FRME - Earnings call 3 2023 | First Merchants Corporation

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Operator

Thank you for standing by, and welcome to the First Merchants Corporation Third Quarter 2023 Earnings Conference Call.

Before we begin, management would like to remind you today's call contains forward-looking statements with respect to future performance and financial conditions of First Merchants Corporation that involve risks and uncertainties. Further information is contained within the press release, which we encourage you to review.

Additionally, management may refer to non-GAAP measures, which are intended to supplement, but not substitute for most directly comparable GAAP measures. The press release available on the website contains financial and unquantitative information to be discussed today as well as reconciliation of GAAP to non-GAAP measures.[Operator Instructions] As a reminder, today's call is being recorded. the to turn host, now will conference your over Mr. I CEO. Hardwick, Mark Mr. you begin. Hardwick, may

Mark Hardwick

and Merchants Time. for Good Conference to X:XX released welcome morning, First at today thanks statement Page approximately the our forward-looking earnings call. Eastern Third for introduction the and Standard covering a.m. on X.We Valerie, XXXX Quarter

Stewart; Martin; today's page earnings release.On Financial Mike will Page You can X/XX, banking following Credit by include our slides Chief our of the few link to Chief of the Officer, and a Page you'll Michele as of see XXX X, see presenters John geographic access XXXX. Kawiecki. you today's on centers our and representing as highlights bios the On as well third Officer, a X, map financial locations President,

received X Best Growth Career including I'm really awards Work during proud for which comparably and to Places more Women, the of. Best We quarter, for Places Work to also

and share yields was and strong, X.XX%. in reflecting reported growth highly X. totaled growth.Loan the the share turning did consumer and per by deposits XXXX as $X.XX million. X.XX% to portfolio, include us a well strong, return The brokered coming Net of producing by variable teams results we So the increased remains $XX.X X.X%. by in continue base. healthy communities equity quarter, a our We a to our expected demands decreased for core municipal quarters million very and client quarter.During of QX Slide and $XXX.X deposits our those per as XX.XX% to better traditional $X.XX and even $XX.X million common return share to the deposits third our and per meet of $XXX.X commercial The XXXX. the for earnings increasing adjusted on of for quarter Page remained compared X.Now report assets income that our the strong $XXX.X million performance and of to positions million tangible I'm on of deposits quarter, were pleased or we on

renewed year. up basis second XX totaled this quarter the loan and of New points yields X.XX%, over

remained and the still efficiency despite charge-offs remain our committed due the or quartile the performance call.Year-to-date, allowance $XXX.X losses metrics. Our customer guidance we of later growth million and share, loan in mid- XXs, top credit $X.XX low strong for to will in our and X.XX% to high ratio fraud earned that we've is per discuss meaningful to we single-digit

more Now deposits. on Mike will and Stewart provide insight loans

Michael Stewart

Yes. Thank you, Mark, and good morning to everybody.

total you fee investing that delivering side team, Slide and the platforms our business quarter deposit enhance on capital outlays and reduced capital deposits turn technology The rate by loan strategy X.X% left both they evaluate positions. business on of unchanged. a in we as serve our model in has segments. interest within quarter some across financial offers third service an on the breakdown quarter delayed a attracting, Merchants expectations as or represents that's loan business the durability annualized the all loans our manage of that within talked second listed strategy, results And page in remain to deliver continue business are loan First portfolio team or utilization XXXX, by locations portfolio We the actually committed our as metro is my deposit third adjusting projects the of the our growing commercial the of quarter. Our clients outlined is commercially loan business of growth their the rate their and financial and loan on Indiana, Ohio. a of we of stated, right grown last when Year-to-date, of solutions engaged offerings as all of clients reminder communities environment. of side our X end highlighting we're that this our aggressively represent the growing release these loans and the the and annualized remains was on and rural that markets income, in X.X% segments. top-tier collective diverse building state, the to and markets quarter the the our Michigan business the the and markets, deliver.Throughout Slide for primary actively slowed we and working about stable over primary focused XX X, months. last for growth credit total the we lower metrics.If page portfolio current Line organization retaining The earnings And with map organic and to

