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 25, 2011
Commission File Number 0-17071
FIRST MERCHANTS CORPORATION
(Exact name of registrant as specified in its charter)
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INDIANA
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35-1544218
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(State or other jurisdiction of incorporation)
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(IRS Employer Identification No.)
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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:
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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On October 25, 2011 First Merchants Corporation issued a press release to report its financial results for the third quarter ended September 30, 2011. 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 25, 2011, issued 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: October 25, 2011
EXHIBIT INDEX
Exhibit No. Description
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99.1
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Press Release, dated October 25, 2011, issued by First Merchants Corporation
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N / E / W / S R / E / L / E / A / S / E
October 25, 2011
FOR IMMEDIATE RELEASE
For more information, contact:
David L. Ortega, First Vice President/Director of Investor Relations
765-378-8937
http://www.firstmerchants.com/
SOURCE: First Merchants Corporation, Muncie, Indiana
FIRST MERCHANTS CORPORATION ANNOUNCES 3rd QUARTER EARNINGS PER SHARE
First Merchants Corporation (NASDAQ – FRME) has reported improved core earnings per share for the 3rd Quarter off-set by a one-time charge due to the repayment of its participation in the Treasury’s TARP program as communicated in a press release and 8-K on September 9, 2011.
September 30, 2011, year-to-date earnings per share totaled $.10 per fully diluted common share. When adjusted for the one-time charge of $.47 per share related to CPP repayment, year-to-date core earnings per share would have totaled $.57. Quarter-to-date earnings per share, including the one-time charge, resulted in a loss of $.25 per fully diluted common share. Before the one-time charge, the normalized core earnings totaled $.22 per fully diluted common share.
Michael C. Rechin, President and Chief Executive Officer, stated, “Management is pleased with the continued upward trajectory of the Corporation’s core earnings improvement and pleased to have repaid all shares related to the TARP program.” Rechin also stated, “The combination of continued margin management, loan balance stabilization, improving asset quality trends and a newly positioned capital structure positions First Merchants well for the future.”
Total assets were $4.1 billion as of quarter end and total loans were $2.7 billion. The Corporation’s liquidity is fully deployed in the bond portfolio as investment securities totaled $938 million for the quarter. The Corporation’s loan-to-deposit ratio is now 89 percent and the loan-to-asset ratio totals 66 percent.
The balance sheet and resulting net interest income were virtually identical to the second quarter of 2011 as net interest income totaled $35.8 million in each of the last two quarters. Net-interest margin remained strong during the quarter totaling 4.02 percent as yields on earning assets totaled 5.01 percent and the cost of supporting liabilities totaled .99 percent.
Non-interest income increased to $13.2 million for the quarter an improvement of $2.2 million over the second quarter of 2011. Net gains from the sale of mortgage loans improved by $738,000 and insurance commission income improved by $504,000. Other income improved by $745,000 due primarily to the sale of back-to-back hedging activity on commercial loans. The hedges provide fixed rates to our customers while maintaining a variable rate loan on the Bank’s books.
Non-interest expense also declined to $34.2 million for the quarter an improvement of $177,000 over the second quarter of 2011. However, salary and benefit expenses increased by $1.4 million due to increased benefit expense of $597,000 and increased commission expense of $338,000 related to mortgage and insurance sales. Off-setting the increases above were reductions in OREO and credit related expenses of $836,000, core deposit intangible amortization of $346,000 and FDIC assessments of $250,000
As of September 30, 2011, the Corporation’s total risk-based capital equaled 16.21 percent, Tier 1 risk-based capital totaled 13.60 percent, Tier 1 leverage ratio totaled 10.20 percent, and tangible common equity ratio totaled 6.88 percent. All regulatory capital ratios exceed the regulatory definitions of “well capitalized”.
Non-performing assets (NPA) plus 90 days delinquent loans totaled $107 million, or 2.59 percent of total assets. The Corporation’s allowance for loan losses totaled $73 million or 2.68 percent of total loans, including loans held for sale, and the allowance coverage ratio to non-accrual loans totals 92.6 percent. Net charge-offs for the quarter totaled $9.6 million and provision expense totaled $5.6 million. Specific reserves declined during the quarter by $5.5 million and classified assets declined by $34.1 million.
CONFERENCE CALL
First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 2:30 p.m. (EDT) on Tuesday, October 25, 2011.
To participate, dial (Toll Free) 877-317-6789 and reference First Merchants Corporation’s third quarter earnings release. International callers please call +1 412-317-6789. A replay of the call will be available until October 25, 2012. To access a replay of the call, US/Canada participants should dial (Toll Free) 877-344-7529 or for International participants, dial +1 412-317-0088. The replay passcode is 10004200.
In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme111025.html during the time of the call.
During the call, Forward-Looking Statements about the relative business outlook may be made. 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.
