First Merchants Corporation Announces 7 Percent Increase in First Quarter Earnings Per Share
MUNCIE, Ind.--(BUSINESS WIRE)--
First Merchants Corporation (NASDAQ:FRME) has reported March 31, 2008 diluted earnings per share totaling $.45, a 7.1 percent increase over 2007 first quarter earnings per share of $.42. Net income totaled $8.1 million, a $355,000 increase over the $7.8 million earned in the first quarter of 2007.
Total assets reached $3.8 billion at quarter-end, an increase of $212 million, or 6 percent, from March 31, 2007. Loans and investments, the Corporation's primary earning assets, totaled $3.37 billion, an increase of $157 million, or 4.9 percent over the prior year.
Net-Interest margin expanded by 24 basis points from 3.50 percent in the first quarter of 2007 to 3.74 percent in 2008. As a result, net-interest income increased by $3.7 million or 13.8 percent. On March 31, 2008 the Corporation reported on form 8-K the sale of three prime-based interest rate floors. For the quarter, $236,000 of the $4.7 million gain was recognized in the Corporation's net interest margin. Due to the accounting treatment of FASB 133, $277,000 of the gain was accelerated and recognized in non-interest income.
Total non-interest income increased by $723,000, or 7.4 percent, during the quarter and total expenses increased by $2.1 million.
Provision expense increased by $2.2 million, or 139 percent, during the quarter as charge-offs totaled $3.0 million. Non-performing assets increased from 73 basis points to 93 basis points during the quarter and the allowance for loan losses as a percent of total loans increased to .99 percent.
Michael C. Rechin, President and Chief Executive Officer, stated that, "First Merchants is a stronger banking company because of the work that has taken place over the last 12 months. Our company is structurally more efficient, our sales teams are better equipped to win in the marketplace and our lending discipline and pricing has improved." Rechin also added that, "Given the volatility in the banking sector First Merchants management team is pleased with the quarter-end results. We are managing our loan portfolio rigorously recognizing the softness in the economy. Our Bankers are working with clients actively to identify deterioration in cash flow and real estate values. It's our goal to build earnings momentum while at the same time adding to our allowance for loan losses."
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m. Eastern Daylight Time on Tuesday, April 22, 2008. To participate, dial (Toll Free) 800-860-2442 and reference First Merchants Corporation's first quarter earnings. A replay will be available until April 30, 2008. To access replay, US/Canada participants should dial (Toll Free) 877-344-7529 or for International participants, dial 412-317-0088. The replay will require the passcode is 417952.
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., First Merchants Bank of Central Indiana, 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) March 31,
2008 2007
Assets
Cash and due from banks $89,961 $43,629
Interest-bearing time deposits 21,280 6,785
Investment securities 426,055 476,199
Mortgage loans held for sale 3,494 2,732
Loans 2,937,710 2,731,140
Less: Allowance for loan losses (29,094) (26,819)
---------- ----------
Net loans 2,908,616 2,704,321
Premises and equipment 44,526 43,262
Federal Reserve and Federal Home Loan Bank
stock 25,345 23,691
Interest receivable 21,212 21,941
Core deposit intangibles and goodwill 135,056 137,847
Cash surrender value of life insurance 71,663 68,360
Other assets 19,950 26,047
---------- ----------
Total assets $3,767,158 $3,554,814
========== ==========
Liabilities
Deposits
Noninterest-bearing $380,364 $325,615
Interest-bearing 2,432,763 2,361,773
---------- ----------
Total deposits 2,813,127 2,687,388
Borrowings 574,462 497,188
Interest payable 7,621 10,834
Other liabilities 23,107 30,756
---------- ----------
Total liabilities 3,418,317 3,226,166
Stockholders' equity
Preferred stock, no-par value
Authorized and unissued -- 500,000 shares
Cumulative Preferred Stock, $1,000 par value:
Authorized -- 600 shares
