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 17, 2005
------------------------------
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 11
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On October 17, 2005, First Merchants Corporation issued a press
release to report its financial results for the third quarter ended September
30, 2005. A copy of the press release is furnished as Exhibit 99.1 to this
Current Report on Form 8-K.
The information in this Current Report on Form 8-K, including Exhibit
No. 99.1 hereto, shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to liability
of that section. The information in this Current Report shall not be
incorporated by reference into any filing or other document pursuant to the
Securities Act of 1933, as amended, except as shall be expressly set forth by
specific reference in such filing or document.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
Exhibit 99.1 Press Release, dated October 17, 2005, issued by
First Merchants Corporation
Page 2 of 11
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 17, 2005
Page 3 of 11
EXHIBIT INDEX
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Exhibit No.
- -----------
99.1 Description
-----------
Press Release, dated October 17, 2005, issued by
First Merchants Corporation.
Page 4 of 11
First Merchants Corporation
Exhibit No. 99.1
Press Release, dated October 17, 2005
N / E / W / S R / E / L / E / A / S / E
October 17, 2005
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 7.3% INCREASE IN THIRD QUARTER EARNINGS
PER SHARE
First Merchants Corporation (NASDAQ - FRME) has reported third quarter diluted
earnings per share of $.44, a 7.3 percent increase over $.41 recorded in the
third quarter of 2004. Net income during the quarter totaled $8.2 million
compared to $7.7 million in 2004.
Year-to-date diluted earnings per share totaled $1.22, a 3.4 percent increase
over $1.18 recorded in 2004. Net income for the nine months ended September 30,
2005 totaled $22.7 million compared to $21.9 million in 2004.
Year-to-date net-interest income improved by $4.7 million, or 6.0 percent, as
net-interest margin improved to 3.96 percent. Non-interest income also increased
by $705,000, or 2.7 percent. Mitigating costs include increased provisions for
loan losses of $1.9 million and increased operating expenses of $2.8 million, or
4.0 percent. 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 4.0 percent increase.
As of September 30, 2005, non-performing loans totaled 75 basis points of
average total loans and the allowance for loan losses as a percent of total
loans equaled 1.03 percent.
Total assets equaled $3.2 billion at quarter-end, an increase of $57 million, or
1.8 percent from September 30, 2004. Loans, investments and bank-owned life
insurance, the Corporation's three primary earning assets, totaled $2.9 billion,
an increase of $66 million over the prior year.
Michael L. Cox, President and Chief Executive Officer, stated that, "Consecutive
quarters of seven percent earnings per share increases are reflective of
management's expectations of high single digit to low double digit earnings per
share growth. With the cost of the first quarter curtailment expense added back
to net income the Corporation would also be up 7.6 percent for the year."
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m.
(CT)/3:30 p.m. (ET) on Wednesday, October 19, 2005. To participate dial (Toll
Free) 877-407-9210 and reference First Merchants Corporation's third quarter
earnings release. A replay will be available until October 26, 2005. 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 # 170946.
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, First United 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) September 30,
2005 2004
Assets
Cash and due from banks $ 81,310 $ 73,367
Federal funds sold 22,700
----------- -----------
Cash and cash equivalents 81,310 96,067
Interest-bearing time deposits 10,708 12,204
Investment securities 436,794 420,645
Mortgage loans held for sale 5,026 2,715
Loans 2,443,931 2,395,306
Less: Allowance for loan losses (25,149) (25,243)
---------- ----------
Net Loans 2,418,782 2,370,063
Premises and equipment 38,473 38,170
Federal Reserve and Federal Home Loan Bank stock 23,165 22,750
Interest receivable 19,561 17,594
Core deposit intangibles and goodwill 139,597 140,186
