First Merchants Corporation Announces Increase in 2005 Earnings Per Share
MUNCIE, Ind.--(BUSINESS WIRE)--Jan. 27, 2006--First Merchants Corporation (NASDAQ:FRME) has reported fourth-quarter diluted earnings per share of $.41, a 2.5 percent increase over $.40 recorded in the fourth quarter of 2004. Net income during the quarter totaled $8.2 million compared to $7.7 million in 2004.
Full-year 2005 diluted earnings per share totaled $1.63, a 3.2 percent increase over $1.58 recorded in 2004. Net income totaled $30.2 million compared to $29.4 million in 2004.
2005 net-interest income improved by $5.7 million, or 5.4 percent, as net-interest margin improved to 3.97 percent, a 9-basis point increase over 2004. Core non-interest income also increased by $1,353,000, or 4.1 percent, after discounting nonrecurring gains from the sale of securities of $1.2 million taken in 2004.
The allowance for loan losses improved to 1.02 percent of total loans on December 31, 2005, a 9-basis point improvement over 2004. The improvement in the allowance is reflective of increased provisions of $2.6 million during 2005. Additionally, non-performing assets declined from 79-basis points in 2004 to 69 basis points in 2005, a $2 million dollar improvement.
Operating expenses increased by $2.3 million, or 2.5 percent in 2005. However, as reported in the Corporation's 8-K filing of February 16, 2005, a $1.6 million charge related to the curtailment of the Corporation's defined benefit pension plan is included in the increase. Absent the curtailment charge, operating expenses increased by just .7 percent.
Total assets equaled $3.2 billion at year-end, an increase of $45 million, or 1.4 percent from December 31, 2004. Loans, investments and bank-owned life insurance, the Corporation's three primary earning assets, totaled $2.9 billion, an increase of $44 million over the prior year.
Michael L. Cox, President and Chief Executive Officer, stated that, "Given the many extraordinary events of the year, including our voluntary increase in the allowance for loan losses, the absence of non-recurring gains from the sale of securities and the pension curtailment expense, 2005 represents a good improvement in the overall run rate and financial condition of the Corporation. First Merchants' earnings have now increased in 29 of the past 30 years."
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m. (ET) today, Friday, January 27, 2006. To participate dial (Toll Free) 877-407-9210 and reference First Merchants Corporation's fourth quarter earnings release. A replay will be available until February 3, 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 # 186821.
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, 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) December 31,
2005 2004
Assets
Cash and due from banks $ 70,417 $ 69,960
Interest-bearing time deposits 8,748 9,343
Investment securities 434,266 421,535
Mortgage loans held for sale 4,910 3,367
Loans 2,457,427 2,428,051
Less: Allowance for loan losses (25,188) (22,548)
---------- ----------
Net Loans 2,432,239 2,405,503
Premises and equipment 39,417 38,254
Federal Reserve and Federal Home Loan Bank
stock 23,200 22,858
Interest receivable 19,690 17,318
Core deposit intangibles and goodwill 138,833 141,284
Cash surrender value of life insurance 43,579 42,061
Other assets 21,780 20,185
---------- ----------
Total assets $3,237,079 $3,191,668
========== ==========
Liabilities
Deposits
Noninterest-bearing $ 314,335 $ 330,685
Interest-bearing 2,068,241 2,077,465
---------- ----------
Total deposits 2,382,576 2,408,150
Borrowings 508,236 440,891
Interest payable 5,874 4,411
Other liabilities 26,997 23,613
---------- ----------
Total liabilities 2,923,683 2,877,065
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 - 18,416,714 and
18,573,997 2,302 2,322
Additional paid-in capital 145,682 150,862
Retained earnings 174,717 161,459
Accumulated other comprehensive loss (9,305) (40)
---------- ----------
Total stockholders' equity 313,396 314,603
---------- ----------
Total liabilities and stockholders'
equity $3,237,079 $3,191,668
========== ==========
FINANCIAL HIGHLIGHTS
Three Months Ended Year Ended
(In thousands) December 31, December 31,
2005 2004 2005 2004
NET CHARGE OFF'S $ 1,906 $ 3,929 $ 5,714 $ 8,650
AVERAGE BALANCES
Total Assets $3,160,619 $3,184,109 $3,179,464 $3,109,104
Total Loans 2,447,794 2,409,170 2,434,134 2,369,017
Total Deposits 2,414,251 2,444,563 2,418,752 2,365,306
Total Stockholders'
Equity 317,510 315,869 315,525 310,004
FINANCIAL RATIOS
Return on Average Assets .95% .94% .95% .95%
Return on Avg.
