FRME - Earnings call transcript Q4 2021 | First Merchants Corporation

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Operator

00:05 Good day and welcome to the First Merchants Corporation Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. 00:31 And before we begin, management would like to remind you that today's call contains forward-looking statements with respect to the future performance and financial condition of First Merchants Corporation that involve risks and uncertainties. contained review. press be encourage which can to you information within release, the we Further management refer the Additionally, supplement, GAAP XX:XX may but intended which measures. not to are substitute for most comparable to directly non-GAAP measures, press and quantitative financial as as information website GAAP of today, other a discussed release reconciliation available be to The the well contains on to non-GAAP measures. like to to CEO. over turn Mark conference now the would I XX:XX Hardwick, ahead. go please Sir,

Mark Hardwick

and business assets X. is X.XX%, X:XX Credit Slide on highlights presenters Financial Page sustainable few grade footprint financial President, Hey, Kawiecki. for you, Time. morning, Chris. [AX] high a Credit page X, review. for you presentation. covering Chief following Eastern Now released release. slides your on of Hopefully, Michele to We And Page Officer, good and by way you of Stewart; today rating our XX:XX the AM everyone, all everyone, to of X good tangible John link (ph) if On and today's see access approximately turn earlier and are Mike at Martin; equity one-page afternoon, First Officer, quarter model. statements. our Thank or XX:XX your on Merchants' and the the our XXXX Chief fourth But return snapshot Year-to-date, of the the forward-looking you earnings second slide our thanks and performing haven't, our earnings Baseline X:XX relevant our return the introduction call. have you found XX.XX% will Moody's to if you can conference geographic investment to reflective of XX:XX for a bios include

by $X.XX levels XX:XX per Merchants' both first our record the financials the John million As a data. income levels. loans, of provide totaled our a states, investing produced for and before more We've of Stewart in lines in and press some deposits, record reached on Mike record Michele future First now than share, history. year time my record credit EPS record for delivered assets and net while review total the the on culturally will earning we $XXX many fronts. at business and quote business, we digitally in release color

Mike Stewart

Thank XX:XX Mark, and all. you, good to afternoon

can to an to core the on look by As The a business, just next lot two and the of you their X. focus at offers business changed strategy a our line business lines business within I our update nothing's region growth loan results of of provide we the X, ask slides, the Page top I'd of and quarter. Page breakdown XX:XX turn of page to key want the contributions units. highlights. Since and within is which on

During our loan each annualized the growth. fourth group contributing an total business grew portfolio XX%, in with that rate by we quarter, excess of to

annualized Private percentages from Groups, low-single-digit on rates full throughout First of increased For the are fourth the existing portfolio mid-single-digit home has along Mortgage loans in grew expected product and both the rate, loan our at the Consumer up drivers increased increases. steadily HELOC online with year quarter consumer Our XX:XX utilization and growth equity originations. in-branch the balances the we and quarter the grew nearly The X%. all our year, Wealth growth Merchants' at

X%. sheet the more fourth prior is up quarter clients put strong of by year-end. our consumer credit from work values and mortgage loan in which pipeline the the than liquidity to equity. XX% their home experience profiles, have to continue portfolio, the and good quarter, XX:XX purchase consumer volumes, strong home Our have using For And we increases construction balance over in drove

first-time worked purchases up homebuyers, with consecutive total pipeline year For our or The that second reached XXXX. $XXX assisted refinancing, team full for with mortgage new the over of the million X,XXX highlight ended on rate. home the growing and portfolio more annualized quarter of within the end year, over originations loan mortgage in was clients XX% the for than total XXXX. from quarter, growth XX% the strong, non-PPP an XX:XX commercial Our

the For growth approach XX%. commercial the year, full

of Within the commercial have line business, several we segments.

real commercial of of our quarter The key volumes. decline year. QX markets. at footings in new real is is real commercial of at The XX:XX an annualized commercial XX:XX continue grew commercial quarter, team One the strong spoke industrial rate the investment During remains high. through strong more leader the estate than the end last about the in which and segment the two-year be continue originations with our origination balances of to estate. fourth the pipeline quarter the and group We and year The full fourth in growth. and for end real estate the quarter both the to drivers primary a X% continued grow estate and commercial

finance our XX engaged equipment is serve, team and expertise that commercial the joined the have and stated treasury with This share managers demand. debt the new Our expanding middle-market, providing Within in growing businesses or relationship meet services XX:XX teammates new new to clients' clients. and we are team winning existing to and markets plant an team. asset-base, senior have contributed been investment The has real growth. have market in additional along sponsor estate active First augmented Merchants' with to

