First Merchants Corporation Announces 3rd Quarter Earnings Per Share
MUNCIE, Ind.--(BUSINESS WIRE)--
First Merchants Corporation (NASDAQ:FRME) has reported September 30, 2006 year-to-date diluted earnings per share totaling $1.22, equaling 2005.
Third quarter diluted earnings per share totaled $.42, a $.02 decline from second quarter earnings per share of $.44 in 2005. Net income for the quarter totaled $7.7 million compared to $8.2 million in 2005.
Total assets reached a record $3.5 billion at quarter-end, an increase of $233 million, or 7.2 percent from September 30, 2005. Loans and investments, the Corporation's primary earning assets, totaled $3.1 billion, an increase of $229 million or 8.0 percent over the prior year.
Net income declined by $169,000 for the nine months ended September 30, 2006, reflecting the challenges of a sustained and increasingly inverted yield curve. Net-interest income declined by $24,000 despite increases in earning assets as the Corporation's volume variance totaled a positive $4,180,000 mitigated by a negative rate variance of $4,204,000.
Non-interest income declined by $745,000 resulting primarily from reduced gains from the sale of mortgage loans totaling $668,000. Year-to-date operating expense increased by a modest 1.3 percent as management continues the process of streamlining its operating structure.
The allowance for loan losses has increased during the year by $1.8 million as the Corporation's provision for loan losses declined by $1.4 million. As of September 30, 2006, non-performing loans totaled 87 basis points of average total loans and the allowance for loan losses as a percent of total loans equaled 1.02 percent.
Michael L. Cox, President and Chief Executive Officer, stated that, "High single digit growth of loans and deposits coupled with expense management and talent acquisition continues to be the most positive representations of the controllable items in this business. Management is pleased with balance sheet growth, but the yield curve remains a challenge."
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m. Eastern Daylight Time on Monday, October 23, 2006. To participate, dial (Toll Free) 877-407-9210 and reference First Merchants Corporation's third quarter earnings. A replay will be available until October 30, 2006. To access replay, 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 # 216501.
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, N.A., Madison Community Bank, N.A., United Communities National Bank, First National Bank, Decatur Bank & Trust Company, N.A., Frances Slocum Bank, N.A., Lafayette Bank & Trust Company, N.A., Commerce National Bank and First Merchants Trust Company, N.A. The Corporation also operates First Merchants Insurance Services, a full-service property casualty, personal lines, and healthcare insurance agency 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) September 30,
2006 2005
Assets
Cash and due from banks $65,641 $81,310
Interest-bearing time deposits 8,717 10,708
Investment securities 468,074 436,794
Mortgage loans held for sale 3,395 5,026
Loans 2,641,644 2,443,931
Less: Allowance for loan losses (26,975) (25,149)
----------- -----------
Net loans 2,614,669 2,418,782
Premises and equipment 40,511 38,473
Federal Reserve and Federal Home Loan Bank
stock 23,620 23,165
Interest receivable 23,946 19,561
Core deposit intangibles and goodwill 136,666 139,597
Cash surrender value of life insurance 63,539 43,230
Other assets 23,261 21,792
----------- -----------
Total assets $3,472,039 $3,238,438
=========== ===========
Liabilities
Deposits
Noninterest-bearing $324,601 $346,318
Interest-bearing 2,369,690 2,118,975
----------- -----------
Total deposits 2,694,291 2,465,293
Borrowings 419,146 423,959
Interest payable 10,236 5,643
Other liabilities 26,075 25,153
----------- -----------
Total liabilities 3,149,748 2,920,048
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 -- 18,334,811 and
18,507,970 shares 2,292 2,313
Additional paid-in capital 143,688 148,004
Retained earnings 184,555 171,419
Accumulated other comprehensive loss (8,244) (3,346)
----------- -----------
Total stockholders' equity 322,291 318,390
----------- -----------
Total liabilities and stockholders'
equity $3,472,039 $3,238,438
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
2006 2005 2006 2005
NET CHARGE OFF'S $467 $1,736 $3,226 $3,808
AVERAGE BALANCES
Total Assets $3,424,504 $3,202,198 $3,328,120 $3,185,815
Total Loans 2,613,805 2,444,131 2,541,589 2,429,530
Total Deposits 2,613,507 2,419,204 2,505,027 2,420,268
Total Stockholders'
Equity 318,327 316,615 317,282 314,856
FINANCIAL RATIOS
Return on Average
Assets .90% 1.03% .90% .95%
Return on Avg.
