FRME - Earnings call transcript Q4 2024 | First Merchants Corporation

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Operator

Thank you for standing by, and welcome to the First Merchants Corporation Fourth Quarter 2024 Earnings Conference Call.

Before we begin, management would like to remind you that today's call contains forward-looking statements with respect to the future performance of financial condition of First Merchants Corporation that involves 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 the most directly comparable GAAP measures. The press release available on the website contains financial and other quantitative information to be discussed today as well as reconciliation of GAAP to non-GAAP measures.

call recorded. today's reminder, a is being As And to Mr. like to program over hand the now I'd Hardwick, CEO. Mr. Hardwick, may you begin.

Mark Hardwick

and forward-looking Good morning, released Eastern call. introductions Time. conference fourth our quarter covering and welcome approximately to Thanks First earnings today for X:XX X. on Page statement Merchants' at XXXX for We the a.m. the

Page bios, You third our earnings our X. our on the X the certainly to resilient of had building. President, and we're XXXX page focused slides, presenters today's results We're in the hand. will and our including release. On and by many stayed today's Officer, challenges, bank. Michele the following Chief John quarter We but slides a quite team for with fourth access Kawiecki. Stewart; respects of can was many link focused year that Please our the see you Credit the turn at momentum on Mike Martin; Financial was tasks Page pleased in Officer, great Chief

into of and consumer We order, a wealth Diamond. completed securities and online real-time slipped and quarter our first by portion corresponding account program, in-branch to portfolio our Finastra. upgrade of to work the completed Terafina, of X sale restructure noncore though of the Black commercial in our then for we system voluntary private SS&C a our We just wire the upgraded the retirement platform Illinois platform both branches upgrade mobile early XXXX, and even platform we powered of to the and to the upgraded our our and clients. origination InnoTrust XXXX platform During

also XXX Slide minimal now $X X, Michigan share we're branch quarter we no to Ohio are locations, earnings with our distractions. rewarding focused you and On adjusting bond and financial an sub tighter XXXX XXXX for delivering results notice per to will $X.XX map innovative the quarter. growth Chicago a proving related helped on QX can the on are interest for gain or our on of Loan security on the million for expectations. drive core by down the be basis $XX.X You quartile top acquisition points on or our branches, and and linked Net The totaled strategies, sales. focus will after Indiana, over which margin in a consistent $XX share highly that fun. loss offset see for sale ratio a quarter, new X X% and by the markets, efficiency customer drive per the improved PPNR QX again X% even totaled to million with and basis supported of growth XX%

totaled book is full years. Fourth and has by tangible Our over ratio XX% now XXXX share to build value X $X.XX. earnings share has tangible reported Net or common equity million X.XX%. year XX, and $XXX increased Slide $XX.XX $X.XX income the per was quarter share, on which of last is continued for totaled and the per per share per

now and very pre-Silicon QX we like is performance Our Valley and momentum levels. are back QX feel we satisfying, metric to

of Now Mike? will momentum. our Mike business discuss Stewart line

Michael Stewart

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

and experience. rewarding share enhanced and our implementing organic imperatives income our executing about loan our the engaging remained We're new a earnings summarized taking focused XXXX, and organization these primary by strategy, Ohio. momentum teammates remains and have building business Mark and retaining our and Our throughout talked technology Slide platforms which on on X, business by strategic of growth deposit, client fee we all And markets is unchanged. segments across of that by commercially market Michigan focused Indiana, that

year. delivered you on on throughout summarize So Mark we X, Slide earnings heard as the this momentum

during growth year Loan the X% to and both X. fourth the on Slide annualized commercial X%. quarter billion growing commercial the or full the nearly and consumer with $XX was segment quarter was basis increasing million to the growth estate the million growing bringing segments, growth an $XXX portfolio the $XX primary turn driver C&I across strong the reaching X% The portfolio and for of investment by Let's real million. $X.X over