Issued and outstanding -- 125 shares 125
Common stock, $.125 stated value
Authorized -- 50,000,000 shares
Issued and outstanding -- 17,978,263 and
18,002,787 shares 2,247 2,289
Additional paid-in capital 137,633 143,672
Retained earnings 206,710 191,476
Accumulated other comprehensive loss 2,126 (8,789)
---------- ----------
Total stockholders' equity 348,841 328,648
---------- ----------
Total liabilities and stockholders'
equity $3,767,158 $3,554,814
========== ==========
FINANCIAL HIGHLIGHTS
Three Months Ended
(In thousands) March 31,
2008 2007
NET CHARGE OFF'S $2,957 $1,320
AVERAGE BALANCES
Total Assets $3,758,332 $3,522,334
Total Loans 2,908,162 2,703,134
Total Deposits 2,836,174 2,689,908
Total Stockholders' Equity 344,722 328,342
FINANCIAL RATIOS
Return on Average Assets .86 .88
Return on Avg. Stockholders' Equity 9.43 9.47
Avg. Earning Assets to Avg. Assets 90.38 91.13
Allowance for Loan Losses as % Of Total Loans .99 .98
Net Charge Off's as % Of Avg. Loans
(Annualized) .41 .20
Dividend Payout Ratio 51.10 54.76
Avg. Stockholders' Equity to Avg. Assets 9.17 9.32
Tax Equivalent Yield on Earning Assets 6.78 7.01
Cost of Supporting Liabilities 3.04 3.51
Net Int. Margin (FTE) on Earning Assets 3.74 3.50
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended
March 31,
2008 2007
Interest income
Loans receivable
Taxable $51,101 $49,645
Tax exempt 165 201
Investment securities
Taxable 3,249 3,282
Tax exempt 1,513 1,661
Federal funds sold 8 1
Deposits with financial institutions 282 123
Federal Reserve and Federal Home Loan Bank stock 335 328
--------- -------
Total interest income 56,653 55,241
--------- -------
Interest expense
Deposits 19,433 21,806
Federal funds purchased 669 854
Securities sold under repurchase agreements 816 569
Federal Home Loan Bank advances 3,036 2,936
Subordinated debentures, revolving credit lines
and term loans 1,890 2,001
--------- -------
Total interest expense 25,844 28,166
--------- -------
Net interest income 30,809 27,075
Provision for loan losses 3,823 1,599
--------- -------
Net interest income after provision for loan losses 26,986 25,476
--------- -------
Other income
Service charges on deposit accounts 2,931 2,883
Fiduciary activities 2,142 2,036
Other customer fees 1,679 1,491
Commission income 1,669 1,638
Earnings on cash surrender value of life
insurance 738 685
Net gains and fees on sales of loans 643 532
Net realized gains (losses) on sale of available-
for-sale securities 73 (1)
Other income 652 540
--------- -------
Total other income
10,527 9,804
--------- -------
Other expenses
Salaries and employee benefits 16,098 14,726
Net occupancy 1,805 1,598
Equipment 1,654 1,722
Marketing 484 487
Outside data processing fees 882 951
Printing and office supplies 281 299
Core deposit amortization 790 791
Other expenses 4,279 3,620
--------- -------
Total other expenses 26,273 24,194
--------- -------
Income before income tax 11,240 11,086
Income tax expense 3,114 3,315
--------- -------
Net income $8,126 $7,771
========= =======
Per Share Data
Basic Net Income .45 .42
Diluted Net Income .45 .42
Cash Dividends Paid .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,055 18,497
CONSOLIDATED BALANCE SHEETS
(in thousands) March December September June March
31, 31, 30, 30, 31,
2008 2007 2007 2007 2007
Assets
Cash and due
from banks $89,961 $134,683 $85,645 $80,921 $43,629
Interest-
bearing time
deposits 21,280 24,931 22,295 8,898 6,785
Investment
securities 426,055 451,167 474,613 479,281 476,199
Mortgage
loans held
for sale 3,494 3,735 4,328 2,842 2,732
Loans 2,937,710 2,876,843 2,869,001 2,806,068 2,731,140
Less:
Allowance
for loan
losses (29,094) (28,228) (27,635) (27,608) (26,819)
---------- ---------- ---------- ---------- ----------
Net
loans 2,908,616 2,848,615 2,841,366 2,778,460 2,704,321
Premises and
equipment 44,526 44,445 44,255 44,126 43,262
Federal
Reserve and
Federal Home
Loan Bank
stock 25,345 25,250 25,050 23,822 23,691
Interest
receivable 21,212 23,402 25,954 21,615 21,941
Core deposit
intangibles
and goodwill 135,056 135,856 136,266 137,056 137,847
Cash
surrender
value of
life
insurance 71,663 70,970 70,082 69,111 68,360