cycle the manufacturing the utilization see for ESOP sponsor of recaps to or a driver financing within increases larger plans XX:XX working driving Additionally, be production continued sites their events these onshore lines. credit finance for have to meet commitments We middle-market expanded in new ownership through to capital planning or our continue of Increases more of transactions. dividend growth companies succession of their and is equipment to line capabilities. to team and and

is teams navigate the supply labor our good. They see within and capital solid have in management positioned plans all XX:XX We balance sheets, effectively growth to events. business for the expertise these We chain climate and they solid markets have and very of business companies. and they are of resiliency economic continue across issues. any strategic The the

their in the their Our engaged market is the and enhanced lead the meeting leverage of delivering capital XX:XX consumer a to with to product have remains of with the size engaged across sets drives Their our of clients the to to few demographics eager The gain our growth. prospective on heart a mortgage I business sheet Midwest their First XX:XX building The spend Level and culture their team and comments business. at I've with have their pipeline of efforts see early commercial track able top time like clients. much Merchants synergies commercial want and ready a currently of source to to the strong and portion talent growth with offered and year. record One. lines larger of of for The about and demonstrated and They that FMB stable originations. map a commercial teams. end of you team left post-close. their needs, X been our of active all team balance or growing the our the I mortgage communities team bankers Merchants and offers. within that the XX:XX team prepared action, offer is witnessed in a And access active the the environment, will First remains double economic strong represents Page drive is commercial

complete I much XX:XX in work but now John metrics will We the marketplace. call to of we review and results the now before have continued for quarter soundness to Southeast of portfolio. between Michele, over and Michigan shares provide the winning do the more our integration, are who'll poised operating turn

Michele Kawiecki

quarter begin My covering X, fourth Mike. on results. XX:XX Slide Thanks, comments will

per on quarter share exceptional on pre-tax to year. shows growth quarter $X.XX gains million, Therefore year-to-date you for of yield return Stewart returns Lines strong. operating The X.XX% share rising, a shows to million, covered, on Mike $X.XX, $X.X at the show $XX.X earnings yield core remain X. right and investment a XX the tangible only securities This equity points we common less during decline growth. One were securities earnings portfolio. as the results. year. Realized million, contains the are a into the quarter bottom-left market XX million trend In excess assets basis the exceptional Despite highlights on performance XX.XX%, XX:XX is the fee line at XX XX.X% a net where during declined portfolio yield. $XX.X of $XX.X quarter. portfolio and prior in or right $X which the proactively assets annualized reaching of pre-provision be The meaningful mix a Because equity an high you than at that which growth, Line to portfolio on X.XX%. disclosed representing sheet reflective bonds $X.XX $XXX.X from with invested buying that bond to basis the the You see corner, pre-provision represented earnings the recent due to bringing from fourth buy graph efficiency of compression, buy. liquidity margin portfolio basis report shows X.XX% Slide XX.XX%, our on on less quarter yield of XXXX XXXX, movement total a grew we XX:XX is the Earnings variance. The in growth increase X the numbers result our earning portfolio lines strong decline of income, new on $XX on stated yield points of increased was XX:XX continued the gains pleased at highlights portfolio. XX to XX performance. third of currently quarter. quarter created on are of quarter income X PPP another million all ratio of prior XX:XX in loan linked We an strong declines prior gains return interest the and for of X%. income totaled declined and the of increase the on of given deposit and the an earnings Total liquidity double-digit securities over or XX, XX% return was XX:XX bottom just fourth for Slide pre-provision deploying bonds asset line income balance shows overall this The asset last fee loan the totaled will strong million that expenses. $XXX year pre-tax Pre-tax, PPP the see lower XX see quarter a for excess over our to leading through basis. top throughout headwinds per yield. the a million and million X XX.XX%. increase over can $X.XX, acquisition loan our which from year-to-date the year. bond The core will the Slide a and of Level quarter through XX

yield our losses XX:XX any the X.XX%, loans. were was and loan to signs of basis due impact commercial We PPP see renewed of future refinancing. sheet see of Yield this the prior to of compression of benefit, loans, great bottom for loans, growth that of will be or compression. this points impact credit core yields the balance of case On Excluding XX% allowance sensitivity we our offset loans Slide loan on the from rising asset pleased yield XX no be loans the showing loan the stable billion quarter. strong We mortgage loans on The as X right, during will and rate. XX:XX this were came our to details installment expectations new and were higher $X.X compared of the are year. that from given shows will compression pay-downs portfolios portfolio you of environment the the believe variable to quarter a rate related on experience Yield rate averaged the the quarter. quarter decline on only XX:XX X.XX%.