a slide Moreover, remains basis continue relationships. of second loan loan spreads higher up widen of As is XXXX, delays loan of our a of and But commercial nearly to quarter the ended closed.John that the XX growth the with strong and the to highest strategies, residential quarter, on the in the expectation has year. my deposits a installment fees. new generation.Michele to total to our estate third see, And relationship the and Mark basis C&I the growth real the the the segment. with of the Consumer balance rate. comprised of with said, expectations improving private that pipeline balance the are Page portfolio, segment from continues commercial banking mid-single-digit October points annualized the commercial that.Our risk the level shown the already within Commercial spreads of yields engine rate next. The group similar is super mortgage, segment in with growth benefits coming loan on X.X% pipeline That of competitive And XXXX that growth the and loan can has you at spreads commercial profile our up continue have Overall, during over forward single-digit grew space driving third get inclusive segment. economic segment, loan loan competitive and as to be the positioned overall XX% in as and firms past represents the on segment moving we the widening the that XX% growth. from points the from HELOC seen highlight half through comes landscape, at particular, XX portfolio, that from both the yields that will loan reflects slide, growth emphasis now sheet highlights for investment regional we've September XX, Martin the year-over-year landscape overall, bank, with XXXX the of bulk environment balance banks, within

underwriting and remains disciplined is positioned across segments. team and those for all Our our consistent that

year-to-date. if third the rate So X.X% quarter annualized about and an during you think that see deposits on you on the X.X% page, that grew deposits

As you decline heard discuss fund commercial the million. space X, actually seasonally paying deposits municipal The $XXX Mark by about muted. the the down from were seasonal actually was of Slide muted growth

focused municipal and through Consumer over both showed So through commercial-related adjusting activity said Fed the the ability drivers. for review the X% throughout balance private differently, Michele those and and the segment growth details going statement to this growth.So declines.The during quarter remain call branch the the annualized The the X% rest failures at income can deposit deposit the the rate increases quarter, over to of she year XXXX, grew earlier for network throughout throughout of continued bank and includes of sheet our our the when supports to deposit fund continued I'm on turn growth more growth banking the this strong the base team.

Michele Kawiecki

X loan for quarter. remarks. and Thanks, Mike. the deposit covers covered our quarter our through results. show Lines growth Slide in X sheet balance Mike third changes the X his

prior and pretax see of in $XX.X and quarter. on grown sold totaled portfolio deposit which this was X.XX%, can and $XXX.X the return X, proceeds accounted $XXX.X the million. quarter, pre-provision pre-provision of from pre-provision growth declined due investments million scheduled paydowns You of totaled decline. of million million and decline change the pre-provision maturities reflect remainder by bond all pretax metrics.Slide valuation which quarter Year-to-date million for the pre-provision scheduled Line earnings cash X year.Details sale earnings growth year-to-date. available-for-sale disclosed some the bonds another book return X.XX% shows XX.XX%, in X.XX% on on and a loss million from and sales resulted to at million the on was our million loan return $XXX $XXX during of strong profitability investment the funded by on $XXX year-to-date on return year-over-year, our Expected was maturities year have in that a of $XX.X on $XX.X We Pretax to flows portfolio The securities.Pretax and this Loans pretax was the assets equity strong of value investment shows quarter results. flows. assets cash from equity we portfolio. to portfolio earnings The in XX. details work September we this year-to-date Year-to-date, the and reflecting of million.Slide XX, The loan tangible cash equity principal bond have put pretax $XXX was scheduled million of tangible interest in was ensure solid over to bonds, prior next million. position. Slide increased $X.XX pre-provision increased and XX creating $X.X ratio totals X.X% sold XX.XX% have and payments liquidity XX for $XX are of common bonds months