Stockholders'
Equity 9.72 10.38 9.47 9.62
Avg. Earning Assets
to Avg. Assets 91.26 90.83 91.25 90.75
Allowance for Loan
Losses as %
Of Total Loans 1.02 1.03 1.02 1.03
Net Charge Off's as
% Of Avg. Loans
(Annualized) .07 .28 .17 .21
Dividend Payout
Ratio 54.76 52.27 56.56 56.56
Avg. Stockholders'
Equity to Avg.
Assets 9.30 9.89 9.53 9.88
Tax Equivalent Yield
on Earning Assets 7.08 6.40 6.87 6.15
Cost of Supporting
Liabilities 3.42 2.40 3.09 2.19
Net Int. Margin
(FTE) on Earning
Assets 3.66 4.00 3.78 3.96
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Interest income
Loans receivable
Taxable $48,738 $40,853 $137,475 $116,506
Tax exempt 189 160 588 483
Investment securities
Taxable 3,289 2,427 9,097 7,132
Tax exempt 1,645 1,595 4,905 4,702
Federal funds sold 13 51 41 190
Deposits with financial
institutions 144 185 390 493
Federal Reserve and Federal
Home Loan Bank stock 307 296 938 889
-------- --------- -------- --------
Total interest income 54,325 45,567 153,434 130,395
-------- --------- -------- --------
Interest expense
Deposits 20,291 12,172 51,624 32,707
Federal funds purchased 635 1,749
Securities sold under
repurchase agreements 852 523 2,740 965
Federal Home Loan Bank
advances 2,796 2,549 8,062 7,367
Subordinated debentures,
revolving credit lines
and term loans 2,067 1,894 6,078 5,522
Other borrowings 60 289 202 831
-------- --------- -------- --------
Total interest expense 26,701 17,427 70,455 47,392
-------- --------- -------- --------
Net interest income 27,624 28,140 82,979 83,003
Provision for loan losses 1,558 1,794 5,013 6,409
-------- --------- -------- --------
Net interest income
after provision for loan
losses 26,066 26,346 77,966 76,594
-------- --------- -------- --------
Other income
Fiduciary activities 1,863 1,794 5,763 5,719
Service charges on deposit
accounts 3,055 2,836 8,252 8,607
Other customer fees 1,386 1,389 4,130 3,662
Net realized gains on
sales of available-for-sale
securities 16 22
Commission income 971 870 3,421 3,131
Earnings on cash surrender
value of life insurance 719 441 1,574 1,281
Net gains and fees on sales of
loans 493 770 1,558 2,226
Other income 348 664 1,145 1,940
-------- --------- -------- --------
Total other income 8,835 8,780 25,843 26,588
-------- --------- -------- --------
Other expenses
Salaries and employee benefits 14,033 13,384 41,968 41,463
Net occupancy expenses 1,477 1,570 4,388 4,368
Equipment expenses 2,035 1,901 5,991 5,610
Marketing expense 586 446 1,424 1,387
Outside data processing fees 841 979 2,645 3,021
Printing and office supplies 367 328 1,095 969
Core deposit amortization 762 770 2,285 2,335
Other expenses 3,854 3,923 11,841 11,578
-------- --------- -------- --------
Total other expenses 23,955 23,301 71,637 70,731
-------- --------- -------- --------
Income before income tax 10,946 11,825 32,172 32,451
Income tax expense 3,207 3,605 9,633 9,743
-------- --------- -------- --------
Net income $7,739 $8,220 $22,539 $22,708
======== ========= ======== ========
Per Share Data
Basic Net Income .42 .45 1.23 1.23
Diluted Net Income .42 .44 1.22 1.22
Cash Dividends Paid .23 .23 .69 .69
Average Diluted Shares
Outstanding (in thousands) 18,381 18,590 18,455 18,606
CONSOLIDATED BALANCE SHEETS
(in thousands) Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2006 2006 2006 2005 2005
Assets
Cash and due
from banks $65,641 $71,275 $59,176 $70,417 $81,310
Interest-
bearing time
deposits 8,717 8,529 9,104 8,748 10,708
Investment
securities 468,074 466,882 441,651 434,266 436,794
Mortgage
loans held
for sale 3,395 5,338 5,170 4,910 5,026
Loans 2,641,644 2,591,440 2,491,488 2,457,427 2,443,931
Less:
Allowance
for loan
losses (26,975) (25,884) (25,623) (25,188) (25,149)
---------- ---------- ---------- ---------- ----------
Net loans 2,614,669 2,565,556 2,465,865 2,432,239 2,418,782
Premises and
equipment 40,511 41,122 39,029 39,417 38,473
Federal
Reserve and
Federal Home
Loan Bank
stock 23,620 23,889 23,421 23,200 23,165