bottom the of a balance. allowance our forward of On slide roll left the is

graph modestly the $XXX,XXX, $XXX.X of million. Therefore, on which coverage top ending ratio expense left. is a shown balance During not The charge-offs the was quarter. we loans quarter, allowance for losses for recoveries allowance had credit $X.X million did net the trend book the XX:XX we on basis any and the decreased of the and to in provision on

end at of Our coverage down ratio QX from prior is X.XX% X.XX%, the quarter. from

million. to Now loans, move on XX. Slide last increased PPP from the the is Excluding Average X.XX% deposits coverage ratio down $XXX quarter. X.XX% I will XX:XX

interest deposits total of the at deposits low will bottom to see basis XX on expense company's remained However, of left, continued points. average you our decline. cost At

that the have will create month deposit forward, of interest savings. repriced expense relationship large a some that we Looking January during meaningful

X.XX%, X basis our of impact basis net one quarter's as Adjusting on interest deposits cash points from value expect shows quarter. income as line level core QX for NIM interest on was pressure the Margin stay out investments non-core average million. I $XXX.X interest core of value in a the of such cost net totaled of prior and interest last brings income in you line XX million. shows income So income balances us assuming Slide represent accretion Stated for to trending equivalent decline margin fair of PPP net and to XX:XX back the from net to fair XX:XX of X.XX% core increase quarter XXXX PPP on same. totals tax was X accretion core earning to excess assets. the basis loans total margin line decline an X.XX%. interest the of our interest interest elevated three, six net loans $XXX.X of When million, another $X.X net margin. Line on under compared of continue two a items, the $XXX.X in liquidity, points million, fully

Service the XX:XX shows fees XX% as also over total year, In $XX.X the of expected of in rates. The an $X.X based fee volume plan time $X fees program these core $XXX,XXX increase XX, to quarter the XXXX adoption in and XXXX, impact which from in growth to appreciation XXXX of enhancements in the management stemming less XX:XX Stewart inflows million million wealth on is by interest July However, gains of of payment market more in Slide as year. $XXX,XXX by for than increase $X the production lock customer-related a net $XX.X loans to make recover approximately the year just income was asset XXXX annualized from adding was earning strong and fees Mike Hoosier with adoption. or decline by an overdraft yield to X%. in of Offsetting hedge $XX.X on Customer-related as led XX:XX increase those compression million fees expect million, strong income we overdraft to increases interchange totals offset deposits million. in is acquisition year Derivative than earlier, the in decline Trust new totaled growth. prior swipes robust on last million caused Debit annualized non-interest we but million lower basis. of quarter. income continue were that up were were $X.X and charges XX:XX growth. money, fees prior lower customer low fiduciary Durbin customers in fees look On fees increase million, an compared the for and loan our XXXX income Company. of but XXXX million, $X.X of that for fee mentioned million generated was increase those As over to a $X.X mortgage card card $XX.X to in at XXXX,

expenses is line hiring Total acquisition the shows expenses $X.X the Slide totaled $X which wage $XXX.X is of the year, of in the quarter capital Moving and gains in for by salaries strength over than million, of million reflecting million on One XX BOLI ratio QX million, $X.X gains with of line and $XX.X year common and our more to brought target. expenses decline XX:XX higher of million, an top $X.X a Level to prior the a mostly tangible million market. at included securities X% for increase page income of in in were equity TCE Looking non-customer-related year fee with costs. Slide the in non-interest is year. The sale XX. categories, inflation prior the Total to increase million $XXX.X total competitive our offset due ratios. for the to and XX:XX which X.XX% benefits, employee

billion are it over tangible in for credit year losses. common results Officer, bottom the allowance In John pleased equity discuss we capital the to the company. will addition strong of equity, reflect $XXX our page the turn Tier numbers in those Chief soundness $X.X now million we XX:XX financial with having results. X and total Credit the risk-based common ratio and to have Martin and to asset strong my at for our with Coupling of quality. That Overall, the and remarks, our concludes safety I ratio fundamentals reflects