About First Merchants Corporation
First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation is comprised of First Merchants Bank, N.A., which also operates as Lafayette Bank & Trust, Commerce National Bank, and First Merchants Trust Company as divisions of First Merchants Bank, N.A. First Merchants Corporation also operates First Merchants Insurance Group, a full-service property casualty, personal lines, and healthcare insurance agency.
First Merchants Corporation’s common stock is traded on the NASDAQ Global Select 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).
* * * *
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CONSOLIDATED BALANCE SHEETS
|
||||||||
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(Dollars in thousands)
|
September 30,
|
|||||||
|
2011
|
2010
|
|||||||
|
ASSETS
|
||||||||
|
Cash and due from banks
|
$
|
60,166
|
$
|
54,736
|
||||
|
Federal funds sold
|
6,392
|
|||||||
|
Cash and cash equivalents
|
60,166
|
61,128
|
||||||
|
Interest-bearing time deposits
|
16,115
|
114,401
|
||||||
|
Investment securities
|
937,828
|
701,852
|
||||||
|
Mortgage loans held for sale
|
12,257
|
15,390
|
||||||
|
Loans
|
2,712,938
|
2,913,364
|
||||||
|
Less: Allowance for loan losses
|
(73,074
|
)
|
(83,660
|
)
|
||||
|
Net loans
|
2,639,864
|
2,829,704
|
||||||
|
Premises and equipment
|
51,432
|
52,774
|
||||||
|
Federal Reserve and Federal Home Loan Bank stock
|
31,381
|
36,271
|
||||||
|
Interest receivable
|
17,770
|
20,310
|
||||||
|
Core deposit intangibles and goodwill
|
151,062
|
155,180
|
||||||
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Cash surrender value of life insurance
|
123,524
|
96,206
|
||||||
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Other real estate owned
|
19,425
|
21,546
|
||||||
|
Tax asset, deferred and receivable
|
35,804
|
50,972
|
||||||
|
Other assets
|
21,881
|
24,586
|
||||||
|
TOTAL ASSETS
|
$
|
4,118,509
|
$
|
4,180,320
|
||||
|
LIABILITIES
|
||||||||
|
Deposits:
|
||||||||
|
Noninterest-bearing
|
$
|
598,139
|
$
|
525,463
|
||||
|
Interest-bearing
|
2,466,111
|
2,728,888
|
||||||
|
Total Deposits
|
3,064,250
|
3,254,351
|
||||||
|
Borrowings:
|
||||||||
|
Federal funds purchased
|
27,946
|
|||||||
|
Securities sold under repurchase agreements
|
117,097
|
109,647
|
||||||
|
Federal Home Loan Bank advances
|
168,764
|
92,628
|
||||||
|
Subordinated debentures, revolving credit lines and term loans
|
194,961
|
227,514
|
||||||
|
Total Borrowings
|
508,768
|
429,789
|
||||||
|
Interest payable
|
2,186
|
4,011
|
||||||
|
Other liabilities
|
30,760
|
29,704
|
||||||
|
Total Liabilities
|
3,605,964
|
3,717,855
|
||||||
|
STOCKHOLDERS' EQUITY
|
||||||||
|
Preferred Stock, no-par value:
|
||||||||
|
Authorized -- 500,000 shares
|
||||||||
|
Series A, Issued and outstanding - 0 and 69,600 shares
|
67,764
|
|||||||
|
Preferred Stock, no-par value, $1,000 liquidation value:
|
||||||||
|
Authorized -- 500,000 shares
|
||||||||
|
Senior Non-Cumulative Perpetual Preferred Stock, Series B
|
||||||||
|
Issued and outstanding - 90,782.94 and 0 shares
|
90,783
|
|||||||
|
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
|
||||||||
|
Authorized -- 600 shares
|
||||||||
|
Issued and outstanding - 125 shares
|
125
|
125
|
||||||
|
Common Stock, $.125 stated value:
|
||||||||
|
Authorized -- 50,000,000 shares
|
||||||||
|
Issued and outstanding - 28,538,164 and 25,553,601 shares
|
3,567
|
