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): January 28, 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 January 28, 2005, First Merchants Corporation issued a press
release to report its financial results for the fourth quarter ended December
31, 2004. A copy of the press release is furnished as Exhibit 99.1 to this
Current Report on Form 8-K.
The information in this Form 8-K and the attached Exhibit shall not
be deemed filed for purposes of Section 18 of the Securities Act of 1934, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, except as shall be expressly set forth by specific reference in
such filing.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
Exhibit 99.1 Press Release, dated January 28, 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: January 28, 2005
Page 3 of 10
EXHIBIT INDEX
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Exhibit No.
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99.1 Description
-----------
Press Release, dated January 28, 2005, issued by
First Merchants Corporation.
Page 4 of 10
First Merchants Corporation
Exhibit No. 99.1
Press Release, dated January 28, 2005
N / E / W / S R / E / L / E / A / S / E
January 28, 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 29 PERCENT INCREASE IN FOURTH QUARTER
EARNINGS PER SHARE
First Merchants Corporation (NASDAQ - FRME) has reported fourth quarter diluted
earnings per share totaling $.40, a 29 percent increase over $.31 recorded in
the fourth quarter of 2003. Net income during the period totaled $7.5 million
compared to $5.8 million in 2003.
Quarterly net interest income after the provision for loan losses improved by
$1.6 million, or 6.7 percent and non-interest income rose by $1.1 million, or
14.3 percent.
For the year ending December 31, 2004, diluted earnings per share equaled $1.58
a 5.3 percent increase over $1.50 recorded in 2003. Net income totaled $29.4
million compared to $27.6 million in 2003.
Net interest income for the year improved by $6 million, or 6.4 percent. Gains
from the sale of mortgage loans, reflecting lower refinancing activity, declined
by $2.8 million resulting in decreased non-interest income of $1.3 million.
Total assets equaled $3.2 billion at year-end, an increase of $115 million, or
3.7 percent from December 31, 2003. Loans, investments and bank owned life
insurance, the Corporation's three primary earning assets, totaled $2.9 billion,
an increase of $143 million over the prior year.
Michael L. Cox, President and Chief Executive Officer, stated that, "Our fourth
quarter and full year results are encouraging and reflect an improving
environment for our banking services. Our banking activity continued to expand
as evidenced by $164 million growth in our commercial loan portfolio. Mortgage
banking activity, while near historic high levels, continues to be volatile and
impacting gain on sale income. Overall, we are pleased with the year-end, and
look forward to continued growth in 2005."
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m. Eastern
Time on Friday, January 28, 2005. To participate dial (Toll Free) 877-407-8289
and reference First Merchants Corporation's fourth quarter earnings release. A
replay will be available until January 31, 2005 at 11:59 p.m. 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 # 1628 and
Conference ID # 136101.
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,
NA, Madison Community Bank, First United Bank, Union County National Bank, The
Randolph County 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) December 31,
2004 2003
Assets
Cash and due from banks $ 69,960 $ 77,112
Federal funds sold 32,415
----------- -----------
Cash and cash equivalents 69,960 109,527
Interest-bearing time deposits 9,343 8,141