Other assets 19,950 19,033 24,446 23,383 26,047
---------- ---------- ---------- ---------- ----------
Total
assets $3,767,158$3,782,087$3,754,300$3,669,515$3,554,814
========== ========== ========== ========== ==========
Liabilities
Deposits
Noninterest-
bearing $380,364 $370,397 $355,339 $362,083 $325,615
Interest-
bearing 2,432,763 2,473,724 2,403,836 2,357,518 2,361,773
---------- ---------- ---------- ---------- ----------
Total
deposits 2,813,127 2,844,121 2,759,175 2,719,601 2,687,388
Borrowings 574,462 568,774 620,469 587,574 497,188
Interest
payable 7,621 8,325 9,170 10,417 10,834
Other
liabilities 23,107 20,931 32,745 24,543 30,756
---------- ---------- ---------- ---------- ----------
Total
liabilities 3,418,317 3,442,151 3,421,559 3,342,135 3,226,166
Stockholders'
equity
Preferred
stock, no-
par value
Authorized
and
unissued
--
500,000
shares
Cumulative
Preferred
Stock, $1,000
par value:
Authorized
-- 600
shares
Issued and
outstanding 125
Common stock,
$.125 stated
value
Authorized
--
50,000,000
shares
Issued and
outstanding 2,247 2,250 2,269 2,286 2,289
Additional
paid-in
capital 137,633 137,801 140,642 143,317 143,672
Retained
earnings 206,710 202,750 197,609 193,460 191,476
Accumulated
other
comprehensive
loss 2,126 (2,865) (7,779) (11,683) (8,789)
---------- ---------- ---------- ---------- ----------
Total
stockholders'
equity 348,841 339,936 332,741 327,380 328,648
---------- ---------- ---------- ---------- ----------
Total
liabilities
and
stockholders'
equity $3,767,158 $3,782,087 $3,754,300 $3,669,515 $3,554,814
========== ========== ========== ========== ==========
NON-PERFORMING ASSETS
March 31, December 31, September 30, June 30, March 31,
2008 2007 2007 2007 2007
Non Accrual
Loans $27,465 $29,031 $30,165 $30,820 $22,704
Renegotiated
Loans 142 145 58 58 59
-------- ----------- ------------ ------- --------
Non Performing
Loans (NPL) 27,607 29,176 30,223 30,878 22,763
Real Estate
Owned and
Repossessed
Assets 7,372 2,573 2,081 2,274 3,102
-------- ----------- ------------ ------- --------
Non Performing
Assets (NPA) 34,979 31,749 32,304 33,152 25,865
90+ Days
Delinquent 4,996 3,578 3,132 5,203 4,554
-------- ----------- ------------ ------- --------
NPAs & 90 Day
Delinquent 39,975 35,327 35,436 38,355 30,419
Loan Loss
Reserve 29,094 28,228 27,635 27,608 26,819
YTD Charge-offs 2,957 6,819 4,962 2,179 1,320
NPAs / Actual
Assets % 0.93% 0.84% 0.86% 0.90% 0.73%
NPAs & 90 day /
Actual Assets
% 1.06% 0.93% 0.94% 1.05% 0.86%
NPAs / Actual
Loans & REO
(%) 1.19% 1.10% 1.12% 1.18% 0.95%
Loan Loss
Reserves /
Actual Loans
(%) 0.99% 0.98% 0.96% 0.98% 0.98%
NCOs / YTD
Average Loans
(%) 0.10% 0.24% 0.18% 0.08% 0.05%
CONSOLIDATED STATEMENTS OF INCOME
(in thousands,
except share March 31, December 31, September 30, June 30, March 31,
data) 2008 2007 2007 2007 2007
Loans
receivable
Taxable $51,101 $53,338 $53,081 $51,204 $49,645
Tax exempt 165 302 368 249 201
Investment
securities
Taxable 3,249 3,487 3,581 3,394 3,282
Tax exempt 1,513 1,623 1,613 1,651 1,661
Federal funds
sold 8 39 41 91 1
Deposits with
financial
institutions 282 194 145 120 123
Federal
Reserve and
Federal Home
Loan Bank
stock 335 344 328 299 328
-------- ----------- ------------ ------- --------
Total
interest
income 56,653 59,327 59,157 57,008 55,241
-------- ----------- ------------ ------- --------
Interest
expense
Deposits 19,433 22,398 23,327 22,390 21,806
Federal
funds
purchased 669 692 996 1,047 854
Securities
sold under
repurchase
agreements 816 1,182 1,195 910 569
Federal Home
Loan Bank
advances 3,036 3,250 3,302 3,009 2,936
Subordinated
debentures,
revolving
credit
lines and
term loans 1,890 1,910 1,802 2,037 2,001
-------- ----------- ------------ ------- --------
Total
interest
expense 25,844 29,432 30,622 29,393 28,166
-------- ----------- ------------ ------- --------
Net interest
income 30,809 29,895 28,535 27,615 27,075
Provision
for loan
losses 3,823 2,450 2,810 1,648 1,599
-------- ----------- ------------ ------- --------
Net interest
income after
provision for
loan losses 26,986 27,445 25,725 25,967 25,476
-------- ----------- ------------ ------- --------
Other income
Service
charges on
deposit