John Martin

over roughly asset with call Slide In forgive XX:XX commercially leaving provide Of repay. the turning otherwise million slide. loans were repayment the and found of side of $XXX the XX.X%, of the segment million economy of I'll in highlight portfolio Thanks, and million So industry the to bridge, good to Mark. on is Michele, diversified growth at loan loan the and XX:XX on quality a $XXX provided a bridges I the active in $XX X.X%. or loan and quality remaining. of the roughly remarks a forward asset million excluding XX:XX oriented with down our year consistent $XXX program quarter the excluding grew or start XX, with the including of or forgiveness the million, $X before consists quarter, and XX concentrations winding growth growth back right million of turning finish year, $XXX both where roll the loan million, end the loan year, The Slide portfolio, PPP My left PPP and including to then those, portfolio loan those PPP of with review geographies. portfolio for program the afternoon. then concentrations, for forgiveness loan $XXX segments

repayment of we converted the Given remaining applications expect and the substantially second the by borrower forgiveness, be end forgiven loans to or This defaulted our PPP the to smoothly. the So forgiveness quality. historical our would that timing asset the for of XX. and been SBA with highlights experience quarter. would P&I of the reimbursement operated loans and turning slide XX:XX has Slide SBA The responsive processes

for $X.X loan the forward $X.X recovery as net million non-accrual million $XXX,XXX. last Absent of again NPAs with million. NPAs is Our across trends on of million up $XX.X three, non-accrual are in we Then an X finally, with million agribusiness due XX:XX to including last basis quarter to quarter, commercial million reconciles which the $X.X on million relationship, days million provided non-accruals, NPAs gross million last Classified related these a including of a this On million, had XX-day that X dropping reduction during line the had residual loans line left And well-defined XX, the charged year. at down at ending while after And loans. quality. line On in $XX.X left to and line down types. mentioned. This the million in past continued quickly quarter credit and commercial decline chain turn the XX quality This the added $X quarter ORE summary, adjust your and we to line and finishing assets charge-offs hiring roll And the points. issues XX On Slide changes in million $X.X new resolved well. remains past quarterly loans asset labor just be quarter to the Hardwick. contract and five, positive to on on their continue the to $X.X were that and the year. contractor adding decline improving due I've net X.X% moved I quality line stable we due, to $X.X and $X.X XX:XX XX-day our to loans credits past the remains and and as down with including on call continue two, finally, quarter. XX:XX relationship, supply the and operating charge-off. those down $X.X we the we quarter and quality challenging we for fourth quarter five, consecutive line X now businesses. In effects weakness, see added we over a with classified I'll Mark? charge-offs XX, customers quarter, spectrum asset asset back grow Thank XX:XX the in $XX.X attention, non-accrual changes lower challenges, environment discussed improving of Mark off for of the that we you

Mark Hardwick

XX, Slide On record highlight proud our a which it's track John. great of I'm performance, Thanks, XX:XX really of of.

XXX% of the return We SNL XXX%. a have of nearly Bank XX-year total versus index

is which more we Our M&A EPS way repurchases for as the XXXX tangible Slide organic XX:XX XX dividends, post post which, post-crisis. XX:XX nearly share XX.X% years growth M&A CAGR all to after rate dating and post XX.X% activity, is book growth the for XX% our numbers and since highlights totals a including strong XXXX. really normal activity, back result. and think to calculated which is XX.X% asset XX combined you per returning know, for past annual value was back CAGR Our share

exists combined in the first MSA. One excited half of close Mike to XX the in XXXX we're growth acquisition optimistic growing Detroit annual years, about Over the XX%. -- the last our opportunity rate We're we're that mentioned, and is as increasingly the Level

Our folks of needed One connectivity XX:XX to teams this Regarding approvals, was working hard our a our bring really our all kind are to high this is of cool and life. thing. theirs with acquisition Level and

received we were groups of acquisition. all the during X X support have comment that period in open community and letters from You and the period

this Slide it's of excited advocating to that strategic community have I'm kind more to impact XXXX end our the our Merchants We we that all success so great for really nice and X given having And groups Now the of I'm little events, on a it. and XX, XX:XX First year. through guiding So, had of detail, in imperatives go the our XXXX slide of speak, going turn about will really in they in a in be -- of plan. markets.

statement simple, the point, we can resourceful. that First It's introduced that XXXX. Merchants' communities embracing XX:XX in we are we and by have are to wellness have was opinion, superstar vision January on of financial the employees, my my focusing and impact highly diverse like-minded Our the colleagues and self-sacrificing of We the communities in serve serve.

