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earningslides07262012.htm

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): July 26, 2012

 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 July 26, 2012, First Merchants Corporation will conduct a second quarter earnings conference call and web cast on Thursday, July 26, 2012 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 July 26, 2012, 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: July 26, 2012
 

 
 
 


EXHIBIT INDEX
 
Exhibit No.                                Description

99.1
Slide presentation, utilized July 26, 2012, during conference call and web cast by First Merchants Corporation
 
 
 
eslides2nd2012.htm
1
First Merchants Corporation
2nd Quarter 2012
Earnings Call
July 26, 2012
 
 
 
2
Michael C. Rechin
President
and Chief Executive Officer
 
 
 
3
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
§ EPS
 §  $.28 2nd Quarter EPS (56% year-over-year growth)
 § $.74 YTD EPS (111% year-over-year growth)
 § Quarterly Dividend increased from $.01 to $.03
§ Core Revenue Growth
 § $52.1M 2nd Qtr Revenue (10% YOY growth)
 § $39.5M 2nd Qtr Net Interest Income (6% YOY growth)
 § $12.7M 2nd Qtr Non-Interest Income (24% YOY growth)
 § 4.11% Net Interest Margin
§ Company Well Positioned for Growth
 §  Strong Core Deposit Funding Base
 § SCB Integration Complete
 §  Total Risk Based Capital 16.75%
 §  Balanced Risk Profile
 § Engaged Energetic Winning Workforce
 
 
 
5
Mark K. Hardwick
Executive Vice President
and Chief Financial Officer
 
 
 
6
    2010  2011 Q1-’12 Q2-’12
1. Investments  $ 827  $ 946 $ 960 $ 944
2. Loans Held for Sale 21 18 22 15
3. Loans 2,836 2,713 2,793 2,798
4. Allowance (83) (71) (70) (70)
5. CD&I & Goodwill  154 150 150 150
6. BOLI 97 124 123 124
7. Other 319 293 258 271
8. Total Assets        $4,171 $4,173 $4,236 $4,232
($ in Millions)
 
 
 
7
(as of 06/30/2012)
QTD Yield = 5.22%
YTD Yield = 5.19%
Total = $2.8B
 
 
 
8
(as of 06/30/2012)
§ $944 Million Balance
§ Average duration - 3.8 years
§ Tax equivalent yield of 3.79%
§ Net unrealized gain of $32.4
 million
 
 
 
9
      
  
    2010  2011 Q1-’12 Q2-’12
1. Customer Non-Maturity Deposits  $2,127 $2,196 $2,273 $2,343
2. Customer Time Deposits 996 816 836 808
3. Brokered Deposits 146 123 170 138
4. Borrowings 277 378 287 263
5. Other Liabilities 28 34 31 33
6. Hybrid Capital 142 111 111 111
7. Preferred Stock (CPP) 68  ―  ―  ―
8. Preferred Stock (SBLF)  ― 91  91 91
9. Common Equity  387 424 437 445
10. Total Liabilities and Capital        $4,171 $4,173 $4,236     $4,232
($ in Millions)
 
 
 
10
(as of 06/30/2012)
QTD Cost = .60%
 
 
 
11
  2010  2011 Q1-’12 Q2-’12
1. Total Risk-Based
 Capital Ratio  15.74% 16.54% 16.39% 16.75%
2. Tier 1 Risk-Based
 Capital Ratio  12.82% 13.92% 14.14% 14.49%
3. Leverage Ratio 9.50% 10.17% 10.61% 10.73%
4. Tier 1 Common Risk- 
 Based Capital Ratio 7.64% 8.83% 9.20% 9.54%
5. TCE/TCA  5.86% 6.84% 7.07% 7.27%
 
 
 
