UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT (Date of earliest event reported): April 20, 2005
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FIRST MERCHANTS CORPORATION
(Exact name of registrant as specified in its charter)
-------------------------------
INDIANA 0-17071 35-1544218
(State or other jurisdiction (Commission file number) (IRS Employer
of incorporation) Identification No.)
200 East Jackson Street
P.O. Box 792
Muncie, IN 47305-2814
(Address of principal executive offices, including zip code)
(765) 747-1500
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Page 1 of 10
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On April 20, 2005, First Merchants Corporation issued a press
release to report its financial results for the first quarter ended March 31,
2005. A copy of the press release is furnished as Exhibit 99.1 to this Current
Report on Form 8-K.
The information in this Current Report on Form 8-K, including Exhibit
No. 99.1 hereto, shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to liability
of that section. The information in this Current Report shall not be
incorporated by reference into any filing or other document pursuant to the
Securities Act of 1933, as amended, except as shall be expressly set forth by
specific reference in such filing or document.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
Exhibit 99.1 Press Release, dated April 20, 2005, issued by
First Merchants Corporation
Page 2 of 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
First Merchants Corporation
(Registrant)
By: /s/ Mark K. Hardwick
--------------------------------------------
Mark K. Hardwick
Senior Vice President and
Chief Financial Officer
(Principal Financial and Chief
Accounting Officer)
Dated: April 20, 2005
Page 3 of 10
EXHIBIT INDEX
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Exhibit No.
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99.1 Description
-----------
Press Release, dated April 20, 2005, issued by
First Merchants Corporation.
Page 4 of 10
First Merchants Corporation
Exhibit No. 99.1
Press Release, dated April 20, 2005
N / E / W / S R / E / L / E / A / S / E
April 20, 2005
FOR IMMEDIATE RELEASE
For more information, contact:
Mark K. Hardwick, Senior Vice President/Chief Financial Officer, 765-751-1857
http://firstmerchants.com
SOURCE: First Merchants Corporation, Muncie, Indiana
FIRST MERCHANTS CORPORATION ANNOUNCES FIRST QUARTER EARNINGS PER SHARE OF $.35
First Merchants Corporation (NASDAQ - FRME) has reported first quarter diluted
earnings per share totaling $.35, a 4.6 percent decrease over $.37 recorded in
the first quarter of 2004. Net income during the period totaled $6.6 million
compared to $6.9 million in 2004.
Quarterly net interest income improved by $1.3 million, or 5.1 percent and
non-interest income improved by $830,000, or 10.1 percent. Core operating
expenses remained flat compared to the prior quarter. However, as reported in
the Corporation's 8-K filing of February 16, 2005, a $1.6 million expense
related to the curtailment of the Corporation's defined benefit pension plan
resulted in increased operating expenses of $1.7 million. The earnings per share
impact of the curtailment expense totaled $.05 per share.
The provision for loan losses increased by $1.3 million based on the
Corporation's allowance for loan loss methodology. As of March 31, 2005,
non-performing loans totaled 71 basis points of average total loans and the
allowance for loan losses as a percent of total loans equaled 1.01 percent.
Total assets equaled $3.2 billion at quarter-end, an increase of $162 million,
or 5.4 percent from March 31, 2004. Loans, investments and bank owned life
insurance, the Corporation's three primary earning assets, totaled $2.9 billion,
an increase of $129 million over the prior year.
On January 1, 2005, the Corporation combined Randolph County Bank and Union
County National Bank and renamed the combined entity United Communities National
Bank. The data conversions are complete and the related expenses are reflected
in first quarter results.
Michael L. Cox, President and Chief Executive Officer, stated that, "Management
was pleased with core earnings before the increased provision expense and the
curtailment expense approximating $.10 per share. To have the burden of a
volatile defined benefit pension plan behind us and our allowance for loan
losses equal to 1.01 percent of loans positions our earnings well for the
remainder of the year."
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m. Eastern
Standard Time/3:30 p.m. Eastern Daylight Time on Wednesday, April 20, 2005. To
participate dial (Toll Free) 877-407-9210 and reference First Merchants
Corporation's first quarter earnings release. A replay will be available until
April 27, 2005. To access, US/Canada participants should dial (Toll Free)
877-660-6853 or for International participants, dial 201-612-7415. The replay
will require the Account # 286 and Conference ID # 148455.
During the call we may make Forward Looking statements about our relative
business outlook. 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.
