First Merchants Corporation Announces Mid Year 2004 Results
MUNCIE, Ind., July 21 /PRNewswire-FirstCall/ -- First Merchants Corporation (Nasdaq: FRME) has reported June 30, 2004, year-to-date, diluted earnings per share of $.77, a 3.75 percent decline from $.80 recorded in 2003. Net income during the period totaled $14.3 million compared to $14.4 million in 2003.
Total assets of the Corporation equaled $3.1 billion as of June 30, 2004, an increase of $71 million from the prior year. Loans, investments and bank owned life insurance, the Corporation's three primary earning assets totaled $2.8 billion, an increase of $100 million over the June 30, 2003 amount of $2.7 million. The improvement in earning assets was primarily funded by increases in deposits and capital totaling $62 million and reductions in cash and cash equivalents.
Year-to-date net interest margin equaled 3.87 percent, a 30 basis point decline from the mid-year point of 2003, causing a reduction in net interest income for the period of $4.1 million. The decline in net interest income was mitigated by a reduction in the provision for loan losses as credit quality continues to show improvement.
Non-performing loans as a percentage of total loans equaled .93 percent, down from 1.30 percent as of June 30, 2003. The Corporation's provision for loan losses declined by $3.6 million from the prior year and net charge-off's totaled 26 basis points. The allowance for loan losses totaled 1.08 percent at period end.
The addition of CNBC Bancorporation on March 1, 2003, resulted in an additional two months of 2004 net income totaling $472,000. The additional two months also accounted for $2.0 million of additional net interest income, $133,000 of non-interest income and $1.4 million of additional non-interest expense.
Michael L. Cox, President and Chief Executive Officer, stated that, "First Merchants Corporation's second quarter 2004 results represent a continuation of positive trends. Despite higher provisioning for loan losses than planned, earnings per share improved by another $.03 over the prior quarter and non- performing loans declined to the lowest level in two years." Cox also added, "Management was pleased to see the Federal Open Market Committee increase the target Fed Funds rate by 25 basis points. Given our asset sensitive interest rate risk position and the fact that we have a little over $800 million in loans tied to prime we expect to see some improvement in our net interest margin 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, July 21, 2004. To participate dial 888-710-8192 and reference First Merchants Corporation's second quarter earnings release. A digital recording will be available two hours after the completion of the conference from July 21, 2004, to July 23, 2004. To access, US/Canada participants should call 800-642-1687 or for International/Local participants, call 706-645-9291 and enter the Conference I.D. 8733433.
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, Union County National Bank, The Randolph County 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 ).
For more information, contact:
Mark K. Hardwick, Senior Vice President/Chief Financial Officer, 765-751-1857
http://firstmerchants.com
CONSOLIDATED BALANCE SHEETS
(in thousands) June 30,
2004 2003
Assets
Cash and due from banks $72,432 $89,126
Federal funds sold 0 14,150
----------- -----------
Cash and cash equivalents 72,432 103,276
Interest-bearing time deposits 20,424 8,777
Investment securities 411,140 363,103
Mortgage loans held for sale 4,001 15,151
Loans 2,365,380 2,324,576
Less: Allowance for loan losses (25,510) (30,639)
---------- -----------
Net Loans 2,339,870 2,293,937
Premises and equipment 38,437 39,313
Federal Reserve and Federal
Home Loan Bank stock 22,494 13,933
Interest receivable 14,943 16,592
Core deposit intangibles and goodwill 141,014 144,663
Cash surrender value of
life insurance 41,288 34,575
Other assets 22,247 23,641
----------- -----------
Total assets $3,128,290 $3,056,961
=========== ===========
Liabilities
Deposits
Noninterest-bearing $334,018 $324,735
Interest-bearing 2,038,092 1,988,593
----------- -----------
Total deposits 2,372,110 2,313,328
Borrowings 422,885 417,669
Interest payable 4,216 5,494
Other liabilities 24,811 19,460
----------- -----------
Total liabilities 2,824,022 2,755,951
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 -
18,483,936 and 18,408,177 2,310 2,301
Additional paid-in capital 149,194 148,296
Retained earnings 154,876 144,457
Accumulated other comprehensive
income (loss) (2,112) 5,956
----------- -----------
Total stockholders' equity 304,268 301,010
----------- -----------
Total liabilities and
stockholders' equity $3,128,290 $3,056,961
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended Six Months Ended
(In thousands) June 30, June 30,
2004 2003 2004 2003
NET CHARGE OFF'S $2,669 $1,217 $3,075 $2,229
AVERAGE BALANCES
Total Assets $3,077,161 $3,001,760 $3,059,499 $2,868,161
Total Loans 2,343,270 2,313,688 2,341,175 2,212,932
Total Deposits 2,320,546 2,278,743 2,316,627 2,179,316
Total Stockholders'
Equity 307,750 297,214 307,171 285,143
FINANCIAL RATIOS
Return on Average
Assets .96% 1.17% .93% 1.00%
Return on Avg.
