FRME - Earnings call transcript Q1 2018 | First Merchants Corporation

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Operator

Good day and welcome to the First Merchants Corporation First Quarter 2018 Earnings Call and Webcast. [Operator Instructions] Please note, we will be using user-controlled slides for our webcast today. Slides may be viewed by following the URL instructions noted in the First Merchants News Release dated Thursday, April 26, 2018 or by visiting the First Merchants Corporation shareholder relations website and clicking on the webcast URL hyperlink. The Corporation may make forward-looking statements about its relative business outlook. These forward-looking statements and all other statements made during this meeting that do not concern historical facts are subject to risk and uncertainties that may materially affect actual results. income but services limited future industry, the sheet include, regarding any growth statements balance financial the the or forward-looking are to, not indications of Specific statement. economy and releases, Please refer that cause forward-looking results actual XX-Qs any XX-Ks differ from concerning could materially Form to statements. to factors and press our note that being Please call also recorded. is today's I would to over Mr. now like conference to turn the C. Michael CEO. and President Rechin, ahead. go Please

Michael Rechin

earnings XXXX. conference quarter Thank call webcast to you, Austin. first XX, And for ending our March welcome the and

Joining were my Mark also release, Chief Officer; Officer. evening XXXX at in are of material PM, me John We and that begin First shared slide back comments contained to that release Austin X directions press earnings from that Operating webcast speaks the today and and Chief our Hardwick, Page as The Quarter our our Martin, yesterday titled release. Credit X, our approximately on a presentation Highlights. a at released point the to

terms through deposit assets, in all of over first metrics equity, nearly and and efficiency So quarter XX.X% today, per a we’re talk of XX.XX% growth Couple of basis, assets where over over loan share high XX.X% $XX.X of a return We quarter XX.XX% quarter happy $X.X earnings reported Total ratio. during XXXX first performance was the the of XX.X% quarter strong increase grew XXXX. return income annualized average X% were the X.XX% organic to quarter on the it million our period about of first $X.XX on on a XXXX. net join our same an of of of each. average increase you billion

tax the release off Merchants and that a benefit of a sheet acquisitions coupled reform going balance good to same advantage the performance of Midwestern XXXX a year cover couple would second results. talks that the with the to economy about of First strong right part, the on beginning. attribute is I with review a that execution to So now are of benefiting items Income we're taking statement thorough growing Mark more as

Mark Hardwick

My XX% by first Slide XXXX. where the on X quarter begin or increased $X,XXX,XXX,XXX line assets comments Mike. seven since Thanks of out will on total

the balance comments growth since two, year-end since total already end mentioned and focus annualized and line bar X.X% However, this on total can loans will X.X% on majority Mike which bottom. my the at as see million in of sheet growth you highlighted the slide year increase. $XXX XXXX the on gray organic totaled has

quarters a year-over-year. The loan M&A year quarter presentation average XXX. our XX the the for an all footnotes declined, identical of page Our XX% yield bank it billion be growth so decline highlighted that is single which by rates normalized and favorably portfolio composition the digit valuation basis commercial quarter and X, rates our strong loan tax XXXX high to have and but and Slide X.XX% Tax performing adjusted activity The between billion On continues yield experienced yield increase loan in are below. and the tax in produce really XXX of X.XX%. on and of yield. the four reflective fourth for to reform quarter this had all we the is of as the the the When $X.X compared to accretion and are between be asset XXXX. difference yield both XXXXs totaled X.XX% the and high of continues the to compares our portfolio portfolio this the basis on organic last of X.XX% impacted in to it an loan interest quarter bridges last totaled portfolio XXXX reform On compared portfolio value deposit to point of continues first quarter and first $X.X Slide fair loan bond yields. X sensitive XXX information risen in to

page. X, total to growth the XX growth detailed customer of X.X% deposits on annualized deposits Now customer annualized. non-maturity footnotes remaining Non-maturity line in of two all represents by at one is on or Again our year M&A totaled XX% represent the Slide over increased Customer million in line XXXX on on XX% deposit of $XXX timing and total from million bottom XXXX XX%. the deposits.