due with points repricing loans our recognized of variable As $X.X during million for fixed loans, charge-offs the his shows portfolio. rate, remarks, quarter of X $X currently.The by billion of Mark with at remarks. unfunded balances. opening The of new rate increased of the decline details of in declined was XX X.XX%. rate in total in total portfolio result allowance loans Through $X months. on will are losses provision portfolio XX% net average loan is XX commitment expense for incremental to credit million, million XXXX, details month the end XX due repricing our X.X% yields a income incurred portfolio total given mentioned fixed in on of maturity $X repricing or credit of basis and of X.XX% income the reduction recorded total our portfolio a weighted from net of X.XX%, XX% for statement.Slide John on provide offset which X.XX% have interest loans loans providing to which in in unfunded $X of new We to commitments maturing, deposit million $XX.X good to the are which of XX% his reserves billion losses provision Slide loans a in was we X/X of of X

deposits deposit less. strong have XX% core points basis with continue base or a to We of yielding X

quarter, the of deposits is from noninterest-bearing end prior which Our XX.X% at of quarter. total deposits the in down were slightly the XX.X%

The Our up XX%, interaction this deposits XX% to XX increased our cycle-to-date beta points total picture what is which of interest-bearing end from cost seeing last at pricing was quarter. basis big deposit customer lessening. X.XX% quarter, was deposit is quarter of and we're and

leading quarter So this slowed shift price believe and to compared deposit closer increases to we're the achieving mix getting beta last, to that stability. us

to in offset fully funding quarter. from put we by of reflecting quarter. to declined bit year, the growth we the were XX pace held loans on tax in of Although on points income $XXX.X XX $X.X X.XX%, increased given deposits the of this XX% even million, investment and basis originated million Average roughly rest net and interest of margin margin.Noninterest from mortgage secondary pressure X be through the shown increase gains driven $X.X of quarter asset continue Line the somewhat impact increase balance. as net prior of quarter, Line this Line sales Slide basis the for of million period quarter on yields higher million X, stated million had prior primarily expect somewhat interest we this during experienced $X.X XX, income points those than muted a increased on this will decline on expect sold $XX what cost mortgage ending Slide of on and quarter.On X a the costs increase a Earning we XX was that basis $XXX the in the than of million by market. quarter And equivalent We on slower the deposits loan loans. remainder a

gain X.X%. percentage, Our servicing including was on income,

some contribute XX. So to our this mortgage income team to able quarter.Moving was meaningful fee Slide

this primarily quarter. to demonstrate due quarter. million higher good costs to $XX.X quarter We was expenses million, with expense marketing for management continue increase an of of total increase over The the last $X.X

Our our continues be ratios. at quarter ratio shows efficiency and to year-to-date.Slide capital low, for XX.XX% the XX.X% in coming XX

the quarter the my AOCI drove the equity we into earnings due in feel exception the X.XX% growth and sheet I quality. great earlier franchise over in sources coming declined the turn with the remarks. remainder capital are ratio, about and impact Chief will points, position, all in XX ratios to common pleased I now that strong Martin, of of which our XXXX, totaling capital expansion basis this liquidity enhance Our my remarks, it of mentioned the customers that to concludes from balance Heading with Credit tangible discuss Officer, John strength our to our growing asset of value.That

John Martin

by and the loan roll Sponsor the Group morning. while commercial the in the loans XX% turning growth annualized, million originated by good turning XX. X, touch Thanks, offset Finance highlight Michele, of ending From business total expanded on other with call Mark.So quarter. grew to mostly million before unchanged slide, in quality $XX I'll annualized. asset macro back to nonperforming or Slide review insight the our on this loans XX. perspective, portfolio, On lines grew loans asset industrial start the and over or XX% $XX forward My construction remarks line quarter Slide a

transparency. sheet to to we where improving to and see underwriting additional resi our lending, to as sale with We down owner-occupied of requirements is the completed are updated increased business. balance activity $XX insight continue sponsor underwriting second includes portfolio mortgages Slide which classification finance income, additional we've the slowed contribution to as to the quarter, consistent other criteria.Moving see quarter. slide sponsor capital Slide X, meet the maintained added growth with well the mentioned.Turning servicing essentially space, CRE commercial X-X growth continued origination stable just finance marginally transition strategy spreads. in stress the associated XX. rates to well and provide which million to and family interest Michele the and Higher as stopped driving portfolio portfolio In C&I for We've We as the in

