)
Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125)
Add: Qualifying Capital Securities 56,827 51,827 55,776 55,236 55,296 55,355 55,415 55,474 55,534
Less: Tier 1 Capital Deductions (2,371) (3,418) (2,516) (1,999) (1,828) (1,440) (376) (80) (166)
Less: Disallowed Goodwill and Intangible Assets (208,980) (208,749) (247,006) (250,367) (249,932) (249,541) (249,104) (250,493) (300,307)
Less: Disallowed Deferred Tax Assets (1,581) (1,144) (1,677) (2,998) (2,743) (2,161) (564) (320) (665)
Total Tier 1 Capital (Regulatory) 600,215$ 608,989$ 656,323$ 664,944$ 681,183$ 699,029$ 720,484$ 737,648$ 788,003$
Qualifying Subordinated Debentures 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000
Allowance for Loan Losses includible in Tier 2 Capital 60,865 62,012 62,453 62,086 62,186 63,456 66,037 68,225 70,471
Total Risk-Based Capital (Regulatory) 726,080$ 736,001$ 783,776$ 792,030$ 808,369$ 827,485$ 851,521$ 870,873$ 923,474$
Net Risk-Weighted Assets (Regulatory) 4,865,157$ 4,956,737$ 5,247,617$ 5,355,827$ 5,511,557$ 5,836,806$ 5,993,381$ 6,114,112$ 6,592,710$
Total Risk-Based Capital Ratio (Regulatory) 14.92% 14.85% 14.94% 14.79% 14.67% 14.18% 14.21% 14.24% 14.01%
Common Equity Tier 1 Capital Ratio
Total Tier 1 Capital (Regulatory) 600,215$ 608,989$ 656,323$ 664,944$ 681,183$ 699,029$ 720,484$ 737,648$ 788,003$
Less: Qualified Capital Securities (56,827) (51,827) (55,776) (55,236) (55,296) (55,355) (55,415) (55,474) (55,534)
Add: Additional Tier 1 Capital Deductions 2,371 3,418 2,516 1,999 1,828 1,440 376 80 166
Less: Preferred Stock
Common Equity Tier 1 Capital (Regulatory) 545,759$ 560,580$ 603,063$ 611,707$ 627,715$ 645,114$ 665,445$ 682,254$ 732,635$
Net Risk-Weighted Assets (Regulatory) 4,865,157$ 4,956,737$ 5,247,617$ 5,355,827$ 5,511,557$ 5,836,806$ 5,993,381$ 6,114,112$ 6,592,710$
Common Equity Tier 1 Capital Ratio (Regulatory) 11.22% 11.31% 11.49% 11.42% 11.39% 11.05% 11.10% 11.16% 11.11%
a Includes net unrealized gains or losses on securities available for sale, net gains or losses on cash flow hedges, and amounts resulting from the application of the applicable accounting
guidance for defined benefit and other postretirement plans.
29
Appendix – Non-GAAP Reconciliation
TANGIBLE COMMON EQUITY RATIO (dollars in thousands):
2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Total Stockholders' Equity (GAAP) 749,955$ 766,984$ 850,509$ 867,263$ 887,550$ 900,865$ 901,657$ 929,470$ 1,035,116$
Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125)
Less: Intangible Assets (220,196) (219,503) (259,764) (261,799) (260,822) (259,844) (258,866) (257,963) (309,686)
Tangible Common Equity (non-GAAP) 529,634$ 547,356$ 590,620$ 605,339$ 626,603$ 640,896$ 642,666$ 671,382$ 725,305$
Total Assets (GAAP) 6,140,308$ 6,189,797$ 6,761,003$ 6,798,539$ 6,906,418$ 7,022,352$ 7,211,611$ 7,326,193$ 7,805,029$
Less: Intangibles Assets (220,196) (219,503) (259,764) (261,799) (260,822) (259,844) (258,866) (257,963) (309,686)
Tangible Assets (non-GAAP) 5,920,112$ 5,970,294$ 6,501,239$ 6,536,740$ 6,645,596$ 6,762,508$ 6,952,745$ 7,068,230$ 7,495,343$
Tangible Common Equity Ratio (non-GAAP) 8.95% 9.17% 9.08% 9.26% 9.43% 9.48% 9.24% 9.50% 9.68%
ANGIBLE COMMON EQUITY PER SHARE (dollars in thousands):
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Total Stockholders' Equity (GAAP) 454,408$ 514,467$ 552,236$ 634,923$ 726,827$ 850,509$ 867,263$ 887,550$ 900,865$ 901,657$ 929,470$ 1,035,116$
Less: Preferred Stock (67,880) (90,783) (90,908) (125) (125) (125) (125) (125) (125) (125) (125) (125)
Less: Intangible Assets (154,019) (150,471) (149,529) (202,767) (218,755) (259,764) (261,799) (260,822) (259,844) (258,866) (257,963) (309,686)
Tax Benefit 2,907 2,224 2,249 4,973 6,085 6,278 6,753 6,453 6,204 5,930 5,659 6,941
Tangible Common Equity, Net of Tax (non-GAAP) 235,416$ 275,437$ 314,048$ 437,004$ 514,032$ 596,898$ 612,092$ 633,056$ 647,100$ 648,596$ 677,041$ 732,246$