our Slide of I As X on company. previously our deposits a of is mentioned, strength mix the

basis and total XX, March or XX increased First cost XX totaled quarter XXXX points. March XX and Fed XXXX has the funds times basis three of points between deposit of XXXX rate

the margin above the of XX are tangible one internal into in of points in yield quarter in calculation increased our definition basis cost tax the quarter reflects in margin points of to you'll first into - all our in normalization believe Slide which bottom-line and tax fact rate well. is on when the same expense noninterest interest fair am and XX and the basis we benefits provide and XX negatively impacted income interest optimal bottom session XX by risk-based deck are regulatory first by basis exempt basis total Slide which assets ratio We post basis net Corporations better and when are over on activity to capital on funds total has future. during increase to loan the noninterest When has XXXX. Our the quarter the how XXXX our reform it will do really net negatively run XXXX. majority happy items XXXX. of company compared efficiency is net the rates banks now point ratio impact our equity flexibility a XX reform at in quarter net turn much than get XXXX and five basis the value Total M&A yields to a bond yields on interest of as Tax Slide the The timeframe. earning quarter. X.XX% our and of our XX, a for decline XX increases margin X.XX% XXXX declined Federal fourth impact continue remained our from line. all during of primarily The our strength negatively flat the accretion in roughly benefit point normalized, XX On by Q&A well-capitalized margins fourth discuss our of the point one-third. data interest to larger points calculations the both our being integration real later see targets. fund and for on reflects year ratios given capital regulatory that as of X.XX% I overall XX had deposit a increase common Slide

our levels plan and by and increases expense our were $XXX,XXX above during Our the the attributable nonrecurring really quarter. guidance are approximately several items to

the strong. of income $XX.X seven, X.X to per efficiency of per from and place ratio. M&A XXXX. period where million quarter pretty the of see eight share results the talk in line first ago quarter culminate to go really rate quarter XXXX are tax line tax Despite only grew we our line about share. the XX to XXXX. let's rates can for just the we in And XX% which XX% first during $X.XX by XX% increased think line And Now first XX% a had Slide from all percentage over in per $XX.X you can net first On the million on from tax $X.XX into year effective to the roughly negative on impact, that nine, the same margins share declined bottom reform in point earnings quarter

On dividends and and scheduled shareholders be is two share X.X% with XX.XX our are on Slide our also XX. results in Thanks this you’ll XXXX growth XX that than completing now we during you we paying very to post pleased like while you EPS any new and our rate the quality of that materially loan annual XX expect Tax reflection were XXXX stronger quarter Martin and Merchants acquisitions in portfolio trends. line of typically basis XXXX. earnings M&A absent growth. XX% of XX, for continue run our this of see will which discuss clean the We John go results annual First Slide first On pleased at and year related asset of and a compound Reform roughly power occurred annual with dividend quarterly meaningful our is modifications notice XXXX May for on per tangible what meeting value post forward and your attention book our can should feel composition rate a

John Martin

good be review thanks value reconciliation trends then the construction the coverage portfolio, right, color summary and a Slide end fair updating and All and provisioning, XX, on Mark Beginning the asset with of and I'll allowance and loan portfolio. on quality, discuss afternoon.

