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): April 22, 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 April 22, 2004, issued by
First Merchants Corporation
ITEM 9. REGULATION FD DISCLOSURE.
See "ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION" below.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On April 22, 2004, First Merchants Corporation issued a press release
to report its financial results for the first quarter ended March 31, 2004. The
press release is attached hereto as Exhibit 99.1, is being furnished by the
Registrant pursuant to Regulation FD and is not being filed.
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
--------------------------------------------
Larry R. Helms, Senior Vice President
Dated: April 22, 2004
EXHIBIT INDEX
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Exhibit No.
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99.1 Description
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Press Release, dated April 22, 2004, issued by
First Merchants Corporation.
First Merchants Corporation
Exhibit No. 99.1
Press Release, dated April 22, 2004
N / E / W / S R / E / L / E / A / S / E
April 22, 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 1st QUARTER 2004 RESULTS
First Merchants Corporation (NASDAQ - FRME) has reported first quarter 2004
diluted earnings per share of $.37, a 15.6 percent increase from $.32 recorded
in 2003. Net income during the period totaled $6.9 million compared to $5.6
million in 2003.
Total assets of the Corporation were $3 billion as of March 31, 2004, a modest
increase of $26 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 $97 million or 3.6 percent, as fed funds sold declined
by $55 million resulting in increased earning assets of $42 million. The
improvement in earning assets was funded by increases in deposits and capital
totaling $46 million.
Net interest margin equaled 3.87 percent, a fifty-one basis point decline from
the first quarter of 2003 margin of 4.38 percent. Declining margins were
mitigated by a reduction in the provision for loan losses of $1.4 million versus
the $4.6 million provided in the prior year.
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.
Non-performing loans as a percentage of total loans equaled 1.12 percent, down
from 1.19 percent in 2003. The Corporation's allowance for loan losses equaled
1.14 percent of average loans for the quarter and net charge-off's equaled .07
percent.
Michael L. Cox, President and Chief Executive Officer, stated that, "First
Merchants Corporation's first quarter 2004 results reflect positive trends in a
number of areas when compared to the fourth quarter of 2003. Earnings per share
improved by $.06, net interest margin improved by 9 basis points, return on
assets and return on equity improved by 15 and 136 basis points respectively.
Most encouraging is the decline in non-performing loans to the lowest level in
five quarters." Cox also stated that, "First Merchants Corporation's management
team is encouraged by recent progress and remains cautiously optimistic about
the economy and the yield curve for the remainder of 2004."
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 9:30 a.m. Eastern
Standard Time/10:30 a.m. Eastern Daylight Time on Thursday, April 22, 2004. To
participate dial 888-710-8192 and reference First Merchants Corporation's first
quarter earnings release. A digital recording will be available two hours after
the completion of the conference from April 22, 2004, to April 24, 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. 6682180.