3,194
|
||||||
|
Additional paid-in capital
|
254,801
|
231,979
|
||||||
|
Retained earnings
|
162,669
|
158,074
|
||||||
|
Accumulated other comprehensive income
|
600
|
1,329
|
||||||
|
Total Stockholders' Equity
|
512,545
|
462,465
|
||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
4,118,509
|
$
|
4,180,320
|
||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
|
(Dollars in thousands, except per share amounts)
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
INTEREST INCOME
|
||||||||||||||||
|
Loans receivable:
|
||||||||||||||||
|
Taxable
|
$
|
37,024
|
$
|
43,148
|
$
|
113,219
|
$
|
132,573
|
||||||||
|
Tax-exempt
|
86
|
236
|
435
|
765
|
||||||||||||
|
Investment securities:
|
||||||||||||||||
|
Taxable
|
5,078
|
3,100
|
14,665
|
9,277
|
||||||||||||
|
Tax-exempt
|
2,529
|
2,610
|
7,617
|
7,804
|
||||||||||||
|
Federal funds sold
|
3
|
3
|
23
|
|||||||||||||
|
Deposits with financial institutions
|
45
|
84
|
228
|
239
|
||||||||||||
|
Federal Reserve and Federal Home Loan Bank stock
|
323
|
250
|
1,005
|
940
|
||||||||||||
|
Total Interest Income
|
45,085
|
49,431
|
137,172
|
151,621
|
||||||||||||
|
INTEREST EXPENSE
|
||||||||||||||||
|
Deposits
|
5,046
|
9,434
|
17,776
|
31,449
|
||||||||||||
|
Federal funds purchased
|
16
|
1
|
22
|
5
|
||||||||||||
|
Securities sold under repurchase agreements
|
384
|
401
|
1,148
|
1,329
|
||||||||||||
|
Federal Home Loan Bank advances
|
1,089
|
1,218
|
3,067
|
4,222
|
||||||||||||
|
Subordinated debentures, revolving credit lines and term loans
|
2,699
|
2,695
|
7,984
|
6,540
|
||||||||||||
|
Total Interest Expense
|
9,234
|
13,749
|
29,997
|
43,545
|
||||||||||||
|
NET INTEREST INCOME
|
35,851
|
35,682
|
107,175
|
108,076
|
||||||||||||
|
Provision for loan losses
|
5,556
|
10,521
|
16,775
|
39,405
|
||||||||||||
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
|
30,295
|
25,161
|
90,400
|
68,671
|
||||||||||||
|
OTHER INCOME
|
||||||||||||||||
|
Service charges on deposit accounts
|
3,169
|
3,404
|
8,945
|
10,172
|
||||||||||||
|
Fiduciary activities
|
1,881
|
1,773
|
5,846
|
5,811
|
||||||||||||
|
Other customer fees
|
2,583
|
2,080
|
7,452
|
6,773
|
||||||||||||
|
Commission income
|
1,528
|
1,482
|
4,440
|
4,958
|
||||||||||||
|
Earnings on cash surrender value of life insurance
|
644
|
540
|
1,793
|
1,574
|
||||||||||||
|
Net gains and fees on sales of loans
|
1,768
|
2,088
|
4,671
|
4,422
|
||||||||||||
|
Net realized gains on sales of available for sale securities
|
861
|
2
|
2,149
|
2,101
|
||||||||||||
|
Other-than-temporary impairment on available for sale securities
|
(656
|
)
|
(400
|
)
|
(1,544
|
)
|
||||||||||
|
Other income
|
796
|
332
|
1,253
|
684
|
||||||||||||
|
Total Other Income
|
13,230
|
11,045
|
36,149
|
34,951
|
||||||||||||
|
OTHER EXPENSES
|
||||||||||||||||
|
Salaries and employee benefits
|
19,964
|
18,094
|
55,700
|
53,598
|
||||||||||||
|
Net occupancy
|
2,530
|
2,574
|
7,690
|
7,483
|
||||||||||||
|
Equipment
|
1,662
|
1,797
|
5,122
|
5,511
|
||||||||||||
|
Marketing
|
534
|
519
|
1,352
|
1,443
|
||||||||||||
|
Outside data processing fees
|
1,391
|
1,348
|
4,294
|
3,939
|
||||||||||||
|
Printing and office supplies
|
301
|
303
|
902
|
942
|
||||||||||||
|
Core deposit amortization
|
755
|
1,161
|
2,957
|
3,560
|
||||||||||||
|
FDIC assessments
|
1,201
|
2,112
|
4,756
|
6,077
|
||||||||||||
|
Other real estate owned and credit-related expenses
|
2,007
|
2,991
|
