First Merchants Corporation Announces First Quarter Earnings Per Share Increase of 17%
MUNCIE, Ind.--(BUSINESS WIRE)--April 19, 2006--First Merchants Corporation (NASDAQ:FRME) has reported first quarter diluted earnings per share totaling $.41, a 17.1 percent increase over $.35 recorded in the first quarter of 2005. Net income during the period totaled $7.5 million compared to $6.6 million in 2005.
Quarterly net interest income improved $647,000 and the provision for loan losses decreased $941,000 improving net interest income after the provision for loan losses by $1,588,000 or 6.5 percent. Total other income declined by $449,000 and total other expenses declined by $443,000.
As of March 31, 2006, non-performing loans totaled 80 basis points of average total loans and the allowance for loan losses as a percent of total loans equaled 1.03 percent.
Total assets equaled $3.3 billion as of quarter-end, an increase of $82 million from March 31, 2005. Loans, investments and bank owned life insurance, the Corporation's three primary earning assets, totaled $3.0 billion, an increase of $113 million over the prior year.
In order to resolve overlapping market issues and solidify sales efforts, the Corporation merged First United Bank, Middletown into First Merchants Bank, Muncie on January 1, 2006.
Michael L. Cox, President and Chief Executive Officer, stated that, "Management is pleased with the Corporation's improved quarterly earnings per share of 17 percent." Cox also stated that, "Given the inversion of the yield curve and resulting margin compression, continued focus on sales and expense management will be required to attain our Corporate financial goals for the year."
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m. Eastern Daylight Time on Wednesday, April 19, 2006. 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 26, 2006. 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 # 197638.
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, 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,
2006 2005
Assets
Cash and due from banks $59,176 $67,904
Federal funds sold 22,075
----------- -----------
Cash and cash equivalents 59,176 89,979
Interest-bearing time deposits 9,104 10,737
Investment securities 441,651 409,820
Mortgage loans held for sale 5,170 3,084
Loans 2,491,488 2,414,099
Less: Allowance for loan losses (25,623) (24,488)
----------- -----------
Net loans 2,465,865 2,389,611
Premises and equipment 39,029 37,525
Federal Reserve and Federal Home Loan Bank
stock 23,421 22,883
Interest receivable 19,035 16,606
Core deposit intangibles and goodwill 138,174 140,578
Cash surrender value of life insurance 43,964 42,426
Other assets 25,346 24,337
----------- -----------
Total assets $3,269,935 $3,187,586
=========== ===========
Liabilities
Deposits
Noninterest-bearing $325,548 $333,614
Interest-bearing 2,120,524 2,118,605
----------- -----------
Total deposits 2,446,072 2,452,219
Borrowings 469,002 391,193
Interest payable 6,412 6,562
Other liabilities 31,711 27,014
----------- -----------
Total liabilities 2,953,197 2,876,988
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 -- 18,440,316 and
18,497,462 shares 2,305 2,312
Additional paid-in capital 146,374 148,347
Retained earnings 177,975 163,761
Accumulated other comprehensive loss (9,916) (3,822)
----------- -----------
Total stockholders' equity 316,738 310,598
----------- -----------
Total liabilities and stockholders'
equity $3,269,935 $3,187,586
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended
(In thousands) March 31,
2006 2005
NET CHARGE OFF'S $1,291 $727
AVERAGE BALANCES
Total Assets $3,235,933 $3,163,548
Total Loans 2,474,759 2,414,050
Total Deposits 2,407,646 2,418,910
Total Stockholders' Equity 316,629 315,326
FINANCIAL RATIOS
Return on Average Assets .93% .83%
Return on Avg. Stockholders' Equity 9.49 8.33
Avg. Earning Assets to Avg. Assets 91.27 90.61
Allowance for Loan Losses as %
Of Total Loans 1.03 1.01
Net Charge Off's as % Of Avg. Loans
(Annualized) .21 .12
Dividend Payout Ratio 56.10 65.71
Avg. Stockholders' Equity to Avg. Assets 9.78 9.97
Tax Equivalent Yield on Earning Assets 6.64 5.90
Cost of Supporting Liabilities 2.77 2.01
Net Int. Margin (FTE) on Earning Assets 3.87 3.89