For that estate the our C&I the $XXX X%, growing we've grew portfolio. the segment $XXX year, talked over in or the full about million, decline over investment commercial portfolio real the offsetting million throughout with year

growth. the been with such Indiana, increase. bullet sheet driving the a this point It's all of level the Michigan is page strong bulk growth prior year-end on pleasing at a across after has and sponsor shared the pipeline. Another the quarter The balance consistent regions from the teams

of a has begun to the thaw, slow C&I which the of demand, with the like and during the the of are the spending, the had evident loan lending quite to last and relates specifically ownership into X trends months but bit reductions quarters carried spectrum Fed year and/or generally real CapEx during X rate Some across M&A consistent as estate of projects. first positive was pipelines. transitions. XXXX, acquisition it That on commercial impact drove investment have activity a particularly

well. of as of our estate strong production investment the team New that year for has some and real pipeline end been the demonstrates

clients. solid auto balance inflationary All benefiting with are sheet and the of workers benefits construction growth. along industries. are infrastructure the and particular, pressures indicators demand trends easing future for positive What stability in orders, of these In our also for about of

the have remain bulk the on crop almost bird focus declined levels the flu reverted industries, X input as proposed The impacts much equipment not to past reserves. commodity challenged, across to the carries on have our historic prices over the significant along response more years, costs is of remains hasn't while to inventory FMB impact with a the or had segment a that, cash purchases little said agribusiness far, margins. has of Having up So usage no exposure of as and use production. tariffs most soft. revolver been

the our A portfolio been commercial of the the Merchants driver XX% C&I utilize total First the $XX portfolio. always reached X/X on-balance largest with few driving XX% focus commercial. balance of loan increase primary and part the portfolio. construction or our portfolio and growth our We rates, industrial over sheet loans. million. loan commercial on the of balance sheet sheet residential of Year-to-date short-term growth comments that and is the segment variable comprises or Our has $XXX consumer of fixed million for rates,

mortgage continued gain-on-sale the to the activities. As Michelle delivered through production remained treasury mortgage review our has strong will during quarter, our growth has decline the team the year-over-year throughout. XX-year

footprint, growth. continue bankers that a have helping us We really mortgage team our strong of throughout

our reviewing Slide this set improvement of is of deposits. and of story and X, Michelle work to mix, turn The maturity costs. while funds on reducing goal deposit Let's the mix this relationships margin, costs have slide net teams accomplished will in be our and deposit slide our deposit interest deposit core managing of our the public building represents managing categories. product and

our fund commercial balances X.X% of growing So declined important by nonpublic funds X% segment, our essentially categories. total rate. we accounts cost deposit X%, grew our full at quarter would of year, are operating the grew accounts, is nonpublic or $XX the throughout accounts. throughout or story the balances balances, for The by commercial balances the an during account fund operating million year a mix X% XXXX. for one yet highest $XX overall we quarter, And grew Public what the operating deposit annualized the declined of deposits segment $XX were flat. with Year-to-date, Public deposits by improved total depository commercial but fund growing million. The call million. balances deposits

We declined it XX% The also entirety essentially which an at the during deposit maturity the balance consumer quarter the million. pricing consumer on decline continued annualized or the deposits basis, balances our chart states did, was discipline $XXX top segment, deposit that our at they of within but specifically maturity CDs.

account balances has our or grew core through over million of Maturity a roughly CD flat balances focus categories cost. in XXXX. $XXX the million The a were teams, declined deposit primary consumer deposits, $XXX been on or during and a of quarter focus X%. but So focus deposit mix XXXX on accounts, deposit primary

with engagement the are manage with pleased So having we as overall, clients the and costs. I'm active deposit their mix our teams

to going can Michelle review our more I'm Michelle? statement. income the call the balance so she detail our of turn sheet over drivers of composition So in to the and

Michele Kawiecki

sale Thanks, remarks. that, Mike. Below by million our Mike shows performance. covers portfolio. X X can you as derived reposition discussed the the That bonds continue assets. his from quarter offset we Slide was growth of a that fourth in $XXX of Line in loan reflecting was the in total investments, it small the decline to see decline

our its $XX items, Net sale normalized gain million income with growth XX realized of non-interest $XX.X on million. the in remained Illinois million. of of middle Moving increased in on to down increase income which line those line the by continued an of When of interest losses sequentially. page. income non-core the the the income totaling for reflected prior over XX an million, of sale the quarter bonds on strong, $X.X increase the on $XX.X million, Non-interest branches $X.X by offset statement trajectory