8,045
|
7,179
|
||||||||||||
|
Other expenses
|
3,877
|
4,236
|
11,684
|
14,386
|
||||||||||||
|
Total Other Expenses
|
34,222
|
35,135
|
102,502
|
104,118
|
||||||||||||
|
INCOME (LOSS) BEFORE INCOME TAX
|
9,303
|
1,071
|
24,047
|
(496
|
)
|
|||||||||||
|
Income tax expense (benefit)
|
2,561
|
(564
|
)
|
6,356
|
(3,374
|
)
|
||||||||||
|
NET INCOME
|
6,742
|
1,635
|
17,691
|
2,878
|
||||||||||||
|
Gain on exchange of preferred stock for trust preferred debt
|
11,353
|
|||||||||||||||
|
Loss on CPP unamortized discount
|
(1,401
|
)
|
(1,401
|
)
|
(1,301
|
)
|
||||||||||
|
Loss on extinguishment of trust preferred securities
|
(10,857
|
)
|
(10,857
|
)
|
||||||||||||
|
Preferred stock dividends and discount accretion
|
(868
|
)
|
(870
|
)
|
(2,846
|
)
|
(3,763
|
)
|
||||||||
|
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS
|
$
|
(6,384
|
)
|
$
|
765
|
$
|
2,587
|
$
|
9,167
|
|||||||
|
Per Share Data:
|
||||||||||||||||
|
Basic Net Income (Loss) Available to Common Stockholders
|
$
|
(0.25
|
)
|
$
|
0.02
|
$
|
0.10
|
$
|
0.38
|
|||||||
|
Diluted Net Income (Loss) Available to Common Stockholders
|
$
|
(0.25
|
)
|
$
|
0.02
|
$
|
0.10
|
$
|
0.38
|
|||||||
|
Cash Dividends Paid
|
$
|
0.01
|
$
|
0.01
|
$
|
0.03
|
$
|
0.03
|
||||||||
|
Average Diluted Shares Outstanding (in thousands)
|
26,367
|
25,686
|
26,019
|
24,273
|
||||||||||||
|
FINANCIAL HIGHLIGHTS
|
||||||||||||||||
|
(Dollars in thousands)
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
NET CHARGE OFF'S
|
$
|
9,615
|
$
|
13,831
|
$
|
26,678
|
$
|
47,876
|
||||||||
|
AVERAGE BALANCES:
|
||||||||||||||||
|
Total Assets
|
$
|
4,113,316
|
$
|
4,193,717
|
$
|
4,124,697
|
$
|
4,279,305
|
||||||||
|
Total Loans
|
2,725,449
|
3,009,529
|
2,758,635
|
3,103,823
|
||||||||||||
|
Total Earning Assets
|
3,714,401
|
3,790,904
|
3,736,503
|
3,871,484
|
||||||||||||
|
Total Deposits
|
3,101,458
|
3,264,983
|
3,179,218
|
3,342,646
|
||||||||||||
|
Total Stockholders' Equity
|
478,836
|
459,263
|
466,671
|
472,445
|
||||||||||||
|
FINANCIAL RATIOS:
|
||||||||||||||||
|
Return on Average Assets
|
-0.62
|
%
|
0.07
|
%
|
0.08
|
%
|
0.29
|
%
|
||||||||
|
Return on Average Stockholders' Equity
|
(5.33
|
)
|
0.67
|
0.74
|
2.59
|
|||||||||||
|
Average Earning Assets to Average Assets
|
90.30
|
90.39
|
90.59
|
90.47
|
||||||||||||
|
Allowance for Loan Losses as % of Total Loans
|
2.68
|
2.86
|
2.68
|
2.86
|
||||||||||||
|
Net Charge Off's as % of Average Loans (Annualized)
|
1.41
|
1.84
|
1.29
|
2.06
|
||||||||||||
|
Average Stockholders' Equity to Average Assets
|
11.64
|
10.95
|
11.31
|
11.04
|
||||||||||||
|
Tax Equivalent Yield on Earning Assets
|
5.01
|
5.38
|
5.05
|
5.38
|
||||||||||||
|
Cost of Supporting Liabilities
|
0.99
|
1.45
|
1.07
|
1.50
|
||||||||||||
|
Net Interest Margin (FTE) on Earning Assets
|
4.02
|
3.93
|
3.98
|
3.88
|
||||||||||||
|
NON-PERFORMING ASSETS
|
||||||||||||||||||||
|
(Dollars in thousands)
|
September 30,
|
June 30,
|
March 31,
|
December 31,
|
September 30,
|
|||||||||||||||
|
2011
|
2011
|
2011
|
2010
|
2010
|
||||||||||||||||
|
Non-Accrual Loans
|
$
|
78,933
|
$
|
87,583
|
$
|
87,712
|
$
|
90,591
|
$
|
98,597
|
||||||||||
|
Renegotiated Loans
|
6,701
|
6,269
|
2,125
|
7,139
|
5,320
|
|||||||||||||||
|
Non-Performing Loans (NPL)
|
85,634
|
93,852
|
89,837
|
97,730
|
103,917
|
|||||||||||||||
|
Real Estate Owned and Repossessed Assets
|
19,425
|
15,437
|
17,056
|
20,927
|
21,546