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended
March 31,
2006 2005
Interest income
Loans receivable
Taxable $43,079 $36,822
Tax exempt 168 134
Investment securities
Taxable 2,726 2,329
Tax exempt 1,647 1,553
Federal funds sold 17 27
Deposits with financial institutions 114 142
Federal Reserve and Federal Home Loan Bank stock 311 308
--------- --------
Total interest income 48,062 41,315
--------- --------
Interest expense
Deposits 14,419 9,806
Federal funds purchased 489
Securities sold under repurchase agreements 835 249
Federal Home Loan Bank advances 2,656 2,375
Subordinated debentures, revolving credit lines
and term loans 1,991 1,789
Other borrowings 83 154
--------- --------
Total interest expense 20,473 14,373
--------- --------
Net interest income 27,589 26,942
Provision for loan losses 1,726 2,667
--------- --------
Net interest income
after provision for loan losses 25,863 24,275
--------- --------
Other income
Fiduciary activities 1,951 1,962
Service charges on deposit accounts 2,426 2,723
Other customer fees 1,355 1,085
Net realized gains on
sales of available-for-sale securities 9
Commission income 1,504 1,504
Earnings on cash surrender value
of life insurance 423 401
Net gains and fees on sales of loans 554 677
Other income 375 694
--------- --------
Total other income 8,597 9,046
--------- --------
Other expenses
Salaries and employee benefits 14,392 14,821
Net occupancy expenses 1,434 1,376
Equipment expenses 1,949 1,857
Marketing expense 400 415
Outside data processing fees 883 1,009
Printing and office supplies 304 337
Core deposit amortization 762 787
Other expenses 3,664 3,629
--------- --------
Total other expenses 23,788 24,231
--------- --------
Income before income tax 10,672 9,090
Income tax expense 3,163 2,523
--------- --------
Net income $7,509 $6,567
========= ========
Per Share Data
Basic Net Income .41 .35
Diluted Net Income .41 .35
Cash Dividends Paid .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,526 18,697
CONSOLIDATED BALANCE SHEETS
(in March 31, Dec. 31, Sept. 30, June 30, March 31,
thousands) 2006 2005 2005 2005 2005
Assets
Cash and
due from
banks $59,176 $70,417 $81,310 $71,498 $67,904
Federal
funds
sold 22,075
----------- ----------- ----------- ----------- -----------
Cash
and cash
equivalents 59,176 70,417 81,310 71,498 89,979
Interest-
bearing time
deposits 9,104 8,748 10,708 9,255 10,737
Investment
securities 441,651 434,266 436,794 420,685 409,820
Mortgage
loans held
for sale 5,170 4,910 5,026 1,356 3,084
Loans 2,491,488 2,457,427 2,443,931 2,440,906 2,414,099
Less:
Allowance
for loan
losses (25,623) (25,188) (25,149) (25,091) (24,488)
----------- ----------- ----------- ----------- -----------
Net
loans 2,465,865 2,432,239 2,418,782 2,415,815 2,389,611
Premises
and
equipment 39,029 39,417 38,473 37,240 37,525
Federal
Reserve
and Federal
Home Loan
Bank stock 23,421 23,200 23,165 23,054 22,883
Interest
receivable 19,035 19,690 19,561 16,950 16,606
Core
deposit
intangibles
and
goodwill 138,174 138,833 139,597 139,799 140,578
Cash
surrender
value
of life
insurance 43,964 43,579 43,230 42,827 42,426
Other
assets 25,346 21,780 21,792 22,819 24,337
----------- ----------- ----------- ----------- -----------
Total
assets $3,269,935$3,237,079$3,238,438$3,201,298$3,187,586
=========== =========== =========== =========== ===========
Liabilities
Deposits
Non-
interest-
bearing $325,548 $314,335 $346,318 $363,654 $333,614
Interest-
bearing 2,120,524 2,068,241 2,118,975 2,040,624 2,118,605
----------- ----------- ----------- ----------- -----------
Total
depos-
its 2,446,072 2,382,576 2,465,293 2,404,278 2,452,219
Borrowings 469,002 508,236 423,959 454,400 391,193
Interest
payable 6,412 5,874 5,643 5,068 6,562
Other
liabil-
ities 31,711 26,997 25,153 24,194 27,014
----------- ----------- ----------- ----------- -----------
Total
liabil-
ities 2,953,197 2,923,683 2,920,048 2,887,940 2,876,988
Stock-
holders'
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 2,305 2,302 2,313 2,302 2,312
Additional
paid-in
capital 146,374 145,682 148,004 146,057 148,347
Retained
earnings 177,975 174,717 171,419 167,452 163,761
Accumulated
other
compre-
hensive
loss (9,916) (9,305) (3,346) (2,453) (3,822)