12
 Q2-’10 Q3-’10 Q4-’10 Q1-’11 Q2-’11 Q3-’11 Q4-’11 Q1-’12 Q2-’12
Net Interest Income - FTE ($millions) $ 37.7 $ 37.2 $ 36.7 $ 36.9 $ 37.3 $ 37.3 $ 37.6 $ 37.6 $ 39.5
Tax Equivalent Yield on Earning Assets           5.38% 5.38% 5.13% 5.11% 5.04% 5.01% 4.83% 4.74% 4.75%
Cost of Supporting Liabilities 1.48% 1.45% 1.30% 1.16% 1.05% 0.99% 0.84% 0.78% 0.64%
                   
                   
                   
                   
                   
                   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13
      
  
    2010 2011 Q1-’12 Q2-’12
  
1. Service Charges on Deposit Accounts  $13.3 $12.0 $2.8 $ 2.9
  
2. Trust Fees                     7.7 7.7 2.0 1.9
3. Insurance Commission Income 6.2 5.7 1.7 1.5
4. Electronic Card Fees                   6.1 6.5 1.7 2.1
5. Cash Surrender Value of Life Ins   2.1 2.6 1.4 0.7
6. Gains on Sales Mortgage Loans  6.8 7.4 2.0 2.3
7. Securities Gains/Losses              1.9 2.0 0.8 0.5
8. Gain on FDIC Acquisition  ―  ―  9.1  ―
9. Other  4.4 5.2 1.2 1.3
10. Total $48.5 $49.1 $22.7 $13.2
11. Adjusted Non-Interest Income1          $46.6 $47.1 $12.8 $12.7
1Adjusted for Bond Gains & Losses and Gain on FDIC-Modified Whole-Bank Transaction
($ in Millions)
 
 
 
14
($ in Millions)
   2010  2011 Q1-’12 Q2-’12
1. Salary & Benefits             $ 73.3 $74.7 $19.4 $19.6
2. Premises & Equipment 17.2 16.9 4.4 4.1
3. Core Deposit Intangible 4.7 3.5 0.5 0.5
4. Professional Services              1.4 2.2 0.7 0.5
5. OREO/Credit-Related Expense   14.6 10.6 2.2 2.1
6. FDIC Expense 8.1 5.5 1.1 0.9
7. Outside Data Processing 5.1 5.7 1.4 1.5
8. Marketing 2.0 2.0 0.4 0.6
9. Other 15.9 14.8 3.9 4.4
10. Total $142.3 $135.9 $34.0 $34.2
  
 
 
 
15
  2010 2011 Q1-’12 Q2-’12
1. Net Interest Income-FTE              $149.4  $149.1 $37.6 $39.5
2. Non Interest Income1                46.6  47.1 12.8 12.7
3. Non Interest Expense                 (142.3)    (135.9) (34.0) (34.2)
4. Pre-Tax Pre-Provision Earnings $ 53.7  $ 60.3  $16.4 $18.0
5. Provision                     (46.5)        (22.6) (4.9) (4.5)
6. Adjustments1                     1.9  2.0 9.9 0.5
7. Taxes - FTE                    (2.3)    (14.4) (7.1) (4.8)
8. Gain /(Loss) on CPP/Trust Preferred        10.1      (12.3)  ―  ―
9. Preferred Stock Dividend             (5.2)      (4.0) (1.1) (1.1)
10. Net Income Avail. for Distribution $ 11.7  $ 9.0 $13.2 $ 8.1
11. EPS                      $ 0.48  $0.34 $0.46 $0.28
1Adjusted for Bond Gains & Losses and Gain on FDIC-Modified Whole-Bank Transaction
($ in Millions)
 
 
 
16
1
2010
Q1
Q2
Q3
Q4
Total
1. Actual
$ .01
$ .35
$ .02
$ .10
$ .48
2. Core
$ .01
($ .05)
$ .02
$ .10
$ .08
 
 
 
 
 
 
2011
Q1
Q2
Q3
Q4
Total
3. Actual
$ .17
$ .18
($ .25)
$ .24
$ .34
4. Core
$ .17
$ .18
$ .21
$ .24
$ .80
 
 
 
 
 