|
|||||||||||||||
|
Non-Performing Assets (NPA)
|
105,059
|
109,289
|
106,893
|
118,657
|
125,463
|
|||||||||||||||
|
90+ Days Delinquent
|
1,595
|
227
|
752
|
1,330
|
5,320
|
|||||||||||||||
|
NPAS & 90 Day Delinquent
|
$
|
106,654
|
$
|
109,516
|
$
|
107,645
|
$
|
119,987
|
$
|
130,783
|
||||||||||
|
Loan Loss Reserve
|
$
|
73,074
|
$
|
77,133
|
$
|
80,936
|
$
|
82,977
|
$
|
83,660
|
||||||||||
|
YTD Charge-offs
|
26,678
|
17,063
|
7,635
|
55,637
|
47,876
|
|||||||||||||||
|
NPAs / Actual Assets %
|
2.55
|
%
|
2.67
|
%
|
2.60
|
%
|
2.84
|
%
|
3.00
|
%
|
||||||||||
|
NPAs & 90 Day / Actual Assets %
|
2.59
|
%
|
2.67
|
%
|
2.61
|
%
|
2.88
|
%
|
3.13
|
%
|
||||||||||
|
NPAs / Actual Loans and REO %
|
3.83
|
%
|
3.98
|
%
|
3.84
|
%
|
4.12
|
%
|
4.25
|
%
|
||||||||||
|
Loan Loss Reserves / Actual Loans (%)
|
2.68
|
%
|
2.83
|
%
|
2.93
|
%
|
2.90
|
%
|
2.86
|
%
|
||||||||||
|
NCOs / YTD Average Loans (%)
|
0.97
|
%
|
0.61
|
%
|
0.27
|
%
|
1.82
|
%
|
1.54
|
%
|
||||||||||
|
CONSOLIDATED BALANCE SHEETS
|
||||||||||||||||||||
|
(Dollars in thousands)
|
September 30,
|
June 30,
|
March 31,
|
December 31,
|
September 30,
|
|||||||||||||||
|
2011
|
2011
|
2011
|
2010
|
2010
|
||||||||||||||||
|
ASSETS
|
||||||||||||||||||||
|
Cash and due from banks
|
$
|
60,166
|
$
|
50,874
|
$
|
44,283
|
$
|
50,844
|
$
|
54,736
|
||||||||||
|
Federal funds sold
|
6,092
|
7,463
|
6,392
|
|||||||||||||||||
|
Cash and cash equivalents
|
60,166
|
50,874
|
50,375
|
58,307
|
61,128
|
|||||||||||||||
|
Interest-bearing time deposits
|
16,115
|
15,865
|
61,843
|
65,216
|
114,401
|
|||||||||||||||
|
Investment securities
|
937,828
|
938,366
|
886,029
|
826,797
|
701,852
|
|||||||||||||||
|
Mortgage loans held for sale
|
12,257
|
4,846
|
2,111
|
21,469
|
15,390
|
|||||||||||||||
|
Loans
|
2,712,938
|
2,724,022
|
2,764,128
|
2,835,683
|
2,913,364
|
|||||||||||||||
|
Less: Allowance for loan losses
|
(73,074
|
)
|
(77,133
|
)
|
(80,936
|
)
|
(82,977
|
)
|
(83,660
|
)
|
||||||||||
|
Net loans
|
2,639,864
|
2,646,889
|
2,683,192
|
2,752,706
|
2,829,704
|
|||||||||||||||
|
Premises and equipment
|
51,432
|
51,851
|
51,818
|
52,450
|
52,774
|
|||||||||||||||
|
Federal Reserve and Federal Home Loan Bank stock
|
31,381
|
31,384
|
33,801
|
33,884
|
36,271
|
|||||||||||||||
|
Interest receivable
|
17,770
|
17,001
|
17,583
|
18,674
|
20,310
|
|||||||||||||||
|
Core deposit intangibles and goodwill
|
151,062
|
151,817
|
152,918
|
154,019
|
155,180
|
|||||||||||||||
|
Cash surrender value of life insurance
|
123,524
|
102,880
|
102,309
|
96,731
|
96,206
|
|||||||||||||||
|
Other real estate owned
|
19,425
|
15,437
|
17,056
|
20,927
|
21,546
|
|||||||||||||||
|
Tax asset, deferred and receivable
|
35,804
|
36,790
|
38,224
|
45,623
|
50,972
|
|||||||||||||||
|
Other assets
|
21,881
|
30,218
|
19,916
|
24,045
|
24,586
|
|||||||||||||||
|
TOTAL ASSETS
|
$
|
4,118,509
|
$
|
4,094,218
|
$
|
4,117,175
|
$
|
4,170,848
|
$
|
4,180,320
|
||||||||||
|
LIABILITIES
|
||||||||||||||||||||
|
Deposits:
|
||||||||||||||||||||
|
Noninterest-bearing
|
$
|
598,139
|
$
|
590,199
|
$
|
586,973
|
$
|
583,696
|
$
|
525,463
|
||||||||||
|
Interest-bearing
|
2,466,111
|
2,552,334
|
2,565,363
|
2,685,184
|
2,728,888
|
|||||||||||||||
|
Total Deposits
|
3,064,250
|
3,142,533
|
3,152,336
|
3,268,880
|
3,254,351
|
|||||||||||||||
|
Borrowings:
|
||||||||||||||||||||
|
Federal funds purchased
|
27,946
|
22,978
|
||||||||||||||||||
|
