First Merchants Corporation Announces 2003 Results
MUNCIE, Ind., Jan. 21 /PRNewswire-FirstCall/ -- First Merchants Corporation (Nasdaq: FRME) has reported 2003 diluted earnings per share of $1.50, down from $1.69 recorded in 2002. Net income during the period equaled $27.6 million compared to $27.8 million in 2002.
Net Interest Margin equaled 4.01 percent for the year, down 38 basis points from 4.39 in 2002. The decline in Net Interest Margin amounted to $.33 on an earnings per share basis.
Non-performing loans as a percentage of total loans equaled 1.17 percent, up from 1.09 percent in 2002. The Corporation's allowance for loan losses equaled 1.08 percent of total loans as of year-end.
Michael L. Cox, President and Chief Executive Officer, stated that, "First Merchants Corporation's management team is disappointed the legacy of 27 consecutive years of improved earnings per share has come to an end in 2003. Management has always taken pride in its ability to manage through interest rate cycles and various economic environments. However, the fact that our first down year in 28 years occurred during a 40-year low interest rate cycle and a stressed Indiana economy resulting in significant margin compression and higher charge-off's than normal is of some consolation." Cox also stated that, "We maintained a long-term focus throughout a difficult year in 2003 by not sacrificing balance sheet credit quality or asset duration in search of current year earnings. Management believes the balance sheet is positioned for the coming years."
2003 accomplishments included the formation of Merchants Trust Company on January 1st, the acquisition of CNBC Bancorp, Worthington Ohio, on March 1st, the formation of two tax advantaged investment subsidiaries on May 29th and the integration of Lafayette Bank and Trust Company's core processing system on November 7th. Additionally, in order to bring consistency of application and interpretation of all applicable banking regulations, the Corporation successfully converted six state bank charters to national charters effective January 1, 2004. All ten of the Corporation's banks are now nationally chartered bringing enhanced efficiency and consistency to the regulatory process.
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m. Eastern Time on Thursday, January 21, 2004. To participate dial 888-710-8192 and reference First Merchants Corporation's fourth quarter earnings release. A digital recording will be available two hours after the completion of the conference from January 21, 2004, to January 23, 2004. To access, US/Canada participants should call 800-642-1687 or for International/Local participants, call 706-645-9291 and enter the Conference I.D. 4799031.
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, Union County National Bank, The Randolph County 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 and is rated A+ by Standard & Poor's Corporation. Quotations are carried in daily newspapers and can be found on the company's Internet web page (http:/www.firstmerchants.com ).
For more information, contact:
Mark K. Hardwick, Senior Vice President/Chief Financial Officer, 765-751-1857
http://firstmerchants.com
CONSOLIDATED BALANCE SHEETS
(in thousands) December 31,
2003 2002
Assets
Cash and due from banks $77,112 $87,638
Federal funds sold 32,415 31,400
----------- -----------
Cash and cash equivalents 109,527 119,038
Interest-bearing time deposits 8,141 3,568
Investment securities 356,797 342,062
Mortgage loans held for sale 3,043 21,545
Loans 2,353,503 2,004,377
Less: Allowance for loan losses (25,493) (22,417)
----------- -----------
Net loans 2,328,010 1,981,960
Premises and equipment 39,639 38,645
Federal Reserve and
Federal Home Loan Bank stock 15,502 11,409
Interest receivable 16,840 17,346
Core deposit intangibles and goodwill 142,723 107,217
Cash surrender value of life insurance 37,927 14,309
Other assets 18,663 21,588
----------- -----------
Total assets $3,076,812 $2,678,687
=========== ===========
Liabilities
Deposits
Noninterest-bearing $338,201 $272,128
Interest-bearing 2,023,900 1,764,560
----------- -----------
Total deposits 2,362,101 2,036,688
Borrowings 383,170 356,927
Interest payable 4,680 6,019
Other liabilities 22,896 17,924
----------- -----------
Total liabilities 2,772,847 2,417,558
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 -- 18,512,834
and 17,138,885 shares 2,314 2,142
Additional paid-in capital 150,310 116,401
Retained earnings 149,096 138,110
Accumulated other comprehensive income 2,245 4,476
----------- -----------
Total stockholders' equity 303,965 261,129
----------- -----------
Total liabilities and
stockholders' equity $3,076,812 $2,678,687
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended Year Ended
(In thousands) December 31, December 31,
2003 2002 2003 2002
NET CHARGE OFF'S $5,396 $2,607 $10,128 $6,800
AVERAGE BALANCES
Total Assets $3,070,523 $2,665,016 $2,960,195 $2,406,251
Total Loans 2,349,536 2,066,616 2,281,614 1,842,429
Total Deposits 2,361,544 2,023,698 2,257,075 1,857,053
Total
Stockholders'
Equity 302,803 261,139 293,603 237,575
FINANCIAL RATIOS
Return on
Average Assets .76% .99% .93% 1.16%
Return on Avg.