work. XX:XX Merchants fronts. official enjoy from say of you to and hybrid and introduced you flexibility. to team, being winning convinced help customers are Our our you ways open but they're meaningful XX:XX XX to results, We meet for of standard at business deliver their are headway using it, a part friends and the they and with these We've not our they're also XXXX, after our and people and imperatives. only new getting imperatives to neighbors. follow traditional methods to like using unique their transformation needs strategic customers in in clearly XXXX of that writing are and the paper markets a on the officially performance The results. work many and actions We to X way into new love should our goals bank. we then an bring in more and cultural that, whole made statement vision you're introduced serve added and a In welcome in team our First diversity as into self I'd if our believe you visible welcome your

inclusion, equity our the assistance social should achieved out. first corporate gaining new development hired tackled community check nearly delivering it we're XXXX. to community document notable superior footprint our last huge down of having during goal It's made issues skill that while unique trust address challenges. the if setting this interested, We to sets. of years minority evidenced by million these period the space Even a that groups a our Reinvestment CSR volatile home in Communities. strong in versus $X to with challenges hybrid inflation, with public We XX:XX Al and team We've teams couple XXXX. communities earned We Minority responsibility the in We've lending and employees We partner continue environment you diversity, wage we'll during strides Pina, National delivered published letters XX:XX throughout period. and XX:XX partially Community results in Our Level impact maintain payment pandemic. our both lending an website, and One how We Co-Operative. of the are you're Our dealing and over Elevating vacancy leads called in and diverse like by NCRC produced employees community of of statistical with he example groups our delivered other grants. recommendation the majority, momentum on comment

One. career first time a Level merger, For the with endorsed ours in his

As Huntington in you recently individual of was the merger and know, TCF. Al the has who been very public his challenges of

XX% able banking added for out. happy to ahead people a in Officer introduced by the team's We community attention resource on are our a On And formal just fast a it's -- high-quality we've build time. questions. and a full-scale statement but XX:XX X. estimates, We've DE&I business bank above. and in knowledge employee includes that running into digital online We are of Chris, in risk core and early and runs DE&I results XX:XX of Agile front, employee addition lending muscles first opening the for So we've ESG, pace digital take consensus And we're have seeing lines management our as formalized future. Risk XX:XX So, we're XXXX. and with future. we XXXX as sales throughout fast at credit our Mike foreseeable governance in as team. excited group of reminder, a the relationship core. we're ability XX:XX bank, produced investors acquisition history, the our We an XX:XX we're Our finance, and investment. him. our new FTE the about long-term that sustainability terms about Stewart's be comfortable throughout Lastly, build big we running. the competency, been very and commercial that maintain with of talent delivered was Technologies happen coverage practices And the making at financial new XX:XX results. year, prior thrilled [indiscernible] and experience by our IT and consumer additions, by as guess, Our great market the time, entire speed are pages. XXXX. future. color, those top supported account the Our that group, our for been model lines with we're recognized that laid all the to risk a at the Force.com management, coalescing XX% Level companies of and results we're and business new And our community our I'm of to this thanks groups. to your leverage industry-leading and efforts a XXXX our direction specialized have evidenced will IT, grow of both our quartile And set spread had and to continue One. more continue with this Chief growth optimistic for it at M&A And results plan of a we've same stakeholder-centric One, folks announcement MSA largest technology full our we I our about lead new teams comments the your connectivity post-Level on high-performance that November modest statement, pre with the for evidenced -- and XX:XX a the helping hired organic to to of state-of-the-art team the just and investment the Company's as and transformation that's are of specifically, and business the earlier. remain market turning last that platform, IT XX in value cultivate Level to just my and as enthusiastic our team a private wealth can treasury greatly taking space. the One in as banking. We include who bank This the enhanced our our We We

Operator

Thank you. XX:XX

question session. Sandler. question-and-answer Our the begin Siefers Scott comes now [Operator Piper of Instructions] from will We first

Your line is open.

Scott Siefers

Michele, everybody. for the you guess, is probably first question. XX:XX afternoon, question for taking I Thank you. Good

or it benefits, just compressed X liquidity. points purchase so. I So over a lot Maybe basis still some it's expected in X.XX% underlying improvement of margin excess ex-PPP -- funds, thoughts have on around but here? where just you cost of discussed you the and the or the know to from accounting goes

hear go-forward would So be your curious on I to the thoughts expectation?

