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 18, 2005
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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 July 18, 2005, First Merchants Corporation issued a press release
to report its financial results for the second quarter ended June 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 July 18, 2005, 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: July 18, 2005
Page 3 of 10
EXHIBIT INDEX
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Exhibit No.
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99.1 Description
-----------
Press Release, dated July 18, 2005, issued by
First Merchants Corporation.
Page 4 of 10
First Merchants Corporation
Exhibit No. 99.1
Press Release, dated July 18, 2005
N / E / W / S R / E / L / E / A / S / E
July 18, 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 7.5% INCREASE IN SECOND QUARTER EARNINGS
PER SHARE
First Merchants Corporation (NASDAQ - FRME) has reported second quarter diluted
earnings per share of $.43, a 7.5 percent increase over $.40 recorded in the
second quarter of 2004. Net income during the quarter totaled $7.9 million
compared to $7.4 million in 2004.
Year-to-date diluted earnings per share totaled $.78, a 1.3 percent increase
over $.77 recorded in 2004. Net income for the six months ended June 30, 2005
totaled $14.5 million compared to $14.3 million in 2004.
Year-to-date net-interest income improved by $3.4 million, or 6.6 percent, as
net-interest margin improved to 3.93 percent. Non-interest income also increased
by $336,000, or 1.9 percent. Mitigating costs include increased provisions for
loan losses of $1.5 million and increased operating expenses of $2.2 million, or
5.0 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 5.0 percent increase.
As of June 30, 2005, non-performing loans totaled 70 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 $73 million, or
2.3 percent from June 30, 2004. Loans, investments and bank-owned life
insurance, the Corporation's three primary earning assets, totaled $2.9 billion,
an increase of $84 million over the prior year.
Michael L. Cox, President and Chief Executive Officer, stated that, "Core
revenue growth remains positive as operating income on a fully taxable
equivalent basis improved by 6.1%. Absent the curtailment expense, our operating
expenses are up just 1.4%. The Corporation's financial results continue to show
steady improvement."
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m.
(CT)/3:30 p.m. (ET) on Wednesday, July 20, 2005. To participate dial (Toll Free)
877-407-9210 and reference First Merchants Corporation's second quarter earnings
release. A replay will be available until July 27, 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 # 160762.
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) June 30,
2005 2004
Assets
Cash and due from banks $ 71,498 $ 72,432
Federal funds sold 0 0
----------- -----------
Cash and cash equivalents 71,498 72,432
Interest-bearing time deposits 9,255 20,424
Investment securities 420,685 411,140
Mortgage loans held for sale 1,356 4,001
Loans 2,440,906 2,365,380
Less: Allowance for loan losses (25,091) (25,510)
---------- ----------
Net Loans 2,415,815 2,339,870
Premises and equipment 37,240 38,437
Federal Reserve and Federal Home Loan Bank stock 23,054 22,494
Interest receivable 16,950 14,943
Core deposit intangibles and goodwill 139,799 141,014
Cash surrender value of life insurance 42,827 41,288
Other assets 22,819 22,247
----------- -----------
Total assets $ 3,201,298 $ 3,128,290
=========== ===========
Liabilities
Deposits
Noninterest-bearing $ 363,654 $ 334,018
Interest-bearing 2,040,624 2,038,092