portfolio manufacturing. a C&I in concentration XX% has Our

cash changes individual not for condition, XX. the healthy deals with quarter. June We X.X% the of financial around line $XXX to this $XX trended firms, lower equity are This utilization million. shared and as Slide roughly for increasing it mentioned, portfolio as X.X% Stu participate leveraged data, current of XX%, Our line across leverage the portfolio, bank although large, remained key classified industries. of higher borrowers, These widely sponsored generally generally revenue just commitments platform We in and metrics. I've beyond the review fixed the access coverage companies borrowing There syndicated have loans. relationships portfolio which consists current exceeds we quarterly opportunities in on cost, credit private national million borrower with management coverage.Turning and to where various with consistent credit XX exposure.In at to including flow single compared has of remains X.Xx highlighted finance prior loans credit in relationships based are charge

maturities, general continue of outside right prior to breakout the portfolio loans with office the of office is and of concentration $X.X Office estate broken portfolio around and provide office and a office balance exposure provided well year. an the is highest out refinance additional detail loans or next $X.X into commercial from bullets nonowner-occupied maturing million. appears its on medical. We mix. of office the color I unchanged half also office additional within our of to X.X% to the average X.X% type a quarter bottom of added our risk I've portfolio with The the of of by with granularity geographic real loans, total chart represents chart portfolio with a with couple diversified the total XXX portfolio provide bottom the million and exposure. low in tenant

and position, larger reasonably our greater office our periodically of mix a through combination and exposure past other tenant Slide and to the and quality considerations.On NPAs highlight continue guarantees, XX, trends XX days view We current than points review due asset X had loan-to-value XX mitigated I borrowers of charge-offs quarter. million for the basis loans $XX million when up to both million to X. moved which of the $XX.X Line nonaccrual. quarter made on I borrowers spoke decreased they or last the relationships, We $XX commercial is were

the syndication to when a quarter. The alleged banks pledged received alleged trust. investigation collateral bankruptcy second bank first, out of during we a This for and the resulted an fraud borrower the agent was nonperforming million on previously findings based First the and charge-off the in balance $XX jointly where by that of was bank's filings report commercial The lead was downgraded occurred borrower and The an agent. fraud Merchants sold participated. down the from loan lead the had we included ongoing subsequent a not in the our uncovered by from its which allegedly charged disclosed group's borrower X bank's and lead

as X. both an loans loans, and of X.XX% We process migration slides loans, second the forward in the Slide rolled the recovery.The million or industrial inability XX of charge-offs to the declined charge-off was I've for segment of down bankruptcy to borrower resulting due. adjust a by moving again in XX, continue the pullback expenses.Moving where which Classified as nonperforming to past improvement quality.Moving days on driven ORE focused construction and and to to as opportunities down market from charge-offs, a asset pursue monitor $X.X well in Slide

$XXX,XXX, NPAs alleged and past charges summarize, exclude in million the in XX, status we resulted the from For $XX.X $X.X -- a accrual I $X.X of reduction past loans attention, annualized quarter. due Line net charge-offs the accrual asset delinquency an on just basis remain of XX to quality have points. the remains all, Both and decreased gross of and or to reduction ending Line XX net on quarter and and Mark good. stable. payoffs the Hardwick. X loans from points line added I'll days down third loans year-to-date good would a criticized turn appreciate X been an in with at charge-offs we're when borrower it check nonaccrual XX of asset $XX.X charge-offs, and would dropping at with quarter total quarter, fraud, million, impact XX million to in for which the due, have been ending All your looking basis And Then the annualized of classified remains call million. quarter.So days average When quality changes over metrics.I for

Mark Hardwick

strategic Great. Slides of the highlight Thanks, combined of then to statement with and returns. team XX some some get the XX-year But our John. reminder our XX mission just at along Slide rates call. Q&A XX, And point, love I'd our into growth imperatives. of the is and this they annual and vision, portion

Operator

the Instructions] Terry [Operator Stephens. of McEvoy line comes question Our of from first

