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First Merchants Corporation Announces Record Third Quarter 2014 Earnings

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First Merchants Corporation (NASDAQ:FRME) has reported third quarter 2014 earnings per share of $.45, compared to $.35 during the same period in 2013, a 29 percent increase. Net income available to common stockholders totaled a record $16.1 million, during the quarter, compared to $10 million in 2013. Year-to-date earnings per share totaled $1.24 in 2014, compared to $1.07 in 2013, nearly a 16 percent increase. Year-to-date 2014 net income totaled $44.9 million, compared to $30.9 million in 2013.

Michael C. Rechin, President and Chief Executive Officer, stated, “Our return on assets improved to 1.16 percent during the quarter and virtually every key metric improved on a quarter-over-quarter basis. Loans increased, asset quality improved and the efficiency ratio improved driven by balance sheet growth, stabilized margins, strong fee income and controlled expenses.” Rechin also added, “Our momentum continues as our teams are executing on 2014 initiatives, and executive management is focused on refining our plans for 2015 and 2016.”

Total assets equaled $5.6 billion as of quarter-end and total loans were $3.8 billion, an increase of $847 million, or 29 percent over the same period in 2013. Our CFS Bancorp acquisition in November 2013 accounted for $597 million of growth and $250 million was the result of organic growth. On a linked basis, loans increased by $50 million, as commercial and industrial loans increased by $43 million.

Net interest income totaled $47.9 million for the quarter and net-interest margin totaled 3.98 percent as yields on earning assets totaled 4.41 percent and the cost of supporting liabilities totaled .43 percent. Fair value accretion of $3.5 million was included in the quarterly results. When normalized for fair value accretion, net interest margin totaled 3.71 percent. Year-to-date net interest income totaled $139.9 million, compared to $113.1 million in 2013, as net interest margin totaled 3.95 percent. When adjusted for year-to-date fair market value accretion of $7.4 million, net interest margin totaled 3.75 percent.

Our CFS Bancorp acquisition resulted in significant variances in both non-interest income and non-interest expenses. Non-interest income totaled $18.3 million during the quarter, compared to $11.8 million in 2013. Year-to-date non-interest income totaled $49.4 million, compared to $39.7 million in 2013. Non-interest expense totaled $42.6 million during the quarter, up from $34.2 million in the third quarter of 2013. Year-to-date non-interest expense totaled $126.9 million, compared to $102.7 million in 2013. On a linked basis, non-interest income improved by $2.4 million due to increased cash surrender value of life insurance gains of $871,000, increased derivative income of $656,000 and increased gains from the sale of mortgages totaling $299,000. On a linked basis, non-interest expense increased by $1.3 million due primarily to incentive and benefit accruals of $743,000, fixed asset write downs of $305,000 and increased marketing expense of $281,000.

Non-performing assets declined to $64.8 million, or 1.16 percent of assets. Provision expense totaled $1.6 million for the third quarter of 2014, compared to $1.5 million in 2013. Net charge-offs totaled $4.4 million for the third quarter, up from $3.5 million in the third quarter of 2013. Year-to-date provision expense totaled $1.6 million versus $3.9 million of net charge-offs. The allowance for loan losses totaled $65.6 million and our remaining fair value mark totaled $35.5 million.

As of September 30, 2014, the Corporation’s total risk-based capital equaled 15.21 percent, Tier 1 common risk-based capital equaled 11.16 percent and tangible common equity ratio totaled 9.05 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, October 23, 2014.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation’s third quarter earnings release. International callers please call +1 412-317-1073. A replay of the call will be available until October 23, 2015. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529 or for International participants, dial +1 412-317-0088. The replay passcode is 10053524.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme141023.html during the time of the call.

During the call, Forward-Looking Statements about the relative business outlook may be made. These Forward-Looking Statements and all other statements made during the call that do not concern historical facts, are subject to risks and uncertainties that may materially affect actual results.

Specific Forward-Looking Statements include, but are not limited to, any indications regarding the Financial Services industry, the economy and future growth of the balance sheet or income statement.