loans So the up portfolios. both year-over-year or IAB core which Arlington loans on were billion line Comparable grew and X.X%. XX total million linked XX, Slide in $XXX quarter includes on $X.X Bank

activity by Excluding is commercial estate million being and real $XXX commercial industrial this, loans Growth driven and grew year-over-year robust lending. or by XX%. organically

grew on of industrial occupied million. grew and and Moving construction million by working slide $XX line up $XXX the this and loans quarterly top on to CRE one down loans non-owner three by line

non-owner construction funding real As or to calls, portfolios the prior portfolio project occupied market by permanent the are dynamics the the either estate phase completion. bank's of loan during at I've mentioned construction driven while moving on the into

as remain and projects lines briefly for regulatory capital. from the for construction commitments of slides to balances construction to XXX% to During out we and below we XX, XX with portfolio. in the saw occupied investment move estate the on the we the finishing estate continue real real guidelines construction reduction loans quarter construction moderate XXX% concentration Then non-owner

increased two asset line one loans quarter This asset loans the million. to quarter. for point this delinquent quality million, slide of $X.X in increased to $X.X it ORE a from Slide lines and line three remains to loans down in XX, XX.X%. out XX.X% line five XX.X% delinquent assets four on fourth respectively. and percentage the increase on million XX on nonaccrual line in XX points On in assets. XXX declined marginally classified XXX,XXX declining a seven after linked million by the $XX.X XX basis Turning declining million in days and by This Finishing as or of basis NPAs days on of declined and while $XX.X and resulted and quarter was quality XX to $XX.X renegotiated capital moving total declined check $XXX,XXX

added we of which with with titled and column million in charge-offs loans Slide million new right reconciles to $XXX,XXX. $X.X $X.X on writing day far we on the in delinquencies. in seven netted three gross From We nine nonperforming to on million XX there, $XXX,XXX NPAs lines to million QX year line the ORE, migration down million the $X.X six, assets. Turning of five. 'XX up started $XX sold dropping This of line resolve nonaccrual a line non-accruals on while we and $XXX,XXX and new in for eight added decrease $X.X line XX

the So ended $X.X we the restructured in started. after we better changes million XX than past due days quarter

loans. to Turning coverage The X.XX% with allowance million remained million expense total increase to allowance the loan the three non-purchased four $X.X of charge-offs at and and in the X.X% provision loans XX, grow $X.X on of of portfolio. which Slide line in line the allowed quarter of

For value offset million accretion charge-off. adjustments $XX.X and line with $X.X no $XX.X million eight million on $X.X in decreased from to

our are Indianapolis and most the Indianapolis our portfolio summarizing two-thirds our lending. in construction Of of to reach our to more the and construction C&I in lending comprises and remains the and portfolio, a those comprising a Indiana Slide to largely from national book. XX, Outside the in-market states generally construction and Indiana of increases more loan Columbus. we have activity little of Providing commitments. was developers total projects growth Wayne we growth communities markets have to outside down Mishawaka, Fort in our Ohio in who Bloomington and digits So Columbus. Ohio, to of Cleveland the single from Cincinnati in to with Ohio concentrations extended Indiana mid-to-upper on up than X% of CRE and total Toledo on highest color state Ohio In both the all of

continues comprises XX% as and We housing roughly roughly quarter. business opportunities continue demand be Senior been gain of growing housing being selective volume good activity commitments. of to a continues specialty our are commitments this and mixed-use healthy to strong we although sponsor in finance traction to comprises which XX% the the of Transaction C&I in standalone as roughly space, loan non-student of apartment have construction pursue. commitments. In we has to $XXX with balances now over student well actively million XX% also housing the

quality is basis hand. provision. the points annualized of to take of driving the changes changes credit ready growth to your on, we're call good stable Moving seven for part advantage loan opportunities as of the back cycle net turn I’ll although with It’s and charge-offs continue position at attention. always - Rechin. we for over a Mike Thanks for the

