View:
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): April 28, 2010
Commission File Number 0-17071
FIRST MERCHANTS CORPORATION
(Exact name of registrant as specified in its charter)
|
INDIANA
|
35-1544218
|
|
(State or other jurisdiction of incorporation)
|
(IRS Employer 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:
|
|
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
|
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
|
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
|
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
|
|
|
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 28, 2010, First Merchants Corporation will conduct a third quarter earnings conference call and web cast on Wednesday, April 28, 2010 at 2:30 p.m. (ET). A copy of the slide presentation utilized on the conference call is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
|
Exhibit 99.1
|
Slide presentation, utilized April 28, 2010, during conference call and web cast by First Merchants Corporation
|
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
Executive Vice President and Chief Financial Officer
(Principal Financial and Principal Accounting Officer)
Dated: April 28, 2010
EXHIBIT INDEX
Exhibit No.
|
99.1
|
Description
|
Slide presentation, utilized April 28, 2010, during conference call and web cast by First Merchants Corporation
1
First Merchants Corporation
1st Quarter 2010
Earnings Call
April 28, 2010
1st Quarter 2010
Earnings Call
April 28, 2010
2
Michael C. Rechin
President
and Chief Executive Officer
3
Forward-Looking Statement
The Corporation may make forward-looking statements about its
relative business outlook. These forward-looking statements and all
other statements made during this meeting 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.
Please refer to our press releases, Form 10-Qs and 10-Ks concerning
factors that could cause actual results to differ materially from any
forward-looking statements.
The Corporation may make forward-looking statements about its
relative business outlook. These forward-looking statements and all
other statements made during this meeting 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.
Please refer to our press releases, Form 10-Qs and 10-Ks concerning
factors that could cause actual results to differ materially from any
forward-looking statements.
4
1st Quarter 2010 Highlights
§ Return to profitability with $.01 earnings per share
§ Successful private equity placement augments
tangible common equity and regulatory ratios
tangible common equity and regulatory ratios
§ Pre-tax pre-provision run rate remains strong
despite smaller loan portfolio balances
despite smaller loan portfolio balances
§ Operating expense levels declined despite elevated
levels of credit-related workout costs
levels of credit-related workout costs
§ Loan loss reserve ample for projected future
losses at 2.82% of loan portfolio
losses at 2.82% of loan portfolio
5
Mark K. Hardwick
Executive Vice President
and Chief Financial Officer
6
12-31-08 12-31-09 Q1-’09 Q1-’10
1. Investments $ 482 $ 563 $ 446 $ 6
39
2. Loans 3,722 3,278 3,654 3,138
3. Allowance (50) (92) (59) (89)
4. CD&I & Goodwill 166 159 163 158
5. BOLI 93 95 94 95
6. Other 371 478 589 435
7. Total Assets $4,784 $4,481 $4,887 $4,376
($ in Millions)
TOTAL ASSETS
7
Loan Composition (as of 3/31/10)
YTD Yield = 5.74%
LOAN AND CREDIT DETAIL
8