Stockholders' Equity 9.49 9.46 9.58 9.49
Avg. Earning Assets to
Avg. Assets 91.47 91.38 90.93 90.28
Allowance for Loan
Losses as %
Of Total Loans 1.02 .93 1.02 .93
Net Charge Off's as %
Of Avg. Loans
(Annualized) .31 .65 .23 .37
Dividend Payout Ratio 56.10 57.50 56.44 58.23
Avg. Stockholders'
Equity to Avg. Assets 10.05 9.92 9.92 9.97
Tax Equivalent Yield on
Earning Assets 6.62 5.74 6.26 5.72
Cost of Supporting
Liabilities 2.59 1.89 2.29 1.84
Net Int. Margin (FTE)
on Earning Assets 4.03 3.85 3.97 3.88
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
Interest income
Loans receivable
Taxable $41,930 $36,363 $158,436 $139,953
Tax exempt 160 138 643 581
Investment securities
Taxable 2,480 2,224 9,612 8,371
Tax exempt 1,672 1,569 6,374 6,098
Federal funds sold 74 92 264 165
Deposits with financial
institutions 202 167 695 555
Federal Reserve and Federal
Home Loan Bank stock 296 297 1,185 1,251
------- ------- -------- --------
Total interest income 46,814 40,850 177,209 156,974
------- ------- -------- --------
Interest expense
Deposits 13,414 9,288 46,121 33,844
Securities sold under
repurchase agreements 647 183 1,612 517
Federal Home Loan Bank
advances 2,410 2,418 9,777 9,777
Subordinated debentures,
revolving credit lines and
term loans 1,910 1,717 7,432 6,784
Other borrowings 307 126 1,138 663
------- ------- -------- --------
Total interest expense 18,688 13,732 66,080 51,585
------- ------- -------- --------
Net interest income 28,126 27,118 111,129 105,389
Provision for loan losses 1,945 1,233 8,354 5,705
------- ------- -------- --------
Net interest income after
provision for loan losses 26,181 25,885 102,775 99,684
------- ------- -------- --------
Other income
Fiduciary activities 1,762 1,897 7,481 7,632
Service charges on deposit
accounts 2,691 2,924 11,298 11,638
Other customer fees 1,432 1,068 5,094 4,083
Net realized gains (losses) on
sales of available-for-sale
securities (24) 456 (2) 1,188
Commission income 690 671 3,821 3,088
Earnings on cash surrender
value of life insurance 386 439 1,667 1,798
Net gains and fees on sales of
loans 676 801 2,902 3,629
Other income 516 415 2,456 1,498
------- ------- -------- --------
Total other income 8,129 8,671 34,717 34,554
------- ------- -------- --------
Other expenses
Salaries and employee benefits 12,596 13,309 54,059 52,479
Net occupancy expenses 1,428 1,328 5,796 5,308
Equipment expenses 1,952 1,879 7,562 7,665
Marketing expense 625 521 2,012 1,709
Outside data processing fees 989 1,158 4,010 4,920
Printing and office supplies 400 397 1,369 1,580
Core deposit amortization 767 802 3,102 3,375
Other expenses 4,469 4,272 16,047 14,606
------- ------- -------- --------
Total other expenses 23,226 23,666 93,957 91,642
------- ------- -------- --------
Income before income tax 11,084 10,890 43,535 42,596
Income tax expense 3,553 3,422 13,296 13,185
------- ------- -------- --------
Net income $ 7,531 $ 7,468 $ 30,239 $ 29,411
======= ======= ======== ========
Per Share Data
Basic Net Income .41 .41 1.64 1.59
Diluted Net Income .41 .40 1.63 1.58
Cash Dividends Paid .23 .23 .92 .92
Average Diluted Shares
Outstanding (in thousands) 18,558 18,721 18,596 18,667
CONSOLIDATED BALANCE SHEETS
(in thousands) Dec. 31, Sept. 30 June 30, March 31, Dec. 31,
2005 2005 2005 2005 2004
Assets
Cash and due
from banks $70,417 $81,310 $71,498 $67,904 $69,960
Federal funds
sold 22,075
---------- ---------- ---------- ---------- ----------
Cash and cash
equivalents 70,417 81,310 71,498 89,979 69,960
Interest-
bearing time
deposits 8,748 10,708 9,255 10,737 9,343
Investment
securities 434,266 436,794 420,685 409,820 421,535
Mortgage loans
held for sale 4,910 5,026 1,356 3,084 3,367
Loans 2,457,427 2,443,931 2,440,906 2,414,099 2,428,051
Less:
Allowance
for loan
losses (25,188) (25,149) (25,091) (24,488) (22,548)
---------- ---------- ---------- ---------- ----------
Net loans 2,432,239 2,418,782 2,415,815 2,389,611 2,405,503
Premises and