----------- ----------- ----------- ----------- -----------
Total
stock-
holders'
equity 316,738 313,396 318,390 313,358 310,598
----------- ----------- ----------- ----------- -----------
Total
liabil-
ities
and
stock-
holders'
equity $3,269,935$3,237,079$3,238,438$3,201,298$3,187,586
=========== =========== =========== =========== ===========
NON-PERFORMING ASSETS
(in thousands) March 31, Dec. 31, Sept. 30, June 30, March 31,
2006 2005 2005 2005 2005
90 days past
due $5,188 $3,965 $3,560 $3,696 $1,948
Non-accrual
loans 11,424 10,030 11,757 11,626 13,272
Other real
estate 3,209 2,835 3,023 1,804 2,003
---------- ---------- ---------- ---------- ----------
Total
non-
performing
assets $19,821 $16,830 $18,340 $17,126 $17,223
========== ========== ========== ========== ==========
Average
total loans
for the
quarter $2,474,759 $2,447,794 $2,444,131 $2,430,081 $2,414,050
Total non-
performing
assets as a
percent of
average
total loans .80% .69% .75% .70% .71%
Restructured
loans $114 $310 $454 $531 $337
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands, except
share data) March 31, Dec. 31, Sept. 30, June 30, March 31,
2006 2005 2005 2005 2005
Interest Income
Loans receivable
Taxable $43,079 $41,930 $40,853 $38,831 $36,822
Tax exempt 168 160 160 189 134
Investment
securities
Taxable 2,726 2,480 2,427 2,376 2,329
Tax exempt 1,647 1,672 1,595 1,554 1,553
Federal funds sold 17 74 51 112 27
Deposits with
financial
institutions 114 202 185 166 142
Federal Reserve and
Federal Home Loan
Bank stock 311 296 296 285 308
--------- -------- --------- -------- ---------
Total interest
income 48,062 46,814 45,567 43,513 41,315
--------- -------- --------- -------- ---------
Interest expense
Deposits 14,419 13,414 12,172 10,729 9,806
Federal funds
purchased 489
Securities sold
under repurchase
agreements 835 647 523 193 249
Federal Home Loan
Bank advances 2,656 2,410 2,549 2,443 2,375
Subordinated
debentures,
revolving credit
lines and term
loans 1,991 1,910 1,894 1,839 1,789
Other borrowings 83 307 289 388 154
--------- -------- --------- -------- ---------
Total interest
expense 20,473 18,688 17,427 15,592 14,373
--------- -------- --------- -------- ---------
Net interest income 27,589 28,126 28,140 27,921 26,942
Provision for loan
losses 1,726 1,945 1,794 1,948 2,667
--------- -------- --------- -------- ---------
Net interest income
after provision for
loan losses 25,863 26,181 26,346 25,973 24,275
--------- -------- --------- -------- ---------
Other income
Fiduciary
activities 1,951 1,762 1,794 1,963 1,962
Service charges on
deposit accounts 2,426 2,691 2,836 3,048 2,723
Other customer fees 1,355 1,432 1,389 1,188 1,085
Net realized gains
(losses) on sales
of available-for-
sale securities 9 (24) 16 6
Commission income 1,504 690 870 757 1,504
Earnings on cash
surrender value
of life insurance 423 386 441 439 401
Net gains and fees
on sales of loans 554 676 770 779 677
Other income 375 516 664 582 694
--------- -------- --------- -------- ---------
Total other
income 8,597 8,129 8,780 8,762 9,046
--------- -------- --------- -------- ---------
Other expenses
Salaries and
employee benefits 14,392 12,596 13,384 13,258 14,821
Net occupancy
expenses 1,434 1,428 1,570 1,422 1,376
Equipment expenses 1,949 1,952 1,901 1,852 1,857
Marketing expense 400 625 446 526 415
Outside data
processing fees 883 989 979 1,033 1,009
Printing and office
supplies 304 400 328 304 337
Core deposit
amortization 762 767 770 778 787
Other expenses 3,664 4,469 3,923 4,026 3,629
--------- -------- --------- -------- ---------
Total other
expenses 23,788 23,226 23,301 23,199 24,231
--------- -------- --------- -------- ---------
Income before income
tax 10,672 11,084 11,825 11,536 9,090
Income tax expense 3,163 3,553 3,605 3,615 2,523
--------- -------- --------- -------- ---------
Net income $7,509 $7,531 $8,220 $7,921 $6,567
========= ======== ========= ======== =========
Per Share Data
Basic Net Income $.41 $.41 $.45 $.43 $.35
Diluted Net Income .41 .41 .44 .43 .35
Cash Dividends Paid .23 .23 .23 .23 .23
Average Diluted
Shares Outstanding
(in thousands) 18,526 18,558 18,590 18,536 18,697
FINANCIAL RATIOS
Return on Average
Assets .93% .95% 1.03% .99% .83%
Return on Avg.