Michele Kawiecki

rate hikes, Fed see improve Well, funding digits aside Yeah. -- mentioned. the expecting are from double we're you savings we at next quarter with And loans margin the XX:XX savings to stable growing from commercial this funding just any that cost yields.

it in know, that to X% expect our we around it was liquidity, about So because normalizes, margin quarter a we there very how normalize that this of deposit plan, our we're XX:XX our on robust although And is to excess growth discipline. we but deposit to core see when core, growth. feel pressure to don't probably so great We're little it. have pricing X% happy surprised was, do

X% So are we're hikes. X% to expecting four With that's of today. those us the result what rate net models increase hikes what XX:XX expect as to income a in rate That's do telling interest our we the today. forecast,

Scott Siefers

along that it, points, each from guess how the math of benefit sort sort can those the the I And I work? lines, do NII Is but into I guess guess, Perfect. I way so. X% back of a around sort somewhere would Okay. to XX margin have easy basis of maybe, guys best as you guess, XX:XX or and

Michele Kawiecki

Well, we loan have floors. do XX:XX some

floors. in Does rate the our like point will will rate XX points loans That's loan first about XX% variable help? probably first XX There's that asset sensitive. points. that basis beyond sensitivity we in or of hike, move And hike, of is most XX the reprice we kind the that more start basis where so some basis reprice. were rate our to

Scott Siefers

XX:XX does. it It does,

for fourth So your you of are most sort basically, bang where that the of buck get then? and third hikes sort

Michele Kawiecki

XX:XX Right.

Scott Siefers

Great. you Okay. much. guys very Thank XX:XX

Michele Kawiecki

XX:XX You're welcome.

Mark Hardwick

Scott. Thanks, XX:XX

Operator

you. Thank XX:XX

Our next Stephens. Terry question comes from of McEvoy

line open. Your is

Terry McEvoy

afternoon, XX:XX Hi, good everyone.

Mark Hardwick

XX:XX Hi, Terry.

Terry McEvoy

on your growth could I in talk picture hoping you just on standalone a was Hi. big maybe loan XX:XX XXXX basis. about thoughts

just momentum was hires the about new that the growth. see you talked can of fourth occurred building in XXXX, You loan the that and terms in throughout quarter

Mike Stewart

Its Stewart. Terry. Mike XX:XX Hi,

stay see single-digit starting well. we'll really think primarily segment. mid to as side it that confident We're driven with to -- Commercial loan high noted I like probably I the growth, through some the pick-up on consumer

So going keep plan. that's our to we're where

Terry McEvoy

of than company, of A in bit could maybe overall I the some on expecting that know interchange income some kind I in And little down areas what of on as and XXXX? areas fees are play this the bit year. was weaker quarter-over-quarter. that Again, income. second couple into were your thoughts kind and XX:XX areas a weaker then came a And a follow-up of be of maybe a strength half standalone growth, fee fee

Michele Kawiecki

decline pricing. more Terry, gains quarterly income do $XX.X so our to because I but We we all demand But level rate that volume, Yeah. and and healthy we're a will fee pretty interchange income would do business probably in this management production of be it in We much normalize mortgage think XX:XX in year. headwind. the not think because coming in say, XXXX, wealth our run million. meaningful expecting of think will just loan for pricing hedges on offset expect was and XXXX, that we growth

Terry McEvoy

questions. Great. XX:XX taking for Thanks my

Michele Kawiecki

Thank you, XX:XX Terry.

Operator

Tamayo you. of we Thank James. And next Daniel Raymond XX:XX have

is open. line Your

Daniel Tamayo

would the of else on kind for year just were Thanks on coming what Thanks. thinking you're in in we given for We thoughts taking pressures helpful. operating anything and terms touch expense call. everybody. the afternoon, Good Maybe at this with quarter, the could wage base. be inflation if just in the expectations XX:XX of line

Michele Kawiecki

think Expense Daniel. year growth, new be infrastructure that our $XX for digital rate and around run million low Hey, average. digits the next hires on needs. to XX:XX will mid-single to in be We expecting we're

kind So we're what that's of expecting.