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 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) March 31,
2004 2003
Assets
Cash and due from banks $ 60,366 $ 81,789
Federal funds sold 0 54,925
----------- -----------
Cash and cash equivalents 60,366 136,714
Interest-bearing time deposits 10,674 5,170
Investment securities 376,974 333,692
Mortgage loans held for sale 3,883 13,558
Loans 2,320,103 2,291,178
Less: Allowance for loan losses (26,459) (29,733)
----------- -----------
Net loans 2,293,644 2,261,445
Premises and equipment 38,972 38,861
Federal Reserve and Federal Home Loan Bank stock 21,956 13,912
Interest receivable 15,061 16,789
Core deposit intangibles and goodwill 141,867 141,226
Cash surrender value of life insurance 40,843 14,567
Other assets 20,901 23,088
----------- -----------
Total assets $ 3,025,141 $ 2,999,022
=========== ===========
Liabilities
Deposits
Noninterest-bearing $ 303,694 $ 289,835
Interest-bearing 2,009,726 1,996,836
----------- -----------
Total deposits 2,313,420 2,286,671
Borrowings 372,356 388,821
Interest payable 4,542 5,694
Other liabilities 25,676 28,212
----------- -----------
Total liabilities 2,715,994 2,709,398
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 -- 18,532,769 and 18,383,045 shares 2,317 2,298
Additional paid-in capital 150,679 143,505
Retained earnings 151,771 139,743
Accumulated other comprehensive income 4,380 4,078
----------- -----------
Total stockholders' equity 309,147 289,624
----------- -----------
Total liabilities and stockholders' equity $ 3,025,141 $ 2,999,022
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended
(In thousands) March 31,
2004 2003
NET CHARGE OFF'S $ 406 $ 1,012
AVERAGE BALANCES
Total Assets $3,041,837 $2,733,077
Total Loans 2,339,080 2,111,056
Total Deposits 2,312,708 2,078,786
Total Stockholders' Equity 306,592 272,939
FINANCIAL RATIOS
Return on Average Assets .91% .83%
Return on Avg. Stockholders' Equity 9.05 8.29
Avg. Earning Assets to Avg. Assets 90.05 90.17
Allowance for Loan Losses as %
Of Total Loans 1.14 1.29
Net Charge Off's as % Of Avg. Loans
(Annualized) .07 .19
Dividend Payout Ratio 62.16 68.75
Avg. Stockholders' Equity to Avg. Assets 10.08 9.99
Tax Equivalent Yield on Earning Assets 5.71 6.49
Cost of Supporting Liabilities 1.84 2.11
Net Int. Margin (FTE) on Earning Assets 3.87 4.38
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended
March 31,
2004 2003
Interest income
Loans receivable
Taxable $ 34,227 $ 35,173
Tax exempt 163 165
Investment securities
Taxable 1,949 1,679
Tax exempt 1,430 1,631
Federal funds sold 18 113
Deposits with financial institutions 109 22
Federal Reserve and Federal Home Loan Bank stock 328 198
-------- --------
Total interest income 38,224 38,981
-------- --------
Interest expense
Deposits 8,190 8,884
Securities sold under repurchase agreements 220 449
Federal Home Loan Bank advances 2,442 2,273
Subordinated debentures, revolving credit
and term loans 1,234 1,206
Other borrowings 506 159
-------- --------
Total interest expense 12,592 12,971
-------- --------
Net interest income 25,632 26,010
Provision for loan losses 1,372 4,601
-------- --------
Net interest income
after provision for loan losses 24,260 21,409
-------- --------
Other income
Fiduciary activities 1,810 1,697
Service charges on deposit accounts 2,772 2,784
Other customer fees 1,070 1,088
Net realized gains on
sales of available-for-sale securities 37 371
Commission income 953 754
Earnings on cash surrender value
of life insurance 429 199
Net gains and fees on sales of loans 801 935
Other income 344 458
-------- --------
Total other income 8,216 8,286
-------- --------
Other expenses
Salaries and employee benefits 13,024 11,777
Net occupancy expenses 1,254 1,091
Equipment expenses 1,979 1,844
Marketing expense 440 434
Outside data processing fees 1,223 928
Printing and office supplies 398 407
Goodwill and core deposit amortization 892 828
Other expenses 3,354 4,232
-------- --------
Total other expenses 22,564 21,541
-------- --------
Income before income tax 9,912 8,154
Income tax expense 2,977 2,496
-------- --------
Net income $ 6,935 $ 5,658
======== ========
Per Share Data (1)
Basic Net Income .37 .32
Diluted Net Income .37 .32
Cash Dividends Paid .23 .22
Average Diluted Shares
Outstanding (in thousands) 18,646 17,676
(1) Restated for a five percent (5%) stock dividend distributed September 2003.