Stockholders' Equity 9.56 11.77 9.30 10.10
Avg. Earning Assets to
Avg. Assets 89.64 90.14 89.85 90.15
Allowance for Loan Losses
as % Of Total Loans 1.08 1.31 1.08 1.31
Net Charge Off's as %
Of Avg. Loans
(Annualized) .46 .21 .26 .20
Dividend Payout Ratio 57.50 45.83 59.74 55.00
Avg. Stockholders'
Equity to Avg. Assets 10.00 9.90 10.04 9.94
Tax Equivalent Yield
on Earning Assets 5.65 5.99 5.68 6.23
Cost of Supporting
Liabilities 1.78 2.01 1.81 2.06
Net Int. Margin (FTE)
on Earning Assets 3.87 3.98 3.87 4.17
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, Three Months Ended Six Months Ended
except share data) June 30, June 30,
2004 2003 2004 2003
Interest Income
Loans receivable
Taxable $34,021 $35,759 $68,248 $70,932
Tax exempt 137 162 300 327
Investment securities
Taxable 2,052 1,600 4,001 3,279
Tax exempt 1,420 1,626 2,850 3,257
Federal funds sold 37 177 55 290
Deposits with financial
institutions 125 19 234 41
Federal Reserve and
Federal Home Loan
Bank stock 307 211 635 409
-------- -------- -------- --------
Total interest
income 38,099 39,554 76,323 78,535
-------- -------- -------- --------
Interest expense
Deposits 7,879 9,048 16,069 17,932
Securities sold under
repurchase agreements 98 454 318 903
Federal Home Loan
Bank advances 2,433 2,395 4,875 4,668
Subordinated debentures,
revolving credit and
term loans 1,635 1,660 3,245 2,999
Other borrowings 207 42 337 68
-------- -------- -------- --------
Total interest
expense 12,252 13,599 24,844 26,570
-------- -------- -------- --------
Net interest income 25,847 25,955 51,479 51,965
Provision for
loan losses 1,720 2,123 3,092 6,724
-------- -------- -------- --------
Net interest income
after provision for
loan losses 24,127 23,832 48,387 45,241
-------- -------- -------- --------
Other income
Fiduciary activities 2,002 1,889 3,812 3,586
Service charges on
deposit accounts 2,996 2,743 5,768 5,527
Other customer fees 966 1,036 2,036 2,124
Net realized gains on
sales of
available-for-sale
securities 363 67 400 438
Commission income 777 707 1,730 1,461
Earnings on cash
surrender value of
Life insurance 482 204 911 403
Net gains and fees on
sales of loans 1,352 3,351 2,153 4,286
Other income 318 1,156 662 1,614
-------- -------- -------- --------
Total other
income 9,256 11,153 17,472 19,439
-------- -------- -------- --------
Other expenses
Salaries and employee
benefits 13,059 12,902 26,083 24,679
Net occupancy expenses 1,335 1,200 2,589 2,291
Equipment expenses 1,954 2,016 3,933 3,860
Marketing expense 385 411 825 845
Deposit insurance expense
Outside data
processing fees 1,211 1,102 2,434 2,030
Printing and
office supplies 388 432 786 839
Goodwill and core
deposit amortization 852 991 1,744 1,819
Other expenses 3,438 3,881 6,792 8,013
-------- -------- -------- --------
Total other
expenses 22,622 22,935 45,186 44,376
-------- -------- -------- --------
Income before income tax 10,761 12,050 20,673 20,304
Income tax expense 3,406 3,305 6,383 5,901
-------- -------- -------- --------
Net income $7,355 $8,745 $14,290 $14,403
======== ======== ======== ========
Per Share Data (1)
Basic Net Income .40 .48 .77 .80
Diluted Net Income .40 .48 .77 .80
Cash Dividends Paid .23 .22 .46 .44
(1) Restated for a five percent (5%) stock dividend distributed September 2003.