equipment 39,417 38,473 37,240 37,525 38,254
Federal
Reserve and
Federal Home
Loan Bank
stock 23,200 23,165 23,054 22,883 22,858
Interest
receivable 19,690 19,561 16,950 16,606 17,318
Core deposit
intangibles
and goodwill 138,833 139,597 139,799 140,578 141,284
Cash surrender
value of life
insurance 43,579 43,230 42,827 42,426 42,061
Other assets 21,780 21,792 22,819 24,337 20,185
---------- ---------- ---------- ---------- ----------
Total
assets $3,237,079 $3,238,438 $3,201,298 $3,187,586 $3,191,668
========== ========== ========== ========== ==========
Liabilities
Deposits
Noninterest-
bearing $314,335 $346,318 $363,654 $333,614 $330,685
Interest-
bearing 2,068,241 2,118,975 2,040,624 2,118,605 2,077,465
---------- ---------- ---------- ---------- ----------
Total
deposits 2,382,576 2,465,293 2,404,278 2,452,219 2,408,150
Borrowings 508,236 423,959 454,400 391,193 440,891
Interest payable 5,874 5,643 5,068 6,562 4,411
Other
liabilities 26,997 25,153 24,194 27,014 23,613
---------- ---------- ---------- ---------- ----------
Total
liabil-
ities 2,923,683 2,920,048 2,887,940 2,876,988 2,877,065
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 2,302 2,313 2,302 2,312 2,322
Additional
paid-in
capital 145,682 148,004 146,057 148,347 150,862
Retained
earnings 174,717 171,419 167,452 163,761 161,459
Accumulated
other compre-
hensive loss (9,305) (3,346) (2,453) (3,822) (40)
---------- ---------- ---------- ---------- ----------
Total
stockholders'
equity 313,396 318,390 313,358 310,598 314,603
---------- ---------- ---------- ---------- ----------
Total
liabilities
and
stockholders'
equity $3,237,079 $3,238,438 $3,201,298 $3,187,586 $3,191,668
========== ========== ========== ========== ==========
NON-PERFORMING ASSETS
(in thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2005 2005 2005 2005 2004
90 days past due $3,965 $3,560 $3,696 $1,948 $1,907
Non-accrual loans 10,030 11,757 11,626 13,272 15,355
Other real estate 2,835 3,023 1,804 2,003 1,650
---------- ---------- ---------- ---------- ----------
Total non-
performing
assets $16,830 $18,340 $17,126 $17,223 $18,912
========== ========== ========== ========== ==========
Average total
loans for the
quarter $2,447,794 $2,444,131 $2,430,081 $2,414,050 $2,409,170
Total non-
performing
assets as a
percent of
average total
loans .69% .75% .70% .71% .79%
Restructured loans $310 $454 $531 $337 $2,019
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except Three Months Ended
share data) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2005 2005 2005 2005 2004
Interest Income
Loans receivable
Taxable $41,930 $40,853 $38,831 $36,822 $36,363
Tax exempt 160 160 189 134 138
Investment securities
Taxable 2,480 2,427 2,376 2,329 2,224
Tax exempt 1,672 1,595 1,554 1,553 1,569
Federal funds sold 74 51 112 27 92
Deposits with
financial
institutions 202 185 166 142 167
Federal Reserve and
Federal Home Loan
Bank stock 296 296 285 308 297
-------- --------- -------- --------- --------
Total interest
income 46,814 45,567 43,513 41,315 40,850
-------- --------- -------- --------- --------
Interest expense
Deposits 13,414 12,172 10,729 9,806 9,288
Securities sold under
repurchase agreements 647 523 193 249 183
Federal Home Loan Bank
advances 2,410 2,549 2,443 2,375 2,418
Subordinated debentures,
revolving credit
Lines and term loans 1,910 1,894 1,839 1,789 1,717
Other borrowings 307 289 388 154 126
-------- --------- -------- --------- --------
Total interest
expense 18,688 17,427 15,592 14,373 13,732
-------- --------- -------- --------- --------
Net interest income 28,126 28,140 27,921 26,942 27,118
Provision for loan
losses 1,945 1,794 1,948 2,667 1,233
-------- --------- -------- --------- --------
Net interest income
after provision for
loan losses 26,181 26,346 25,973 24,275 25,885
-------- --------- -------- --------- --------
Other income
Fiduciary activities 1,762 1,794 1,963 1,962 1,897
Service charges on
deposit accounts 2,691 2,836 3,048 2,723 2,924
