UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 21, 2004
FIRST MERCHANTS CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA
(State or other jurisdiction of incorporation)
0-17071 35-1544218
(Commission File Number) (IRS Employer Identification No.)
200 East Jackson Street
P.O. Box 792
Muncie, Indiana 47305-2814
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (765) 747-1500
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit 99.1 Press Release, dated January 21, 2004, issued by
First Merchants Corporation
ITEM 9. REGULATION FD DISCLOSURE (INFORMATION PROVIDED UNDER ITEM 12 - RESULTS
OF OPERATIONS AND FINANCIAL CONDITION).
The following information is being provided under Item 12 - Results of
Operations and Financial Condition. It is being furnished under Item 9
of this Form 8-K in accordance with interim guidance issued by the SEC
in Release No. 33-8216. Such information, including the Exhibit
attached hereto, shall not be deemed "filed" for purposes of Section 18
of the Securities Exchange Act of 1934.
On January 21, 2004, First Merchants Corporation issued a press release
to report its financial results for the year ended December 31, 2003.
The release is furnished as Exhibit 99.1 hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
By: /s/ Larry R. Helms
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Larry R. Helms, Senior Vice President
Dated: January 21, 2004
EXHIBIT INDEX
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Exhibit No.
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99.1 Description
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Press Release, dated January 21, 2004, issued by
First Merchants Corporation.
First Merchants Corporation
Exhibit No. 99.1
Press Release, dated January 21, 2004
N / E / W / S R / E / L / E / A / S / E
January 21, 2004
FOR IMMEDIATE RELEASE
For more information, contact:
Mark K. Hardwick, Senior Vice President/Chief Financial Officer, 765-751-1857
http://firstmerchants.com
SOURCE: First Merchants Corporation, Muncie, Indiana
FIRST MERCHANTS CORPORATION ANNOUNCES 2003 RESULTS
First Merchants Corporation (NASDAQ - FRME) has reported 2003 diluted earnings
per share of $1.50, down from $1.69 recorded in 2002. Net income during the
period equaled $27.6 million compared to $27.8 million in 2002.
Net Interest Margin equaled 4.01 percent for the year, down 38 basis points from
4.39 in 2002. The decline in Net Interest Margin amounted to $.33 on an earnings
per share basis.
Non-performing loans as a percentage of total loans equaled 1.17 percent, up
from 1.09 percent in 2002. The Corporation's allowance for loan losses equaled
1.08 percent of total loans as of year-end.
Michael L. Cox, President and Chief Executive Officer, stated that, "First
Merchants Corporation's management team is disappointed the legacy of 27
consecutive years of improved earnings per share has come to an end in 2003.
Management has always taken pride in its ability to manage through interest rate
cycles and various economic environments. However, the fact that our first down
year in 28 years occurred during a 40-year low interest rate cycle and a
stressed Indiana economy resulting in significant margin compression and higher
charge-off's than normal is of some consolation." Cox also stated that, "We
maintained a long-term focus throughout a difficult year in 2003 by not
sacrificing balance sheet credit quality or asset duration in search of current
year earnings. Management believes the balance sheet is positioned for the
coming years."
2003 accomplishments included the formation of Merchants Trust Company on
January 1st, the acquisition of CNBC Bancorp, Worthington Ohio, on March 1st,
the formation of two tax advantaged investment subsidiaries on May 29th and the
integration of Lafayette Bank and Trust Company's core processing system on
November 7th. Additionally, in order to bring consistency of application and
interpretation of all applicable banking regulations, the Corporation
successfully converted six state bank charters to national charters effective
January 1, 2004. All ten of the Corporation's banks are now nationally chartered
bringing enhanced efficiency and consistency to the regulatory process.
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m. Eastern
Time on Thursday, January 21, 2004. To participate dial 888-710-8192 and
reference First Merchants Corporation's fourth quarter earnings release. A
digital recording will be available two hours after the completion of the
conference from January 21, 2004, to January 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. 4799031.