Securities sold under repurchase agreements
|
117,097
|
124,236
|
115,684
|
109,871
|
109,647
|
|||||||||||||||
|
Federal Home Loan Bank advances
|
168,764
|
74,050
|
104,697
|
82,684
|
92,628
|
|||||||||||||||
|
Subordinated debentures, revolving credit lines and term loans
|
194,961
|
226,580
|
226,400
|
226,440
|
227,514
|
|||||||||||||||
|
Total Borrowings
|
508,768
|
447,844
|
446,781
|
418,995
|
429,789
|
|||||||||||||||
|
Interest payable
|
2,186
|
3,601
|
3,117
|
4,262
|
4,011
|
|||||||||||||||
|
Other liabilities
|
30,760
|
31,762
|
52,419
|
24,303
|
29,704
|
|||||||||||||||
|
Total Liabilities
|
3,605,964
|
3,625,740
|
3,654,653
|
3,716,440
|
3,717,855
|
|||||||||||||||
|
STOCKHOLDERS' EQUITY
|
||||||||||||||||||||
|
Preferred Stock, no-par value:
|
||||||||||||||||||||
|
Authorized -- 500,000 shares
|
||||||||||||||||||||
|
Series A, Issued and outstanding
|
68,118
|
67,998
|
67,880
|
67,764
|
||||||||||||||||
|
Preferred Stock, no-par value, $1,000 liquidation value:
|
||||||||||||||||||||
|
Authorized -- 500,000 shares
|
||||||||||||||||||||
|
Senior Non-Cumulative Perpetual Preferred Stock, Series B
|
||||||||||||||||||||
|
Issued and outstanding
|
90,783
|
|||||||||||||||||||
|
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
|
||||||||||||||||||||
|
Authorized -- 600 shares
|
||||||||||||||||||||
|
Issued and outstanding
|
125
|
125
|
125
|
125
|
125
|
|||||||||||||||
|
Common Stock, $.125 stated value:
|
||||||||||||||||||||
|
Authorized -- 50,000,000 shares
|
||||||||||||||||||||
|
Issued and outstanding
|
3,567
|
3,211
|
3,206
|
3,197
|
3,194
|
|||||||||||||||
|
Additional paid-in capital
|
254,801
|
233,544
|
233,032
|
232,503
|
231,979
|
|||||||||||||||
|
Retained earnings
|
162,669
|
169,313
|
165,075
|
160,860
|
158,074
|
|||||||||||||||
|
Accumulated other comprehensive income (loss)
|
600
|
(5,833
|
)
|
(6,914
|
)
|
(10,157
|
)
|
1,329
|
||||||||||||
|
Total Stockholders' Equity
|
512,545
|
468,478
|
462,522
|
454,408
|
462,465
|
|||||||||||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
4,118,509
|
$
|
4,094,218
|
$
|
4,117,175
|
$
|
4,170,848
|
$
|
4,180,320
|
||||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||||||
|
(Dollars in thousands, except per share amounts)
|
September 30,
|
June 30,
|
March 31,
|
December 31,
|
September 30,
|
|||||||||||||||
|
2011
|
2011
|
2011
|
2010
|
2010
|
||||||||||||||||
|
INTEREST INCOME
|
||||||||||||||||||||
|
Loans receivable:
|
||||||||||||||||||||
|
Taxable
|
$
|
37,024
|
$
|
37,457
|
$
|
38,738
|
$
|
41,497
|
$
|
43,148
|
||||||||||
|
Tax exempt
|
86
|
247
|
102
|
(250
|
)
|
236
|
||||||||||||||
|
Investment securities:
|
||||||||||||||||||||
|
Taxable
|
5,078
|
5,040
|
4,547
|
3,680
|
3,100
|
|||||||||||||||
|
Tax exempt
|
2,529
|
2,535
|
2,553
|
2,573
|
2,610
|
|||||||||||||||
|
Federal funds sold
|
1
|
2
|
3
|
3
|
||||||||||||||||
|
Deposits with financial institutions
|
45
|
100
|
83
|
142
|
84
|
|||||||||||||||
|
Federal Reserve and Federal Home Loan Bank stock
|
323
|
341
|
341
|
312
|
250
|
|||||||||||||||
|
Total Interest Income
|
45,085
|
45,721
|
46,366
|
47,957
|
49,431
|
|||||||||||||||
|
INTEREST EXPENSE
|
||||||||||||||||||||
|
Deposits
|
5,046
|
5,864
|
6,866
|
8,427
|
9,434
|
|||||||||||||||
|
Federal funds purchased
|
16
|
3
|
3
|
1
|
||||||||||||||||
|
Securities sold under repurchase agreements
|
384
|
386
|
378
|
383
|
401
|
|||||||||||||||
|