First Merchants Corporation is a financial holding company headquartered in
Muncie, Indiana. Subsidiaries of the Corporation include First Merchants Bank,
NA, Madison Community Bank, First United Bank, United Communities National Bank,
First National Bank, Decatur Bank & Trust Company, Frances Slocum Bank,
Lafayette Bank & Trust Company, Commerce National Bank and Merchants Trust
Company. The Corporation also operates First Merchants Insurance Services, a
full-service property casualty, personal lines, and healthcare insurance agency,
headquartered in Muncie, Indiana, and is a majority member of Indiana Title
Insurance Company, LLC, a title insurance agency.
First Merchants Corporation's common stock is traded over-the-counter on the
NASDAQ National 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).
* * * *
CONSOLIDATED BALANCE SHEETS
(in thousands) March 31,
2005 2004
Assets
Cash and due from banks $ 67,904 $ 60,366
Federal funds sold 22,075 0
----------- -----------
Cash and cash equivalents 89,979 60,366
Interest-bearing time deposits 10,737 10,674
Investment securities 409,820 376,974
Mortgage loans held for sale 3,084 3,883
Loans 2,414,099 2,320,103
Less: Allowance for loan losses (24,488) (26,459)
----------- -----------
Net loans 2,389,611 2,293,644
Premises and equipment 37,525 38,972
Federal Reserve and Federal Home Loan Bank stock 22,883 21,956
Interest receivable 16,606 15,061
Core deposit intangibles and goodwill 140,578 141,867
Cash surrender value of life insurance 42,426 40,843
Other assets 24,337 20,901
----------- -----------
Total assets $ 3,187,586 $ 3,025,141
=========== ===========
Liabilities
Deposits
Noninterest-bearing $ 333,614 $ 303,694
Interest-bearing 2,118,605 2,009,726
----------- -----------
Total deposits 2,452,219 2,313,420
Borrowings 391,193 372,356
Interest payable 6,562 4,542
Other liabilities 27,014 25,676
----------- -----------
Total liabilities 2,876,988 2,715,994
Stockholders' equity
Preferred stock, no-par value
Authorized and unissued -- 500,000 shares
Common stock, $.125 stated value
Authorized -- 50,000,000 shares
Issued and outstanding -- 18,497,462 and 18,532,769 shares 2,312 2,317
Additional paid-in capital 148,347 150,679
Retained earnings 163,761 151,771
Accumulated other comprehensive income (3,822) 4,380
----------- -----------
Total stockholders' equity 310,598 309,147
----------- -----------
Total liabilities and stockholders' equity $ 3,187,586 $ 3,025,141
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended
(In thousands) March 31,
2005 2004
NET CHARGE OFF'S $ 727 $ 406
AVERAGE BALANCES
Total Assets $3,163,548 $3,041,837
Total Loans 2,414,050 2,339,080
Total Deposits 2,418,910 2,312,708
Total Stockholders' Equity 315,326 306,592
FINANCIAL RATIOS
Return on Average Assets .83% .91%
Return on Avg. Stockholders' Equity 8.33 9.05
Avg. Earning Assets to Avg. Assets 90.61 90.05
Allowance for Loan Losses as %
Of Total Loans 1.01 1.14
Net Charge Off's as % Of Avg. Loans
(Annualized) .12 .07
Dividend Payout Ratio 65.71 62.16
Avg. Stockholders' Equity to Avg. Assets 9.97 10.08
Tax Equivalent Yield on Earning Assets 5.90 5.71
Cost of Supporting Liabilities 2.01 1.84
Net Int. Margin (FTE) on Earning Assets 3.89 3.87
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended
March 31,
2005 2004
Interest income
Loans receivable
Taxable $ 36,822 $ 34,227
Tax exempt 134 163
Investment securities
Taxable 2,329 1,949
Tax exempt 1,553 1,430
Federal funds sold 27 18
Deposits with financial institutions 142 109
Federal Reserve and Federal Home Loan Bank stock 308 328
-------- --------
Total interest income 41,315 38,224
-------- --------
Interest expense
Deposits 9,806 8,190
Securities sold under repurchase agreements 249 220
Federal Home Loan Bank advances 2,375 2,442
Subordinated debentures, revolving credit
and term loans 1,789 1,234
Other borrowings 154 506
-------- --------
Total interest expense 14,373 12,592
-------- --------
Net interest income 26,942 25,632
Provision for loan losses 2,667 1,372
-------- --------