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 and is rated A+ by Standard
& Poor's Corporation. 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,
2003 2002
Assets
Cash and due from banks $ 77,112 $ 87,638
Federal funds sold 32,415 31,400
----------- -----------
Cash and cash equivalents 109,527 119,038
Interest-bearing time deposits 8,141 3,568
Investment securities 356,797 342,062
Mortgage loans held for sale 3,043 21,545
Loans 2,353,503 2,004,377
Less: Allowance for loan losses (25,493) (22,417)
----------- -----------
Net loans 2,328,010 1,981,960
Premises and equipment 39,639 38,645
Federal Reserve and Federal Home Loan Bank stock 15,502 11,409
Interest receivable 16,840 17,346
Core deposit intangibles and goodwill 142,723 107,217
Cash surrender value of life insurance 37,927 14,309
Other assets 18,663 21,588
----------- -----------
Total assets $ 3,076,812 $ 2,678,687
=========== ===========
Liabilities
Deposits
Noninterest-bearing $ 338,201 $ 272,128
Interest-bearing 2,023,900 1,764,560
----------- -----------
Total deposits 2,362,101 2,036,688
Borrowings 383,170 356,927
Interest payable 4,680 6,019
Other liabilities 22,896 17,924
----------- -----------
Total liabilities 2,772,847 2,417,558
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 -- 18,512,834 and 17,138,885 shares 2,314 2,142
Additional paid-in capital 150,310 116,401
Retained earnings 149,096 138,110
Accumulated other comprehensive income 2,245 4,476
----------- -----------
Total stockholders' equity 303,965 261,129
----------- -----------
Total liabilities and stockholders' equity $ 3,076,812 $ 2,678,687
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended Year Ended
(In thousands) December 31, December 31,
2003 2002 2003 2002
NET CHARGE OFF'S $ 5,396 $ 2,607 $ 10,128 $ 6,800
AVERAGE BALANCES
Total Assets $3,070,523 $2,665,016 $2,960,195 $2,406,251
Total Loans 2,349,536 2,066,616 2,281,614 1,842,429
Total Deposits 2,361,544 2,023,698 2,257,075 1,857,053
Total Stockholders' Equity 302,803 261,139 293,603 237,575
FINANCIAL RATIOS
Return on Average Assets .76% .99% .93% 1.16%
Return on Avg. Stockholders' Equity 7.69 10.10 9.39 11.72
Avg. Earning Assets to Avg. Assets 90.19 92.11 89.99 91.38
Allowance for Loan Losses as %
Of Total Loans 1.08 1.11 1.08 1.11
Net Charge Off's as % Of Avg. Loans
(Annualized) .92 .50 .44 .37
Dividend Payout Ratio 74.19 57.89 60.00 50.89
Avg. Stockholders' Equity to Avg. Assets 9.86 9.80 9.92 9.87
Tax Equivalent Yield on Earning Assets 5.62 6.57 5.98 6.83
Cost of Supporting Liabilities 1.84 2.30 1.97 2.44
Net Int. Margin (FTE) on Earning Assets 3.78 4.27 4.01 4.39
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended Year Ended
December 31, December 31,
2003 2002 2003 2002
Interest income
Loans receivable
Taxable $ 34,697 $ 34,775 $ 141,236 $ 129,279
Tax exempt 195 235 707 638
Investment securities
Taxable 1,484 2,100 6,105 9,086
Tax exempt 1,451 1,740 6,270 6,190
Federal funds sold 148 169 487 557
Deposits with financial institutions 22 38 76 197
Federal Reserve and Federal Home Loan Bank stock 39 208 649 735
-------- -------- -------- --------
Total interest income 38,036 39,265 155,530 146,682
-------- -------- -------- --------
Interest expense
Deposits 8,303 9,934 34,858 39,700
Securities sold under repurchase agreements 248 502 1,521 2,060
Federal Home Loan Bank advances 2,362 2,359 9,439 8,166
Trust preferred securities 1,234 1,181 4,931 3,324
Other borrowings 586 154 1,639 509
-------- -------- -------- --------
Total interest expense 12,733 14,130 52,388 53,759
-------- -------- -------- --------
Net interest income 25,303 25,135 103,142 92,923
Provision for loan losses 1,047 2,877 9,477 7,174
-------- -------- -------- --------
Net interest income
after provision for loan losses 24,256 22,258 93,665 85,749
-------- -------- -------- --------
Other income
Fiduciary activities 1,603 1,487 6,736 6,258