Interest
receivable 23,946 19,539 19,035 19,690 19,561
Core deposit
intangibles
and goodwill 136,666 137,429 138,174 138,833 139,597
Cash
surrender
value of
life
insurance 63,539 44,358 43,964 43,579 43,230
Other assets 23,261 24,346 25,346 21,780 21,792
---------- ---------- ---------- ---------- ----------
Total
assets $3,472,039 $3,408,263 $3,269,935 $3,237,079 $3,238,438
========== ========== ========== ========== ==========
Liabilities
Deposits
Non-
interest-
bearing $324,601 $340,046 $325,548 $314,335 $346,318
Interest-
bearing 2,369,690 2,195,354 2,120,524 2,068,241 2,118,975
---------- ---------- ---------- ---------- ----------
Total
deposits 2,694,291 2,535,400 2,446,072 2,382,576 2,465,293
Borrowings 419,146 527,347 469,002 508,236 423,959
Interest
payable 10,236 6,927 6,412 5,874 5,643
Other
liabilities 26,075 25,585 31,711 26,997 25,153
---------- ---------- ---------- ---------- ----------
Total
liabil-
ities 3,149,748 3,095,259 2,953,197 2,923,683 2,920,048
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
out-
standing 2,292 2,282 2,305 2,302 2,313
Additional
paid-in
capital 143,688 142,037 146,374 145,682 148,004
Retained
earnings 184,555 181,042 177,975 174,717 171,419
Accumulated
other
compre-
hensive
loss (8,244) (12,357) (9,916) (9,305) (3,346)
---------- ---------- ---------- ---------- ----------
Total
stock-
holders'
equity 322,291 313,004 316,738 313,396 318,390
Total
liabil-
ities
and
stock-
holders'
equity $3,472,039 $3,408,263 $3,269,935 $3,237,079 $3,238,438
========== ========== ========== ========== ==========
NON-PERFORMING ASSETS
(in thousands) Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2006 2006 2006 2005 2005
90 days
past due $4,253 $8,818 $5,188 $3,965 $3,560
Non-accrual
loans 16,524 12,611 11,424 10,030 11,757
Other real
estate 2,194 2,497 3,209 2,835 3,023
---------- ---------- ---------- ---------- ----------
Total
non-
performing
assets $22,971 $23,926 $19,821 $16,830 $18,340
========== ========== ========== ========== ==========
Average total
loans for
the
quarter $2,613,805 $2,534,675 $2,474,759 $2,447,794 $2,444,131
Total non-
performing
assets as a
percent of
average total
loans .87% .94% .80% .69% .75%
Restructured
loans $93 $111 $114 $310 $454
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, Three Months Ended
except share
data) Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2006 2006 2006 2005 2005
Interest Income
Loans receivable
Taxable $48,738 $45,658 $43,079 $41,930 $40,853
Tax exempt 189 231 168 160 160
Investment
securities
Taxable 3,289 3,082 2,726 2,480 2,427
Tax exempt 1,645 1,613 1,647 1,672 1,595
Federal funds
sold 13 11 17 74 51
Deposits with
financial
institutions 144 132 114 202 185
Federal Reserve
and Federal
Home Loan Bank
stock 307 320 311 296 296
------------ --------- --------- -------- ---------
Total
interest
income 54,325 51,047 48,062 46,814 45,567
------------ --------- --------- -------- ---------
Interest expense
Deposits 20,291 16,914 14,419 13,414 12,172
Federal funds
purchased 635 625 489 163 256
Securities sold
under
repurchase
agreements 852 1,053 835 647 523
Federal Home
Loan Bank
advances 2,796 2,610 2,656 2,410 2,549
Subordinated
debentures,
revolving
credit lines
and term loans 2,067 2,020 1,991 1,910 1,894
Other borrowings 60 59 83 144 33
------------ --------- --------- -------- ---------
Total
interest
expense 26,701 23,281 20,473 18,688 17,427
------------ --------- --------- -------- ---------
Net interest
income 27,624 27,766 27,589 28,126 28,140
Provision for
loan losses 1,558 1,729 1,726 1,945 1,794
------------ --------- --------- -------- ---------
Net interest
income after
provision for
loan losses 26,066 26,037 25,863 26,181 26,346
------------ --------- --------- -------- ---------
Other income
Fiduciary
activities 1,863 1,949 1,951 1,762 1,794
Service charges
on deposit
accounts 3,055 2,771 2,426 2,691 2,836
Other customer
fees 1,386 1,389 1,355 1,432 1,389