Stockholders' Equity 7.69 10.10 9.39 11.72
Avg. Earning Assets
to Avg. Assets 90.19 92.11 89.99 91.38
Allowance for
Loan Losses as %
Of Total Loans 1.08 1.11 1.08 1.11
Net Charge Off's as
% Of Avg. Loans
(Annualized) .92 .50 .44 .37
Dividend Payout Ratio 74.19 57.89 60.00 50.89
Avg. Stockholders'
Equity to Avg. Assets 9.86 9.80 9.92 9.87
Tax Equivalent Yield
on Earning Assets 5.62 6.57 5.98 6.83
Cost of Supporting
Liabilities 1.84 2.30 1.97 2.44
Net Int. Margin (FTE)
on Earning Assets 3.78 4.27 4.01 4.39
CONSOLIDATED STATEMENTS OF INCOME
(in thousands,
except share data) Three Months Ended Year Ended
December 31, December 31,
2003 2002 2003 2002
Interest income
Loans receivable
Taxable $34,697 $34,775 $141,236 $129,279
Tax exempt 195 235 707 638
Investment securities
Taxable 1,484 2,100 6,105 9,086
Tax exempt 1,451 1,740 6,270 6,190
Federal funds sold 148 169 487 557
Deposits with
financial institutions 22 38 76 197
Federal Reserve and
Federal Home Loan
Bank stock 39 208 649 735
-------- -------- -------- --------
Total interest
income 38,036 39,265 155,530 146,682
-------- -------- -------- --------
Interest expense
Deposits 8,303 9,934 34,858 39,700
Securities sold under
repurchase agreements 248 502 1,521 2,060
Federal Home Loan
Bank advances 2,362 2,359 9,439 8,166
Trust preferred
securities 1,234 1,181 4,931 3,324
Other borrowings 586 154 1,639 509
-------- -------- -------- --------
Total interest
expense 12,733 14,130 52,388 53,759
-------- -------- -------- --------
Net interest income 25,303 25,135 103,142 92,923
Provision for
loan losses 1,047 2,877 9,477 7,174
-------- -------- -------- --------
Net interest income
after provision for
loan losses 24,256 22,258 93,665 85,749
-------- -------- -------- --------
Other income
Fiduciary activities 1,603 1,487 6,736 6,258
Service charges on
deposit accounts 2,717 2,695 11,105 9,330
Other customer fees 1,039 993 4,124 3,918
Net realized gains
(losses) on sales of
available-for-sale
securities 0 169 950 739
Commission income 569 586 2,668 2,203
Earnings on cash
surrender value
of life insurance 446 200 1,347 689
Net gains and fees on
sales of loans 770 722 6,388 1,712
Other income 443 364 2,584 2,228
-------- -------- -------- --------
Total other
income 7,587 7,216 35,902 27,077
-------- -------- -------- --------
Other expenses
Salaries and employee
benefits 12,599 10,849 50,484 39,150
Net occupancy expenses 1,414 933 4,894 3,632
Equipment expenses 2,217 1,861 8,073 6,709
Marketing expense 538 416 1,797 1,495
Outside data
processing fees 1,063 940 4,118 3,664
Printing and
office supplies 466 442 1,706 1,597
Goodwill and core
deposit amortization 923 750 3,700 2,589
Other expenses 4,623 3,695 16,507 12,173
-------- -------- -------- --------
Total other
expenses 23,843 19,886 91,279 71,009
-------- -------- -------- --------
Income before income tax 8,000 9,588 38,288 41,817
Income tax expense 2,181 2,998 10,717 13,981
-------- -------- -------- --------
Net income $5,819 $6,590 $27,571 $27,836
======== ======== ======== ========
Per Share Data (1)
Basic Net Income .31 .38 1.51 1.70
Diluted Net Income .31 .38 1.50 1.69
Cash Dividends Paid .23 .22 .90 .86
(1) Restated for a five percent (5%) stock dividend distributed September 2003.