Federal Home Loan Bank advances
|
1,089
|
977
|
1,001
|
1,146
|
1,218
|
|||||||||||||||
|
Subordinated debentures, revolving credit lines and term loans
|
2,699
|
2,644
|
2,641
|
2,508
|
2,695
|
|||||||||||||||
|
Total Interest Expense
|
9,234
|
9,874
|
10,889
|
12,464
|
13,749
|
|||||||||||||||
|
NET INTEREST INCOME
|
35,851
|
35,847
|
35,477
|
35,493
|
35,682
|
|||||||||||||||
|
Provision for loan losses
|
5,556
|
5,625
|
5,594
|
7,078
|
10,521
|
|||||||||||||||
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
|
30,295
|
30,222
|
29,883
|
28,415
|
25,161
|
|||||||||||||||
|
OTHER INCOME
|
||||||||||||||||||||
|
Service charges on deposit accounts
|
3,169
|
2,997
|
2,779
|
3,111
|
3,404
|
|||||||||||||||
|
Fiduciary activities
|
1,881
|
1,929
|
2,036
|
1,881
|
1,773
|
|||||||||||||||
|
Other customer fees
|
2,583
|
2,634
|
2,235
|
2,217
|
2,080
|
|||||||||||||||
|
Commission income
|
1,528
|
1,024
|
1,888
|
1,267
|
1,482
|
|||||||||||||||
|
Earnings on cash surrender value of life insurance
|
644
|
571
|
578
|
524
|
540
|
|||||||||||||||
|
Net gains and fees on sales of loans
|
1,768
|
1,030
|
1,873
|
2,384
|
2,088
|
|||||||||||||||
|
Net realized gains on sales of available for sale securities
|
861
|
825
|
463
|
1,305
|
2
|
|||||||||||||||
|
Other-than-temporary impairment on available for sale securities
|
(400
|
)
|
(656
|
)
|
||||||||||||||||
|
Other income
|
796
|
51
|
406
|
904
|
332
|
|||||||||||||||
|
Total Other Income
|
13,230
|
11,061
|
11,858
|
13,593
|
11,045
|
|||||||||||||||
|
OTHER EXPENSES
|
||||||||||||||||||||
|
Salaries and employee benefits
|
19,964
|
18,560
|
17,176
|
19,655
|
18,094
|
|||||||||||||||
|
Net occupancy
|
2,530
|
2,415
|
2,745
|
2,452
|
2,574
|
|||||||||||||||
|
Equipment
|
1,662
|
1,677
|
1,783
|
1,812
|
1,797
|
|||||||||||||||
|
Marketing
|
534
|
436
|
382
|
527
|
519
|
|||||||||||||||
|
Outside data processing fees
|
1,391
|
1,458
|
1,445
|
1,154
|
1,348
|
|||||||||||||||
|
Printing and office supplies
|
301
|
313
|
288
|
317
|
303
|
|||||||||||||||
|
Core deposit amortization
|
755
|
1,101
|
1,101
|
1,161
|
1,161
|
|||||||||||||||
|
FDIC assessments
|
1,201
|
1,451
|
2,104
|
2,044
|
2,112
|
|||||||||||||||
|
Other real estate owned and credit-related expenses
|
2,007
|
2,843
|
3,195
|
5,257
|
2,991
|
|||||||||||||||
|
Other expenses
|
3,877
|
4,145
|
3,662
|
3,814
|
4,236
|
|||||||||||||||
|
Total Other Expenses
|
34,222
|
34,399
|
33,881
|
38,193
|
35,135
|
|||||||||||||||
|
INCOME BEFORE INCOME TAX
|
9,303
|
6,884
|
7,860
|
3,815
|
1,071
|
|||||||||||||||
|
Income tax expense (benefit)
|
2,561
|
1,396
|
2,399
|
(216
|
)
|
(564
|
)
|
|||||||||||||
|
NET INCOME
|
6,742
|
5,488
|
5,461
|
4,031
|
1,635
|
|||||||||||||||
|
Loss on CPP unamortized discount
|
(1,401
|
)
|
||||||||||||||||||
|
Loss on extinguishment of trust preferred securities
|
(10,857
|
)
|
||||||||||||||||||
|
Preferred stock dividends and discount accretion
|
(868
|
)
|
(990
|
)
|
(988
|
)
|
(1,476
|
)
|
(870
|
)
|
||||||||||
|
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS
|
$
|
(6,384
|
)
|
$
|
4,498
|
$
|
4,473
|
$
|
2,555
|
$
|
765
|
|||||||||
|
PER SHARE:
|
||||||||||||||||||||
|
Basic Net Income (Loss) Available to Common Stockholders
|
$
|
(0.25
|
)
|
$
|
0.18
|
$
|
0.17
|
$
|
0.10
|
$
|
0.02
|
|||||||||
|
Diluted Net Income (Loss) Available to Common Stockholders
|
$
|
(0.25
|
)
|
$
|
0.18
|
$
|
0.17
|
$
|
0.10
|
$
|
0.02
|
|||||||||
|