Net realized
gains (losses)
on sales of
available-for-
sale securities (9) 9 (24) 16
Commission
income 971 946 1,504 690 870
Earnings on cash
surrender value
of life
insurance 719 432 423 386 441
Net gains and
fees on sales
of loans 493 511 554 676 770
Other income 348 422 375 516 664
------------ --------- --------- -------- ---------
Total other
income 8,835 8,411 8,597 8,129 8,780
------------ --------- --------- -------- ---------
Other expenses
Salaries and
employee
benefits 14,033 13,543 14,392 12,596 13,384
Net occupancy
expenses 1,477 1,477 1,434 1,428 1,570
Equipment
expenses 2,035 2,007 1,949 1,952 1,901
Marketing
expense 586 438 400 625 446
Outside data
processing fees 841 921 883 989 979
Printing and
office supplies 367 424 304 400 328
Core deposit
amortization 762 761 762 767 770
Other expenses 3,854 4,323 3,664 4,469 3,923
------------ --------- --------- -------- ---------
Total other
expenses 23,955 23,894 23,788 23,226 23,301
------------ --------- --------- -------- ---------
Income before
income tax 10,946 10,554 10,672 11,084 11,825
Income tax
expense 3,207 3,263 3,163 3,553 3,605
------------ --------- --------- -------- ---------
Net income $7,739 $7,291 $7,509 $7,531 $8,220
============ ========= ========= ======== =========
Per Share Data
Basic Net Income $.42 $.39 $.41 $.41 $.45
Diluted Net
Income .42 .39 .41 .41 .44
Cash Dividends
Paid .23 .23 .23 .23 .23
Average Diluted
Shares
Outstanding (in
thousands) 18,381 18,463 18,526 18,558 18,590
FINANCIAL RATIOS
Return on
Average Assets .90% .88% .93% .95% 1.03%
Return on Avg.
Stockholders'
Equity 9.72 9.20 9.49 9.49 10.38
Avg. Earning
Assets to Avg.
Assets 91.26 91.21 91.27 91.47 90.83
Allowance for
Loan Losses as
% Of Total
Loans 1.02 1.00 1.03 1.02 1.03
Net Charge Off's
as % Of Avg.
Loans
(Annualized) .07 .23 .21 .31 .28
Dividend Payout
Ratio 54.76 58.97 56.10 56.10 52.27
Avg.
Stockholders'
Equity to Avg.
Assets 9.30 9.54 9.78 10.05 9.89
Tax Equivalent
Yield on
Earning Assets 7.08 6.87 6.64 6.62 6.40
Cost of
Supporting
Liabilities 3.42 3.07 2.77 2.59 2.40
Net Int. Margin
(FTE) on
Earning Assets 3.66 3.80 3.87 4.03 4.00
LOANS
(in thousands) Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2006 2006 2006 2005 2005
Commercial and
industrial
loans $497,280 $501,238 $486,411 $461,102 $476,010
Agricultural
production
financing and
other loans to
farmers 104,147 95,352 87,433 95,130 94,262
Real estate
loans:
Construction 175,753 178,254 175,784 174,783 171,667
Commercial
and
farmland 835,403 813,171 743,905 734,865 719,154
Residential 757,116 744,552 746,410 751,217 746,777
Individuals'
loans for
household and
other personal
expenditures 215,237 208,768 202,478 200,139 186,792
Tax exempt
loans 16,550 13,656 13,656 8,263 12,439
Lease financing
receivables,
net of
unearned
income 8,543 8,589 8,193 8,713 9,538
Other loans 31,615 27,860 27,218 23,215 27,292
---------- ---------- ---------- ---------- ----------
2,641,644 2,591,440 2,491,488 2,457,427 2,443,931
Allowance for
loan losses (26,975) (25,884) (25,623) (25,188) (25,149)
---------- ---------- ---------- ---------- ----------
Total
loans $2,614,669 $2,565,556 $2,465,865 $2,432,239 $2,418,782
========== ========== ========== ========== ==========
DEPOSITS
(in thousands) Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2006 2006 2006 2005 2005
Demand deposits $743,154 $758,132 $671,027 $690,923 $697,597
Savings
deposits 512,112 510,878 526,554 566,212 568,366
Certificates
and other time
deposits of
$100,000 or
more 394,724 313,751 320,213 264,665 320,640
Other
certificates
and time
deposits 1,044,301 952,639 928,278 860,776 878,690
---------- ---------- ---------- ---------- ----------
$2,694,291 $2,535,400 $2,446,072 $2,382,576 $2,465,293
========== ========== ========== ========== ==========
Source: First Merchants Corporation
Contact: First Merchants Corporation Mark K. Hardwick, 765-751-1857 Executive Vice President/Chief Financial Officer http://firstmerchants.com