CONSOLIDATED BALANCE SHEETS
(in thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2003 2003 2003 2003 2002
Assets
Cash and
due from banks $77,112 $87,619 $89,126 $81,789 $87,638
Federal
funds sold 32,415 0 14,150 54,925 31,400
--------- --------- --------- --------- ----------
Cash and cash
equivalents 109,527 87,619 103,276 136,714 119,038
Interest-bearing
time deposits 8,141 3,789 8,777 5,170 3,568
Investment
securities 356,797 316,852 363,103 333,692 342,062
Mortgage loans
held for sale 3,043 12,042 15,151 13,558 21,545
Loans 2,353,503 2,351,405 2,324,576 2,291,178 2,004,377
Less:
Allowance
for loan
losses (25,493) (29,842) (30,639) (29,733) (22,417)
--------- --------- --------- --------- ---------
Net loans 2,328,010 2,321,563 2,293,937 2,261,445 1,981,960
Premises and
equipment 39,639 39,475 39,313 38,861 38,645
Federal Reserve
and Federal
Home Loan
Bank stock 15,502 14,057 13,933 13,912 11,409
Interest
receivable 16,840 17,139 16,592 16,789 17,346
Core deposit
intangibles
and goodwill 142,723 143,648 144,663 141,226 107,217
Cash surrender
value of
life insurance 37,927 37,536 34,575 14,567 14,309
Other assets 18,663 18,000 23,641 23,088 21,588
---------- --------- --------- --------- ---------
Total
assets $3,076,812 $3,011,720 $3,056,961 $2,999,022 $2,678,687
========== ========== ========== ========== ===========
Liabilities
Deposits
Noninterest-
bearing $338,201 $316,058 $324,735 $289,835 $272,128
Interest-
bearing 2,023,900 1,994,146 1,988,593 1,996,836 1,764,560
---------- ---------- ---------- ---------- -----------
Total
deposits 2,362,101 2,310,204 2,313,328 2,286,671 2,036,688
Borrowings 383,170 374,051 417,669 388,821 356,927
Interest
payable 4,680 5,200 5,494 5,694 6,019
Other
liabilities 22,896 21,064 19,460 28,212 17,924
--------- --------- --------- --------- ---------
Total
liabilities 2,772,847 2,710,519 2,755,951 2,709,398 2,417,558
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 2,314 2,311 2,301 2,298 2,142
Additional paid-in
capital 150,310 149,810 148,296 143,505 116,401
Retained
earnings 149,096 147,559 144,457 139,743 138,110
Accumulated other
comprehensive
income 2,245 1,521 5,956 4,078 4,476
---------- --------- --------- ---------- --------
Total
stockholders'
equity 303,965 301,201 301,010 289,624 261,129
---------- --------- -------- ---------- ----------
Total liabilities
and stockholders'
equity $3,076,812 $3,011,720 $3,056,961 $2,999,022 $2,678,687
========== ========== ========== ========== ===========
NON-PERFORMING ASSETS
(In thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2003 2003 2003 2003 2002
90 days past due $6,530 $4,790 $5,295 $3,552 $6,676
Non-accrual loans 19,453 20,093 22,532 19,747 14,134
Other real estate 1,399 1,547 2,351 1,841 1,691
---------- ---------- -------- -------- ----------
Total non-performing
assets $27,382 $26,430 $30,178 $25,140 $22,501
========== ========== ========= ======== ==========
Average total loans
for the quarter $2,349,536 $2,348,817 $2,313,688 $2,111,056 $2,066,616
Total non-performing
assets as a
percent of
average total
loans 1.17% 1.13% 1.30% 1.19% 1.09%
Restructured loans $641 $647 $899 $2,194 $2,508
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands,