Cash Dividends Paid
|
$
|
0.01
|
$
|
0.01
|
$
|
0.01
|
$
|
0.01
|
$
|
0.01
|
||||||||||
|
Average Diluted Shares Outstanding (in thousands)
|
26,367
|
25,783
|
25,763
|
25,737
|
25,686
|
|||||||||||||||
|
FINANCIAL RATIOS:
|
||||||||||||||||||||
|
Return on Average Assets
|
-0.62
|
%
|
0.43
|
%
|
0.43
|
%
|
0.24
|
%
|
0.07
|
%
|
||||||||||
|
Return on Average Stockholders' Equity
|
(5.33
|
)
|
3.87
|
3.92
|
2.20
|
0.67
|
||||||||||||||
|
Average Earning Assets to Average Assets
|
90.30
|
90.64
|
90.83
|
90.27
|
90.39
|
|||||||||||||||
|
Allowance for Loan Losses as % of Total Loans
|
2.68
|
2.83
|
2.93
|
2.90
|
2.86
|
|||||||||||||||
|
Net Charge Off's as % of Average Loans (Annualized)
|
1.41
|
1.37
|
1.09
|
1.07
|
1.84
|
|||||||||||||||
|
Average Stockholders' Equity to Average Assets
|
11.64
|
11.23
|
11.07
|
10.93
|
10.95
|
|||||||||||||||
|
Tax Equivalent Yield on Earning Assets
|
5.01
|
5.04
|
5.11
|
5.13
|
5.38
|
|||||||||||||||
|
Cost of Supporting Liabilities
|
0.99
|
1.05
|
1.16
|
1.30
|
1.45
|
|||||||||||||||
|
Net Interest Margin (FTE) on Earning Assets
|
4.02
|
3.99
|
3.95
|
3.83
|
3.93
|
|||||||||||||||
|
LOANS
|
||||||||||||||||||||
|
(Dollars in thousands)
|
September 30,
|
June 30,
|
March 31,
|
December 31,
|
September 30,
|
|||||||||||||||
|
2011
|
2011
|
2011
|
2010
|
2010
|
||||||||||||||||
|
Commercial and industrial loans
|
$
|
518,848
|
$
|
529,742
|
$
|
529,110
|
$
|
530,322
|
$
|
550,310
|
||||||||||
|
Agricultural production financing and other loans to farmers
|
106,761
|
99,360
|
89,032
|
95,516
|
99,087
|
|||||||||||||||
|
Real estate loans:
|
||||||||||||||||||||
|
Construction
|
70,044
|
96,308
|
103,956
|
106,615
|
91,705
|
|||||||||||||||
|
Commercial and farm land
|
1,196,270
|
1,171,901
|
1,199,078
|
1,229,037
|
1,229,836
|
|||||||||||||||
|
Residential
|
495,954
|
495,256
|
504,538
|
522,051
|
564,320
|
|||||||||||||||
|
Home Equity
|
196,191
|
191,839
|
195,235
|
201,969
|
215,163
|
|||||||||||||||
|
Individuals' loans for household and other personal expenditures
|
90,810
|
94,123
|
104,701
|
115,295
|
128,400
|
|||||||||||||||
|
Lease financing receivables, net of unearned income
|
4,160
|
4,399
|
4,706
|
5,157
|
5,763
|
|||||||||||||||
|
Other loans
|
33,900
|
41,094
|
33,772
|
29,721
|
28,780
|
|||||||||||||||
|
Loans
|
2,712,938
|
2,724,022
|
2,764,128
|
2,835,683
|
2,913,364
|
|||||||||||||||
|
Allowance for loan losses
|
(73,074
|
)
|
(77,133
|
)
|
(80,936
|
)
|
(82,977
|
)
|
(83,660
|
)
|
||||||||||
|
NET LOANS
|
$
|
2,639,864
|
$
|
2,646,889
|
$
|
2,683,192
|
$
|
2,752,706
|
$
|
2,829,704
|
||||||||||
|
DEPOSITS
|
||||||||||||||||||||
|
(Dollars in thousands)
|
September 30,
|
June 30,
|
March 31,
|
December 31,
|
September 30,
|
|||||||||||||||
|
2011
|
2011
|
2011
|
2010
|
2010
|
||||||||||||||||
|
Demand deposits
|
$
|
1,360,174
|
$
|
1,363,621
|
$
|
1,318,188
|
$
|
1,362,927
|
$
|
1,288,975
|
||||||||||
|
Savings deposits
|
712,545
|
750,337
|
765,138
|
763,949
|
761,181
|
|||||||||||||||
|
Certificates and other time deposits of $100,000 or more
|
278,115
|
292,613
|
318,663
|
334,748
|
350,623
|
|||||||||||||||
|
Other certificates and time deposits
|
570,380
|
597,330
|
624,032
|
661,569
|
685,917
|
|||||||||||||||
|
Brokered deposits
|
143,036
|
138,632
|
126,315
|
145,687
|
167,655
|
|||||||||||||||
|
TOTAL DEPOSITS
|
$
|
3,064,250
|
$
|
3,142,533
|
$
|
3,152,336
|
$
|
3,268,880
|
$
|
3,254,351
|
||||||||||