UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------------------
DATE OF REPORT (Date of earliest event reported): October 20, 2004
------------------------------
FIRST MERCHANTS CORPORATION
(Exact name of registrant as specified in its charter)
-------------------------------
INDIANA 0-17071 35-1544218
(State or other jurisdiction (Commission file number) (IRS Employer
of incorporation) Identification No.)
200 East Jackson Street
P.O. Box 792
Muncie, IN 47305-2814
(Address of principal executive offices, including zip code)
(765) 747-1500
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Page 1 of 10
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On October 20, 2004, First Merchants Corporation issued a press
release to report its financial results for the third quarter ended September
30, 2004. The press release, attached hereto as Exhibit 99.1, is being
furnished by the Registrant and is not being filed.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit 99.1 Press Release, dated October 20, 2004, issued by
First Merchants Corporation
Page 2 of 10
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.
First Merchants Corporation
(Registrant)
By: /s/ Mark K. Hardwick
--------------------------------------------
Mark K. Hardwick
Senior Vice President and
Chief Financial Officer
(Principal Financial and Chief
Accounting Officer)
Dated: October 20, 2004
Page 3 of 10
EXHIBIT INDEX
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Exhibit No.
- -----------
99.1 Description
-----------
Press Release, dated October 20, 2004, issued by
First Merchants Corporation.
Page 4 of 10
First Merchants Corporation
Exhibit No. 99.1
Press Release, dated October 20, 2004
N / E / W / S R / E / L / E / A / S / E
October 20, 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 5 PERCENT INCREASE IN THIRD QUARTER
EARNINGS PER SHARE
First Merchants Corporation (NASDAQ - FRME) has reported third quarter diluted
earnings per share totaled $.41, a 5.1 percent increase over $.39 recorded in
2003. Net income during the period totaled $7.7 million compared to $7.3 million
in 2003.
September 30, 2004, year-to-date, diluted earnings per share equaled $1.18
versus $1.19 recorded in 2003. Year-to-date net income totaled $21.9 million
compared to $21.8 million in 2003.
Quarterly net interest income after the provision for loan losses improved by
$1.2 million, or 5.1 percent. Total non-interest income declined by $466,000 as
gains from the sale of mortgage loans declined by $658,000. Non-interest
expenses for the quarter were reduced by $170,000.
Year-to-date net interest income after the provision for loan losses improved by
$4.4 million, or 6.3 percent. However, gains from the sale of mortgage loans
declined during the same period by 50 percent or $2.8 million. Non-interest
expense increased by 1 percent or $641,000.
Total assets equaled $3.2 billion as of September 30, 2004, an increase of $170
million from September 30, 2003. Loans, investments and bank owned life
insurance, the Corporation's three primary earning assets, totaled $2.9 billion,
an increase of $151 million over the September 30, 2003 amount of $2.7 million.
The improvement in earning assets was funded by increased deposits and capital
of $159 million.
Michael L. Cox, President and Chief Executive Officer, stated that, "First
Merchants Corporation's third quarter 2004 results represent a continuation of
positive trends. Increases in the Federal Open Market Committee's target Fed
Funds rate of an additional 50 basis points during the quarter improved our net
interest income by $945,000 over the second quarter of 2004. We are seeing
continued modest improvement in middle-market lending activity in our
metropolitan markets. Overall, economic activity is showing increased stimulus
accompanied by slight upward pressure on deposit rates."
Page 5 of 10
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, October 20, 2004. To
participate dial 888-710-8192 and reference First Merchants Corporation's third
quarter earnings release. A digital recording will be available two hours after
the completion of the conference from October 20, 2004, to October 22, 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. 1347220.
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).