Net interest income
after provision for loan losses 24,275 24,260
-------- --------
Other income
Fiduciary activities 1,962 1,810
Service charges on deposit accounts 2,723 2,772
Other customer fees 1,085 1,070
Net realized gains on
sales of available-for-sale securities 37
Commission income 1,504 953
Earnings on cash surrender value
of life insurance 401 429
Net gains and fees on sales of loans 677 801
Other income 694 344
-------- --------
Total other income 9,046 8,216
-------- --------
Other expenses
Salaries and employee benefits 14,821 13,024
Net occupancy expenses 1,376 1,254
Equipment expenses 1,857 1,979
Marketing expense 415 440
Outside data processing fees 1,009 1,223
Printing and office supplies 337 398
Goodwill and core deposit amortization 787 892
Other expenses 3,629 3,354
-------- --------
Total other expenses 24,231 22,564
-------- --------
Income before income tax 9,090 9,912
Income tax expense 2,523 2,977
-------- --------
Net income $ 6,567 $ 6,935
======== ========
Per Share Data
Basic Net Income .35 .37
Diluted Net Income .35 .37
Cash Dividends Paid .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,697 18,646
CONSOLIDATED BALANCE SHEETS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2005 2004 2004 2004 2004
Assets
Cash and due from banks $ 67,904 $ 69,960 $ 73,367 $ 72,432 $ 60,366
Federal funds sold 22,075 22,700
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents 89,979 69,960 96,067 72,432 60,366
Interest-bearing time deposits 10,737 9,343 12,204 20,424 10,674
Investment securities 409,820 421,535 420,645 411,140 376,974
Mortgage loans held for sale 3,084 3,367 2,715 4,001 3,883
Loans 2,414,099 2,428,051 2,395,306 2,365,380 2,320,103
Less: Allowance for loan losses (24,488) (22,548) (25,243) (25,510) (26,459)
----------- ----------- ----------- ----------- -----------
Net loans 2,389,611 2,405,503 2,370,063 2,339,870 2,293,644
Premises and equipment 37,525 38,254 38,170 38,437 38,972
Federal Reserve and Federal Home Loan Bank stock 22,883 22,858 22,750 22,494 21,956
Interest receivable 16,606 17,318 17,594 14,943 15,061
Core deposit intangibles and goodwill 140,578 141,284 140,186 141,014 141,867
Cash surrender value of life insurance 42,426 42,061 41,700 41,288 40,843
Other assets 24,337 20,185 19,268 22,247 20,901
----------- ----------- ----------- ----------- -----------
Total assets $ 3,187,586 $ 3,191,668 $ 3,181,362 $ 3,128,290 $ 3,025,041
=========== =========== =========== =========== ===========
Liabilities
Deposits
Noninterest-bearing $ 333,614 $ 330,685 $ 373,548 $ 334,018 $ 303,694
Interest-bearing 2,118,605 2,077,465 2,083,271 2,038,092 2,009,726
----------- ----------- ----------- ----------- -----------
Total deposits 2,452,219 2,408,150 2,456,819 2,372,110 2,313,420
Borrowings 391,193 440,891 379,922 422,885 372,356
Interest payable 6,562 4,411 5,706 4,216 4,542
Other liabilities 27,014 23,613 25,253 24,811 25,676
----------- ----------- ----------- ----------- -----------
Total liabilities 2,876,988 2,877,065 2,867,700 2,824,022 2,715,994
Stockholders' equity
Preferred stock, no-par value
Authorized and unissued -- 500,000 shares
Common stock, $.125 stated value
Authorized -- 50,000,000 shares
Issued and outstanding 2,312 2,322 2,320 2,310 2,317
Additional paid-in capital 148,347 150,862 148,993 149,194 150,679
Retained earnings 163,761 161,459 160,004 154,876 151,771
Accumulated other comprehensive income (loss) (3,822) (40) 2,345 (2,112) 4,380
----------- ----------- ----------- ----------- -----------
Total stockholders' equity 310,598 314,603 313,662 304,268 309,147
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 3,187,586 $ 3,191,668 $ 3,181,362 $ 3,128,290 $ 3,025,141
=========== =========== =========== =========== ===========
NON-PERFORMING ASSETS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2005 2004 2004 2004 2004
90 days past due $ 1,948 $ 1,907 $ 6,664 $ 2,488 $ 4,770
Non-accrual loans 13,272 15,355 16,852 17,702 19,914
Other real estate 2,003 1,650 1,546 1,653 1,571
---------- ---------- ---------- ---------- ----------