Slide earnings book interest pre-provision impacting the $XX.X franchise despite our million, performance. higher result, value million totaled performance annual linked during fueled a strong shows and growth XX nearly negatively As results. reflecting tangible grew by quarter That AOCI. core pretax quarter $X.X rates

sheet X our life totaling that those to Operating book million balance growth earnings increasing Tangible a the strong and was lines had the a third for was including and and asset Expected share at were the bond during total The X.XX loss $XXX.X $XXX The pre-provision resulted earnings, value sold pretax $XX.X the were Slide flows cash loss buybacks due the XX average lower-yielding on value million. from favorable the weighted overall loans. details bonds sold mix, a impact months the of approximately in portfolio in decrease quarter portfolio shareholders X.XX%, million which payments of X on some in $XXX portfolio shows change year next book book investment through strong in dividend show positive interest increase shows maturities roll-off and million year. have yield returning of during principal with in $XX.XX higher-yielding yield of or sale tangible the top, and of earning with years. Slide XX decreased payments early scheduled sold million. had for million branches XX the yield million yield totaled in the deposits the closed rates. total of benefited the X.XX% at next from The XX to a a average Illinois portfolio on line X.XX% repositioning, the per earnings loan to variable of an The see a X% fourth response of rate a lower basis for can million in to points year-to-date our year-end. a strong We of of achieved $XXX $XXX investment quarter, of reflecting portfolio. $XX.X decline share by bonds sold portfolio to details $X.XX and $XXX.X in while portfolio. December. securities You value value repriced loan our in The total a year. totaling $XXX.X through as bond an short-term will million.

forward to on loans New new for loan the variable do helped repricing repricing with Slide continue strong XXXX. rate shown priced is going along yield. and will of and benefit X.XX% the losses The yields, fixed credit so rate a were The offset allowance renewed XX. to loan in with loan

quarter reserves $XXX.X This provision only commitment which was loans, balances net We losses $XXX,XXX. we result expense $X.X of of for credit X.X%. million. a unfunded recorded in offset of of was million for the coverage reserve statement. The million, was at the The charge-offs by reduction million on and ratio recorded of had quarter, income was provision net $X.X $X.X end

deposit fair Overall, coverage In addition X.XX%. declined we than XX When our XX Slide of still shows deposits meaningfully allowance $XX.X marks ratio ACL, those value have adequately of are we portfolio. to on reserved of above X.XX% this cost quarter. million by our points remains including as details marks, the to well levels. more The is our basis loans. remaining total peer acquired

Our costs deposit XX basis XX%. reflecting downward points, of declined interest-bearing a beta deposit

increased grew Therefore, prior of $XXX.X income $X.X total for end sale basis of reflected Illinois the third included deposit quarter deposits to the $XXX.X linked third the Slide and XX, reminder, the from a held million quarter. a million the quarter. fully $XXX.X were at of the reclassed quarter. As branches million million X.X% were sale in not or balance deposits of in net On tax annualized equivalent on interest in

a assets of basis increase it linked points year. decline from earning and of the basis funding XX basis line X expansion of costs points was XX shown on X. first quarter, of declined in outpaced was on points margin the interest net points The meaningful yield by quarter Although XX result the of stated an basis

Next, an increase of strong Slide securities branches gain the loan with mortgage and on XX the totaled fees. income million, Customer-related and of on quarter. income. realized $XX.X $X.X sales gains level over wealth fees was $XX.X for hedge and of noninterest at million reflecting loans, robust loss of management when the prior normalized million Illinois fees shows details Noninterest higher on the remained along sale million, customer $XX.X

over quarter marketing due the other positive and delivered operating onetime XX.X% prior efficiency million and operating million, our capital Moving to expense increase ratio. and $X.X totaled quarter maintained costs and this discipline adjusting expense $XX.X our achieved Slide for of ratios. Slide shows expenses. for higher leverage a again items XX quarter an noncore to XX. Noninterest We core

We X Credit John to concludes I Tier over common equity my climbing That with ratios to grow These X.XX%. the into strong to with going will XXXX. Officer, equity us year at quality. now discuss capital this tangible ended The ratio it provide Chief flexibility Martin, turn and asset remarks, common strategic to our continue quarter capital XX.XX%.

John Martin

the portfolio slides, I'll Thanks, asset over updated turning review to touch before on nonperforming asset Michelle, XX. and loan quality morning. highlighting good the insight the start by on My roll forward growth, and call remarks Slide back begin Mark.