* * * *
Page 6 of 10
CONSOLIDATED BALANCE SHEETS
(in thousands) September 30,
2004 2003
Assets
Cash and due from banks $ 73,367 $ 87,619
Federal funds sold 22,700 0
----------- -----------
Cash and cash equivalents 96,067 87,619
Interest-bearing time deposits 12,204 3,789
Investment securities 420,645 316,852
Mortgage loans held for sale 2,715 12,042
Loans 2,395,306 2,351,405
Less: Allowance for loan losses (25,243) (29,842)
---------- -----------
Net Loans 2,370,063 2,321,563
Premises and equipment 38,170 39,475
Federal Reserve and Federal Home Loan Bank stock 22,750 14,057
Interest receivable 17,594 17,139
Core deposit intangibles and goodwill 140,186 143,648
Cash surrender value of life insurance 41,700 37,536
Other assets 19,268 18,000
----------- -----------
Total assets $ 3,181,362 $ 3,011,720
=========== ===========
Liabilities
Deposits
Noninterest-bearing $ 373,548 $ 316,058
Interest-bearing 2,083,271 1,994,146
----------- -----------
Total deposits 2,456,819 2,310,204
Borrowings 379,922 374,051
Interest payable 5,706 5,200
Other liabilities 25,253 21,064
----------- -----------
Total liabilities 2,867,700 2,710,519
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 - 18,562,001 and 18,487,974 2,320 2,311
Additional paid-in capital 148,993 149,810
Retained earnings 160,004 147,559
Accumulated other comprehensive income (loss) 2,345 1,521
----------- -----------
Total stockholders' equity 313,662 301,201
----------- -----------
Total liabilities and stockholders' equity $ 3,181,362 $ 3,011,720
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
2004 2003 2004 2003
NET CHARGE OFF'S $ 2,053 $ 2,503 $ 4,722 $ 4,732
AVERAGE BALANCES
Total Assets $3,132,228 $3,030,935 $3,083,919 $2,923,015
Total Loans 2,383,942 2,348,817 2,355,535 2,258,725
Total Deposits 2,382,347 2,305,589 2,338,694 2,221,870
Total Stockholders' Equity 309,744 301,048 308,035 290,503
FINANCIAL RATIOS
Return on Average Assets .98% .97% .95% .99%
Return on Avg. Stockholders' Equity 9.88 9.76 9.50 9.98
Avg. Earning Assets to Avg. Assets 89.98 89.48 89.89 89.92
Allowance for Loan Losses as %
Of Total Loans 1.05 1.26 1.05 1.26
Net Charge Off's as % Of Avg. Loans
(Annualized) .34 .43 .27 .28
Dividend Payout Ratio 56.10 58.97 58.47 56.30
Avg. Stockholders' Equity to Avg. Assets 9.89 9.93 9.99 9.94
Tax Equivalent Yield on Earning Assets 5.79 5.89 5.71 6.11
Cost of Supporting Liabilities 1.85 1.93 1.82 2.01
Net Int. Margin (FTE) on Earning Assets 3.94 3.96 3.89 4.10
Page 7 of 10
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
Interest Income
Loans receivable
Taxable $ 35,342 $ 35,607 $103,590 $106,539
Tax exempt 143 185 443 512
Investment securities
Taxable 2,146 1,342 6,147 4,621
Tax exempt 1,679 1,562 4,529 4,819
Federal funds sold 18 49 73 339
Deposits with financial institutions 154 13 388 54
Federal Reserve and Federal Home Loan Bank stock 319 201 954 610
-------- -------- -------- --------
Total interest income 39,801 38,959 116,124 117,494
-------- -------- -------- --------
Interest expense
Deposits 8,487 8,623 24,556 26,555
Securities sold under repurchase agreements 16 370 334 1,273
Federal Home Loan Bank advances 2,484 2,409 7,359 7,077
Subordinated debentures, revolving
credit and term loans 1,822 1,575 5,067 4,441
Other borrowings 200 108 537 309
-------- -------- -------- --------
Total interest expense 13,009 13,085 37,853 39,655
-------- -------- -------- --------
Net interest income 26,792 25,874 78,271 77,839
Provision for loan losses 1,380 1,706 4,472 8,430
-------- -------- -------- --------
Net interest income
after provision for loan losses 25,412 24,168 73,799 69,609
-------- -------- -------- --------
Other income
Fiduciary activities 1,923 1,547 5,735 5,133
Service charges on deposit accounts 2,946 2,861 8,714 8,388
Other customer fees 979 961 3,015 3,085
Net realized gains on
sales of available-for-sale securities 332 512 732 950
Commission income 687 638 2,417 2,099
Earnings on cash surrender value of
Life insurance 448 498 1,359 901