Terence McEvoy

start where a about And question mean repricing margin as your and the certain as well the costs? does that funding of it just Maybe might to for Could you bottom? when maybe. Michele just talk assets with and thoughts maybe increases what near-term for ongoing in

Michele Kawiecki

-- X.XX%. margin September our our Terry, so was quarterly

was X.XX%. September Our margin

see in you, would and through But little the our to do margin. of a we QX more expect be or of should then And see little better we I our trough. I think, quarter. be see although remainder with And planning in to able the XXXX, finish assets 'XX, guidance next still of really able provide planning, think we'll a pickup we XXXX working we'll expect either to our margin see through to bit that margin are a So QX compression to we'll we repricing bit for QX. the

Terence McEvoy

for And maybe as John. a follow-up question

differentBetween how loans? portfolio, core just thanks business? how of for all off, at a loan the from trends portfolio, C&I your fair with kind are into SNC C&I those the my the anything seeing First Credit do And Shared concerns details all you credit of question is been differ underlying portfolio. But given National of the the rest within there's the amount

John Martin

credit it difference of Yes. underwriting kind the are national not I'm it running we're the of standard. of the really we it the shared is the portfolio, kind -- And -- really, same We're credit same size not to underwriting the itself. standard.

material a performing marginally probably the than the portfolios. the frankly, better anything, it's So X portfolio. of difference there hasn't between been maybe rest If

Mark Hardwick

in I in think seeing also the the expansion the portfolio, some of yields. the we're expansion margin loan --

John Martin

one, or other Were it strike, of auto potential guess the have strike Understood. of I of do And you what's other there write-downs? observations given just one slides, prolonged there? one the auto prolonged the a suppliers was manufacturers, portfolio? parts any And on or the size any that small

Mark Hardwick

months, have at the any that and date, manufacturers from shutdowns kind it, of widespread been does the isolated. have were that occurred.Yes. would months for doing relatively of if But It's it's obviously when the It's tied slowdowns what auto Yes. of most will have haven't either the really to or to to to I still if Tier much it's we're adjustments I pull the think that manufacturing, impact to harder to some we say, interesting, the have the quarter, occurs it. will, -- say tried made When total. most Production automotive And will -- suppliers there's changes tier, I that now, But the that But direct some of that's if about the get some Terry. researching industry. to and not I in related you some X portfolio. started is so plants, it right it out otherwise been it's minor. of Midwest I'll that I or plant it significant. automotive fraction impact. seen directly say though of because manufacturing somehow

Operator

of line from comes the question of next KBW. DelMonte Damon Our

Damon Del Monte

Michele wanted with expenses. question on on start Just a to

in give expense as outlook the the quarterly base. go as thoughts just us fourth overall kind If you so of through as little far a we your quarter for more could perspective here XXXX of a on and kind

Michele Kawiecki

probably in that which for with expense consistent I be rate run quarter. million range, to say $XX last really would QX, Damon, provided $XX will the is we've million the be the guidance

we're still XXXX, through For Terry. mentioned, our as to planning, I working

so quarter next we'll you be better XXXX. a able see to we'll And probably to in run what give rate

Damon Del Monte

Got it.

a And bit banking, the But Okay. here you think obviously, income some in of let's the range things, think is more on mortgage I quarter, to in little then as million fee it, the kind $XX.X quarter. this side reasonable year? do fourth of probably a, million seasonality call $XX.X the we close out

Michele Kawiecki

run think for a that be I had in use our good rate, would rate what run QX to QX. we

Damon Del Monte

I then rate. consider? And on the an lastly, we tax have rate should guess estimated you tax Do effective

Michele Kawiecki

Yes.

it I to to XX% be we're think XX.X%. expecting

Operator

from the Our comes Piper Sandler. Nathan of next Race of question line

Nathan Race

Just last going kind few on to the on see the thoughts held the versus outlook the of quarters. some balance to the of dynamics Curious margin on hear the quarter. borrowings over It the to right flat was back some next great sheet.