Turning C&I, while X, mid-single most, can on on line portfolio XX. on finance line commercial had growth continued the digit the industrial you declined. line which shown includes Regional to which estate finance. We Slide strong commercial owner-occupied and and X, real X loan grew see sponsor sponsor

see the stabilized or are mostly was as sponsor properties funds or matures, line finance which land mature. Total unchanged. As periodic companies portfolio construction, payoffs development, real estate, expect both sponsors land investment we to and on nonowner-occupied includes portfolio would CRE sold stabilizing and X and

for conditions. We opportunity grow view this as continue ample an have future and this market depending to portfolio to growth room on

due and municipal ability quarter, fourth insights transactions into Moving was in attractive public quarter-over-quarter transparency our down $XX opportunities. XX The There move Part willingness to quickly which provide high-quality million. very finance, in Indiana. in growth was loan on X. to concentrated line some all and competitive up in originations strong are lending growth geographically the this to intended The was and resulted the of less slides were portfolio to portfolio. Pages XX which

includes businesses. CRE. prior owner-occupied As XX% loans calls, finance our on Slide of as sponsor classification mentioned C&I manufacturing XX support shown well as the C&I on

desks. management in with this $XXX contributing roughly the Our current by for C&I quarter. participate again to commitments line million rose Line We access increased shared national finance in In $XX the There growth portfolio. or including for leverage to credits generally are and portfolio bank On key with utilization assortment revenue cash XX%, changes break X% highlighted deals utilization of as portfolio flow the coverage. nonowner-occupied large, review industries. information. an These of to exposure. metrics. loans generally we coverage private total X.Xx million borrower ratio XX, platform portfolio, have companies the quarter. we relationships roughly on go have fixed condition, center than from for $XX opportunities based leverage roughly the across of and credit consists rising real individual XX This C&I sponsors million commercial investment sponsor are widely QX borrower a firms We bank beyond active in estate syndicated single greater industries. I've to that where opposed XX% charge companies relationships money out platform various trading credit of Slide and equity quarterly

less the maturities, well the loans quarter. by in chart represent tenant loans office right XX% outside half in of the office mix. of slide general the the diversified maturing type office space. and geographic from a bottom concentration Our portfolio than detailed on are our highest portfolio million, The the last wheel office or of XX% represent is X.X% year of bottom up office medical $XX.X portfolio details and loans portfolio on with The -- office total

continue We our to reasonably periodically office and review borrowers exposure consideration. mitigated guarantees, larger combination and other view through as a the mix loan-to-value tenant of

a roughly million, year under and a is than loan is has less tenant largest a $XX lease. Our maturing long-term credit office

course Slide highlight position. We quality On and quarter's asset renewed expect year. be we this to this trends XX, due in this loan later

while nonaccrual relationship the involved to loan largely is million, $X.X loans dispute discussed after a $XX loans XX-day million multifamily $XX.X million Our in our declined the from unrelated million of were quarter's to increase last nonaccruals housing during in developer $XX call. renewal project. a resulted past due up The a matured to that

nonaccrual delinquent nonperforming of credit XX down forward in project by gross first ending in exit XX, and $X.X million. migration reduction expect later the loans the in Finishing to nonaccrual of renewal the had rolled recent quarter for charge-offs, $X.X to classified charge-offs $XX.X the had the 'XX, delinquent the ORE from Dropping moving be loss. X loans of than early multifamily payoffs relationship largest quarter while at million to project headed charge-offs outflow Our anticipated line accrual we second a hospitality loans with we in $XX $XX.X were and with loans days in quarters Slide In $XX.X from past or which XX-day the million line Then to resulting the was plus I XX, $XXX,XXX. the more $XX status and of taking changes the decreased we've of X or movement roughly on out leveled We of of no paid million largest quarter, XXXX again with the from XQ quarter, million mentioned. last a is column the reduction to due. sale, just in QX out, net with NPAs XX-day on million, inflows from a loans, line of million. quarter a

estate combined remains charge-offs. with of summarize, refinance leveled activity. have finance with asset quarter public stable. growth, C&I quality Classified nominal and to a loan robust So loan with We And had the balances activity solid I traction hope attention. loan growth and your construction to abating, commercial to we'll in sale now in back we the Hardwick. the And see over Mark real portfolio. appreciate call turn

Mark Hardwick

Thanks, John.