Shares Outstanding 25,574,251 28,559,707 28,692,616 35,921,761 37,669,948 40,664,258 40,749,340 40,772,896 40,799,025 40,912,697 41,047,543 43,153,509
Tangible Common Equity per Share (non-GAAP) 9.21$ 9.64$ 10.95$ 12.17$ 13.65$ 14.68$ 15.02$ 15.53$ 15.86$ 15.85$ 16.49$ 16.97$
30
Appendix – Non-GAAP Reconciliation
EFFICIENCY RATIO (dollars in thousands):
2015 2016 1Q17 2Q17
Non Interest Expense (GAAP) 174,806$ 177,359$ 43,099$ 47,316$
Less: Core Deposit Intangible Amortization (2,835) (3,910) (903) (991)
Less: OREO and Foreclosure Expenses (3,956) (2,877) (531) (731)
Adjusted Non Interest Expense (non-GAAP) 168,015 170,572 41,665 45,594
Net Interest Income (GAAP) 196,404 226,473 60,999 63,100
Plus: Fully Taxable Equivalent Adjustment 10,975 13,541 3,950 4,083
Net Interest Income on a Fully Taxable Equivalent Basis (non-GAAP) 207,379 240,014 64,949 67,183
Non Interest Income (GAAP) 69,868 65,203 14,846 18,434
Less: Investment Securities Gains (Losses) (2,670) (3,389) (598) (567)
Adjusted Non Interest Income (non-GAAP) 67,198 61,814 14,248 17,867
Adjusted Revenue (non-GAAP) 274,577 301,828 79,197 85,050
Efficiency Ratio (non-GAAP) 61.19% 56.51% 52.61% 53.61%
FORWARD DIVIDEND YIELD
2Q17
Most recent quarter's divid nd per share 0.18$
Most recent quarter's dividend per share - Annualized 0.72$
Stock Price at 6/30/17 40.14$
Forward Dividend Yield 1.79%
DIVIDEND PAYOUT RATIO
2017 YTD
Dividends per share 0.33$
Earnings Per Share 1.13$
Dividend Payout Ratio - YTD 29.2%
31
Appendix – Non-GAAP Reconciliation
CONSTRUCTION AND INVESTMENT REAL ESTATE CONCENTRATIONS (dollars in thousands):
2015 2016 1Q17 2Q17
Total Risk-Based Capital (Subsidiary Bank Only)
Total Stockholders' Equity (GAAP) 927,774$ 973,641$ 993,130$ 1,099,762$
Adjust for Accumulated Other Comprehensive (Income) Loss 1 (579) 9,701 8,226 3,830
Less: Preferred Stock (125) (125) (125) (125)
Less: Tier 1 Capital Deductions (1,903) - - -
Less: Disallowed Goodwill and Intangible Assets (246,558) (248,656) (250,047) (299,859)
Less: Disallowed Deferred Tax Assets (1,269) - - -
Total Tier 1 Capital (Regulatory) 677,340 734,561 751,184 803,608
Allowance for Loan Losses includible in Tier 2 Capital 62,453 66,037 68,225 70,471
Total Risk-Based Capital (Regulatory) 739,793$ 800,598$ 819,409$ 874,079$
Construction, Land and Land Development Loans 366,704$ 418,703$ 336,931$ 442,389$
Concentration as a % of the Bank's Risk-Based Capital 50% 52% 41% 51%
Construction, Land and Land Development Loans 366,704$ 418,703$ 336,931$ 442,389$
Investment Real Estate Loans 1,090,573 1,272,415 1,423,792 1,443,576
Total Construction and Investment RE Loans 1,457,277$ 1,691,118$ 1,760,723$ 1,885,965$
Concentration as a % of the Bank's Risk-Based Capital 197% 211% 215% 216%
1 Includes net unrealized gains or losses on securities available for sale, net gains or losses on cash flow hedges, and amounts resulting
from the application of the applicable accounting guidance for defined benefit and other postretirement plans.
ALLOWANCE AS A PERCENTAGE OF NON-PURCHASED LOANS (dollars in thousands):
3Q16 4Q16 1Q17 2Q17
Loans Held for Sale (GAAP) 1,482$ 2,929$ 1,262$ 4,036$
Loans (GAAP) 4,973,844 5,139,645 5,274,909 5,613,144
Tot l Loans 4,975,326 5,142,574 5,276,171 5,617,180
Less: Purchased Loans (733,715) (665,417) (608,724) (762,893)
Non-Purchased Loans (non-GAAP) 4,241,611$ 4,477,157$ 4,667,447$ 4,854,287$
Allowance for Loan Losses (GAAP) 63,456$ 66,037$ 68,225$ 70,471$
Fair Value Adjustment (FVA) (GAAP) 37,898 34,936 30,623 29,664
Allowance plus FVA (non-GAAP) 101,354$ 100,973$ 98,848$ 100,135$
Total Loans 4,975,326$ 5,142,574$ 5,276,171$ 5,617,180$
Fair Value Adjustment (FVA) (GAAP) 37,898 34,936 30,623 29,664
Total Loans plus FVA (non-GAAP) 5,013,224$ 5,177,510$ 5,306,794$ 5,646,844$
Allowance as a Percentage of Non-Purchased Loans (non-GAAP) 1.50% 1.47% 1.46% 1.45%
Allowance plus FVA as a Percentage of Total Loans plus FVA (non-GAAP) 2.02% 1.95% 1.86% 1.77%