Cash surrender value of life insurance 43,230 41,700
Other assets 21,792 19,268
----------- -----------
Total assets $ 3,238,438 $ 3,181,362
=========== ===========
Liabilities
Deposits
Noninterest-bearing $ 346,318 $ 373,548
Interest-bearing 2,118,975 2,083,271
----------- -----------
Total deposits 2,465,293 2,456,819
Borrowings 423,959 379,922
Interest payable 5,643 5,706
Other liabilities 25,153 25,253
----------- -----------
Total liabilities 2,920,048 2,867,700
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 - 18,507,970 and 18,562,001 2,313 2,320
Additional paid-in capital 148,004 148,993
Retained earnings 171,419 160,004
Accumulated other comprehensive income (loss) (3,346) 2,345
----------- -----------
Total stockholders' equity 318,390 313,662
----------- -----------
Total liabilities and stockholders' equity $ 3,238,438 $ 3,181,362
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
2005 2004 2005 2004
NET CHARGE OFF'S $ 1,736 $ 1,647 $ 3,808 $ 4,722
AVERAGE BALANCES
Total Assets $3,202,198 $3,132,228 $3,185,815 $3,083,919
Total Loans 2,444,131 2,383,942 2,429,530 2,355,535
Total Deposits 2,419,204 2,382,347 2,420,268 2,338,694
Total Stockholders' Equity 316,615 309,744 314,856 308,035
FINANCIAL RATIOS
Return on Average Assets 1.03% .98% .95% .95%
Return on Avg. Stockholders' Equity 10.38 9.88 9.62 9.50
Avg. Earning Assets to Avg. Assets 90.83 89.98 90.75 89.89
Allowance for Loan Losses as %
Of Total Loans 1.03 1.05 1.03 1.05
Net Charge Off's as % Of Avg. Loans
(Annualized) .28 .28 .21 .27
Dividend Payout Ratio 52.27 56.10 56.56 58.47
Avg. Stockholders' Equity to Avg. Assets 9.89 9.89 9.88 9.99
Tax Equivalent Yield on Earning Assets 6.40 5.79 6.15 5.71
Cost of Supporting Liabilities 2.40 1.85 2.19 1.82
Net Int. Margin (FTE) on Earning Assets 4.00 3.94 3.96 3.89
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Interest Income
Loans receivable
Taxable $ 40,853 $ 35,342 $116,506 $103,590
Tax exempt 160 143 483 443
Investment securities
Taxable 2,427 2,146 7,132 6,147
Tax exempt 1,595 1,679 4,702 4,529
Federal funds sold 51 18 190 73
Deposits with financial institutions 185 154 493 388
Federal Reserve and Federal Home Loan Bank stock 296 319 889 954
-------- -------- -------- --------
Total interest income 45,567 39,801 130,395 116,124
-------- -------- -------- --------
Interest expense
Deposits 12,172 8,487 32,707 24,556
Securities sold under repurchase agreements 523 16 965 334
Federal Home Loan Bank advances 2,549 2,484 7,367 7,359
Subordinated debentures, revolving
credit and term loans 1,894 1,822 5,522 5,067
Other borrowings 289 200 831 537
-------- -------- -------- --------
Total interest expense 17,427 13,009 47,392 37,853
-------- -------- -------- --------
Net interest income 28,140 26,792 83,003 78,271
Provision for loan losses 1,794 1,380 6,409 4,472
-------- -------- -------- --------
Net interest income
after provision for loan losses 26,346 25,412 76,594 73,799
-------- -------- -------- --------
Other income
Fiduciary activities 1,794 1,923 5,719 5,735
Service charges on deposit accounts 2,836 2,946 8,607 8,714
Other customer fees 1,389 979 3,662 3,015
Net realized gains on
sales of available-for-sale securities 16 332 22 732
Commission income 870 687 3,131 2,417
Earnings on cash surrender value of
Life insurance 441 448 1,281 1,359
Net gains and fees on sales of loans 770 675 2,226 2,828
Other income 664 421 1,940 1,083
-------- -------- -------- --------
Total other income 8,780 8,411 26,588 25,883
-------- -------- -------- --------
Other expenses
Salaries and employee benefits 13,384 13,087 41,463 39,170
Net occupancy expenses 1,570 1,391 4,368 3,980
Equipment expenses 1,901 1,853 5,610 5,786
Marketing expense 446 363 1,387 1,188
Deposit insurance expense
Outside data processing fees 979 1,328 3,021 3,762
Printing and office supplies 328 397 969 1,183
Core deposit amortization 770 827 2,335 2,571
Other expenses 3,923 3,544 11,578 10,336
-------- -------- -------- --------
Total other expenses 23,301 22,790 70,731 67,976
-------- -------- -------- --------
Income before income tax 11,825 11,033 32,451 31,706
Income tax expense 3,605 3,380 9,743 9,763
-------- -------- -------- --------
Net income $ 8,220 $ 7,653 $ 22,708 $ 21,943
======== ======== ======== ========
Per Share Data
Basic Net Income .45 .41 1.23 1.18