CONSOLIDATED BALANCE SHEETS
(in thousands) June 30, March 31, December 31, September 30, June 30,
2004 2004 2003 2003 2003
Assets
Cash and due
from banks $72,432 $60,366 $77,112 $87,619 $89,126
Federal funds
sold 0 0 32,415 0 14,150
----------- ----------- ---------- ---------- -----------
Cash and cash
equivalents 72,432 60,366 109,527 87,619 103,276
Interest-bearing
time deposits 20,424 10,674 8,141 3,789 8,777
Investment
securities 411,140 376,974 356,797 316,852 363,103
Mortgage loans
held for sale 4,001 3,883 3,043 12,042 15,151
Loans 2,365,380 2,320,103 2,353,503 2,351,405 2,324,576
Less: Allowance
for loan
losses (25,510) (26,459) (25,493) (29,842) (30,639)
----------- ----------- ---------- ---------- -----------
Net
loans 2,339,870 2,293,644 2,328,010 2,321,563 2,293,937
Premises and
equipment 38,437 38,972 39,639 39,475 39,313
Federal Reserve
and Federal
Home Loan
Bank stock 22,494 21,956 15,502 14,057 13,933
Interest
receivable 14,943 15,061 16,840 17,139 16,592
Core deposit
intangibles
and goodwill 141,014 141,867 142,723 143,648 144,663
Cash surrender
value of life
insurance 41,288 40,843 37,927 37,536 34,575
Other assets 22,247 20,901 18,663 18,000 23,641
----------- ----------- ---------- ---------- -----------
Total
assets $3,128,290 $3,025,041 $3,076,812 $3,011,720 $3,056,961
=========== =========== ========== ========== ===========
Liabilities
Deposits
Noninterest-
bearing $334,018 $303,694 $338,201 $316,058 $324,735
Interest-
bearing 2,038,092 2,009,726 2,023,900 1,994,146 1,988,593
----------- ----------- ---------- ---------- -----------
Total
deposits 2,372,110 2,313,420 2,362,101 2,310,204 2,313,328
Borrowings 422,885 372,356 383,170 374,051 417,669
Interest
payable 4,216 4,542 4,680 5,200 5,494
Other
liabilities 24,811 25,676 22,896 21,064 19,460
----------- ----------- ---------- ---------- -----------
Total
liabil-
ities 2,824,022 2,715,994 2,772,847 2,710,519 2,755,951
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 2,310 2,317 2,314 2,311 2,301
Additional paid-in
capital 149,194 150,679 150,310 149,810 148,296
Retained
earnings 154,876 151,771 149,096 147,559 144,457
Accumulated other
comprehensive
income (loss) (2,112) 4,380 2,245 1,521 5,956
----------- ----------- ---------- ---------- -----------
Total stockholders'
equity 304,268 309,147 303,965 301,201 301,010
----------- ----------- ---------- ---------- -----------
Total liabilities
and stockholders'
equity $3,128,290 $3,025,141 $3,076,812 $3,011,720 $3,056,961
=========== =========== ========== ========== ===========
NON-PERFORMING ASSETS
(In thousands) June 30, March 31, December 31, September 30, June 30,
2004 2004 2003 2003 2003
90 days past
due $2,488 $4,770 $6,530 $4,790 $5,295
Non-accrual
loans 17,702 19,914 19,453 20,093 22,532
Other real
estate 1,653 1,571 1,399 1,547 2,351
---------- ---------- ------------ ------------ ----------
Total
non-performing
assets $21,843 $26,255 $27,382 $26,430 $30,178
========== ========== ============ ============ ==========
Average total
loans for the
quarter $2,343,270 $2,339,080 $2,349,536 $2,348,817 $2,313,688
Total non-performing
assets as a
percent of
average total
loans .93% 1.12% 1.17% 1.13% 1.30%
Restructured
loans $926 $957 $641 $647 $899
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands,
except share
data) June 30, March 31, December 31, September 30, June 30,
2004 2004 2003 2003 2003
Interest Income
Loans receivable
Taxable $34,021 $34,227 $34,697 $35,607 $35,759
Tax exempt 137 163 195 185 162
Investment securities
Taxable 2,052 1,949 1,484 1,342 1,600
Tax exempt 1,420 1,430 1,451 1,562 1,626
Federal funds
sold 37 18 148 49 177
Deposits with
financial