Net gains and fees on sales of loans 675 1,332 2,828 5,618
Other income 421 527 1,083 2,141
-------- -------- -------- --------
Total other income 8,411 8,876 25,883 28,315
-------- -------- -------- --------
Other expenses
Salaries and employee benefits 13,087 13,206 39,170 37,885
Net occupancy expenses 1,391 1,189 3,980 3,480
Equipment expenses 1,853 1,996 5,786 5,856
Marketing expense 363 414 1,188 1,259
Deposit insurance expense
Outside data processing fees 1,328 1,025 3,762 3,055
Printing and office supplies 397 401 1,183 1,240
Goodwill and core deposit amortization 827 958 2,571 2,777
Other expenses 3,544 3,771 10,336 11,784
-------- -------- -------- --------
Total other expenses 22,790 22,960 67,976 67,336
-------- -------- -------- --------
Income before income tax 11,033 10,084 31,706 30,388
Income tax expense 3,380 2,735 9,763 8,636
-------- -------- -------- --------
Net income $ 7,653 $ 7,349 $ 21,943 $ 21,752
======== ======== ======== ========
Per Share Data
Basic Net Income .41 .40 1.18 1.20
Diluted Net Income .41 .39 1.18 1.19
Cash Dividends Paid .23 .23 .69 .67
Page 8 of 10
CONSOLIDATED BALANCE SHEETS
(in thousands) September 30, June 30, March 31, December 31, September 30,
2004 2004 2004 2003 2003
Assets
Cash and due from banks $ 73,367 $ 72,432 $ 60,366 $ 77,112 $ 87,619
Federal funds sold 22,700 0 0 32,415 0
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents 96,067 72,432 60,366 109,527 87,619
Interest-bearing time deposits 12,204 20,424 10,674 8,141 3,789
Investment securities 420,645 411,140 376,974 356,797 316,852
Mortgage loans held for sale 2,715 4,001 3,883 3,043 12,042
Loans 2,395,306 2,365,380 2,320,103 2,353,503 2,351,405
Less: Allowance for loan losses (25,243) (25,510) (26,459) (25,493) (29,842)
----------- ----------- ----------- ---------- ----------
Net loans 2,370,063 2,339,870 2,293,644 2,328,010 2,321,563
Premises and equipment 38,170 38,437 38,972 39,639 39,475
Federal Reserve and Federal Home Loan Bank stock 22,750 22,494 21,956 15,502 14,057
Interest receivable 17,594 14,943 15,061 16,840 17,139
Core deposit intangibles and goodwill 140,186 141,014 141,867 142,723 143,648
Cash surrender value of life insurance 41,700 41,288 40,843 37,927 37,536
Other assets 19,268 22,247 20,901 18,663 18,000
----------- ----------- ----------- ----------- -----------
Total assets $ 3,181,362 $ 3,128,290 $ 3,025,041 $ 3,076,812 $ 3,011,720
=========== =========== =========== =========== ===========
Liabilities
Deposits
Noninterest-bearing $ 373,548 $ 334,018 $ 303,694 $ 338,201 $ 316,058
Interest-bearing 2,083,271 2,038,092 2,009,726 2,023,900 1,994,146
----------- ----------- ----------- ----------- -----------
Total deposits 2,456,819 2,372,110 2,313,420 2,362,101 2,310,204
Borrowings 379,922 422,885 372,356 383,170 374,051
Interest payable 5,706 4,216 4,542 4,680 5,200
Other liabilities 25,253 24,811 25,676 22,896 21,064
----------- ----------- ----------- ----------- -----------
Total liabilities 2,867,700 2,824,022 2,715,994 2,772,847 2,710,519
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 2,320 2,310 2,317 2,314 2,311
Additional paid-in capital 148,993 149,194 150,679 150,310 149,810
Retained earnings 160,004 154,876 151,771 149,096 147,559
Accumulated other comprehensive income (loss) 2,345 (2,112) 4,380 2,245 1,521
----------- ----------- ----------- ----------- -----------
Total stockholders' equity 313,662 304,268 309,147 303,965 301,201
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 3,181,362 $ 3,128,290 $ 3,025,141 $ 3,076,812 $ 3,011,720
=========== =========== =========== =========== ===========
NON-PERFORMING ASSETS
(In thousands) September 30, June 30, March 31, December 31, September 30,
2004 2004 2004 2003 2003
90 days past due $ 6,664 $ 2,488 $ 4,770 $ 6,530 $ 4,790
Non-accrual loans 16,852 17,702 19,914 19,453 20,093
Other real estate 1,546 1,653 1,571 1,399 1,547
---------- ---------- ---------- ------------ ------------
Total non-performing assets $ 25,062 $ 21,843 $ 26,255 $ 27,382 $ 26,430