Michael Rechin

to the on to page. remarks and my Page have going we’re of I’m looking balance John. Thanks XX forward

in our do job out most which a - year following great two with XXXX. two acquisitions start tactic is we really in As year important the for the

heavy a virtually than was of here announcement the the strengths to we about. quarter so about changes there, as take into particular. Wayne bank our then are before near-term about the the of made clients - have commercially handful downtown excited [indiscernible] new in Fort franchise facilities the Bank each the with that months of about seeing at in other are seen we’re Arlington oriented the excited and strong complete retail, growth we're marketplace of Ohio of Independent former of the completed our headquarters cases performing of John advantage an business regional the end that'll folks heavy those be them second in and kind talked of the one move part mortgage Bank, and ago as Alliance we some So And which would

some recognitions work. our the in places had Ohio might it last recognition work new servicing for of three help feeding branding couple to you that and kind states world our points thoughts similar of all had assisting, of hurt client. in of operations first which actually Indiana, and and and speak are attracted neat next quantitative best or retention couple around to and to know around the that and Our attraction what or of best bullet performance winning doesn't business, not to employer months over Illinois places either We growing recent earned places as talent, we've us certainly

actually So we're apart from that we’re and adding talked appropriate. John the you that. growth in our our some expense levels with and referred sized to would in of I people to items pleased Mark businesses remarks, tell as that specialty Mark his nonrecurring

that to talked and specific get in - a market in So and last to reference about it I’ll that’s production ends and we've to restructure the adding options in summer. relates of the complete on banking banking important as quarter whether it's end redo ads are years. specialty products over the grandfathered checking like 'XX come the geographic our folks through or to of sheet, to that half needs discussion made probability rebuild coverage that we the that it dozen benefit margin and will and we and had a to our opportunity what be client XXXX of consolidation our our out some this in of we evidenced the actions our in retail grandfathered that acquisitions really know have We through project earlier the types calls a our associates way as the finance basis account only of and rate plan of a there from had rounds of a took of like 'XX by up may business, we've would whatever we've Wayne around maybe probably next - notes the in moves on he centers the and couple of them of might a then the also feel completion a presence some refresh that, benefit more steps core about asset been but several from all lot next last preference eliminating highest sold we about would appear would in not interest our through for moving couple questions feds a not in the product of here. have did I but the Fort prior from we private wealth franchise balance nature in about here full that which moves we’re we’ll business we win the retail our good we that they the sensitive way that clearly that use bank. mirrors the

cost several when bit rate be longer range X% have I balance kind we've growth talked to organic a underlying the funding that. the proactive end liquidity know no apparent is reflect something our And loan of where for us tried but high the that that he Mark so the make in been it's now we of think our of percent more and liabilities, factors, finding be One a at of about the of sure don't to higher little but our it's that quarters would for covered, what to that. couple a loan appears sheet I to growth

in clients replacing is they on pricing with, and as would been bulk market larger entities, taken some what there do what sources of see HSA call of such spent of governmental command we've arena primarily deposits states, institutional that place providers, with successful that higher a the priority offer we've us. we lot might sources for You of the actually borrowings universities, has foundations, funding they a public those deposits as could - funds be funding

metrics the Mark of be would highlighted. in that some that So included

record expansion and shareholder value continued use Next speaks to bullet out through M&A our our in point franchise well-thought activity. track to producing appetite just

with that take where M&A billion know its over at without will to don��t either or us likely us level billion. assets $XX total that XXXX I takes its XXX us absent a for that $X.X clear So

of expectations underway not responsibilities include even around the or the clarity having Senate and DFAST which preparation whether are as real great And all the gets or that not well so is underway to well approved not. to bill

of trying ourselves move midpoint is XXXX as as So preparedness as us much we with year momentum rest to the bullish of to and a optionality we the they excited themselves. approved adapt take yet anniversary XXXth possible. conditions ability year kind feel the celebrating as and as the and with we so about Martin of we’re the into about John in and give the Company closed

So at is this for you if have point pipeline. the Austin, our ready team I think anyone questions in

Operator

Sandler [Operator with go first come question will our Instructions] ahead. Scott Siefers O'Neill. And from Please

Scott Siefers

Mike you anticipated margin upon accretion both higher I can hoping of guess ex thoughts. quarter. the think slightly I Mark, and sort you your just might guys on I purchase core touched have accounting margin this expand

the FTE chains Mike on then the sort asset negative great you I least at thoughts your of you the in think kind mix with from of expectations. fund and we And of noted the things just cost had law deposits quarter the of then chatted a about kind tax kind sensitive benefits first that might maybe to curious relative know to about have still be as your how hear won’t on standpoint. of focus about ramification but came

on margin puts the a core and from takes the margin So see talking just about you here could that the major hoping moment is? you spend