Diluted Net Income .44 .41 1.22 1.18
Cash Dividends Paid .23 .23 .69 .69
Average Diluted Shares
Outstanding (in thousands) 18,590 18,658 18,606 18,645
CONSOLIDATED BALANCE SHEETS
(in thousands) September 30, June 30, March 31, December 31, September 30,
2005 2005 2005 2004 2004
Assets
Cash and due from banks $ 81,310 $ 71,498 $ 67,904 $ 69,960 $ 73,367
Federal funds sold 22,075 22,700
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents 81,310 71,498 89,979 69,960 96,067
Interest-bearing time deposits 10,708 9,255 10,737 9,343 12,204
Investment securities 436,794 420,685 409,820 421,535 420,645
Mortgage loans held for sale 5,026 1,356 3,084 3,367 2,715
Loans 2,443,931 2,440,906 2,414,099 2,428,051 2,395,306
Less: Allowance for loan losses (25,149) (25,091) (24,488) (22,548) (25,243)
----------- ----------- ----------- ----------- -----------
Net loans 2,418,782 2,415,815 2,389,611 2,405,503 2,370,063
Premises and equipment 38,473 37,240 37,525 38,254 38,170
Federal Reserve and Federal Home Loan Bank stock 23,165 23,054 22,883 22,858 22,750
Interest receivable 19,561 16,950 16,606 17,318 17,594
Core deposit intangibles and goodwill 139,597 139,799 140,578 141,284 140,186
Cash surrender value of life insurance 43,230 42,827 42,426 42,061 41,700
Other assets 21,792 22,819 24,337 20,185 19,268
----------- ----------- ----------- ----------- -----------
Total assets $ 3,238,438 $ 3,201,298 $ 3,187,586 $ 3,191,668 $ 3,181,362
=========== =========== =========== =========== ===========
Liabilities
Deposits
Noninterest-bearing $ 346,318 $ 363,654 $ 333,614 $ 330,685 $ 373,548
Interest-bearing 2,118,975 2,040,624 2,118,605 2,077,465 2,083,271
----------- ----------- ----------- ----------- -----------
Total deposits 2,465,293 2,404,278 2,452,219 2,408,150 2,456,819
Borrowings 423,959 454,400 391,193 440,891 379,922
Interest payable 5,643 5,068 6,562 4,411 5,706
Other liabilities 25,153 24,194 27,014 23,613 25,253
----------- ----------- ----------- ----------- -----------
Total liabilities 2,920,048 2,887,940 2,876,988 2,877,065 2,867,700
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 2,313 2,302 2,312 2,322 2,320
Additional paid-in capital 148,004 146,057 148,347 150,862 148,993
Retained earnings 171,419 167,452 163,761 161,459 160,004
Accumulated other comprehensive income (loss) (3,346) (2,453) (3,822) (40) 2,345
----------- ----------- ----------- ----------- -----------
Total stockholders' equity 318,390 313,358 310,598 314,603 313,662
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 3,238,438 $ 3,201,298 $ 3,187,586 $ 3,191,668 $ 3,181,362
=========== =========== =========== =========== ===========
NON-PERFORMING ASSETS
(in thousands) September 30, June 30, March 31, December 31, September 30,
2005 2005 2005 2004 2004
90 days past due $ 3,560 $ 3,696 $ 1,948 $ 1,907 $ 6,664
Non-accrual loans 11,757 11,626 13,272 15,355 16,852
Other real estate 3,023 1,804 2,003 1,650 1,546
---------- ---------- ---------- ---------- ----------
Total non-performing assets $ 18,340 $ 17,126 $ 17,223 $ 18,912 $ 25,062
========== ========== ========== ========== ==========
Average total loans for the quarter $2,444,131 $2,430,081 $2,414,050 $2,409,170 $2,383,942
Total non-performing assets as a
percent of average total loans .75% .70% .71% .79% 1.05%
Restructured loans $ 454 $ 531 $ 337 $ 2,019 $ 2,169
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands, except share data) September 30, June 30, March 31, December 31, September 30,
2005 2005 2005 2004 2004
Interest Income
Loans receivable
Taxable $ 40,853 $ 38,831 $ 36,822 $ 36,363 $ 35,342
Tax exempt 160 189 134 138 143
Investment securities
Taxable 2,427 2,376 2,329 2,224 2,146
Tax exempt 1,595 1,554 1,553 1,569 1,679
Federal funds sold 51 112 27 92 18
Deposits with financial institutions 185 166 142 167 154
Federal Reserve and Federal Home Loan Bank stock 296 285 308 297 319
-------- -------- -------- -------- --------
Total interest income 45,567 43,513 41,315 40,850 39,801
-------- -------- -------- -------- --------
Interest expense
Deposits 12,172 10,729 9,806 9,288 8,487
Securities sold under repurchase agreements 523 193 249 183 16
Federal Home Loan Bank advances 2,549 2,443 2,375 2,418 2,484
Subordinated debentures, revolving credit
and term loans 1,894 1,839 1,789 1,717 1,822
Other borrowings 289 388 154 126 200