Stockholders'
Equity 9.49 9.49 10.38 10.13 8.33
Avg. Earning Assets
to Avg. Assets 91.27 91.47 90.83 90.81 90.61
Allowance for Loan
Losses as % Of
Total Loans 1.03 1.02 1.03 1.03 1.01
Net Charge Off's as
% Of Avg. Loans
(Annualized) .21 .31 .28 .22 .12
Dividend Payout
Ratio 56.10 56.10 52.27 53.49 65.71
Avg. Stockholders'
Equity to Avg.
Assets 9.78 10.05 9.89 9.80 9.97
Tax Equivalent Yield
on Earning Assets 6.64 6.62 6.40 6.14 5.90
Cost of Supporting
Liabilities 2.77 2.59 2.40 2.15 2.01
Net Int. Margin
(FTE) on Earning
Assets 3.87 4.03 4.00 3.99 3.89
LOANS
(in March 31, Dec. 31, Sept. 30, June 30, March 31,
thousands) 2006 2005 2005 2005 2005
Commercial
and
industrial
loans $486,411 $461,102 $476,010 $463,002 $447,552
Agricultural
production
financing
and other
loans to
farmers 87,433 95,130 94,262 93,274 83,800
Real estate
loans:
Construction 175,784 174,783 171,667 166,367 170,498
Commercial
and farm-
land 743,905 734,865 719,154 723,099 726,345
Residential 746,410 751,217 746,777 759,003 760,560
Individuals'
loans for
household
and other
personal
expenditures 202,478 200,139 186,792 182,362 187,552
Tax exempt
loans 13,656 8,263 12,439 14,135 10,592
Lease
financing
receivables,
net of
unearned
income 8,193 8,713 9,538 10,533 10,704
Other loans 27,218 23,215 27,292 29,131 16,496
----------- ----------- ----------- ----------- -----------
2,491,488 2,457,427 2,443,931 2,440,906 2,414,099
Allowance
for loan
losses (25,623) (25,188) (25,149) (25,091) (24,488)
----------- ----------- ----------- ----------- -----------
Total
loans $2,465,865$2,432,239$2,418,782$2,415,815$2,389,611
=========== =========== =========== =========== ===========
DEPOSITS
(in
thousands) March 31, Dec. 31, Sept. 30, June 30, March 31,
2006 2005 2005 2005 2005
Demand
deposits $671,027 $690,923 $697,597 $720,263 $686,695
Savings
deposits 526,554 566,212 568,366 593,770 655,643
Certificates
and other
time deposits
of $100,000
or more 320,213 264,665 320,640 234,988 285,878
Other
certificates
and time
deposits 928,278 860,776 878,690 855,257 824,003
----------- ----------- ---------- ---------- -----------
$2,446,072 $2,382,576 $2,465,293 $2,404,278 $2,452,219
=========== =========== ========== ========== ===========
CONTACT: First Merchants Corporation, Muncie
Mark K. Hardwick, 765-751-1857
http://firstmerchants.com
SOURCE: First Merchants Corporation