Michael Rechin

maybe and in was fourth And a modest quarter the tax and of basis item the first core the normalize all had of we we what XX made accretion year expected where Well first fair just the the around rebounded reform, that that last then dip to in we it comments points kind think one quarter. discussion quarter had on the I value of second from quarter. second a similar in you

the Fed if with to in love which But be, And happens the aren’t curve actively longer the going quarter. on environment, will it’s yields at what much we some additional there managing it - get get side. what we but to - about back we portfolio compared days couple increases how this likely be on of we’re investment fund's of that you flattens think think I the current if they’re extra the I second the as have commercial end point to depository think of of the

expecting the think at we I that So, funds we’re movements we here level can rate. in unless see expansion good but a maintain, more Fed really not

Mark Hardwick

quarters look rate would that The it’s growth in It which but appear a of appear of handful off Scott other XXXX. only of our about I at to what in level us looking going little the we will would part similar to happen, touched pipeline term it I that fund of about know question on don't balance to that particular they’re couple that outlook your not and bit to level backwards me the talk all is prompts of a near that. quarter typically we well through but for way. then hold think the quarters our next be to at of how loan best the

so of traditional know deposits. offset little franchise And you referenced loan that as We million the just earlier, retail what call and it are than remarks bit business in deposit of doing minus, need or count in with sticky benefited retail or a that kind with really for really true $X would $X.X million to from. cost that better I plus do you growth low a execution the stores we we’re you methodical XXX on to my clients our

that's in to why bit So of measure. a up and a the larger deposits what that's blip strategy little attract

Scott Siefers

And one then ticky-tack you maybe Mark. just for

a still you you’ve last the somewhere saying been of looks in coming number accretion think neighborhood million reasonable? year $XX is probably the quarter first for full think I that

Mark Hardwick

that's moment, which our quarter behind I estimate mean moving the little this X.X plan. was a were still bit a I we forward. right Just think Yes,

Operator

go question DelMonte KBW. Please Damon next our And with comes from ahead.

Damon DelMonte

maybe there circle the My income first the quarter next your one-time quarter? wouldn't I that question, repeated back some and in on Mike that could kind was you be components of this if noninterest just wondering

Mark Hardwick

The expense? non-interest

Damon DelMonte

there anything any interest from obviously but security - noninterest or other sorry, category? income income No the gains aside line other in was

Mark Hardwick

difficult in that average income, income a highlight. but extraordinary or I And item. to mentioned The in noninterest notes the the income good quarter other really see something and I can - hedge around my had predict other you nothing No, we is that we in hedged call to don't had were think line on expense.

Damon DelMonte

you well, those please? revisit Could as

Mark Hardwick

to necessarily. and about Yes, to $XXX,XXX related a matching forward. about hundred have really year-end of that even that during when paid. had end the M&A we as couple We But type related the going first thousand that everything out quarter we and quarter, few items had gets like try the out first simple are bit it in get something and as little to to - a activity acquisitions from expense expense was year into to by we carryover where call XXX,XXX carryover didn't the had we a paid made incentives accelerated think things expect as possibly we sense incentive could all M&A don't benefits XXX(k) it

coming we So first payment that had that repeat little in forward. our rest showed tax versus over $XXX,XXX we the to slower then quarter REIT of up the us the costs related year. this And recognize a throughout that quarter going won’t in

us to the run items going we look that So or forward. at as accelerated rate least nonrecurring those at feel the are

Damon DelMonte

all need that expenses be billion as to threshold, you feel you XX and And a you guess, level? in order incurred to that to closer you’ve do compliance then I go get the as over the like guys

Mark Hardwick

part to on an there. of know of cost we’re as much income investment - will is pretty you good expense. From Yes, expense part the go question it expense is you if your

this producing the at point. aren't stress We DFAST test

has The in I'm to should out compiled. bill provide it be We’re hopeful to methodology actually proves to prevail. benefit that still been having so. prepared it the to do terms of that while XXXX data net a us

the derivatives yes. process clearing parts good work, shape in and so The other internal around audit far on

Damon DelMonte

year of for your a lastly for growth the still loan remainder And then range confirm to just the outlook just single-digit upper bit the is target?