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation is comprised of First Merchants Bank, N.A., which also operates as Lafayette Bank & Trust, Commerce National Bank, and First Merchants Trust Company as divisions of First Merchants Bank, N.A. First Merchants Corporation also operates First Merchants Insurance Group, a full-service property casualty, personal lines, and healthcare insurance agency.

First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company’s Internet web page (http://www.firstmerchants.com).

FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands) September 30,
2014 2013
ASSETS
Cash and cash equivalents $ 74,237 $ 92,341
Interest-bearing time deposits 24,171 18,875
Investment securities 1,189,814 914,135
Loans held for sale 6,423 5,312
Loans 3,772,467 2,925,457
Less: Allowance for loan losses (65,596 ) (66,224 )
Net loans 3,706,871 2,859,233
Premises and equipment 74,105 54,386
Federal Reserve and Federal Home Loan Bank stock 43,127 32,790
Interest receivable 19,455 16,171
Core deposit intangibles and goodwill 200,991 148,376
Cash surrender value of life insurance 165,423 127,322
Other real estate owned 14,540 12,052
Tax asset, deferred and receivable 41,131 31,385
Other assets 31,095 13,533
TOTAL ASSETS $ 5,591,383 $ 4,325,911
LIABILITIES
Deposits:
Noninterest-bearing $ 939,540 $ 790,174
Interest-bearing 3,370,583 2,465,672
Total Deposits 4,310,123 3,255,846
Borrowings:
Federal funds purchased 61,428 115,938
Securities sold under repurchase agreements 117,892 123,935
Federal Home Loan Bank advances 255,423 172,292
Subordinated debentures and term loans 126,874 111,849
Total Borrowings 561,617 524,014
Interest payable 3,819 1,155
Other liabilities 31,271 31,427
Total Liabilities 4,906,830 3,812,442
STOCKHOLDERS’ EQUITY
Preferred Stock, no-par value, $1,000 liquidation value:
Authorized — 500,000 shares
Senior Non-Cumulative Perpetual Preferred Stock, Series B
Issued and outstanding – 0 and 34,043 shares 34,043
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized — 600 shares
Issued and outstanding – 125 shares 125 125
Common Stock, $.125 stated value:
Authorized — 50,000,000 shares
Issued and outstanding – 36,074,246 and 28,825,465 shares 4,509 3,603
Additional paid-in capital 395,582 258,350
Retained earnings 280,187 233,546
Accumulated other comprehensive income (loss) 4,150 (16,198 )
Total Stockholders’ Equity 684,553 513,469
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 5,591,383 $ 4,325,911

CONSOLIDATED STATEMENTS OF INCOME

(Dollars In Thousands, Except Per Share Amounts)