Turning to per Slide The has rate value and X.X% we've X% is earnings annual share. share of helped the growth in XX. rate tangible support XX-year compound book per growth seen

equity As those calculation. those Slide last materially activity that years highlights the XX% of and our acquisitions in dividends, are are M&A to to vision it dilution help CAGR There both shows XX our total during fuel no asset our Slide the acquisitions, post our numbers meaningful live you from growth. continue changes AOCI our XX and or footprint total the includes we as XX added impact and post know, also and our to imperatives. is have that strategic

happy that page of I'm And proud I'm I'm repositioning. of summary, on XXXX. a proud employees delivered the of the really in and accomplishments yet, to X,XXX-plus we this proud So I'm all very turn year that team. we have, of in

grow, and table share a that Our all to your to meet us of and and we you never financial we hope clients been very attention optimism have better same needs serve. position your around I put to the that hard bank in investment, positioned teams worked this share. the the for the Thanks last of year

happy So at questions. take point, we're this to

Operator

comes question the first today Brendan from Hovde for Group. Nosal of our line And from

Brendan Nosal

here we off of Maybe the as kind asset starting move repricing on through dynamics year.

you back book of the can pickup of asset either book, that yield us SOFR achieve I repricing book think But you're your floats XX% across how much on or have loan the to and year looking paper? how other XX% you prime. on much remind for the

Michele Kawiecki

are have about the going rate And I about will next rate to I repricing in yield. like at fixed believe maybe XX $XXX think fixed securities be probably million securities our a in they're that X.X% months.

some saw pickup there. we So good

tailwind will that nice be I a for us. think

Brendan Nosal

said what I about the then And loan think securities. was side? that you

Michele Kawiecki

book. loan I'm sorry, apologize. that was I the

Brendan Nosal

Okay. makes That great a deal.

me investment a expenses of investments more for and slate on Perhaps from you overall. spend for kind the forward XXXX, you XXXX this tie thoughts into Okay. then did early the I of Any be one to of where and base with on X just or major work on the mean that in need of kind initiatives. overall ton dollars on your cost commentary into that pull thoughts year? whether 'XX pace project allocated

Mark Hardwick

amount it's our up our we I'll forward cost pull Where charges, technology conversion and let amazing Michele for without the of of but short the we onetime income to quality of projects XXXX really expense duplicating able an carrying speak not But to the increased those in base, changing the any related to really increase. even overall upgrade those a related expense. maybe technology the showed platforms time. actual it over were numbers the all of is really were technology were to projects, statement kind expense where

in forward. back core investment to comes just move increase people really the in our we it as So what's

Michele Kawiecki

say, maybe our in expenses X% at end of XXXX, for When range. we that. I'll the somewhere looking XXXX, of more Brendan, just pretty expense the of second minimal. And towards Really, that kind we Yes. part to I you probably the to keep leaning X%, would can answer think growth total look low

XXXX as Our we'll and efficiency have we efficiency doubt ratio no to continues do continue well. low, a expense and that that ratio to maintain sub-XX% deliver in discipline be

Operator

comes our Stephens Inc. from McEvoy of line the next Terry And from question

Terence McEvoy

the you the if quarters? of of handy, in I'm just that you do QX, Or end wondering have December? cost at heading couple don't where was over X.XX%. next costs deposits total where the Maybe maybe those see of that deposit

Michele Kawiecki

X.XX%. Our deposit costs December were

the fourth of can those end quarter progress we cutting we quite And costs. believe fourth made that actually quarter, we've the through continue a in momentum. bit deposit overall, that of really the So

said have beta deposit of As I my XX%. we remarks, a down in

rates So on our the forward. competition as all will in commitment go our share. of If always we're is. to cuts it XXXX, going is to be Fed grab dependent continue more to move It

we'll so make as And adjustments needed.

Terence McEvoy

And Thanks will in in. half support positioned highlight the since that area the as then your asking continue ample better real capacity. of that follow-up, and the in estate C&I I'm think to momentum a out the just What's exposure? to for certain your growth? given on showing first the industries just estate like the opportunities and Mike, desire the you sectors, of build loan sounds portfolio, relative based real year Are on some ample your commercial comments. there comment you low are it for conversations