accounts 2,931 3,206 3,241 3,091 2,883
Fiduciary
activities 2,142 2,094 1,985 2,257 2,036
Other
customer
fees 1,679 1,686 1,767 1,535 1,491
Commission
income 1,669 1,031 1,175 1,269 1,638
Earnings on
cash
surrender
value
of life
insurance 738 1,186 998 782 685
Net gains
and fees on
sales of
loans 643 546 749 611 532
Net realized
gains
(losses) on
sales of
available-
for-sale
securities 73 1 (1)
Other income 652 383 933 221 540
-------- ----------- ------------ ------- --------
Total
other
income 10,527 10,133 10,848 9,766 9,804
-------- ----------- ------------ ------- --------
Other expenses
Salaries and
employee
benefits 16,098 14,738 14,583 14,796 14,726
Net occupancy 1,805 1,619 1,818 1,612 1,598
Equipment 1,654 1,619 1,645 1,783 1,722
Marketing 484 505 560 653 487
Outside data
processing
fees 882 872 972 1,036 951
Printing and
office
supplies 281 329 394 388 299
Core deposit
amortization 790 789 789 790 791
Write-off of
unamortized
underwriting
expense 1,771
Other
expenses 4,279 4,776 4,241 4,910 3,620
-------- ----------- ------------ ------- --------
Total
other
expenses 26,273 25,247 25,002 27,739 24,194
-------- ----------- ------------ ------- --------
Income before
income tax 11,240 12,331 11,571 7,994 11,086
Income tax
expense 3,114 3,021 3,221 1,786 3,315
-------- ----------- ------------ ------- --------
Net income $8,126 $9,310 $8,350 $6,208 $7,771
======== =========== ============ ======= ========
Per Share Data
Basic Net
Income $.45 $.51 $.46 $.34 $.42
Diluted Net
Income .45 .51 .46 .34 .42
Cash
Dividends
Paid .23 .23 .23 .23 .23
Average
Diluted
Shares
Outstanding
(in
thousands) 18,055 18,138 18,276 18,369 18,497
FINANCIAL
RATIOS
Return on
Average
Assets .86% 1.00% .90% .69% .88%
Return on Avg.
Stockholders'
Equity 9.43 11.10 10.14 7.53 9.47
Avg. Earning
Assets to
Avg. Assets 90.38 90.70 90.88 90.96 91.13
Allowance for
Loan Losses
as %
Of Total Loans .99 .98 .96 .98 .98
Net Charge
Off's as % Of
Avg. Loans
(Annualized) .41 .26 .39 .23 .20
Dividend
Payout Ratio 51.10 45.10 50.00 67.65 54.76
Avg.
Stockholders'
Equity to
Avg. Assets 9.17 8.98 8.91 9.15 9.32
Tax Equivalent
Yield on
Earning
Assets 6.78 7.13 7.17 7.09 7.01
Cost of
Supporting
Liabilities 3.04 3.47 3.65 3.59 3.51
Net Int.
Margin (FTE)
on Earning
Assets 3.74 3.66 3.52 3.50 3.50
CONSOLIDATED STATEMENTS OF INCOME
LOANS
March December September June March
31, 31, 30, 30, 31,
(in thousands) 2008 2007 2007 2007 2007
Commercial and
industrial
loans $724,643 $662,701 $626,301 $590,345 $557,304
Agricultural
production
financing and
other loans to
farmers 123,314 114,324 113,132 103,713 97,784
Real estate
loans:
Construction 178,171 165,425 160,624 172,247 151,782
Commercial
and farmland 961,431 947,234 912,063 895,301 906,726
Residential 728,956 744,627 769,890 768,392 756,316
Individuals'
loans for
household and
other personal
expenditures 174,857 187,880 194,181 206,435 210,578
Tax exempt
loans 11,646 16,423 28,726 23,181 15,306
Lease
financing
receivables,
net of
unearned
income 8,438 8,351 8,932 7,906 7,648
Other loans 26,254 29,878 55,152 38,548 27,696
---------- ---------- ---------- ---------- ----------
2,937,710 2,876,843 2,869,001 2,806,068 2,731,140
Allowance for
loan losses (29,094) (28,228) (27,635) (27,608) (26,819)
---------- ---------- ---------- ---------- ----------
Total
loans $2,908,616$2,848,615$2,841,366$2,778,460$2,704,321
========== ========== ========== ========== ==========
DEPOSITS
(in thousands) March December September June March
31, 31, 30, 30, 31,
2008 2007 2007 2007 2007
Demand deposits $881,498 $903,380 $825,185 $855,458 $787,538
Savings deposits 562,942 552,379 508,139 494,738 530,692
Certificates and
other time
deposits of
$100,000 or
more 459,038 470,733 472,842 443,355 398,061
Other
certificates
and time
deposits 909,649 917,629 953,009 926,050 971,097
---------- ---------- ---------- ---------- ----------
Total
deposits $2,813,127 $2,844,121 $2,759,175 $2,719,601 $2,687,388
========== ========== ========== ========== ==========
Source: First Merchants Corporation
Contact: First Merchants Corporation Mark K. Hardwick, 765-751-1857 Executive Vice President/Chief Financial Officer http://www.firstmerchants.com