Mark Hardwick

long At this X% I've that actual. is. bit - offered point been to be proven time what It a we’ve X% I know little a and on shy to for

X% X%, seems think X%, I appropriate. So

Operator

question Our go next comes Please with Terry from Stephens. ahead. McEvoy

Terry McEvoy

on year-to-date the opportunities is Slide and within flipside that standout on and pricing thanks a pricing when areas where that think competitive on you I forward your seeing being for guess Starting X, maybe loan the portfolio today yield call. you’re the the then from adjusting best standpoint. pressure

Michael Rechin

see the John as I our it, of of throughout kind company looking have mortgage our that as the this company than quarter which over I part us as been had for and numbers of it’s mortgage a the business mostly dramatically balance for lending end for of quarters. we soft Martin it’s bit he it around C&I unit. answer so as a even powerful of looking commercial a pipeline the than sale pipeline kind did XXXX, it of the an less a Arlington as you slide little which of and I'm component to The not John last first manifests itself And real Bank a couple and in what strong of business higher is mean. of and estate well. to is referred had kind the the origination pipeline though gets

terms lending, obviously back John of return the is that to however, up to vulnerabilities growing more year. of with question our in the is to of group over is getting at a rate John the your that finding the terms outstanding XXX going public group overall And million on that specialty finance that sponsor since finance last be kind meet In target difficult. finance opportunities tax within change late it’s a other in described finance and public $XXX balance and speaks sheet that

it about And but slow. scaling part side of that to deposit credit of expect business aspect back the the business. aspects, the so the side credit, has for least I both loan book at credit of think that is great business expectations do our And and we’re relationship we the

Terry McEvoy

clients your seeing as through to all betas follow-up then recent rates beta rise? thanks reacted for see accelerating then you most shift here And going deposits and Fed a are is in move I interest you the mix the by from at have deposit how as guess do the a

Michael Rechin

We to there retail see our looking to product make. trends watching and for very, see some and we are shift that very need team us is if patterns modifications closely

And and to been rate customers very in special we to that highly the space some have money dramatically. it's the able offerings I we to change so expected in far we’ve space that sensitive use CD are been market know retain to that the manageable don't also move.

end continue to long have the long the changes rates curve for we end We looking which to upward move expenses. be all back it the interest of put sense into is rate and think think interest if And of where strategy. incredibly whether much I or as to we watch going calculate diligent are the just I deposit to about stays how the curve a

that’s So about internally. thinking how we’re it

Terry McEvoy

$XX the just or really to question future catch at last quarter indicator is $XXX bounce increase happen just month-to-month, number quarter And quarter? million assets around one the in any first million to of and charge-offs at classified of the that end sort you of does leading that it

Mark Hardwick

is at the saw it that to now Yes, does what quarter you're that at down to around $XXX I year you the is million of quarter. and number end the think seeing bounce went of kind low

first year-end a quarter in and we million yeah. up back the at the had $XX kind So dip we’re of and low

Operator

next question Jaffray. with go from comes ahead. Race Our Piper Please Nathan

Nathan Race

to pretty at non-recurring in appreciate terms back $XX the in to need feel that comments in of around going thing. much expenses that guys your like I incur you discussion terms the of expenses the and of you billion some be asset quarter items the to there you’re Mark

as XQ do at run closing as rate it So expense kind kind on expect naturally the at of up just of we of about inflationary just sits growth curious look pressures base thinking physics we here guys forward? going kind from you or