CONSOLIDATED BALANCE SHEETS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2004 2003 2003 2003 2003
Assets
Cash and due from banks $ 60,366 $ 77,112 $ 87,619 $ 89,126 $ 81,789
Federal funds sold 0 32,415 0 14,150 54,925
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents 60,366 109,527 87,619 103,276 136,714
Interest-bearing time deposits 10,674 8,141 3,789 8,777 5,170
Investment securities 376,974 356,797 316,852 363,103 333,692
Mortgage loans held for sale 3,883 3,043 12,042 15,151 13,558
Loans 2,320,103 2,353,503 2,351,405 2,324,576 2,291,178
Less: Allowance for loan losses (26,459) (25,493) (29,842) (30,639) (29,733)
----------- ---------- ---------- ----------- -----------
Net loans 2,293,644 2,328,010 2,321,563 2,293,937 2,261,445
Premises and equipment 38,972 39,639 39,475 39,313 38,861
Federal Reserve and Federal Home Loan Bank stock 21,956 15,502 14,057 13,933 13,912
Interest receivable 15,061 16,840 17,139 16,592 16,789
Core deposit intangibles and goodwill 141,867 142,723 143,648 144,663 141,226
Cash surrender value of life insurance 40,843 37,927 37,536 34,575 14,567
Other assets 20,901 18,663 18,000 23,641 23,088
----------- ----------- ----------- ----------- -----------
Total assets $ 3,025,041 $ 3,076,812 $ 3,011,720 $ 3,056,961 $ 2,999,022
=========== =========== =========== =========== ===========
Liabilities
Deposits
Noninterest-bearing $ 303,694 $ 338,201 $ 316,058 $ 324,735 $ 289,835
Interest-bearing 2,009,726 2,023,900 1,994,146 1,988,593 1,996,836
----------- ----------- ----------- ----------- -----------
Total deposits 2,313,420 2,362,101 2,310,204 2,313,328 2,286,671
Borrowings 372,356 383,170 374,051 417,669 388,821
Interest payable 4,542 4,680 5,200 5,494 5,694
Other liabilities 25,676 22,896 21,064 19,460 28,212
----------- ----------- ----------- ----------- -----------
Total liabilities 2,715,994 2,772,847 2,710,519 2,755,951 2,709,398
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 2,317 2,314 2,311 2,301 2,298
Additional paid-in capital 150,679 150,310 149,810 148,296 143,505
Retained earnings 151,771 149,096 147,559 144,457 139,743
Accumulated other comprehensive income 4,380 2,245 1,521 5,956 4,078
----------- ----------- ----------- ----------- -----------
Total stockholders' equity 309,147 303,965 301,201 301,010 289,624
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 3,025,141 $ 3,076,812 $ 3,011,720 $ 3,056,961 $ 2,999,022
=========== =========== =========== =========== ===========
NON-PERFORMING ASSETS
(In thousands) March 31, December 31, September 30, June 30, March 31,
2004 2003 2003 2003 2003
90 days past due $ 4,770 $ 6,530 $ 4,790 $ 5,295 $ 3,552
Non-accrual loans 19,914 19,453 20,093 22,532 19,747
Other real estate 1,571 1,399 1,547 2,351 1,841
---------- ------------ ------------ ---------- ----------
Total non-performing assets $ 26,255 $ 27,382 $ 26,430 $ 30,178 $ 25,140
========== ============ ============ ========== ==========
Average total loans for the quarter $2,339,080 $ 2,349,536 $ 2,348,817 $2,313,688 $2,111,056
Total non-performing assets as a
percent of average total loans 1.12% 1.17% 1.13% 1.30% 1.19%
Restructured loans $ 957 $ 641 $ 647 $ 899 $ 2,194
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands, except share data) March 31, December 31, September 30, June 30, March 31,
2004 2003 2003 2003 2003
Interest Income
Loans receivable
Taxable $ 34,227 $ 34,697 $ 35,607 $ 35,759 $ 35,173
Tax exempt 163 195 185 162 165