except share data) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2003 2003 2003 2003 2002
Interest Income
Loans receivable
Taxable $34,697 $35,607 $35,759 $35,173 $34,775
Tax exempt 195 185 162 165 235
Investment securities
Taxable 1,484 1,342 1,600 1,679 2,100
Tax exempt 1,451 1,562 1,626 1,631 1,740
Federal funds sold 148 49 177 113 169
Deposits with
financial
institutions 22 13 19 22 38
Federal Reserve and
Federal Home Loan
Bank stock 39 201 211 198 208
------ ------ ------ ------ ------
Total interest
income 38,036 38,959 39,554 38,981 39,265
------ ------- -------- -------- --------
Interest expense
Deposits 8,303 8,623 9,048 8,884 9,934
Securities sold
under repurchase
agreements 248 370 454 449 502
Federal Home Loan
Bank advances 2,362 2,409 2,395 2,273 2,359
Trust preferred
securities 1,234 1,232 1,259 1,206 1,181
Other borrowings 586 451 443 159 154
-------- -------- ------- -------- --------
Total interest
expense 12,733 13,085 13,599 12,971 14,130
-------- -------- ------- -------- --------
Net interest income 25,303 25,874 25,955 26,010 25,135
Provision for loan
losses 1,047 1,706 2,123 4,601 2,877
------- ------- -------- -------- --------
Net interest income
after provision for
loan losses 24,256 24,168 23,832 21,409 22,258
-------- -------- -------- -------- --------
Other income
Fiduciary
activities 1,603 1,547 1,889 1,697 1,487
Service charges
on deposit
accounts 2,717 2,861 2,743 2,784 2,695
Other customer fees 1,039 961 1,036 1,088 993
Net realized gains
on sales of
available-for-sale
securities 0 512 67 371 169
Commission income 569 638 707 754 586
Earnings on cash
surrender value
of life insurance 446 498 204 199 200
Net gains and fees
on sales of loans 770 1,332 3,351 935 722
Other income 443 527 1,156 458 364
-------- -------- -------- -------- -------
Total other
income 7,587 8,876 11,153 8,286 7,216
-------- -------- -------- -------- -------
Other expenses
Salaries and
employee benefits 12,599 13,206 12,902 11,777 10,849
Net occupancy
expenses 1,414 1,189 1,200 1,091 933
Equipment expenses 2,217 1,996 2,016 1,844 1,861
Marketing expense 538 414 411 434 416
Outside data
processing fees 1,063 1,025 1,102 928 940
Printing and
office supplies 466 401 432 407 442
Goodwill and core
deposit amortization 923 958 991 828 750
Other expenses 4,623 3,771 3,881 4,232 3,695
-------- -------- -------- -------- --------
Total other
expenses 23,843 22,960 22,935 21,541 19,886
-------- -------- -------- -------- --------
Income before
income tax 8,000 10,084 12,050 8,154 9,588
Income tax expense 2,181 2,735 3,305 2,496 2,998
-------- -------- -------- -------- --------
Net income $5,819 $7,349 $8,745 $5,658 $6,590
======== ======== ======== ======== ========
Per Share Data(1)
Basic Net Income $.31 $.40 $.48 $.32 $.38
Diluted Net Income .31 .39 .48 .32 .38
Cash Dividends Paid .23 .23 .22 .22 .22
(1) Restated for a five percent (5%) stock dividend distributed September 2003.
SOURCE First Merchants Corporation
-0- 01/21/2004
/CONTACT: Mark K. Hardwick, Senior Vice President/Chief Financial Officer
of First Merchants Corporation, +1-765-751-1857/
/Web site: http://www.firstmerchants.com /
(FRME)
CO: First Merchants Corporation
ST: Indiana
IN: FIN
SU: ERN CCA MAV
TM-AM
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