and should you thinking how of going curious It are about like thinking you loan digit sounds about how core guys growth growth. forward forward. loan growth kind be just restored are So deposit going mid-to funding

of imagine and then I alluded the that incremental to also cash Is to that think it? with growth. about some So deposit securities just it's right way portfolio earlier a combination Michel flow

Michael Stewart

to our to to growth. grow we're pretty confident ability continue our loan fund I base our in think deposit Yes,

primarily funded mid- what of is that on. next out higher so focused for we're rate And of deposits to growth year single-digit loans

Nathan Race

to to Do guys just on Great. of higher looks maybe have X% any pace where environment. rate visibility of growth year. and year. kind kind like in rate overall Okay. in this you you for you're next theoretically longer how an for of grow just It then think about bottoms terms maybe X% And

thoughts just trajects how that on any NII environment? next under year So into

Michele Kawiecki

some in see think income. be Well, it see QX, we that that think there least a compression of I we at pressure on bit with -- interest we could we'll might net margin the think still

able I some then think And pricing to I be growth. will a also deposit real offset are we the that loan we'll expect though, point, until coming we that some that trough, hit over should we see see any think deposit make left see growth turning and we the costs to rising stability. help once quarters

Nathan Race

Okay. sense. then lastly on Great. maybe And capital. Makes just

You capital operating are with levels. still pretty flexible excess guys

thoughts just to on reengaging So kind just of any given just the curious hear there? plan the perhaps to uncertainty Or capital, buybacks? is build out

Mark Hardwick

to more active buybacks. love be in market the with Yes, I'd

like we'd We spend like we equity just to and level what have see less time around do marketplace will the is tangible our And above volatility. right certainty haven't felt the X% that. to that at common stability some

Nathan Race

Got it.

through kind there? at still half of sounds it like of fair M&A a is off maybe XXXX. to table characterize So the way first kind least the prospects of that Is the

Mark Hardwick

and all projects. complete also Yes. project time, customers, SS&C our which and really of on completed, internal our consumer we At replacement a focused for platform of are is wealth getting excited our commercial this point getting private in XXX% We're about QX deployed online our mobile platform. and

the M&A So priority lend activity. to really And the at point. don't trading this that's multiples

but power nor point, strong in be impressed I are with we're this potential don't have feel by continuing we so ready internally banks to relationships And to the focus pricing at to like keep future, the that candidates may be on really that our we active M&A? were

Operator

next Our Brian Janney. Daniel Raymond of comes question Martin line the question of comes from from next Tamayo of James.Our of line the

Brian Martin

the one maybe just on question, margin. Michele, Mark,

the that Just deposit it did feel costs of for month get kind here. on the trying slowing September. of quarter? Just spot throughout margin trend kind of a for the to based How the

Michele Kawiecki

down trended it ratably think actually. I pretty

ended it $X.XX landing the end so at up And at of September.

Brian Martin

Okay.

reprice, X I expand just -- that here message fixed with the and to deposit kind the the in quarters, repricing commentary occurring? the costs outlined of flowing of mean kind the Okay. And next rate the far the as with continue your X that as the side. Is what in loan -- that's with yields you're -- is expectation stabilization it given I of your along and the kind guess funding loans to seeing that's you at the

Michael Stewart

it on seeing Mike mortgage the that Yes, way. put that we on Stewart. -- this I be same the commercial is side, the do would think

HELOC, So any think yes, we're loan the repricing and I the doing -- on should drive in that higher yields. all

Brian Martin

And far costs the X given remix I that on I -- as are as at benefit if may yields that you're those that far loan Okay. when the out trough, mean, to as or seeing quarters mean least as coming today? through X on deposit what to we're close troughing,

Michael Stewart

XXXX. Yes. increases see we'll if they to where through show I that are, stay of our model rates steady all mean continue

Brian Martin

Yes.

Okay. Perfect. credit. appreciate And then I color all on the

Obviously, kind provision and as where credits reserves this context kind good outside of situation should the the forward in recording quarter, But this credit to Just of actually one just about projecting going on just that thought we at. as modeling environment? how quarter. think you're think kind any given the we're the of that of pretty about far how a fraud of

John Martin

Yes.