========== ========== ========== ============ ============
Average total loans for the quarter$2,383,942 $2,343,270 $2,339,080 $ 2,349,536 $ 2,348,817
Total non-performing assets as a
percent of average total loans 1.05% .93% 1.12% 1.17% 1.13%
Restructured loans $ 2,169 $ 926 $ 957 $ 641 $ 647
Page 9 of 10
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands, except share data) September 30, June 30, March 31, December 31,September 30,
2004 2004 2004 2003 2003
Interest Income
Loans receivable
Taxable $ 35,342 $ 34,021 $ 34,227 $ 34,697 $ 35,607
Tax exempt 143 137 163 195 185
Investment securities
Taxable 2,146 2,052 1,949 1,484 1,342
Tax exempt 1,679 1,420 1,430 1,451 1,562
Federal funds sold 18 37 18 148 49
Deposits with financial institutions 154 125 109 22 13
Federal Reserve and Federal Home Loan Bank stock 319 307 328 39 201
-------- -------- -------- -------- --------
Total interest income 39,801 38,099 38,224 38,036 38,959
-------- -------- -------- -------- --------
Interest expense
Deposits 8,487 7,879 8,190 8,303 8,623
Securities sold under repurchase agreements 16 98 220 248 370
Federal Home Loan Bank advances 2,484 2,433 2,442 2,362 2,409
Subordinated debentures, revolving credit
and term loans 1,822 1,635 1,610 1,587 4,441
Other borrowings 200 207 130 233 309
-------- -------- -------- -------- --------
Total interest expense 13,009 12,252 12,592 12,733 13,085
-------- -------- -------- -------- --------
Net interest income 26,792 25,847 25,632 25,303 25,874
Provision for loan losses 1,380 1,720 1,372 1,047 1,706
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses 25,412 24,127 24,260 24,256 24,168
-------- -------- -------- -------- --------
Other income
Fiduciary activities 1,923 2,002 1,810 1,603 1,547
Service charges on deposit accounts 2,946 2,996 2,772 2,717 2,861
Other customer fees 979 966 1,070 1,039 961
Net realized gains on sales of
available-for-sale securities 332 363 37 0 512
Commission income 687 777 953 569 638
Earnings on cash surrender value
of life insurance 448 482 429 446 498
Net gains and fees on sales of loans 675 1,352 801 770 1,332
Other income 421 318 344 443 527
-------- -------- -------- -------- --------
Total other income 8,411 9,256 8,216 7,587 8,876
-------- -------- -------- -------- --------
Other expenses
Salaries and employee benefits 13,087 13,059 13,024 12,599 13,206
Net occupancy expenses 1,391 1,335 1,254 1,414 1,189
Equipment expenses 1,853 1,954 1,979 2,217 1,996
Marketing expense 363 385 440 538 414
Outside data processing fees 1,328 1,211 1,223 1,063 1,025
Printing and office supplies 397 388 398 466 401
Goodwill and core deposit amortization 827 852 892 923 958
Other expenses 3,544 3,438 3,354 4,623 3,771
-------- -------- -------- -------- --------
Total other expenses 22,790 22,622 22,564 23,843 22,960
-------- -------- -------- -------- --------
Income before income tax 11,033 10,761 9,912 8,000 10,084
Income tax expense 3,380 3,406 2,977 2,181 2,735
-------- -------- -------- -------- --------
Net income $ 7,653 $ 7,355 $ 6,935 $ 5,819 $ 7,349
======== ======== ======== ======== ========
Per Share Data
Basic Net Income $ .41 $ .40 $ .37 $ .31 $ .40
Diluted Net Income .41 .40 .37 .31 .39
Cash Dividends Paid .23 .23 .23 .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,658 18,633 18,646 18,666 18,622
FINANCIAL RATIOS
Return on Average Assets .98% .96% .91% .76% .97%
Return on Avg. Stockholders' Equity 9.88 9.56 9.05 7.69 9.76
Avg. Earning Assets to Avg. Assets 89.98 89.64 90.05 90.19 89.48
Allowance for Loan Losses as %
Of Total Loans 1.05 1.08 1.14 1.08 1.26
Net Charge Off's as % Of Avg. Loans
(Annualized) .34 .46 .07 .92 .43
Dividend Payout Ratio 56.10 57.50 62.16 74.19 58.97
Avg. Stockholders' Equity to Avg. Assets 9.89 10.00 10.08 9.86 9.93
Tax Equivalent Yield on Earning Assets 5.79 5.65 5.71 5.62 5.89
Cost of Supporting Liabilities 1.85 1.78 1.84 1.84 1.93
Net Int. Margin (FTE) on Earning Assets 3.94 3.87 3.87 3.78 3.96
Page 10 of 10