Service charges on deposit accounts 2,717 2,695 11,105 9,330
Other customer fees 1,039 993 4,124 3,918
Net realized gains (losses)on
sales of available-for-sale securities 0 169 950 739
Commission income 569 586 2,668 2,203
Earnings on cash surrender value
of life insurance 446 200 1,347 689
Net gains and fees on sales of loans 770 722 6,388 1,712
Other income 443 364 2,584 2,228
-------- -------- -------- --------
Total other income 7,587 7,216 35,902 27,077
-------- -------- -------- --------
Other expenses
Salaries and employee benefits 12,599 10,849 50,484 39,150
Net occupancy expenses 1,414 933 4,894 3,632
Equipment expenses 2,217 1,861 8,073 6,709
Marketing expense 538 416 1,797 1,495
Outside data processing fees 1,063 940 4,118 3,664
Printing and office supplies 466 442 1,706 1,597
Goodwill and core deposit amortization 923 750 3,700 2,589
Other expenses 4,623 3,695 16,507 12,173
-------- -------- -------- --------
Total other expenses 23,843 19,886 91,279 71,009
-------- -------- -------- --------
Income before income tax 8,000 9,588 38,288 41,817
Income tax expense 2,181 2,998 10,717 13,981
-------- -------- -------- --------
Net income $ 5,819 $ 6,590 $ 27,571 $ 27,836
======== ======== ======== ========
Per Share Data (1)
Basic Net Income .31 .38 1.51 1.70
Diluted Net Income .31 .38 1.50 1.69
Cash Dividends Paid .23 .22 .90 .86
(1) Restated for a five percent (5%) stock dividend distributed September 2003.
CONSOLIDATED BALANCE SHEETS
(in thousands) December 31, September 30, June 30, March 31, December 31,
2003 2003 2003 2003 2002
Assets
Cash and due from banks $ 77,112 $ 87,619 $ 89,126 $ 81,789 $ 87,638
Federal funds sold 32,415 0 14,150 54,925 31,400
----------- ----------- ----------- ----------- ------------
Cash and cash equivalents 109,527 87,619 103,276 136,714 119,038
Interest-bearing time deposits 8,141 3,789 8,777 5,170 3,568
Investment securities 356,797 316,852 363,103 333,692 342,062
Mortgage loans held for sale 3,043 12,042 15,151 13,558 21,545
Loans 2,353,503 2,351,405 2,324,576 2,291,178 2,004,377
Less: Allowance for loan losses (25,493) (29,842) (30,639) (29,733) (22,417)
---------- ---------- ----------- ----------- ------------
Net loans 2,328,010 2,321,563 2,293,937 2,261,445 1,981,960
Premises and equipment 39,639 39,475 39,313 38,861 38,645
Federal Reserve and Federal Home Loan Bank stock 15,502 14,057 13,933 13,912 11,409
Interest receivable 16,840 17,139 16,592 16,789 17,346
Core deposit intangibles and goodwill 142,723 143,648 144,663 141,226 107,217
Cash surrender value of life insurance 37,927 37,536 34,575 14,567 14,309
Other assets 18,663 18,000 23,641 23,088 21,588
----------- ----------- ----------- ----------- ------------
Total assets $ 3,076,812 $ 3,011,720 $ 3,056,961 $ 2,999,022 $ 2,678,687
=========== =========== =========== =========== ============
Liabilities
Deposits
Noninterest-bearing $ 338,201 $ 316,058 $ 324,735 $ 289,835 $ 272,128
Interest-bearing 2,023,900 1,994,146 1,988,593 1,996,836 1,764,560
----------- ----------- ----------- ----------- ------------
Total deposits 2,362,101 2,310,204 2,313,328 2,286,671 2,036,688
Borrowings 383,170 374,051 417,669 388,821 356,927
Interest payable 4,680 5,200 5,494 5,694 6,019
Other liabilities 22,896 21,064 19,460 28,212 17,924
----------- ----------- ----------- ----------- ------------
Total liabilities 2,772,847 2,710,519 2,755,951 2,709,398 2,417,558
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 2,314 2,311 2,301 2,298 2,142
Additional paid-in capital 150,310 149,810 148,296 143,505 116,401
Retained earnings 149,096 147,559 144,457 139,743 138,110
Accumulated other comprehensive income 2,245 1,521 5,956 4,078 4,476
----------- ----------- ----------- ----------- ------------
Total stockholders' equity 303,965 301,201 301,010 289,624 261,129
----------- ----------- ----------- ----------- ------------