-------- -------- -------- -------- --------
Total interest expense 17,427 15,592 14,373 13,732 13,009
-------- -------- -------- -------- --------
Net interest income 28,140 27,921 26,942 27,118 26,792
Provision for loan losses 1,794 1,948 2,667 1,233 1,380
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses 26,346 25,973 24,275 25,885 25,412
-------- -------- -------- -------- --------
Other income
Fiduciary activities 1,794 1,963 1,962 1,897 1,923
Service charges on deposit accounts 2,836 3,048 2,723 2,924 2,946
Other customer fees 1,389 1,188 1,085 1,068 979
Net realized gains on sales of
available-for-sale securities 16 6 456 332
Commission income 870 757 1,504 671 687
Earnings on cash surrender value
of life insurance 441 439 401 439 448
Net gains and fees on sales of loans 770 779 677 801 675
Other income 664 582 694 415 421
-------- -------- -------- -------- --------
Total other income 8,780 8,762 9,046 8,671 8,411
-------- -------- -------- -------- --------
Other expenses
Salaries and employee benefits 13,384 13,258 14,821 13,309 13,087
Net occupancy expenses 1,570 1,422 1,376 1,328 1,391
Equipment expenses 1,901 1,852 1,857 1,879 1,853
Marketing expense 446 526 415 521 363
Outside data processing fees 979 1,033 1,009 1,158 1,328
Printing and office supplies 328 304 337 397 397
Core deposit amortization 770 778 787 802 827
Other expenses 3,923 4,026 3,629 4,272 3,544
-------- -------- -------- -------- --------
Total other expenses 23,301 23,199 24,231 23,666 22,790
-------- -------- -------- -------- --------
Income before income tax 11,825 11,536 9,090 10,890 11,033
Income tax expense 3,605 3,615 2,523 3,422 3,380
-------- -------- -------- -------- --------
Net income $ 8,220 $ 7,921 $ 6,567 $ 7,468 $ 7,653
======== ======== ======== ======== ========
Per Share Data
Basic Net Income $ .45 $ .43 $ .35 $ .41 $ .41
Diluted Net Income .44 .43 .35 .40 .41
Cash Dividends Paid .23 .23 .23 .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,590 18,536 18,697 18,721 18,658
FINANCIAL RATIOS
Return on Average Assets 1.03% .99% .83% .94% .98%
Return on Avg. Stockholders' Equity 10.38 10.13 8.33 9.46 9.88
Avg. Earning Assets to Avg. Assets 90.83 90.81 90.61 91.38 89.98
Allowance for Loan Losses as %
Of Total Loans 1.03 1.03 1.01 .93 1.05
Net Charge Off's as % Of Avg. Loans
(Annualized) .28 .22 .12 .65 .28
Dividend Payout Ratio 52.27 53.49 65.71 57.50 56.10
Avg. Stockholders' Equity to Avg. Assets 9.89 9.80 9.97 9.92 9.89
Tax Equivalent Yield on Earning Assets 6.40 6.14 5.90 5.74 5.79
Cost of Supporting Liabilities 2.40 2.15 2.01 1.89 1.85
Net Int. Margin (FTE) on Earning Assets 4.00 3.99 3.89 3.85 3.94
LOANS
(in thousands) September 30, June 30, March 31, December 31, September 30,
2005 2005 2005 2004 2004
Commercial and industrial loans $ 476,010 $ 463,002 $ 447,552 $ 451,227 $ 435,874
Agricultural production financing and
other loans to farmers 94,262 93,274 83,800 98,902 99,464
Real estate loans:
Construction 171,667 166,367 170,498 164,738 154,711
Commercial and farmland 719,154 723,099 726,345 709,163 592,199
Residential 746,777 759,003 760,560 761,163 859,901
Individuals' loans for household and other
personal expenditures 186,792 182,362 187,552 198,532 203,763
Tax exempt loans 12,439 14,135 10,592 8,203 11,062
Lease financing receivables, net of unearned income 9,538 10,533 10,704 11,311 9,361
Other loans 27,292 29,131 16,496 24,812 28,971
----------- ----------- ----------- ----------- -----------
2,443,931 2,440,906 2,414,099 2,428,051 2,395,306
Allowance for loan losses (25,149) (25,091) (24,488) (22,548) (25,243)
----------- ----------- ----------- ----------- -----------
Total loans $2,418,782 $2,415,815 $2,389,611 $2,405,503 $2,370,063
=========== =========== =========== =========== ===========
DEPOSITS
(in thousands) September 30, June 30, March 31, December 31, September 30,
2005 2005 2005 2004 2004
Demand deposits $ 697,597 $ 720,263 $ 686,695 $ 703,989 $ 714,429
Savings deposits 568,366 593,770 655,643 634,132 654,626
Certificates and other time deposits of
$100,000 or more 320,640 234,988 285,878 258,362 289,839
Other certificates and time deposits 878,690 855,257 824,003 811,667 797,925
----------- ----------- ----------- ----------- -----------
$2,465,293 $2,404,278 $2,452,219 $2,408,150 $2,456,819
=========== =========== =========== =========== ===========