Mark Hardwick

capital, human categories is most as that that things nice when we've becoming year within. way of think years increasing the types in really done range it to just are think that what definitely mean more we’re job million those by remainder of demanded And efficient other. in of Well I this be finding the over technology, XX about to operating we offset we like expenses the I the will XX.X

future And think to level. XXXX at always least in really the of focus single-digit foreseeable trying rates that's expense the rest for growth end the so And keep XXXX and possible. I of low our at that’s

Nathan Race

think current continue a then on of of growth just as book And on of about to remain you kind securities portfolio you here trajectory, the security percent guys as expect relative its do the asset. an kind level from

as you do more it or kind So that dynamics? grow to shrink those you so thoughts any guys of loans on just and expect

Mark Hardwick

We between really percentage the like total makeup right and of our out loans mix. now asset investments

keep goal reason on of forward our heightened which that it the that level you have at we the so And efforts on go our is side. part is basis depositary

Nathan Race

that on quarter, apologize much how basis this mentioned and from you touch I to reform if adjustments this XX on FTE I the was was loans? points already but tax you think securities XX

Mark Hardwick

loan points. was it on basis the the six portfolio basis XX bond net Actually margin total it points. basis it In was XX interest points and was portfolio

our have we biggest portfolio nearly that's we tax in bond the is against where and XX% decline. of so So municipals saw

Nathan Race

for there I’d dividend this raise at potentially going one later say speak you I just in is Mike, to healthy then month. are on of And be capital one accretive last to guys if pretty front the could capital flips.

course just if about So the year seeing and the into opportunities M&A deploy over what front of optimistic via capital curious you're you’re feeling to on your this more M&A XXXX?

Michael Rechin

Yes.

growth terms look don’t this crowds - that that would at in flexibility actually in have quarter last done all level current and both to we were going to two when a to we next likely to find trying the three or of were level dividend look whether give In that loan stock an some opportunity or we cash in kind it, M&A transactions of XXX% forward. balance our that doesn’t we put and at us idea recognize I look of cash deposits to our probably the if its flow that earnings uses of those and have annually month

So achieve I ends. all those think we’re able to

Operator

ahead. our And Partners. Brian with Martin FIG Please from question comes next go

Brian Martin

of if kind Mark didn’t think So I it but tax things, where just lot has covered couple just rate think you about a it just been talk the guess here I you it this bit the higher first think than quarter the – what next was of effective here. rate in is XX.XX little kind at it quarter, of couple the about unfolds quarters, I was

So you’re about the thinking just how balance the of year?

Mark Hardwick

Yes, in of sort ballpark that we to we XX.XX of level think is this that expect. XX what

first all and XX, expense of XXXX quarter at of on was go back way based DTA quarter X.X all was - you if the XX to high XXXX the was of was XX savings million. last XX nice So

So, the of the it range. be are levels expecting XX.XX% to we XX.XX% of to the kind that’s where year for that rest

Brian Martin

take quarter was next not if a there option that’s so higher did any little would I this quarter, benefits that helpful? know

Mark Hardwick

was a see why a we that’s There bump bit little of some up.

Brian Martin

be didn’t future to you rate kind benefits elaborated at just And next of from how about of it funding these like Mike you that guess hikes some of increase that next larger for guys you’re a on of wouldn’t much to after I seeing institutional benefit in other all than talk and reason? about going I of bit making on changes look rate we type the the just least but hike near-term a the positive. that think the sound hey the that just some here you be much going rate the kind the that little as what was from for is may on margin it you of rate much you at that data talk Mark the of given the side, a before biggest and if kind the When given can - minute, still of are discussion back you kind guess changing changes of funding. get