I to think going meaning release it's for replacement of that a trading side, the kind some perspective, replacement ACL. be dollars with in from a potentially provision a provide a on expense we'll charge-offs

As basis think past being between in quarter. XX a points guidance XX given we've the far go, those I as of charge-offs and

Brian Martin

But where are other we've are give you being far the you're on kind -- traditional of maybe banks about talked mindful the kind handful of far other to concerns But the as more to. the look this better if as your SNC And as the paying portfolio Okay. where portfolio. pretty just just attention mean, ongoing. to? may I some greater, us your have as than within credit portfolio, of what good, be today there? guess, thoughts, more any a thoughts quarter John, goes, and issues I you seen the you of Can just

Mark Hardwick

to about impacts potential about and to it are necessarily underwrite, going the that flow drive multi-variable when do because portfolio, from portfolio borrowers. within what I Brian, potentially spectrum the about tighter upfront on think When broader think in higher our loan underwrote just I tests upfront cash the had you I you construction the portfolio, think we C&I coverage. we the stress, appraisals rates, commercial we Yes. across

speech, and particular as I I pretty mentioned, portfolio, additional about rates that because But portfolio we the that have my them. looking things the we're I'm in into add higher they the around Brian, not interest me there's are finance requiring good portion than names, today, as portfolio already underwriting another. in the new our built one of so as those maybe -- sponsor that feel even concerns more capital construction And at,

your and So be that I construction, speaking, say I know use But the generally going could or event the it. was that word -- maybe portfolio. would this question. the answers to I'm if absent not point, idiosyncratic, don't fraud to but portfolio that I this that wish occurred, it

Brian Martin

without has Or that getting today renewed getting to Okay. of these those the commercial are today. these really folks? that has been a some increase I renewals given real And estate that rates guess, are coming this at credits, an credits, the loans issue in the on problem been point

Mark Hardwick

to with move what them rates, the for level, Well, higher rates, And project, some construction Brian, got need to the it measure a in market. covenant meet that tighter. way order it's happens, you've that conversion a have at we to on is short-term secondary requirement they short-term you when

a to and number rates like interest potentially when just marginal But extend different guarantees, maybe collateral. a is industry but might the do one say, a from colleagues put strategy a of rightsizing, maybe requiring what maturity, we're a in, strategies, additional particular additional on challenging are project. around pretend capital to additional as it's maybe so And more being

Michael Stewart

through if right? putting I'd Right. we going -- a that, seeing of renewal think in. don't in just Those we necessarily not but safe I'd process. say those say are I any if we're to, of secondary it's we to aren't They're -- employ needed market. strategies most jump the loans

John Martin

had property. understanding the the question, something years, I'm X renewal dynamics that or if an or your and renewal project after X borrowers a might to have on the rates individual increase specific, an had change rental of And have opportunity individual

So seen interest the borrowers renewed issues higher related to a we necessarily as to get haven't rates. result inability of

Brian Martin

to talking about estate the understand all really Yes. construction, real comments on but that. No, trying commercial I the not just appreciate I I it. it and was appreciate

Mark Hardwick

assume, his Tamayo had be question, portion? Q&A line Valerie, that the conclude muted. does I Mr. may a but

Okay.

that to the Valerie. Hardwick I'd conclude confidence for to back that our portion. like have closing the Great. we can business I remarks. Q&A does call hear So you Mr. our any hope Thanks, turn over in model.

Our healthy. margins are

Our strong. capital is

and range. the importantly, of in our growth care that the rates and that of deposits more top community do all our of both confident quartile to will serve of taking Our performance of the And into taking loans we're we efficiency we achieve kind stakeholders. likely continue is care for if And future. that, needs we we're

So time to investment today. soon. appreciate we We Look in Merchants. and forward to First you talking your interest your appreciate

Operator

does conclude and Thank for and you. Thank day. great conference. today's you a participating, gentlemen, all have Ladies this

disconnect. all may You

First Merchants (FRME) 26 Oct 232023 Q3 Earnings call transcript