First Merchants Corporation Announces First Quarter Earnings Per Share of $.35
MUNCIE, Ind.--(BUSINESS WIRE)--April 20, 2005--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, Dec. 31, Sept. 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, Dec. 31, Sept. 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, March 31, Dec. 31, Sept. 30, June 30, March 31,
except share data) 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
CONTACT: First Merchants Corporation
Mark K. Hardwick, 765-751-1857
http://firstmerchants.com
SOURCE: First Merchants Corporation