Michael Stewart

some next last to I think even you I we've about we're strides our you, in plans On really of know, inside our momentum is in addition and there new is in growth. And Also, anymore. business of the But a like up manufacturing outlook inside we're gives segment. just years there X. sitting is X maybe in really today, the market. brand we're quarter, that can't these great bullish manufacturing a our the the me -- couple gives to it's remind as We're doing. the say making me the those you personal we Michigan things outlook gaining companies in a build in part what X C&I for states, that would that pipeline of outlook, here, the done team approach, big what what see when

that we're So to trying our share fair marketplace. of get

some So that of additional taking growth. market that of offers runway and in of itself of us share

real what just points it's estate point what balanced. I out I'd we're to really -- John is just say and with think portfolio the out

developers lot really -- projects the industrial warehouse. the in classes have core that They're inside doing the with. strong could that We that we be work segment, multifamily we we still like, asset a

we do really estate like way in You assets. hear to cool us out to we continue with But little that gotten our to to more it's that space got our as from earn differentiate though process. syndications, that with things more we've to we've continue student even full be our just bit. already capacity and approach, in ability a with and underwriting, real consistency be continue might we build grow, other the doing our saying the housing, the got is talking might to we're into that's banks ourselves about as reputation developers And close and that trying

So we of ability if the just out to underwriting the the advantage pencil that projects if like have we attributes. and take

Operator

And comes of from from the DelMonte question KBW. Damon line our next

Damon Del Monte

and margin of that portfolio. growth? some the get on little with some cash I to bit you loan flows wanted off guys funding kind color a of the at Just that split coming about more reinvest intent reinvestment of $XXX the securities higher maybe million rates? outlook. Michelle, you think noted to the Is are Or to going

Michele Kawiecki

loan to Our our is it growth XXXX intention use to plan. fund for

of and rate see the both in We so one is where is say we year. the for And just I margin. X to do margin them built in. grow we'll But plan the plan, one have March in half in should early looking cuts growth are for our XXXX, in when that our goes. June have

in although we yields. 'XX. proactive got loan have in We strong And been loan And 'XX. do we really so costs our -- loans can have we sensitive, new deposit our down, think yields, we've in it we've asset do managing and reprice also, to are we'll very

believe that fixed margin it. feel but rate to achieve we'll that, grow about, loans we stability, Brendan minimum can asked we And the the growth able be that with coupled very so we at the

Damon Del Monte

Great.

loan commentary. back I the circle just color. appreciate Okay. on that And to then

low So do net get Mike, you growth Or a could solid do to mid-single-digit doable? footing? you single-digit think feel growth kind more of you a middle actually is

Michael Stewart

not talk high used of might It I'm single on I'm to be bullish single Yes, the the in feeling high, but We digit. about middle digit. side that.

Mark Hardwick

Yes. 'XX. And I a about the number my good opening this made quarter to is just in X% think that for a really comment

Damon Del Monte

Got it.

management? Your capital been then activities very capital there's strong. just market, been thoughts There's your across a Great. on Okay. lastly, in footprint. some M&A the and levels And are obviously any thawing updated

of support think M&A expand Is organic opportunities are to core capital? feel kind need your Or maybe out you markets? geographically, Just Do there's priorities in positions for wondering what the your you markets? opportunities? growth? it enhance your do core just if deploying you to so, of see to do your kind of And

Michael Stewart

of capital I much with earnings the balance into flexibility, Yes, really the stream Damon. our love as base. where to a to power our would use XXXX. today. grow It of as love are sheet. Thanks, provides we I'm levels lot happy we it possible the of

I kind with of we'll loans. is I of number think mid a kind mentioned, I to where in gave high As single-digit come

So to need X/X We growth. balance base support about for and to the our dividends, rest arguably, the use will capital accumulate. sheet continue X/X of about we

to nice it's it X were like are make would may sense to that some into Our it's priority. don't Indiana, M&A communication if what focus long if we a organic banks. for know or give time, and is business, just there over a institution is with Michigan. new in their the able be. where states feel market Ohio, that But in certainly I like we're the going footprint But acquire real it currently do X where us where time, be appetite in that been a we we has an makes we future. sense, And not to something grow

focus the prioritization of is Our organically. performing

Operator

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

Nathan Race

you the the questioning last are on back Just quarter. looked like line active going capital. repurchases of on guys share to in It

given heading into some of So just just this commentary. that curious if remains appetite M&A the year,

Mark Hardwick

just I of averages. I out the have Yes. where I our And historical about below trading being future are And what when if a that historical earnings appropriate, in then believe we're an historical where the that, we we're for and repurchase XX.X apply closer capital stay we're are XX, that years. our averages, trading say interest multiple. repurchases just to share estimates, think I'm to interested then likely in below share trading averages the cetera, we're or and active accumulate et at if

Nathan Race

And income we $XX Michele, run talking going for to helpful. $XX around million last forward. I then, really That's Okay. were think about Great. a million fee rate quarter,

guys You of kind here thoughts any growth XXXX? trajectory but quarter, just income exceeded fee run in obviously rate into the fourth the on that of kind or