Total liabilities and stockholders' equity $ 3,076,812 $ 3,011,720 $ 3,056,961 $ 2,999,022 $ 2,678,687
=========== =========== =========== =========== ============
NON-PERFORMING ASSETS
(In thousands) December 31, September 30, June 30, March 31, December 31,
2003 2003 2003 2003 2002
90 days past due $ 6,530 $ 4,790 $ 5,295 $ 3,552 $ 6,676
Non-accrual loans 19,453 20,093 22,532 19,747 14,134
Other real estate 1,399 1,547 2,351 1,841 1,691
------------ ------------ ---------- ---------- ------------
Total non-performing assets $ 27,382 $ 26,430 $ 30,178 $ 25,140 $ 22,501
============ ============ ========== ========== ============
Average total loans for the quarter $ 2,349,536 $ 2,348,817 $2,313,688 $2,111,056 $ 2,066,616
Total non-performing assets as a
percent of average total loans 1.17% 1.13% 1.30% 1.19% 1.09%
Restructured loans $ 641 $ 647 $ 899 $ 2,194 $ 2,508
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands, except share data) December 31, September 30, June 30, March 31, December 31,
2003 2003 2003 2003 2002
Interest Income
Loans receivable
Taxable $ 34,697 $ 35,607 $ 35,759 $ 35,173 $ 34,775
Tax exempt 195 185 162 165 235
Investment securities
Taxable 1,484 1,342 1,600 1,679 2,100
Tax exempt 1,451 1,562 1,626 1,631 1,740
Federal funds sold 148 49 177 113 169
Deposits with financial institutions 22 13 19 22 38
Federal Reserve and Federal Home Loan Bank stock 39 201 211 198 208
-------- -------- -------- -------- --------
Total interest income 38,036 38,959 39,554 38,981 39,265
-------- -------- -------- -------- --------
Interest expense
Deposits 8,303 8,623 9,048 8,884 9,934
Securities sold under repurchase agreements 248 370 454 449 502
Federal Home Loan Bank advances 2,362 2,409 2,395 2,273 2,359
Trust preferred securities 1,234 1,232 1,259 1,206 1,181
Other borrowings 586 451 443 159 154
-------- -------- -------- -------- --------
Total interest expense 12,733 13,085 13,599 12,971 14,130
-------- -------- -------- -------- --------
Net interest income 25,303 25,874 25,955 26,010 25,135
Provision for loan losses 1,047 1,706 2,123 4,601 2,877
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses 24,256 24,168 23,832 21,409 22,258
-------- -------- -------- -------- --------
Other income
Fiduciary activities 1,603 1,547 1,889 1,697 1,487
Service charges on deposit accounts 2,717 2,861 2,743 2,784 2,695
Other customer fees 1,039 961 1,036 1,088 993
Net realized gains on sales of
available-for-sale securities 0 512 67 371 169
Commission income 569 638 707 754 586
Earnings on cash surrender value
of life insurance 446 498 204 199 200
Net gains and fees on sales of loans 770 1,332 3,351 935 722
Other income 443 527 1,156 458 364
-------- -------- -------- -------- -------
Total other income 7,587 8,876 11,153 8,286 7,216
-------- -------- -------- -------- -------
Other expenses
Salaries and employee benefits 12,599 13,206 12,902 11,777 10,849
Net occupancy expenses 1,414 1,189 1,200 1,091 933
Equipment expenses 2,217 1,996 2,016 1,844 1,861
Marketing expense 538 414 411 434 416
Outside data processing fees 1,063 1,025 1,102 928 940
Printing and office supplies 466 401 432 407 442
Goodwill and core deposit amortization 923 958 991 828 750
Other expenses 4,623 3,771 3,881 4,232 3,695
-------- -------- -------- -------- --------
Total other expenses 23,843 22,960 22,935 21,541 19,886
-------- -------- -------- -------- --------
Income before income tax 8,000 10,084 12,050 8,154 9,588
Income tax expense 2,181 2,735 3,305 2,496 2,998
-------- -------- -------- -------- --------
Net income $ 5,819 $ 7,349 $ 8,745 $ 5,658 $ 6,590
======== ======== ======== ======== ========
Per Share Data(1)
Basic Net Income $ .31 $ .40 $ .48 $ .32 $ .38
Diluted Net Income .31 .39 .48 .32 .38
Cash Dividends Paid .23 .23 .22 .22 .22
(1) Restated for a five percent (5%) stock dividend distributed September 2003.