Three Months Ended Nine Months Ended

September 30, September 30,
2014 2013 2014 2013
INTEREST INCOME
Loans receivable:
Taxable $ 43,981 $ 33,548 $ 128,329 $ 104,725
Tax-exempt 61 85 180 315
Investment securities:
Taxable 5,046 3,876 14,902 11,071
Tax-exempt 3,683 2,840 10,691 7,809
Deposits with financial institutions 18 18 76 99
Federal Reserve and Federal Home Loan Bank stock 501 369 1,648 1,108
Total Interest Income 53,290 40,736 155,826 125,127
INTEREST EXPENSE
Deposits 2,853 2,213 8,276 7,703
Federal funds purchased 102 72 174 84
Securities sold under repurchase agreements 74 192 457 594
Federal Home Loan Bank advances 734 506 2,092 1,427
Subordinated debentures and term loans 1,661 731 4,950 2,189
Total Interest Expense 5,424 3,714 15,949 11,997
NET INTEREST INCOME 47,866 37,022 139,877 113,130
Provision for loan losses 1,600 1,533 1,600 5,632
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 46,266 35,489 138,277 107,498
OTHER INCOME
Service charges on deposit accounts 4,119 3,120 11,768 8,761
Fiduciary activities 2,152 1,986 6,724 6,357
Other customer fees 3,991 2,899 11,773 8,495
Commission income 1,723 1,636 5,877 5,556
Earnings on cash surrender value of life insurance 1,524 611 2,925 1,921
Net gains and fees on sales of loans 1,458 1,673 3,340 6,508
Net realized gains on sales of available for sale securities 910 2,335 487
Other income 2,417 (125 ) 4,671 1,651
Total Other Income 18,294 11,800 49,413 39,736
OTHER EXPENSES
Salaries and employee benefits 24,173 20,616 72,904 61,943
Net occupancy 3,401 2,430 10,543 7,299
Equipment 2,187 1,852 7,022 5,368
Marketing 1,070 559 2,628 1,561
Outside data processing fees 1,853 1,515 5,723 4,386
Printing and office supplies 350 320 1,201 962
Core deposit amortization 592 383 1,776 1,153
FDIC assessments 920 677 2,843 2,095
Other real estate owned and credit-related expenses 2,618 1,648 6,988 4,993
Professional and other outside services 1,573 1,444 4,483 4,936
Other expenses 3,839 2,775 10,804 7,965
Total Other Expenses 42,576 34,219 126,915 102,661
INCOME BEFORE INCOME TAX 21,984 13,070 60,775 44,573
Income tax expense 5,862 2,667 15,873 11,490
NET INCOME 16,122 10,403 44,902 33,083
Preferred stock dividends (430 ) (2,139 )
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 16,122 $ 9,973 $ 44,902 $ 30,944
Per Share Data:
Basic Net Income Available to Common Stockholders $ 0.45 $ 0.35 $ 1.25 $ 1.08
Diluted Net Income Available to Common Stockholders $ 0.45 $ 0.35 $ 1.24 $ 1.07
Cash Dividends Paid $ 0.08 $ 0.05 $ 0.21 $ 0.13
Average Diluted Shares Outstanding (in thousands) 36,329 29,081 36,295 29,026
FINANCIAL HIGHLIGHTS
(Dollars in thousands) Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
NET CHARGE OFF’S $ 4,371 $ 3,511 $ 3,874 $ 8,774
AVERAGE BALANCES:
Total Assets $ 5,578,704 $ 4,286,982 $ 5,500,281 $ 4,288,645
Total Loans 3,753,690 2,918,207 3,683,936 2,912,700
Total Earning Assets 5,010,877 3,888,646 4,921,105 3,885,061
Total Deposits 4,288,788 3,295,369 4,290,157 3,332,589
Total Stockholders’ Equity 679,306 508,034 662,408 528,156
FINANCIAL RATIOS:
Return on Average Assets 1.16 % 0.93 % 1.09 % 0.96 %
Return on Average Stockholders’ Equity 9.49 7.85 9.04 7.81
Return on Average Common Stockholders’ Equity 9.50 8.42 9.04 8.76
Average Earning Assets to Average Assets 89.82 90.71 89.47 90.59
Allowance for Loan Losses as % of Total Loans 1.74 2.26 1.74 2.26
Net Charge Off’s as % of Average Loans (Annualized) 0.47 0.48 0.14 0.4
Average Stockholders’ Equity to Average Assets 12.18 11.85 12.04 12.32
Tax Equivalent Yield on Earning Assets 4.41 4.35 4.38 4.44
Cost of Supporting Liabilities 0.43 0.38 0.43 0.41
Net Interest Margin (FTE) on Earning Assets 3.98 3.97 3.95 4.03
Tangible Book Value Per Share $ 13.53 $ 11.56 $ 13.53 $ 11.56
NON-PERFORMING ASSETS
(Dollars In Thousands) September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
Non-Accrual Loans $ 49,104 $ 51,289 $ 55,686 $ 56,402 $ 34,992
Renegotiated Loans 1,171 1,359 378 3,048 3,269
Non-Performing Loans (NPL) 50,275 52,648 56,064 59,450 38,261
Other Real Estate Owned 14,540 18,621 21,077 22,246 12,052
Non-Performing Assets (NPA) 64,815 71,269 77,141 81,696 50,313
90+ Days Delinquent 831 1,135 1,709 1,350 837
NPAS & 90 Day Delinquent $ 65,646 $ 72,404 $ 78,850 $ 83,046 $ 51,150
Loan Loss Reserve $ 65,596 $ 68,367 $ 69,583 $ 67,870 $ 66,224
Quarterly Net Charge-offs 4,371 1,216 (1,713 ) (630 ) 3,511
NPAs / Actual Assets % 1.16 % 1.27 % 1.41 % 1.50 % 1.16 %
NPAs & 90 Day / Actual Assets % 1.17 % 1.29 % 1.45 % 1.53 % 1.18 %
NPAs / Actual Loans and OREO % 1.71 % 1.90 % 2.12 % 2.23 % 1.71 %
Loan Loss Reserves / Actual Loans (%) 1.74 % 1.83 % 1.92 % 1.87 % 2.26 %
Net Charge Off’s as % of Average Loans (Annualized) 0.47 % 0.13 % (0.19