INVESTMENT PORTFOLIO
(as of 3/31/10)
(as of 3/31/10)
§ $639 Million Balance
§ Average duration - 4.4 years
§ Tax equivalent yield of 4.71%
§ No private label MBS exposure
§ Trust Preferred Pools with book balance of
$6.6 million and a market value of $1.4
million
$6.6 million and a market value of $1.4
million
§ Net unrealized gain of the entire portfolio
totals $7.4 million
totals $7.4 million
9
2008 2009 Q1-’09 Q1-’10
1. Customer Non-Maturity
Deposits $1,858 $2,042 $1,910 $2,000
2. Customer Time Deposits 1,384 1,220 1,365 1,167
3. Brokered Deposits 477 275 410 231
4. Borrowings 507 339 485 320
5. Other Liabilities 51 30 98 58
6. Hybrid Capital 111 111 111 111
7. Preferred Stock (CPP) 0 112 112 113
8. Common Equity 396 352 396 376
9. Total Liabilities and Capital $4,784 $4,481 $4,887 $4,376
($ in Millions)
TOTAL LIABILITIES AND CAPITAL
10
$751M
$231M
$1,261M
$739M
YTD Cost of Deposits = 1.60%
DEPOSITS (as of 3/31/10)
11
2008 2009 Q1-’09 Q1-’10
1. Total Risk-Based
Capital Ratio 10.24% 13.04% 12.97% 14.44%
2. Tier 1 Risk-Based
Capital Ratio 7.71% 10.32% 10.47% 11.65%
3. Leverage Ratio 8.16% 8.20% 9.17% 9.13%
4. TCE/TCA 5.01% 4.54% 4.89% 5.27%
CAPITAL RATIOS
12
$3,463
$4,245
$4,299
$3,956
― Net Interest Margin
3.68%
3.82%
3.84%
3.74%
NET INTEREST MARGIN
13
CREDIT COSTS OVER TIME
14
2008 2009 Q1-’09 Q1-’10
1. Service Charges on Deposit
Accounts $13.0 $15.1 $3.5 $ 3.3
2. Trust Fees 8.0 7.4 2.1 2.1
3. Insurance Commission Income 5.8 6.4 2.1 2.0
4. Cash Surrender Value of Life Ins (0.3) 1.6 0.3 0.5
5. Gains on Sales Mortgage Loans 2.5 6.8 1.4 1.1
6. Securities Gains/Losses (2.1) 4.4 2.3 1.3
7. Other 9.5 9.5 2.8 2.7
8. Total $36.4 $51.2 $14.5 $13.0
9. Adjusted Non-Interest Income1 $38.5 $46.5 $12.2 $11.7
1Adjusted for Bond Gains & Losses and one-time mortgage sale
($ in Millions)
NON-INTEREST INCOME
15
NON-INTEREST EXPENSE
2008 2009 Q1-’09 Q1-’10
1. Salary & Benefits $63.0 $76.3 $20.0 $17.6
2. Premises & Equipment 14.4 17.9 4.4 4.7
3. Core Deposit Intangible 3.2 5.1 1.3 1.2
4. Professional Services 2.6 4.4 1.1 1.5
5. OREO/Credit-Related Expense 2.8 9.8 0.5 2.7
6. FDIC Expense 1.7 10.4 0.8 1.7
7. FHLB Prepayment Penalties 0 1.9 0 0
8. Outside Data Processing 4.1 6.2 1.9 1.3
9. Marketing 2.3 2.1 0.5 0.4
10. Other 14.7 17.5 4.2 3.6
11. Total $108.8 $151.6 $34.7 $34.7
12. Adjust Non-Interest Expense2 $106.0 $134.7 $34.2 $31.0
2Adjusted for the FDIC Special Assessment, FHLB Prepayment Penalties & OREO
Expense & Credit-Related Professional Services
Expense & Credit-Related Professional Services
($ in Millions)
16
2008 2009 Q1-’09 Q1-’10
1. Net Interest Income-FTE $133.1 $159.1 $39.6 $ 37.8
2. Non Interest Income1 38.5 46.5 12.2 11.7
3. Non Interest Expense2 106.0 134.7 34.2 31.0
4. Pre-Tax Pre-Provision Earnings $ 65.6 $ 70.9 $17.6 $ 18.5
5. Provision 28.2 122.2 12.9 13.9
6. Adjustments 5.0 12.1 (1.7) 2.3
7. Taxes - FTE 11.8 (22.7) 2.3 0.7
8. CPP Dividend 0 5.0 0.6 1.5
9. Net Income Avail. for Distribution $20.6 ($45.7) $3.5 $ .1
10. EPS $1.14 ($2.17) $0.17 $ .01
1Adjusted for Bond Gains & Losses and one-time mortgage sale
2Adjusted for the FDIC Special Assessment, FHLB Prepayment Penalties & OREO
Expense & Credit-Related Professional Services
($ in Millions)
EARNINGS
17
John J. Martin
Senior Vice President
and Chief Credit Officer
18
30+ day delinquent loans declined from $40.5 to $34.2 million, the third
consecutive quarterly decline.
consecutive quarterly decline.