Other customer fees 1,432 1,389 1,188 1,085 1,068
Net realized gains
(losses) on sales of
available-for-sale
securities (24) 16 6 456
Commission income 690 870 757 1,504 671
Earnings on cash
surrender value
of life insurance 386 441 439 401 439
Net gains and fees on
sales of loans 676 770 779 677 801
Other income 516 664 582 694 415
-------- --------- -------- --------- --------
Total other
income 8,129 8,780 8,762 9,046 8,671
-------- --------- -------- --------- --------
Other expenses
Salaries and employee
benefits 12,596 13,384 13,258 14,821 13,309
Net occupancy expenses 1,428 1,570 1,422 1,376 1,328
Equipment expenses 1,952 1,901 1,852 1,857 1,879
Marketing expense 625 446 526 415 521
Outside data
processing fees 989 979 1,033 1,009 1,158
Printing and office
supplies 400 328 304 337 397
Core deposit
amortization 767 770 778 787 802
Other expenses 4,469 3,923 4,026 3,629 4,272
-------- --------- -------- --------- --------
Total other
expenses 23,226 23,301 23,199 24,231 23,666
-------- --------- -------- --------- --------
Income before income tax 11,084 11,825 11,536 9,090 10,890
Income tax expense 3,553 3,605 3,615 2,523 3,422
-------- --------- -------- --------- --------
Net income $7,531 $8,220 $7,921 $6,567 $7,468
======== ========= ======== ========= ========
Per Share Data
Basic Net Income $.41 $.45 $.43 $.35 $.41
Diluted Net Income .41 .44 .43 .35 .40
Cash Dividends Paid .23 .23 .23 .23 .23
Average Diluted Shares
Outstanding (in
thousands) 18,558 18,590 18,536 18,697 18,721
FINANCIAL RATIOS
Return on Average Assets .95% 1.03% .99% .83% .94%
Return on Avg.
Stockholders' Equity 9.49 10.38 10.13 8.33 9.46
Avg. Earning Assets to
Avg. Assets 91.47 90.83 90.81 90.61 91.38
Allowance for Loan
Losses as %
Of Total Loans 1.02 1.03 1.03 1.01 .93
Net Charge Off's as %
Of Avg. Loans
(Annualized) .31 .28 .22 .12 .65
Dividend Payout Ratio 56.10 52.27 53.49 65.71 57.50
Avg. Stockholders'
Equity to Avg. Assets 10.05 9.89 9.80 9.97 9.92
Tax Equivalent Yield
on Earning Assets 6.62 6.40 6.14 5.90 5.74
Cost of Supporting
Liabilities 2.59 2.40 2.15 2.01 1.89
Net Int. Margin (FTE)
on Earning Assets 4.03 4.00 3.99 3.89 3.85
LOANS
(in thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2005 2005 2005 2005 2004
Commercial and
industrial
loans $461,102 $476,010 $463,002 $447,552 $451,227
Agricultural
production
financing and
other loans
to farmers 95,130 94,262 93,274 83,800 98,902
Real estate loans:
Construction 174,783 171,667 166,367 170,498 164,738
Commercial
and farmland 734,865 719,154 723,099 726,345 709,163
Residential 751,217 746,777 759,003 760,560 761,163
Individuals'
loans for
household and
other personal
expenditures 200,139 186,792 182,362 187,552 198,532
Tax exempt loans 8,263 12,439 14,135 10,592 8,203
Lease financing
receivables,
net of unearned
income 8,713 9,538 10,533 10,704 11,311
Other loans 23,215 27,292 29,131 16,496 24,812
---------- ---------- ---------- ---------- -----------
2,457,427 2,443,931 2,440,906 2,414,099 2,428,051
Allowance for
loan losses (25,188) (25,149) (25,091) (24,488) (22,548)
---------- ---------- ---------- ---------- -----------
Total loans $2,432,239$2,418,782$2,415,815$2,389,611$2,405,503
========== ========== ========== ========== ===========
DEPOSITS
(in thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2005 2005 2005 2005 2004
Demand deposits $690,923 $697,597 $720,263 $686,695 $703,989
Savings deposits 566,212 568,366 593,770 655,643 634,132
Certificates and
other time
deposits of
$100,000 or
more 264,665 320,640 234,988 285,878 258,362
Other certificates
and time
deposits 860,776 878,690 855,257 824,003 811,667
----------- ---------- ---------- ----------- ----------
$2,382,576 $2,465,293 $2,404,278 $2,452,219 $2,408,150
=========== ========== ========== =========== ==========
CONTACT: First Merchants Corporation, Muncie
Mark K. Hardwick, 765-751-1857
http://firstmerchants.com
SOURCE: First Merchants Corporation, Muncie, Indiana