)%

(0.08

)%

0.48 %
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands) September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
ASSETS
Cash and cash equivalents $ 74,237 $ 115,891 $ 112,920 $ 109,434 $ 92,341
Interest-bearing time deposits 24,171 27,856 37,078 55,069 18,875
Investment securities 1,189,814 1,214,087 1,149,977 1,095,579 914,135
Loans held for sale 6,423 7,370 6,586 5,331 5,312
Loans 3,772,467 3,722,733 3,616,627 3,632,409 2,925,457
Less: Allowance for loan losses (65,596 ) (68,367 ) (69,583 ) (67,870 ) (66,224 )
Net loans 3,706,871 3,654,366 3,547,044 3,564,539 2,859,233
Premises and equipment 74,105 74,856 74,847 74,454 54,386
Federal Reserve and Federal Home Loan Bank stock 43,127 43,127 38,990 38,990 32,790
Interest receivable 19,455 18,341 18,001 18,672 16,171
Core deposit intangibles and goodwill 200,991 201,583 202,175 202,766 148,376
Cash surrender value of life insurance 165,423 165,974 165,320 164,571 127,322
Other real estate owned 14,540 18,621 21,077 22,246 12,052
Tax asset, deferred and receivable 41,131 44,622 50,684 56,614 31,385
Other assets 31,095 28,426 28,237 28,997 13,533
TOTAL ASSETS $ 5,591,383 $ 5,615,120 $ 5,452,936 $ 5,437,262 $ 4,325,911
LIABILITIES
Deposits:
Noninterest-bearing 939,540 917,825 936,741 930,772 790,174
Interest-bearing 3,370,583 3,411,785 3,346,438 3,300,696 2,465,672
Total Deposits 4,310,123 4,329,610 4,283,179 4,231,468 3,255,846
Borrowings:
Federal funds purchased 61,428 100,000 48,357 125,645 115,938
Securities sold under repurchase agreements 117,892 133,137 137,381 148,672 123,935
Federal Home Loan Bank advances 255,423 220,765 170,887 122,140 172,292
Subordinated debentures and term loans 126,874 126,874 127,172 126,807 111,849
Total Borrowings 561,617 580,776 483,797 523,264 524,014
Interest payable 3,819 2,489 3,192 1,771 1,155
Other liabilities 31,271 31,649 30,657 45,836 31,427
Total Liabilities 4,906,830 4,944,524 4,800,825 4,802,339 3,812,442
STOCKHOLDERS’ EQUITY
Preferred Stock, no-par value, $1,000 liquidation value:
Authorized — 500,000 shares
Senior Non-Cumulative Perpetual Preferred Stock, Series B
Issued and outstanding 34,043
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized — 600 shares
Issued and outstanding 125 125 125 125 125
Common Stock, $.125 stated value:
Authorized — 50,000,000 shares
Issued and outstanding 4,509 4,507 4,502 4,490 3,603
Additional paid-in capital 395,582 394,774 393,765 393,783 258,350
Retained earnings 280,187 266,980 254,735 242,935 233,546
Accumulated other comprehensive income (loss) 4,150 4,210 (1,016 ) (6,410 ) (16,198 )
Total Stockholders’ Equity 684,553 670,596 652,111 634,923 513,469
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 5,591,383 $ 5,615,120 $ 5,452,936 $ 5,437,262 $ 4,325,911
CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts) September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
INTEREST INCOME
Loans receivable:
Taxable $ 43,981 $ 42,323 $ 42,025 $ 38,027 $ 33,548
Tax-exempt 61 58 61 78 85
Investment securities:
Taxable 5,046 5,046 4,810 4,143 3,876
Tax-exempt 3,683 3,570 3,438 3,020 2,840
Deposits with financial institutions 18 35 23 59 18
Federal Reserve and Federal Home Loan Bank stock 501 495 652 380 369
Total Interest Income 53,290 51,527 51,009 45,707 40,736
INTEREST EXPENSE
Deposits 2,853 2,874 2,549 2,350 2,213
Federal funds purchased 102 23 49 18 72
Securities sold under repurchase agreements 74 187 196 193 192
Federal Home Loan Bank advances 734 676 682 669 506
Subordinated debentures and term loans 1,661 1,648 1,641 1,342 731
Total Interest Expense 5,424 5,408 5,117 4,572 3,714
NET INTEREST INCOME 47,866 46,119 45,892 41,135 37,022
Provision for loan losses 1,600 1,016 1,533
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 46,266 46,119 45,892 40,119 35,489
OTHER INCOME
Service charges on deposit accounts 4,119 4,098 3,551 3,639 3,120
Fiduciary activities 2,152 2,360 2,212 2,237 1,986
Other customer fees 3,991 4,049 3,733 3,371 2,899