----------- -----------
Total deposits 2,404,278 2,372,110
Borrowings 454,400 422,885
Interest payable 5,068 4,216
Other liabilities 24,194 24,811
----------- -----------
Total liabilities 2,887,940 2,824,022
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 - 18,415,725 and 18,483,936 2,302 2,310
Additional paid-in capital 146,057 149,194
Retained earnings 167,452 154,876
Accumulated other comprehensive income (2,453) (2,112)
----------- -----------
Total stockholders' equity 313,358 304,268
----------- -----------
Total liabilities and stockholders' equity $ 3,201,298 $ 3,128,290
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended Six Months Ended
(In thousands) June 30, June 30,
2005 2004 2005 2004
NET CHARGE OFF'S $ 1,345 $ 2,669 $ 2,072 $ 3,075
AVERAGE BALANCES
Total Assets $3,191,275 $3,077,161 $3,177,488 $3,059,499
Total Loans 2,430,081 2,343,270 2,422,110 2,341,175
Total Deposits 2,422,688 2,320,546 2,420,810 2,316,627
Total Stockholders' Equity 312,611 307,750 313,961 307,171
FINANCIAL RATIOS
Return on Average Assets .99% .96% .91% .93%
Return on Avg. Stockholders' Equity 10.13 9.56 9.23 9.30
Avg. Earning Assets to Avg. Assets 90.81 89.64 90.71 89.85
Allowance for Loan Losses as %
Of Total Loans 1.03 1.08 1.03 1.08
Net Charge Off's as % Of Avg. Loans
(Annualized) .22 .46 .17 .26
Dividend Payout Ratio 53.49 57.50 58.98 59.74
Avg. Stockholders' Equity to Avg. Assets 9.80 10.00 9.88 10.04
Tax Equivalent Yield on Earning Assets 6.14 5.65 6.01 5.68
Cost of Supporting Liabilities 2.15 1.78 2.08 1.81
Net Int. Margin (FTE) on Earning Assets 3.99 3.87 3.93 3.87
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Interest Income
Loans receivable
Taxable $ 38,831 $ 34,021 $ 75,653 $ 68,248
Tax exempt 189 137 323 300
Investment securities
Taxable 2,376 2,052 4,705 4,001
Tax exempt 1,554 1,420 3,107 2,850
Federal funds sold 112 37 139 55
Deposits with financial institutions 166 125 308 234
Federal Reserve and Federal Home Loan Bank stock 285 307 593 635
-------- -------- -------- --------
Total interest income 43,513 38,099 84,828 76,323
-------- -------- -------- --------
Interest expense
Deposits 10,729 7,879 20,535 16,069
Securities sold under repurchase agreements 193 98 442 318
Federal Home Loan Bank advances 2,443 2,433 4,818 4,875
Subordinated debentures, revolving
credit and term loans 1,839 1,635 3,628 3,245
Other borrowings 388 207 542 337
-------- -------- -------- --------
Total interest expense 15,592 12,252 29,965 24,844
-------- -------- -------- --------
Net interest income 27,921 25,847 54,863 51,479
Provision for loan losses 1,948 1,720 4,615 3,092
-------- -------- -------- --------
Net interest income
after provision for loan losses 25,973 24,127 50,248 48,387
-------- -------- -------- --------
Other income
Fiduciary activities 1,963 2,002 3,925 3,812
Service charges on deposit accounts 3,048 2,996 5,771 5,768
Other customer fees 1,188 966 2,273 2,036
Net realized gains on
sales of available-for-sale securities 6 363 6 400
Commission income 757 777 2,261 1,730
Earnings on cash surrender value of
Life insurance 439 482 840 911
Net gains and fees on sales of loans 779 1,352 1,456 2,153
Other income 582 318 1,276 662
-------- -------- -------- --------
Total other income 8,762 9,256 17,808 17,472
-------- -------- -------- --------
Other expenses
Salaries and employee benefits 13,258 13,059 28,079 26,083
Net occupancy expenses 1,422 1,335 2,798 2,589
Equipment expenses 1,852 1,954 3,709 3,933
Marketing expense 526 385 941 825
Outside data processing fees 1,033 1,211 2,042 2,434
Printing and office supplies 304 388 641 786
Goodwill and core deposit amortization 778 852 1,565 1,744
Other expenses 4,026 3,438 7,655 6,792