 
2012
Q1
Q2
Q3
Q4
Total
5. Actual
$ .46
$ .28
-
-
$ .74
6. Core
$ .25
$ .28
-
-
$ .53
1Adjusted for gains and losses on CPP/Trust Preferred refinance and repayment net of taxes (Line 8 on slide 15)
2Adjusted for Gain on FDIC-Modified Whole-Bank Transaction
2
1
 
 
 
17
John J. Martin
Senior Vice President
and Chief Credit Officer
 
 
 
18
($ in Millions)
 
 
 
19
§ Allowance coverage of non-accruals
 increases to 111.1%
§ Allowance remains strong at 2.49% of
 total loans
§ Provision and charge-offs continue to
 decline
 
 
 
20
($ in Millions)
 
 
 
21
 
 
2Q-’11
 
3Q-’11
 
4Q-’11
 
1Q-’12
 
2Q-’12
$ Δ
1Q to 2Q
Core Loan Portfolio
2,724.0
2,712.9
2,713.4
2,793.0
2,797.6
 4.6
Held for Sale
4.9
12.3
17.9
22.1
15.3
 (6.8)
 
Loan Growth:
 
2Q-’11
 
3Q-’11
 
4Q-’11
 
1Q-’12
 
2Q-’12
$ Δ
1Q to 2Q
Commercial/Industrial
546.7
525.7
540.0
550.5
567.9
 17.4
Ag Production
99.4
106.8
104.5
97.2
106.1
 9.0
Investment RE
425.9
425.4
423.6
456.7
462.3
 5.6
 
 
 
 
 
 
 
 
Loan Declines:
 
2Q-’11
 
3Q-’11
 
4Q-’11
 
1Q-’12
 
2Q-’12
$ Δ
1Q to 2Q
1-4 Family (excludes held for sale)
495.2
495.9
481.5
498.4
480.9
 (17.5)
Owner occupied CRE
442.1
468.6
464.7
466.3
453.1
 (13.2)
Farm RE
132.5
128.8
131.4
130.1
126.8
 (3.3)
($ in Millions)
 
 
 
22
§ Core loan portfolio growth led by C & I, IRE and Ag production
§ Renegotiated “A/B” note strategy improving asset quality
§ Focus on progress of agriculture production portfolio
§ OREO and other credit related expenses trending lower 
 
 
 
23
Michael C. Rechin
President
and Chief Executive Officer
 
 
 
24
Increasing Core EPS - $.28, linked qtr 12% and year over year 56%
Increasing Tangible Book Value - $297M, year over year 18%
Increasing Dividend - $.01 to $.03
Growing Revenue - $52.1M, year over year 10%
Growing Loans - $2.8B, year over year 3%
Growing Deposits - $3.3B, year over year 5%
Growing Net Income - $8.1M, year over year 79%
Growing Pipeline - Robust Commercial and Mortgage Pipelines
Investing in Customers - Product Offerings and Platforms
Investing in Employees - Hiring, Training, Development = Engagement
Investing in Facilities - Consolidations and Upgrades
 
 
 
25
§ Continue to grow revenue by intensifying revenue-generating
 activity:
 §  sustain market coverage tactics to accelerate Commercial
   banking opportunities…convert pipeline
 §  bear fruits of new retail checking account packaging
 §  continue to make additional investments in business
  banking professionals in key markets
§ Implementing systems and processes to improve efficiency:
 §  announced three banking center consolidations
 §  invested in consumer collections, human resources
   and finance systems
 §  continue to leverage back-office infrastructure
§ Evaluating non-organic growth opportunities
“Growth and Top-Tier
Performance”
 
 
 
26
§ First Merchants Corporation common stock is traded
 on the NASDAQ Global Select Market under the
 symbol FRME.
§ Additional information can be found at
 www.firstmerchants.com
§ Investor inquiries:
  David L. Ortega, Investor Relations
  Telephone: 765.378.8937
  dortega@firstmerchants.com