Commission income 1,723 1,886 2,268 1,585 1,636
Earnings on cash surrender value of life insurance 1,524 653 748 692 611
Net gains and fees on sales of loans 1,458 1,159 723 1,003 1,673
Net realized gains on sales of available for sale securities 910 844 581
Other income 2,417 884 1,370 2,546 (125 )
Total Other Income 18,294 15,933 15,186 15,073 11,800
OTHER EXPENSES
Salaries and employee benefits 24,173 23,430 25,301 23,470 20,616
Net occupancy 3,401 3,204 3,938 2,992 2,430
Equipment 2,187 2,096 2,739 2,369 1,852
Marketing 1,070 789 769 675 559
Outside data processing fees 1,853 2,039 1,831 1,205 1,515
Printing and office supplies 350 393 458 378 320
Core deposit amortization 592 592 592 496 383
FDIC assessments 920 863 1,060 767 677
Other real estate owned and credit-related expenses 2,618 2,613 1,757 1,668 1,648
Professional and other outside services 1,573 1,531 1,379 3,361 1,444
Other expenses 3,839 3,700 3,265 3,177 2,775
Total Other Expenses 42,576 41,250 43,089 40,558 34,219
INCOME BEFORE INCOME TAX 21,984 20,802 17,989 14,634 13,070
Income tax expense 5,862 5,642 4,369 3,187 2,667
NET INCOME 16,122 15,160 13,620 11,447 10,403
Preferred stock dividends (241 ) (430 )
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 16,122 $ 15,160 $ 13,620 $ 11,206 $ 9,973
Per Share Data:
Basic Net Income Available to Common Stockholders $ 0.45 $ 0.42 $ 0.38 $ 0.34 $ 0.35
Diluted Net Income Available to Common Stockholders $ 0.45 $ 0.41 $ 0.38 $ 0.34 $ 0.35
Cash Dividends Paid $ 0.08 $ 0.08 $ 0.05 $ 0.05 $ 0.05
Average Diluted Shares Outstanding (in thousands) 36,329 36,294 36,261 32,913 29,081
FINANCIAL RATIOS:
Return on Average Assets 1.16 % 1.10 % 1.01 % 0.91 % 0.93 %
Return on Average Stockholders’ Equity 9.49 9.15 8.45 7.78 7.85
Return on Average Common Stockholders’ Equity 9.50 9.15 8.45 8.05 8.42
Average Earning Assets to Average Assets 89.82 89.57 89.00 89.08 90.71
Allowance for Loan Losses as % of Total Loans 1.74 1.83 1.92 1.87 2.26
Net Charge Off’s as % of Average Loans (Annualized) 0.47 0.13 (0.19 ) (0.08 ) 0.48
Average Stockholders’ Equity to Average Assets 12.18 12.00 11.94 11.64 11.85
Tax Equivalent Yield on Earning Assets 4.41 4.33 4.40 4.30 4.35
Cost of Supporting Liabilities 0.43 0.44 0.43 0.41 0.38
Net Interest Margin (FTE) on Earning Assets 3.98 3.89 3.97 3.89 3.97
Tangible Book Value Per Share $ 13.53 $ 13.14 $ 12.63 $ 12.17 $ 11.56
LOANS
(Dollars In Thousands) September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
Commercial and industrial loans $ 900,970 $ 857,844 $ 787,390 $ 761,705 $ 652,356
Agricultural production financing and other loans to farmers 99,649 102,270 99,226 114,348 98,489
Real estate loans:
Construction 178,213 165,388 155,117 177,082 149,875
Commercial and farmland 1,603,698 1,621,436 1,606,735 1,611,809 1,264,180
Residential 625,609 629,162 626,202 616,385 452,277
Home Equity 269,952 261,811 256,790 255,223 206,816
Individuals’ loans for household and other personal expenditures 66,832 61,533 61,742 69,783 70,380
Lease financing receivables, net of unearned income 1,208 1,231 1,378 1,545 1,815
Other loans 26,336 22,058 22,047 24,529 29,269
Loans 3,772,467 3,722,733 3,616,627 3,632,409 2,925,457
Allowance for loan losses (65,596 ) (68,367 ) (69,583 ) (67,870 ) (66,224 )
NET LOANS $ 3,706,871 $ 3,654,366 $ 3,547,044 $ 3,564,539 $ 2,859,233
DEPOSITS
(Dollars In Thousands) September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
Demand deposits $ 1,947,040 $ 2,041,183 $ 1,966,895 $ 2,018,650 $ 1,610,662
Savings deposits 1,281,994 1,251,277 1,282,702 1,257,994 937,521
Certificates and other time deposits of $100,000 or more 241,163 251,585 265,683 272,660 190,866
Other certificates and time deposits 502,965 534,344 568,160 595,110 422,151
Brokered deposits 336,961 251,221 199,739 87,054 94,646
TOTAL DEPOSITS $ 4,310,123 $ 4,329,610 $ 4,283,179 $ 4,231,468 $ 3,255,846
NET INTEREST INCOME
(Dollars in Thousands) For the Three Months Ended
September 30, 2014 September 30, 2013