-------- -------- -------- --------
Total other expenses 23,199 22,622 47,430 45,186
-------- -------- -------- --------
Income before income tax 11,536 10,761 20,626 20,673
Income tax expense 3,615 3,406 6,138 6,383
-------- -------- -------- --------
Net income $ 7,921 $ 7,355 $ 14,488 $ 14,290
======== ======== ======== ========
Per Share Data
Basic Net Income .43 .40 .78 .77
Diluted Net Income .43 .40 .78 .77
Cash Dividends Paid .23 .23 .46 .46
Average Diluted Shares
Outstanding (in thousands) 18,536 18,633 18,614 18,645
CONSOLIDATED BALANCE SHEETS
(in thousands) June 30, March 31, December 31, September 30, June 30,
2005 2005 2004 2004 2004
Assets
Cash and due from banks $ 71,498 $ 67,904 $ 69,960 $ 73,367 $ 72,432
Federal funds sold 22,075 22,700
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents 71,498 89,979 69,960 96,067 72,432
Interest-bearing time deposits 9,255 10,737 9,343 12,204 20,424
Investment securities 420,685 409,820 421,535 420,645 411,140
Mortgage loans held for sale 1,356 3,084 3,367 2,715 4,001
Loans 2,440,906 2,414,099 2,428,051 2,395,306 2,365,380
Less: Allowance for loan losses (25,091) (24,488) (22,548) (25,243) (25,510)
----------- ----------- ----------- ----------- -----------
Net loans 2,415,815 2,389,611 2,405,503 2,370,063 2,339,870
Premises and equipment 37,240 37,525 38,254 38,170 38,437
Federal Reserve and Federal Home Loan Bank stock 23,054 22,883 22,858 22,750 22,494
Interest receivable 16,950 16,606 17,318 17,594 14,943
Core deposit intangibles and goodwill 139,799 140,578 141,284 140,186 141,014
Cash surrender value of life insurance 42,827 42,426 42,061 41,700 41,288
Other assets 22,819 24,337 20,185 19,268 22,247
----------- ----------- ----------- ----------- -----------
Total assets $ 3,201,298 $ 3,187,586 $ 3,191,668 $ 3,181,362 $ 3,128,290
=========== =========== =========== =========== ===========
Liabilities
Deposits
Noninterest-bearing $ 363,654 $ 333,614 $ 330,685 $ 373,548 $ 334,018
Interest-bearing 2,040,624 2,118,605 2,077,465 2,083,271 2,038,092
----------- ----------- ----------- ----------- -----------
Total deposits 2,404,278 2,452,219 2,408,150 2,456,819 2,372,110
Borrowings 454,400 391,193 440,891 379,922 422,885
Interest payable 5,068 6,562 4,411 5,706 4,216
Other liabilities 24,194 27,014 23,613 25,253 24,811
----------- ----------- ----------- ----------- -----------
Total liabilities 2,887,940 2,876,988 2,877,065 2,867,700 2,824,022
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 2,302 2,312 2,322 2,320 2,310
Additional paid-in capital 146,057 148,347 150,862 148,993 149,194
Retained earnings 167,452 163,761 161,459 160,004 154,876
Accumulated other comprehensive income (loss) (2,453) (3,822) (40) 2,345 (2,112)
----------- ----------- ----------- ----------- -----------
Total stockholders' equity 313,358 310,598 314,603 313,662 304,268
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 3,201,298 $ 3,187,586 $ 3,191,668 $ 3,181,362 $ 3,128,290
=========== =========== =========== =========== ===========
NON-PERFORMING ASSETS
(in thousands) June 30, March 31, December 31, September 30, June 30,
2005 2005 2004 2004 2004
90 days past due $ 3,696 $ 1,948 $ 1,907 $ 6,664 $ 2,488
Non-accrual loans 11,626 13,272 15,355 16,852 17,702
Other real estate 1,804 2,003 1,650 1,546 1,653
---------- ---------- ---------- ---------- ----------
Total non-performing assets $ 17,126 $ 17,223 $ 18,912 $ 25,062 $ 21,843
========== ========== ========== ========== ==========
Average total loans for the quarter $2,430,081 $2,414,050 $2,409,170 $2,383,942 $2,343,270
Total non-performing assets as a
percent of average total loans .70% .71% .79% 1.05% .93%