Michele Kawiecki

in we're noninterest grow to we a team. mortgage expect can single-digits. in think performance grow from Yes. drivers they that the delivered our high year-over-year, income XXXX of I growth They've that come probably double-digit management 'XX. 'XX, to and wealth mean at The and mid pace in exceptional our to we expecting

income fee mid with when you kind think high when growth, that income so components of to will couple our And that noninterest you it growth other we of bring to at that year-over-year. overall the look single-digits

Mark Hardwick

continue. with QX, similar Yes. in management commercial wealth, plan the of really fees, performance. the about a business, range love use private can the And in we our or And of TM should we historical treasury mortgage think even I they're performance, it be when think strong the and drivers

Nathan Race

on the thoughts really helpful. then And any tax going Okay. rate That's forward?

Michele Kawiecki

to maybe be expect it the in XX% for 'XX. year XX% would to I

Nathan Race

Great. basis given about kind level pretty maybe range the it we're the in the south Obviously, what's some the that with then trends fourth sounds past, one just below to quarter maybe it transitory, specific in that's we've talked In like of nonperforming kind in client. quarter, John. XXXX? charge-off increase just seems a of points, for Okay. that but of one given on trend kind here normalized with And last credit that some going of XX going of like benign

John Martin

I classifieds still being of as being see charge-offs. they reasonable that points with is expectations are. I but XX are, XX think they basis good nonperformers is a for and transitory, that And still range it being where number sort of the -- a where between

Operator

comes And line Raymond from our from question next the of Tamayo Daniel James.

Daniel Tamayo

Maybe fourth quarter. on for details first, just the of Michele the restructuring the in

expect if any benefit quarter? curious securities. margin and know the cash further were relates flows talked particular, into in the you transaction growth. those as first reinvesting in depending in timing then the on on when Just reinvested loan you happened just I funds if of those about that it But to

Michele Kawiecki

cash the not those those branches. actually with Yes. that bonds, of from Illinois deposits used to We we We bonds did the sale the the sold reinvest flows flows. the cash replace

deposits the points maybe yield to some the I the us you on be basis versus X the will benefit. actually look so on And of yield when expect in to we bonds that the XXXX. X that pickup give at tune sold to margin of

Daniel Tamayo

Okay.

basis in one that. maybe And Mark X see appreciate here bigger that restructuring, X it here, related you'll for points picture. So to to the first quarter like then I sounds okay.

about year. you investments lot last a made the talked You

Or the on here of you're fourth you bank and for of and made an about a into Curious forward. how about now term? going thinking talked the investments strong profitability forward, how be expense quarter just curious minimal as achievable a about pretty about more ROA given growth an Is kind sound XXXX pretty in you've get environment? basis, we type operating number the guys good longer going that about normalized what XXX%. would excited think You

Mark Hardwick

indicators Yes. XXX. is for you we mentioned of single-digit the in fee XXX great we And series XXXX, sort It's key we kind The a Danny. reach about that's across of don't high in question, we'll place that mid level target XX% performance the range. expense whether And the but be. just goal, us the single-digits, income -- a is to you low know a maintaining great really growth, of have sheet, to around growth think our I number that whole use. our balance in

like it's And perform that look we margin you quartile at ROA strong to about under place our kind with the Valley quartile XX% that top us we of just numbers, and going with And just pre-Silicon mentioned, believe it we're to numbers gives a levels. finally happy level, kind that if back stock is for then rebound the a really think flexibility are think next. to what's we've yes, efficiency performance. of top trades that we to We starts seen -- as stay us ratio the

Operator

the question-and-answer like This Hardwick back Mark to does hand I'd program program. session the to of today's conclude for remarks. any further

Mark Hardwick

know a have here. audience we Well, I broad

Merchants, shareholders, thank going Merchants to First listen to your times. at your commitment our all partnership I have want And We First with stakeholders. forward. We employees, the you and in that say of interest appreciate customers just

pleased a where there's can XXXX And year. lands. clearly, from tell the around with the you again, optimism So sense call, of

a and day. So thank time, you your Thank great have for you.

Operator

you, participation and today's for This conference. in ladies your Thank gentlemen, does program. conclude the

may now You day. Good disconnect.

First Merchants (FRME) 30 Jan 252024 Q4 Earnings call transcript