90+ day delinquent loans declined from $4.0 to $2.6 million, the third
consecutive quarterly decline.
consecutive quarterly decline.
Non-accrual loans increased from $118.4 to $122.9 million for the quarter
while remaining lower than the peak non-accrual level of $123.3 million at
9/30/09.
while remaining lower than the peak non-accrual level of $123.3 million at
9/30/09.
Non-performing assets plus 90 days past due declined from $146.0 to
$144.6 million for the quarter.
$144.6 million for the quarter.
The allowance increased to 2.82% of total assets while covering non-
accrual loans at 72%.
accrual loans at 72%.
PORTFOLIO OVERVIEW
1st Quarter Highlights
19
($ in millions)
NON-ACCRUAL LOANS
20
($ in millions)
NEW NON-ACCRUAL LOANS
21
($ in millions)
OTHER REAL ESTATE OWNED
22
30+ Day Delinquency
(as a % of period end total loans)
(as a % of period end total loans)
LOAN DELINQUENCY TRENDS
23
|
Beginning NPAs & 90+ Days Past Due (12/31/2009)
Non-accrual
Add: New NPLs
Less: To Accrual/Pay-off/Restructured
Less: To OREO and Charge-off
Less: Charge-offs (includes write-downs for transfer to OREO)
Δ in Non-accrual loans
Other Real Estate Owned (ORE)
Add: New ORE Properties
Less: ORE Sold
Less: ORE Losses (write-downs)
Δ in ORE
Δ 90 days past due
Δ Restructured/Renegotiated Loans
Total NPA Change
Ending NPAs & 90+ Days Past Due (03/31/2010)
|
($ in millions)
$146.1
$38.6
($7.5)
($9.5)
($17.1)
$4.5
$8.4
($3.8)
($1.2)
$3.4
($1.4)
($8.0)
($1.5)
$144.6
|
|
NON-PERFORMING ASSET RECONCILIATION
24
CREDIT METRIC TREND
25
Allowance as a % of Non-Accrual Loans
($ in millions)
ALLOWANCE COVERAGE TO NON-ACCRUAL LOANS
26
PORTFOLIO SUMMARY
• Classified loans declined for the quarter from $305 to $286 million.
• Non-accrual coverage is in line with 3rd quarter of 2009. Non-accrual
loans are up for quarter but in line with 3rd quarter.
loans are up for quarter but in line with 3rd quarter.
• Five largest Classified accruing relationships average $6.3 million with
none exceeding $10 million.
none exceeding $10 million.
• The ten largest overall bank commitments and outstanding balances
average $15.0 million and $11.8 million, respectively.
average $15.0 million and $11.8 million, respectively.
• Provision expense is model dependent absent impact of specific
reserves associated with any new impaired loans.
reserves associated with any new impaired loans.
• 30-89 and 90+ day past due improving and stable.
• Most significant “watch list” credits are handled by a dedicated
workout team.
workout team.
27
Michael C. Rechin
President
and Chief Executive Officer
28
Overview of 2010 Strategy and Tactics
“Protect and Strengthen”
“Protect and Strengthen”
§ Complete CPP exchange transaction with Treasury
Department in second quarter
Department in second quarter
§ Continue to improve asset quality and reduce all-in credit
costs
costs
§ Intensify revenue activity using common platforms and
market coverage tactics
market coverage tactics
§ Solidify brand position as community bank competing
primarily in consumer, small business and middle market
primarily in consumer, small business and middle market
§ Implement opt-in Reg E strategy around education and
choice
choice
29
Contact Information
First Merchants Corporation common stock is
traded on the NASDAQ Global Select Market
under the symbol FRME.
traded on the NASDAQ Global Select Market
under the symbol FRME.
Additional information can be found at
www.firstmerchants.com
Investor inquiries:
Mark K. Hardwick
Executive Vice President &
Chief Financial Officer
Telephone: 765.751.1857
mhardwick@firstmerchants.com