Restructured loans $ 531 $ 337 $ 2,019 $ 2,169 $ 926
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands, except share data) June 30, March 31, December 31, September 30, June 30,
2005 2005 2004 2004 2004
Interest Income
Loans receivable
Taxable $ 38,831 $ 36,822 $ 36,363 $ 35,342 $ 34,021
Tax exempt 189 134 138 143 137
Investment securities
Taxable 2,376 2,329 2,224 2,146 2,052
Tax exempt 1,554 1,553 1,569 1,679 1,420
Federal funds sold 112 27 92 18 37
Deposits with financial institutions 166 142 167 154 125
Federal Reserve and Federal Home Loan Bank stock 285 308 297 319 307
-------- -------- -------- -------- --------
Total interest income 43,513 41,315 40,850 39,801 38,099
-------- -------- -------- -------- --------
Interest expense
Deposits 10,729 9,806 9,288 8,487 7,879
Securities sold under repurchase agreements 193 249 183 16 98
Federal Home Loan Bank advances 2,443 2,375 2,418 2,484 2,433
Subordinated debentures, revolving credit
and term loans 1,839 1,789 1,717 1,822 1,635
Other borrowings 388 154 126 200 207
-------- -------- -------- -------- --------
Total interest expense 15,592 14,373 13,732 13,009 12,252
-------- -------- -------- -------- --------
Net interest income 27,921 26,942 27,118 26,792 25,847
Provision for loan losses 1,948 2,667 1,233 1,380 1,720
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses 25,973 24,275 25,885 25,412 24,127
-------- -------- -------- -------- --------
Other income
Fiduciary activities 1,963 1,962 1,897 1,923 2,002
Service charges on deposit accounts 3,048 2,723 2,924 2,946 2,996
Other customer fees 1,188 1,085 1,068 979 966
Net realized gains on sales of
available-for-sale securities 6 456 332 363
Commission income 757 1,504 671 687 777
Earnings on cash surrender value
of life insurance 439 401 439 448 482
Net gains and fees on sales of loans 779 677 801 675 1,352
Other income 582 694 415 421 318
-------- -------- -------- -------- --------
Total other income 8,762 9,046 8,671 8,411 9,256
-------- -------- -------- -------- --------
Other expenses
Salaries and employee benefits 13,258 14,821 13,309 13,087 13,059
Net occupancy expenses 1,422 1,376 1,328 1,391 1,335
Equipment expenses 1,852 1,857 1,879 1,853 1,954
Marketing expense 526 415 521 363 385
Outside data processing fees 1,033 1,009 1,158 1,328 1,211
Printing and office supplies 304 337 397 397 388
Goodwill and core deposit amortization 778 787 802 827 852
Other expenses 4,026 3,629 4,272 3,544 3,438
-------- -------- -------- -------- --------
Total other expenses 23,199 24,231 23,666 22,790 22,622
-------- -------- -------- -------- --------
Income before income tax 11,536 9,090 10,890 11,033 10,761
Income tax expense 3,615 2,523 3,422 3,380 3,406
-------- -------- -------- -------- --------
Net income $ 7,921 $ 6,567 $ 7,468 $ 7,653 $ 7,355
======== ======== ======== ======== ========
Per Share Data
Basic Net Income $ .43 $ .35 $ .41 $ .41 $ .40
Diluted Net Income .43 .35 .40 .41 .40
Cash Dividends Paid .23 .23 .23 .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,536 18,697 18,721 18,658 18,633
FINANCIAL RATIOS
Return on Average Assets .99% .83% .94% .98% .96%
Return on Avg. Stockholders' Equity 10.13 8.33 9.46 9.88 9.56
Avg. Earning Assets to Avg. Assets 90.81 90.61 91.38 89.98 89.64
Allowance for Loan Losses as %
Of Total Loans 1.03 1.01 .93 1.05 1.08
Net Charge Off's as % Of Avg. Loans
(Annualized) .22 .12 .65 .34 .46
Dividend Payout Ratio 53.49 65.71 57.50 56.10 57.50
Avg. Stockholders' Equity to Avg. Assets 9.80 9.97 9.92 9.89 10.00
Tax Equivalent Yield on Earning Assets 6.14 5.90 5.74 5.79 5.65
Cost of Supporting Liabilities 2.15 2.01 1.89 1.85 1.78
Net Int. Margin (FTE) on Earning Assets 3.99 3.89 3.85 3.94
3.87