Average
Balance

Interest
Income /
Expense

Average
Rate

Average
Balance

Interest
Income /
Expense

Average
Rate

Assets:
Interest-bearing time deposits $ 28,549 $ 18 0.3 % $ 24,497 $ 18 0.3 %
Federal Reserve and Federal Home Loan Bank stock 43,127 501 4.6 32,790 369 4.5
Investment Securities: (1)
Taxable 776,270 5,046 2.6 615,878 3,876 2.5
Tax-Exempt (2) 409,241 5,665 5.5 297,274 4,368 5.9
Total Investment Securities 1,185,511 10,711 3.6 913,152 8,244 3.6
Loans held for sale 9,393 152 6.5 11,063 158 5.7
Loans: (3)
Commercial 2,905,920 34,344 4.7 2,309,226 26,417 4.6
Real Estate Mortgage 455,714 5,025 4.4 274,345 3,049 4.4
Installment 369,797 4,460 4.8 308,520 3,924 5.1
Tax-Exempt (2) 12,866 94 2.9 15,053 131 3.5
Total Loans 3,753,690 44,075 4.7 2,918,207 33,679 4.6
Total Earning Assets 5,010,877 55,305 4.4 % 3,888,646 42,310 4.4 %
Net unrealized gain on securities available for sale 11,247 (4,733 )
Allowance for loan losses (68,123 ) (69,117 )
Cash and cash equivalents 74,773 69,974
Premises and equipment 74,696 54,757
Other assets 475,234 347,455
Total Assets $ 5,578,704 $ 4,286,982
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 1,059,163 $ 279 0.1 % $ 847,009 $ 224 0.1 %
Money market deposits 736,339 372 0.2 576,135 290 0.2
Savings deposits 528,746 154 0.1 357,267 93 0.1
Certificates and other time deposits 1,032,274 2,048 0.8 739,413 1,606 0.9
Total Interest-bearing Deposits 3,356,522 2,853 0.3 2,519,824 2,213 0.4
Borrowings 572,923 2,571 1.8 446,894 1,501 1.3
Total Interest-bearing Liabilities 3,929,445 5,424 0.6 2,966,718 3,714 0.5
Noninterest-bearing deposits 932,266 775,545
Other liabilities 37,687 36,685
Total Liabilities 4,899,398 3,778,948
Stockholders’ Equity 679,306 508,034
Total Liabilities and Stockholders’ Equity $ 5,578,704 5,424 0.4 $ 4,286,982 3,714 0.4
Net Interest Income $ 49,881 $ 38,596
Net Interest Margin 4.0 % 4.0 %
(1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 35 percent for 2014 and 2013. These totals equal $2,015 and $1,574 for the three months ended September 30, 2014 and 2013, respectively.
(3) Non accruing loans have been included in the average balances.
NET INTEREST INCOME
(Dollars in Thousands) For the Nine Months Ended
September 30, 2014 September 30, 2013