Investment securities
Taxable 1,949 1,484 1,342 1,600 1,679
Tax exempt 1,430 1,451 1,562 1,626 1,631
Federal funds sold 18 148 49 177 113
Deposits with financial institutions 109 22 13 19 22
Federal Reserve and Federal Home Loan Bank stock 328 39 201 211 198
-------- -------- -------- -------- --------
Total interest income 38,224 38,036 38,959 39,554 38,981
-------- -------- -------- -------- --------
Interest expense
Deposits 8,190 8,303 8,623 9,048 8,884
Securities sold under repurchase agreements 220 248 370 454 449
Federal Home Loan Bank advances 2,442 2,362 2,409 2,395 2,273
Subordinated debentures, revolving credit
and term loans 1,234 1,234 1,232 1,259 1,206
Other borrowings 506 586 451 443 159
-------- -------- -------- -------- --------
Total interest expense 12,592 12,733 13,085 13,599 12,971
-------- -------- -------- -------- --------
Net interest income 25,632 25,303 25,874 25,955 26,010
Provision for loan losses 1,372 1,047 1,706 2,123 4,601
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses 24,260 24,256 24,168 23,832 21,409
-------- -------- -------- -------- --------
Other income
Fiduciary activities 1,810 1,603 1,547 1,889 1,697
Service charges on deposit accounts 2,772 2,717 2,861 2,743 2,784
Other customer fees 1,070 1,039 961 1,036 1,088
Net realized gains on sales of
available-for-sale securities 37 0 512 67 371
Commission income 953 569 638 707 754
Earnings on cash surrender value
of life insurance 429 446 498 204 199
Net gains and fees on sales of loans 801 770 1,332 3,351 935
Other income 344 443 527 1,156 458
-------- -------- -------- -------- --------
Total other income 8,216 7,587 8,876 11,153 8,286
-------- -------- -------- -------- --------
Other expenses
Salaries and employee benefits 13,024 12,599 13,206 12,902 11,777
Net occupancy expenses 1,254 1,414 1,189 1,200 1,091
Equipment expenses 1,979 2,217 1,996 2,016 1,844
Marketing expense 440 538 414 411 434
Outside data processing fees 1,223 1,063 1,025 1,102 928
Printing and office supplies 398 466 401 432 407
Goodwill and core deposit amortization 892 923 958 991 828
Other expenses 3,354 4,623 3,771 3,881 4,232
-------- -------- -------- -------- --------
Total other expenses 22,564 23,843 22,960 22,935 21,541
-------- -------- -------- -------- --------
Income before income tax 9,912 8,000 10,084 12,050 8,154
Income tax expense 2,977 2,181 2,735 3,305 2,496
-------- -------- -------- -------- --------
Net income $ 6,935 $ 5,819 $ 7,349 $ 8,745 $ 5,658
======== ======== ======== ======== ========
Per Share Data(1)
Basic Net Income $ .37 $ .31 $ .40 $ .48 $ .32
Diluted Net Income .37 .31 .39 .48 .32
Cash Dividends Paid .23 .23 .23 .22 .22
Average Diluted Shares
Outstanding (in thousands) 18,646 18,666 18,622 18,519 17,676
FINANCIAL RATIOS
Return on Average Assets .91% .76% .97% 1.17% .83%
Return on Avg. Stockholders' Equity 9.05 7.69 9.76 11.77 8.29
Avg. Earning Assets to Avg. Assets 90.05 90.19 89.48 90.14 90.17
Allowance for Loan Losses as %
Of Total Loans 1.14 1.08 1.26 1.31 1.29
Net Charge Off's as % Of Avg. Loans
(Annualized) .07 .92 .43 .21 .19
Dividend Payout Ratio 62.16 74.19 58.97 46.00 68.75
Avg. Stockholders' Equity to Avg. Assets 10.08 9.86 9.93 9.90 9.99
Tax Equivalent Yield on Earning Assets 5.71 5.62 5.89 5.99 6.49
Cost of Supporting Liabilities 1.84 1.84 1.93 2.01 2.11
Net Int. Margin (FTE) on Earning Assets 3.87 3.78 3.96 3.98 4.38
(1) Restated for a five percent (5%) stock dividend distributed September 2003.