Investment securities 421,535 356,797
Mortgage loans held for sale 3,367 3,043
Loans 2,428,051 2,353,503
Less: Allowance for loan losses (22,548) (25,493)
---------- -----------
Net Loans 2,405,503 2,328,010
Premises and equipment 38,254 39,639
Federal Reserve and Federal Home Loan Bank stock 22,858 15,502
Interest receivable 17,318 16,840
Core deposit intangibles and goodwill 141,284 142,723
Cash surrender value of life insurance 42,061 37,927
Other assets 20,185 18,663
----------- -----------
Total assets $ 3,191,668 $ 3,076,812
=========== ===========
Liabilities
Deposits
Noninterest-bearing $ 330,685 $ 338,201
Interest-bearing 2,077,465 2,023,900
----------- -----------
Total deposits 2,408,150 2,362,101
Borrowings 440,891 383,170
Interest payable 4,411 4,680
Other liabilities 23,613 22,896
----------- -----------
Total liabilities 2,877,065 2,772,847
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 - 18,573,997 and 18,512,834 2,322 2,314
Additional paid-in capital 150,862 150,310
Retained earnings 161,459 149,096
Accumulated other comprehensive income (loss) (40) 2,245
----------- -----------
Total stockholders' equity 314,603 303,965
----------- -----------
Total liabilities and stockholders' equity $ 3,191,668 $ 3,076,812
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended Year Ended
(In thousands) December 31, December 31,
2004 2003 2004 2003
NET CHARGE OFF'S $ 3,929 $ 5,396 $ 8,650 $ 10,128
AVERAGE BALANCES
Total Assets $3,184,109 $3,070,523 $3,109,104 $2,906,195
Total Loans 2,409,170 2,349,536 2,369,017 2,281,614
Total Deposits 2,444,563 2,361,544 2,365,306 2,257,075
Total Stockholders' Equity 315,869 302,803 310,004 293,603
FINANCIAL RATIOS
Return on Average Assets .94% .76% .95% .93%
Return on Avg. Stockholders' Equity 9.46 7.69 9.49 9.39
Avg. Earning Assets to Avg. Assets 91.38 90.19 90.28 89.99
Allowance for Loan Losses as %
Of Total Loans .93 1.08 .93 1.08
Net Charge Off's as % Of Avg. Loans
(Annualized) .65 .92 .37 .44
Dividend Payout Ratio 57.50 74.19 58.23 60.00
Avg. Stockholders' Equity to Avg. Assets 9.92 9.86 9.97 9.92
Tax Equivalent Yield on Earning Assets 5.74 5.62 5.72 5.98
Cost of Supporting Liabilities 1.89 1.84 1.84 1.97
Net Int. Margin (FTE) on Earning Assets 3.85 3.78 3.88 4.01
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003
Interest income
Loans receivable
Taxable $ 36,363 $ 34,697 $ 139,953 $ 141,236
Tax exempt 138 195 581 707
Investment securities
Taxable 2,224 1,484 8,371 6,105
Tax exempt 1,569 1,451 6,098 6,270
Federal funds sold 92 148 165 487
Deposits with financial institutions 167 22 555 76
Federal Reserve and Federal Home Loan Bank stock 297 39 1,251 649
-------- -------- -------- --------
Total interest income 40,850 38,036 156,974 155,530
-------- -------- -------- --------
Interest expense
Deposits 9,288 8,303 33,844 34,858
Securities sold under repurchase agreements 183 248 517 1,521
Federal Home Loan Bank advances 2,418 2,362 9,777 9,439
Subordinated debentures, revolving
credit and term loans 1,717 1,587 6,784 6,161
Other borrowings 126 233 663 409
-------- -------- -------- --------
Total interest expense 13,732 12,733 51,585 52,388
-------- -------- -------- --------
Net interest income 27,118 25,303 105,389 103,142
Provision for loan losses 1,233 1,047 5,705 9,477
-------- -------- -------- --------
Net interest income
after provision for loan losses 25,885 24,256 99,684 93,665
-------- -------- -------- --------
Other income
Fiduciary activities 1,897 1,603 7,632 6,736
Service charges on deposit accounts 2,924 2,717 11,638 11,105
Other customer fees 1,068 1,039 4,083 4,124
Net realized gains on
sales of available-for-sale securities 456 1,188 950
Commission income 671 569 3,088 2,668
Earnings on cash surrender value