institutions 125 109 22 13 19
Federal Reserve
and Federal Home
Loan Bank stock 307 328 39 201 211
-------- -------- -------- -------- --------
Total interest
income 38,099 38,224 38,036 38,959 39,554
-------- -------- -------- -------- --------
Interest expense
Deposits 7,879 8,190 8,303 8,623 9,048
Securities sold
under repurchase
agreements 98 220 248 370 454
Federal Home Loan
Bank advances 2,433 2,442 2,362 2,409 2,395
Subordinated debentures,
revolving credit
and term loans 1,635 1,610 1,587 1,575 1,660
Other borrowings 207 130 233 108 42
-------- -------- -------- -------- --------
Total
interest
expense 12,252 12,592 12,733 13,085 13,599
-------- -------- -------- -------- --------
Net interest
income 25,847 25,632 25,303 25,874 25,955
Provision for
loan losses 1,720 1,372 1,047 1,706 2,123
-------- -------- -------- -------- --------
Net interest income
after provision
for loan losses 24,127 24,260 24,256 24,168 23,832
-------- -------- -------- -------- --------
Other income
Fiduciary
activities 2,002 1,810 1,603 1,547 1,889
Service charges
on deposit
accounts 2,996 2,772 2,717 2,861 2,743
Other customer
fees 966 1,070 1,039 961 1,036
Net realized
gains on sales of
available-for-sale
securities 363 37 0 512 67
Commission income 777 953 569 638 707
Earnings on cash
surrender value
of life insurance 482 429 446 498 204
Net gains and fees
on sales
of loans 1,352 801 770 1,332 3,351
Other income 318 344 443 527 1,156
-------- -------- -------- -------- --------
Total other
income 9,256 8,216 7,587 8,876 11,153
-------- -------- -------- -------- --------
Other expenses
Salaries and
employee
benefits 13,059 13,024 12,599 13,206 12,902
Net occupancy
expenses 1,335 1,254 1,414 1,189 1,200
Equipment
expenses 1,954 1,979 2,217 1,996 2,016
Marketing
expense 385 440 538 414 411
Outside data
processing fees 1,211 1,223 1,063 1,025 1,102
Printing and
office supplies 388 398 466 401 432
Goodwill and
core deposit
amortization 852 892 923 958 991
Other expenses 3,438 3,354 4,623 3,771 3,881
-------- -------- -------- -------- --------
Total other
expenses 22,622 22,564 23,843 22,960 22,935
-------- -------- -------- -------- --------
Income before
income tax 10,761 9,912 8,000 10,084 12,050
Income tax
expense 3,406 2,977 2,181 2,735 3,305
-------- -------- -------- -------- --------
Net income $7,355 $6,935 $5,819 $7,349 $8,745
======== ======== ======== ======== ========
Per Share Data(1)
Basic Net
Income $.40 $.37 $.31 $.40 $.48
Diluted Net
Income .40 .37 .31 .39 .48
Cash Dividends
Paid .23 .23 .23 .23 .22
Average Diluted
Shares
Outstanding
(in thousands) 18,633 18,646 18,666 18,622 18,519
FINANCIAL RATIOS
Return on
Average Assets .96% .91% .76% .97% 1.17%
Return on Avg.
Stockholders'
Equity 9.56 9.05 7.69 9.76 11.77
Avg. Earning
Assets to Avg.
Assets 89.64 90.05 90.19 89.48 90.14
Allowance for
Loan Losses as %
Of Total Loans 1.08 1.14 1.08 1.26 1.31
Net Charge Off's
as % Of Avg. Loans
(Annualized) .46 .07 .92 .43 .21
Dividend Payout
Ratio 57.50 62.16 74.19 58.97 45.83
Avg. Stockholders'
Equity to Avg.
Assets 10.00 10.08 9.86 9.93 9.90
Tax Equivalent
Yield on Earning
Assets 5.65 5.71 5.62 5.89 5.99
Cost of Supporting
Liabilities 1.78 1.84 1.84 1.93 2.01
Net Int. Margin
(FTE) on Earning
Assets 3.87 3.87 3.78 3.96 3.98
(1) Restated for a five percent (5%) stock dividend distributed September 2003.
SOURCE First Merchants Corporation
-0- 07/21/2004
/CONTACT: Mark K. Hardwick, Senior Vice President/Chief Financial Officer
of First Merchants Corporation, +1-765-751-1857/
/Web site: http://firstmerchants.com /
(FRME)
CO: First Merchants Corporation
ST: Indiana
IN: FIN
SU: ERN CCA MAV
TM-TH
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