Michael Rechin

think Fed expanded XX XX we points margin basis in you where increase core it basis look funds rate. Yes, was the if point I

flatter each around and of giving been be of which is, guidance tougher move a couple were going the and capture. reasons. call than points, but for we’ve points flatter is basis - to less that’s, the going to some getting each One think depository makes reasons six curve yield it's getting it basis it move forward just six so others And X and just do I

we points have basis X past. the to X in the So

but still than some improvement in So less we’re modeling margin. that

Brian Martin

just talking been to looks this balance this thing could but is think about? current big run this was it but from that mentioned pretty was without earlier mean rate million jump service up in that guess something someone think quarter - charges that I I that little year, And run the bit have about I the it just you mortgage that or of I it about a one quarter I a in as seasonality a one-off fair of other like income the but around being or particular way a a line fee guess with the at level some $XX income think guess rate baseline the give-or-take good to look type is a,

Michael Rechin

income quarter have by to up which other then always this but release improve can really a hedging should from as is move ended forward. income due in and press I transaction nice we where lowest our did pickup It's you is Mortgage last to in the quarter transaction the we quarter hedge the activities. we the quarter first unpredictable. see mean is

Brian Martin

one talked in it the piece expenses, or total about was grand you nonrecurring million? the the And - the maybe this I part about about mentioned you quarter XXX misunderstood was when that

Michael Rechin

number it that the No, was was I gave? X.XX

Brian Martin

discussions, it threshold bit how level? maybe an down, can I just to the characterize that and - little Mike today maybe about as would organically going just kind on a you at like if - look didn’t activity guess how has kind it $XX doing hear been the and would how of wrote the the M&A maybe and down little you thinking if over just that XX trying one level manage seems it you but guess I bit out kind then industry how mark I you with here the versus - last color important a the billion guess depending covered on acquisition for last I play of billion I just on things give I you kind you're and through the of you’re balance of guess are is approach it you just of those sheet question

Michael Rechin

in absent front I If is the you kind allows full think year. first, balance our to organic cadence the beneath advantage the of the in and billion that opportunities company stay to us do of that that the tackle even us I question this to be portion think able of of with will do your $XX just taking running manage sheet acquisition marketplace organic

the mind. plan, of kind that that’s are running So our knows everybody managers their in with that business

the seems get the value change a you rates As of to what overall lot been prior and a have conversations The with consistent pretty striking tax focus hear for we we’re I that It’s quarters. make something to it so, We could me really behind a that reform for think one say immediately leadership has the are It day and say having identical. the And so are that what such and a what from really be, it's for regulation, planning results culture to win-win would we’re in future two sense conversations the that affirmation sense. pricing and conversation, maybe standpoint their and And ingredients ongoing frequency in would relates be then environment integration a execution parties. it that interest their tax is. are on whether lot. about around it's though have I what everyone see to wanted the to same. does to other people

Brian Martin

a now that there you I changed just optimal is me, has what would level size kind - minimum point, I of that maybe of billion remind size you’ve a this guess I at mean remind mean knew or you guess the just at guys articulated? that I that transaction $XX And look size guys me would you entertain

Michael Rechin

a think effort at looking in and work something billion, like bank asset the billion to for think into it really new $X identical roll on over of market have be end, I or us. at $XX size that higher we to is only kind that that franchise. magnitude would but in the that of period I the I $X.XX at synergies that to look to other get Well bank don't from the $X.XX end us a on To make has entities in lot a of million knowing market and great some seem a to transaction, Brian $XXX presence. a more bank would expense thing we you have into with marketplace doesn't regards would think change words it that don't feel a more substance have lower sense go billion billion prior is to of larger

Operator

And at further this time no I questions. am showing

like closing would for I conference Mike the So to remarks. over Rechin turn any back to

Michael Rechin

call to you very interest you for help today thank any remarks other forward But have with you than appreciation and the get the no feel to that talking thank that next of much. and end free can have if we Austin, follow-up to at quarter. didn't that have I you look we you closing to you questions us.

Operator

presentation. now Thank for you is The conference concluded. today's attending

disconnect. now may You

First Merchants (FRME) 26 Apr 182018 Q1 Earnings call transcript