of life insurance 439 446 1,798 1,347
Net gains and fees on sales of loans 801 770 3,629 6,388
Other income 415 443 1,498 2,584
-------- -------- -------- --------
Total other income 8,671 7,587 34,554 35,902
-------- -------- -------- --------
Other expenses
Salaries and employee benefits 13,309 12,599 52,479 50,484
Net occupancy expenses 1,328 1,414 5,308 4,894
Equipment expenses 1,879 2,217 7,665 8,073
Marketing expense 521 538 1,709 1,797
Outside data processing fees 1,158 1,063 4,920 4,118
Printing and office supplies 397 466 1,580 1,706
Goodwill and core deposit amortization 802 923 3,373 3,704
Other expenses 4,272 4,623 14,608 16,503
-------- -------- -------- --------
Total other expenses 23,666 23,843 91,642 91,279
-------- -------- -------- --------
Income before income tax 10,890 8,000 42,596 38,288
Income tax expense 3,422 2,181 13,185 10,717
-------- -------- -------- --------
Net income $ 7,468 $ 5,819 $ 29,411 $ 27,571
======== ======== ======== ========
Per Share Data
Basic Net Income .41 .31 1.59 1.51
Diluted Net Income .40 .31 1.58 1.50
Cash Dividends Paid .23 .23 .92 .90
CONSOLIDATED BALANCE SHEETS
(in thousands) December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
Assets
Cash and due from banks $ 69,960 $ 73,367 $ 72,432 $ 60,366 $ 77,112
Federal funds sold 22,700 32,415
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents 69,960 96,067 72,432 60,366 109,527
Interest-bearing time deposits 9,343 12,204 20,424 10,674 8,141
Investment securities 421,535 420,645 411,140 376,974 356,797
Mortgage loans held for sale 3,367 2,715 4,001 3,883 3,043
Loans 2,428,051 2,395,306 2,365,380 2,320,103 2,353,503
Less: Allowance for loan losses (22,548) (25,243) (25,510) (26,459) (25,493)
----------- ----------- ----------- ----------- ----------
Net loans 2,405,503 2,370,063 2,339,870 2,293,644 2,328,010
Premises and equipment 38,254 38,170 38,437 38,972 39,639
Federal Reserve and Federal Home Loan Bank stock 22,858 22,750 22,494 21,956 15,502
Interest receivable 17,318 17,594 14,943 15,061 16,840
Core deposit intangibles and goodwill 141,284 140,186 141,014 141,867 142,723
Cash surrender value of life insurance 42,061 41,700 41,288 40,843 37,927
Other assets 20,185 19,268 22,247 20,901 18,663
----------- ----------- ----------- ----------- -----------
Total assets $ 3,191,668 $ 3,181,362 $ 3,128,290 $ 3,025,041 $ 3,076,812
=========== =========== =========== =========== ===========
Liabilities
Deposits
Noninterest-bearing $ 330,685 $ 373,548 $ 334,018 $ 303,694 $ 338,201
Interest-bearing 2,077,465 2,083,271 2,038,092 2,009,726 2,023,900
----------- ----------- ----------- ----------- -----------
Total deposits 2,408,150 2,456,819 2,372,110 2,313,420 2,362,101
Borrowings 440,891 379,922 422,885 372,356 383,170
Interest payable 4,411 5,706 4,216 4,542 4,680
Other liabilities 23,613 25,253 24,811 25,676 22,896
----------- ----------- ----------- ----------- -----------
Total liabilities 2,877,065 2,867,700 2,824,022 2,715,994 2,772,847
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 2,322 2,320 2,310 2,317 2,314
Additional paid-in capital 150,862 148,993 149,194 150,679 150,310
Retained earnings 161,459 160,004 154,876 151,771 149,096
Accumulated other comprehensive income (loss) (40) 2,345 (2,112) 4,380 2,245
----------- ----------- ----------- ----------- -----------
Total stockholders' equity 314,603 313,662 304,268 309,147 303,965
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 3,191,668 $ 3,181,362 $ 3,128,290 $ 3,025,141 $ 3,076,812
=========== =========== =========== =========== ===========
NON-PERFORMING ASSETS
(in thousands) December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
90 days past due $ 1,907 $ 6,664 $ 2,488 $ 4,770 $ 6,530
