First Merchants Corp.(FRME) in Muncie, Ind., is benefiting from loan growth after a recent acquisition.
The $5.5 billion-asset company said on Thursday first-quarter net income increased 14.8% from a year earlier, to $13.6 million, or 38 cents a share.
Loans increased by $737 million from the same period a year ago, including $140 million in organic growth and $597 million from its November acquisition of CFS Bancorp in Munster, Ind.
Michael Rechin, First Merchants' president and chief executive, said in a press release that the company successfully integrated more than 30,000 new customers as of Feb. 24, which is reflected in the quarterly results. He also said that all of the cost savings expected from the CFS acquisition were recognized.
Net interest income was $45.9 million for the quarter, and the net interest margin was 3.97%, with yields on earning assets at 4.4% and deposit costs at 0.43%. The margin was down 28 basis points from a year earlier, but up 8 basis points from the previous quarter.
Noninterest income totaled $15.2 million, up 9.4% from a year ago, despite a drop in gains on sale from mortgages. First Merchants attributed the drop in mortgage volume to higher rates and sub-zero weather.
Net recoveries of $1.7 million allowed the company to avoid provision expenses during the quarter. The allowance for loan losses totaled $69.6 million, or 1.92% of total loans, as nonperforming assets declined to $77.1 million.
Strong earnings and capital levels enabled the company to increase its quarterly dividend to 8 cents per share, up 60% compared with the same quarter a year ago.
Mark Hardwick, First Merchants' chief financial officer, said the company has the financial firepower to continue looking for deals. "Utilizing cash as a component of future acquisitions is also an option that we intend to consider," he said.