Total non-performing assets $ 17,223 $ 18,912 $ 25,062 $ 21,843 $ 26,255
========== ========== ========== ========== ==========
Average total loans for the quarter $2,414,050 $2,409,170 $2,383,942 $2,343,270 $2,339,080
Total non-performing assets as a
percent of average total loans .71% .79% 1.05% .93% 1.12%
Restructured loans $ 337 $ 2,019 $ 2,169 $ 926 $ 957
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands, except share data) March 31, December 31, September 30, June 30, March 31,
2005 2004 2004 2004 2004
Interest Income
Loans receivable
Taxable $ 36,822 $ 36,363 $ 35,342 $ 34,021 $ 34,227
Tax exempt 134 138 143 137 163
Investment securities
Taxable 2,329 2,224 2,146 2,052 1,949
Tax exempt 1,553 1,569 1,679 1,420 1,430
Federal funds sold 27 92 18 37 18
Deposits with financial institutions 142 167 154 125 109
Federal Reserve and Federal Home Loan Bank stock 308 297 319 307 328
-------- -------- -------- -------- --------
Total interest income 41,315 40,850 39,801 38,099 38,224
-------- -------- -------- -------- --------
Interest expense
Deposits 9,806 9,288 8,487 7,879 8,190
Securities sold under repurchase agreements 249 183 16 98 220
Federal Home Loan Bank advances 2,375 2,418 2,484 2,433 2,442
Subordinated debentures, revolving credit
and term loans 1,789 1,717 1,822 1,635 1,610
Other borrowings 154 126 200 207 130
-------- -------- -------- -------- --------
Total interest expense 14,373 13,732 13,009 12,252 12,592
-------- -------- -------- -------- --------
Net interest income 26,942 27,118 26,792 25,847 25,632
Provision for loan losses 2,667 1,233 1,380 1,720 1,372
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses 24,275 25,885 25,412 24,127 24,260
-------- -------- -------- -------- --------
Other income
Fiduciary activities 1,962 1,897 1,923 2,002 1,810
Service charges on deposit accounts 2,723 2,924 2,946 2,996 2,772
Other customer fees 1,085 1,068 979 966 1,070
Net realized gains on sales of
available-for-sale securities 456 332 363 37
Commission income 1,504 671 687 777 953
Earnings on cash surrender value
of life insurance 401 439 448 482 429
Net gains and fees on sales of loans 677 801 675 1,352 801
Other income 694 415 421 318 344
-------- -------- -------- -------- --------
Total other income 9,046 8,671 8,411 9,256 8,216
-------- -------- -------- -------- --------
Other expenses
Salaries and employee benefits 14,821 13,309 13,087 13,059 13,024
Net occupancy expenses 1,376 1,328 1,391 1,335 1,254
Equipment expenses 1,857 1,879 1,853 1,954 1,979
Marketing expense 415 521 363 385 440
Outside data processing fees 1,009 1,158 1,328 1,211 1,223
Printing and office supplies 337 397 397 388 398
Goodwill and core deposit amortization 787 802 827 852 892
Other expenses 3,629 4,272 3,544 3,438 3,354
-------- -------- -------- -------- --------
Total other expenses 24,231 23,666 22,790 22,622 22,564
-------- -------- -------- -------- --------
Income before income tax 9,090 10,890 11,033 10,761 9,912
Income tax expense 2,523 3,422 3,380 3,406 2,977
-------- -------- -------- -------- --------
Net income $ 6,567 $ 7,468 $ 7,653 $ 7,355 $ 6,935
======== ======== ======== ======== ========
Per Share Data
Basic Net Income $ .35 $ .41 $ .41 $ .40 $ .37
Diluted Net Income .35 .40 .41 .40 .37
Cash Dividends Paid .23 .23 .23 .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,697 18,721 18,658 18,633 18,646
FINANCIAL RATIOS
Return on Average Assets .83% .94% .98% .96% .91%
Return on Avg. Stockholders' Equity 8.33 9.46 9.88 9.56 9.05
Avg. Earning Assets to Avg. Assets 90.61 91.38 89.98 89.64 90.05
Allowance for Loan Losses as %
Of Total Loans 1.01 .93 1.05 1.08 1.14
Net Charge Off's as % Of Avg. Loans
(Annualized) .12 .65 .34 .46 .07
Dividend Payout Ratio 65.71 57.50 56.10 57.50 62.16
Avg. Stockholders' Equity to Avg. Assets 9.97 9.92 9.89 10.00 10.08
Tax Equivalent Yield on Earning Assets 5.90 5.74 5.79 5.65 5.71
Cost of Supporting Liabilities 2.01 1.89 1.85 1.78 1.84
Net Int. Margin (FTE) on Earning Assets 3.89 3.85 3.94 3.87 3.87