Average
Balance

Interest
Income /
Expense

Average
Rate

Average
Balance

Interest
Income /
Expense

Average
Rate

Assets:
Interest-bearing time deposits $ 43,906 $ 76 0.2 % $ 60,853 $ 99 0.2 %
Federal Reserve and Federal Home Loan Bank stock 41,657 1,648 5.3 32,787 1,108 4.5
Investment Securities: (1)
Taxable 761,924 14,902 2.6 608,343 11,071 2.4
Tax-Exempt (2) 389,682 16,447 5.6 270,378 12,013 5.9
Total Investment Securities 1,151,606 31,349 3.6 878,721 23,084 3.5
Loans held for sale 6,653 322 6.5 19,866 691 4.6
Loans: (3)
Commercial 2,893,922 99,685 4.6 2,290,938 82,691 4.8
Real Estate Mortgage 417,899 14,650 4.7 277,666 9,259 4.4
Installment 353,134 13,672 5.2 308,240 12,084 5.2
Tax-Exempt (2) 12,328 277 3.0 15,990 484 4.0
Total Loans 3,683,936 128,606 4.7 2,912,700 105,209 4.8
Total Earning Assets 4,921,105 161,679 4.4 % 3,885,061 129,500 4.4 %
Net unrealized gain on securities available for sale 7,929 6,076
Allowance for loan losses (68,703 ) (69,432 )
Cash and cash equivalents 83,259 67,109
Premises and equipment 74,732 54,142
Other assets 481,959 345,689
Total Assets $ 5,500,281 $ 4,288,645
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 1,061,762 $ 827 0.1 % $ 850,125 $ 683 0.1 %
Money market deposits 755,097 1,136 0.2 563,863 911 0.2
Savings deposits 527,147 461 0.1 354,941 292 0.1
Certificates and other time deposits 1,021,044 5,852 0.8 795,074 5,817 1.0
Total Interest-bearing Deposits 3,365,050 8,276 0.3 2,564,003 7,703 0.4
Borrowings 508,992 7,673 2.0 391,294 4,294 1.5
Total Interest-bearing Liabilities 3,874,042 15,949 0.5 2,955,297 11,997 0.5
Noninterest-bearing deposits 925,107 768,586
Other liabilities 38,724 36,606
Total Liabilities 4,837,873 3,760,489
Stockholders’ Equity 662,408 528,156
Total Liabilities and Stockholders’ Equity $ 5,500,281 15,949 0.4 $ 4,288,645 11,997 0.4
Net Interest Income $ 145,730 $ 117,503
Net Interest Margin 4.0 % 4.0 %
(1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 35 percent for 2014 and 2013. These totals equal $5,853 and $4,373 for the nine months ended September 30, 2014 and 2013, respectively.
(3) Non accruing loans have been included in the average balances.

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