Daniel Tamayo

question, margin is in balances? in there right. average fourth quarter the any there impact All and helpful. end on the this period was nuance but That's Okay. XX:XX a And loans little from the the in difference

Michele Kawiecki

the Stewart Mike quarter? some can loan maybe bit end And came of whether the about the little towards the loan and more of growth a XX:XX in growth talk

Mike Stewart

about Well, here on. good thinking a that. Right I'm sitting nuanced. XX:XX question,

Mark Hardwick

it XX:XX -- mean, was I

Mike Stewart

I'm back watching XX:XX going to November. October,

Mark Hardwick

sitting in the lower was had time. to earning get XX:XX which of have It's later And just quarter, period It so a we means deployed assets in for much dollars hard the it were quickly. liquidity. growth in

in So loan the or in putting bond we're portfolio. putting the portfolio

Michele Kawiecki

back bit quarter. the XX:XX the on growth a of little was And the loan end heavier

Mark Hardwick

Yeah. XX:XX

Daniel Tamayo

first for benefit bit from potential little time? perhaps a So XX:XX the quarter in of that a

Mark Hardwick

Yeah. upside. little XX:XX A

Michele Kawiecki

XX:XX Yeah.

Daniel Tamayo

Thanks XX:XX All right. had. That's all questions. taking I my for

Mark Hardwick

XX:XX Thank Yeah. you.

Operator

XX:XX Thank you.

Our from Damon next KBW. DelMonte comes question of

is open. line Your

Damon DelMonte

XX:XX Hey, good afternoon, well everyone. Hope everybody doing today. is

the little than things outlook Can on rather regarding mean humming the reserve a you I you just are implied pretty along on going past, of in guys. the know you'd I forward? credit. reserves. question, First for release well perspective just obviously into give you grow to the provision kind

true wondering just if for what expect So still and that we could holds provision outlook?

John Martin

been the is really end portfolio see is, speak can think a in minimal into of positive the don't I you a can of it's really grow through the look as speak the into to terms no -- can to with and -- today, expense. the material I I story the just it's really our as doing XXXX, to been XXXX. allowance And I plan from to calling the on portfolio, expense, In Yeah. the grow where or Damon, don't stable et coverage outlook look continues see year, stands itself given XX:XX through be Martin. provision I -- improving. to XX:XX hey, It's credit change provision throughout cetera. the reviews, and John allowance

Damon DelMonte

XX:XX Got it.

still to is scheduled deal. of Or the the I lines, kind at close of are think right. you second And it outstanding? All I the -- it Mark, quarter? then And end second quarter? during That's along One Okay. to what helpful. approvals the with Level is regards guess, those the mentioned, it's additional

Mark Hardwick

We're Yeah. far all approvals. with our regulatory XX:XX pretty process into of the

whether a Fed to it XX-day would the delegated decides to least frame. happen, item happens all timing. think the DC, approve are the office or the merger I it's just at If authority which key to additional regional in indications go I would accelerate And through think it's in -- the one Chicago. time that is not

So is we but the still anticipating it quarter. over that first are carries a into second chance there late quarter,

Damon DelMonte

XX:XX Got it.

Okay. That's had. much. that Thank very I you all

Mark Hardwick

XX:XX Thank you.

Operator

And you. Brian we have XX:XX next Martin Thank of Janney.

open. Your line is

Brian Martin

you Thank good afternoon questions. the XX:XX everyone. taking for Hey,

were you Just you this guys with on wanted to year. the touch recruiting successful just people the guys hired,

where yet that you have I'm Just looking you're you're you're as still you here. but talent kind into of wondering go kind of areas maybe any of you'll for guess assuming to how just kind on bulk or be I areas XXXX guess opportunistic, up really targeting? still I about thinking added Certainly,

Mark Hardwick

the drive about a bank, et Investment, of folks. XX:XX In Agile is scattered the increase of of combination But almost same meaningful helping Force.com side of mentioned, account others a amount had digital that XXXX, lines team of the the remaining knowledge, XX we the Mike And and the IT exact in cetera. about also we in online opening had the business. on sales of those as XX were commercial throughout our kind were

focus talent the same. that in sales and a So the expect office. additions about I is the back similar So side number in the in investment XXXX on XX:XX half still

to outside Pfizer the stepping intentions we traditional grow office, we're trying did the and competitive. add continue And make the that additional wherever are the just bankers to that to customer a and and to we're our our level at more online agile spots make needle we're to that move balance to back can are where sure think drive and that the for where can Our have in upgrade we investments And our with sheet, of to is we choosing ability tech we volume. like account technology us we up bank-in-a-box technologies allows be like opening. picking Terafina FIS

that's, best we're I for thinking way the what So 'XX. guess, put could I

Brian Martin

you maybe Thanks, talked guys helpful. That's to given what the the M&A benefits the Yeah. it balance touched for buyback, there, about you you're you doing And the side, XX:XX asset-sensitive -- the but just and about just will Mark. sheet? capital on -- with I of that and outlook just kind accrue rate thinking given your are increases guess how you on

Mark Hardwick

buyback side, XX:XX just opportunistic. We're just we're to the be -- on going

will it. I difference like a more make And of takes we're of equity. tangible that in meaningful feel the it defensive we putting acquisition the our our overall feeling on to And with pressure have aggressive off real be common We a the into It's cash and repurchases. have maybe measure. TCE return like

Brian Martin

one, talked on the last and I Okay. -- maybe it I just about Mike And XX:XX just commercial a guess, Perfect. guess the bit. what utilization, little

of kind year? throughout unfolds of that how kind Just about where the are thinking you

Mike Stewart

you that? Yeah. XX:XX got start want to has something. Do And John

John Martin

Go compare notes when go you got here. ahead. in what We'll terms provide of ahead. No, I've XX:XX

Mike Stewart

XX:XX Yeah.

rates when So side years about track in from think the commercial go as several say, the it's subs two to run what in still basis would saw revolver a still of pure that. increases three I -- we segment, you ago, average we back, into under, normal that, point it but what would I

of to up grow. off to past that market starts XX:XX and sit off commercial year, can that. when those and balance about sheet loans So our lifting are part there's in of the secondary originations this talk construction still was very I assets then originations and inside construction, the early inside of that to draw originations a active move construction happened continue lot new primarily group, liquidity -- our real estate in that But and

up So we'll see well. those as utilizations move

Mark Hardwick

Both Go John. ahead, XX:XX headwinds. nice Yeah.

John Martin

on just what XX:XX to Yeah. was kind going build Mike of I just said.

Mark Hardwick

XX:XX Or say. should I tailwinds,

John Martin

We were Yeah. in XX%. billion in the $X.X through $X.X the real been, has today, XX%, our pre-pandemic, through pandemic get call is at a XX:XX call mentioned background, seen Mike utilization and even it, it we've at to we in the and growth down standing also like it, now high to billion earlier, in had our booked utilization, Brian, And XX:XX running not up had, we commitments. now only billion Pre-pandemic, we've and in commitments. commitments. we're in We commitments. What's looking So rebound $X additional we're of, at XX%. but

come being out couple to back the and the Mike's forces we pandemic. wind of Mark's comments of as So of a at back there our

Brian Martin

XX:XX Got you.

just from Okay. That's benefit hike, -- just from if last I When the a the Maybe get the on assuming hike, margin basis it. of than said, you housekeeping. guess, full just you much helpful. kind versus guess, one, benefit burn And missed be of did between is XX% the rate just or of a a I you I the two? XX% rather get there the through on point benefit impact raise you XX Michele, would impact -- once kind full how that an you the maybe How of difference those first the the much what floors? one level

Michele Kawiecki

we Well, are variable. XX:XX $X.X have billion of loans that

so I in repriced will basis of XX% be those said, first And points. the like XX

Mark Hardwick

comment XX:XX And had point how much of we your XXX move, Michele basis expansion, Speakers] [Multiple

Michele Kawiecki

XX:XX X%. Yeah. will I'm sorry. X% net On income increase our interest a XXX lift, to point basis

Brian Martin

year also of XX:XX for of this -- end year the number? year's the Okay. end full that's And

Michele Kawiecki

correct. That's XX:XX

Brian Martin

XX:XX Yeah.

Speakers] [Multiple Okay.

Mark Hardwick

obviously each move. more it's so And XX:XX incremental

Brian Martin

XX:XX Yeah.

That's need. Okay. all much. so I you thank And

Michele Kawiecki

XX:XX Brian. Thanks,

Operator

this turn I now And the for remarks. like back session. Thank question-and-answer to our any Mark over to XX:XX would conference closing Hardwick concludes you.

Mark Hardwick

to your XX:XX Yeah. Merchants. appreciate and remarks only attention My interest closing that, I your are First

our customers and we to regulators, We and appreciate are listening just from stakeholders our today the have commitment number shareholders a of to employees continued and that performance.

So next the until call, first year. quarter great have of a the

Operator

presentation. you today's This you. has Thank attending XX:XX Thank for conference concluded.

a now all may disconnect and You have pleasant day.

First Merchants (FRME) 27 Jan 222021 Q4 Earnings call transcript