Non-accrual loans 15,355 16,852 17,702 19,914 19,453
Other real estate 1,650 1,546 1,653 1,571 1,399
---------- ---------- ---------- ---------- ------------
Total non-performing assets $ 18,912 $ 25,062 $ 21,843 $ 26,255 $ 27,382
========== ========== ========== ========== ============
Average total loans for the quarter $2,409,170 $2,383,942 $2,343,270 $2,339,080 $ 2,349,536
Total non-performing assets as a
percent of average total loans .79% 1.05% .93% 1.12% 1.17%
Restructured loans $ 2,019 $ 2,169 $ 926 $ 957 $ 641
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands, except share data) December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
Interest Income
Loans receivable
Taxable $ 36,363 $ 35,342 $ 34,021 $ 34,227 $ 34,697
Tax exempt 138 143 137 163 195
Investment securities
Taxable 2,224 2,146 2,052 1,949 1,484
Tax exempt 1,569 1,679 1,420 1,430 1,451
Federal funds sold 92 18 37 18 148
Deposits with financial institutions 167 154 125 109 22
Federal Reserve and Federal Home Loan Bank stock 297 319 307 328 39
-------- -------- -------- -------- --------
Total interest income 40,850 39,801 38,099 38,224 38,036
-------- -------- -------- -------- --------
Interest expense
Deposits 9,288 8,487 7,879 8,190 8,303
Securities sold under repurchase agreements 183 16 98 220 248
Federal Home Loan Bank advances 2,418 2,484 2,433 2,442 2,362
Subordinated debentures, revolving credit
and term loans 1,717 1,822 1,635 1,610 1,587
Other borrowings 126 200 207 130 233
-------- -------- -------- -------- --------
Total interest expense 13,732 13,009 12,252 12,592 12,733
-------- -------- -------- -------- --------
Net interest income 27,118 26,792 25,847 25,632 25,303
Provision for loan losses 1,233 1,380 1,720 1,372 1,047
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses 25,885 25,412 24,127 24,260 24,256
-------- -------- -------- -------- --------
Other income
Fiduciary activities 1,897 1,923 2,002 1,810 1,603
Service charges on deposit accounts 2,924 2,946 2,996 2,772 2,717
Other customer fees 1,068 979 966 1,070 1,039
Net realized gains on sales of
available-for-sale securities 456 332 363 37
Commission income 671 687 777 953 569
Earnings on cash surrender value
of life insurance 439 448 482 429 446
Net gains and fees on sales of loans 801 675 1,352 801 770
Other income 415 421 318 344 443
-------- -------- -------- -------- --------
Total other income 8,671 8,411 9,256 8,216 7,587
-------- -------- -------- -------- --------
Other expenses
Salaries and employee benefits 13,309 13,087 13,059 13,024 12,599
Net occupancy expenses 1,328 1,391 1,335 1,254 1,414
Equipment expenses 1,879 1,853 1,954 1,979 2,217
Marketing expense 521 363 385 440 538
Outside data processing fees 1,158 1,328 1,211 1,223 1,063
Printing and office supplies 397 397 388 398 466
Goodwill and core deposit amortization 802 827 852 892 923
Other expenses 4,272 3,544 3,438 3,354 4,623
-------- -------- -------- -------- --------
Total other expenses 23,666 22,790 22,622 22,564 23,843
-------- -------- -------- -------- --------
Income before income tax 10,890 11,033 10,761 9,912 8,000
Income tax expense 3,422 3,380 3,406 2,977 2,181
-------- -------- -------- -------- --------
Net income $ 7,468 $ 7,653 $ 7,355 $ 6,935 $ 5,819
======== ======== ======== ======== ========
Per Share Data
Basic Net Income $ .41 $ .41 $ .40 $ .37 $ .31
Diluted Net Income .40 .41 .40 .37 .31
Cash Dividends Paid .23 .23 .23 .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,721 18,658 18,633 18,646 18,666
FINANCIAL RATIOS
Return on Average Assets .94% .98% .96% .91% .76%
Return on Avg. Stockholders' Equity 9.46 9.88 9.56 9.05 7.69
Avg. Earning Assets to Avg. Assets 91.38 89.98 89.64 90.05 90.19
Allowance for Loan Losses as %
Of Total Loans .93 1.05 1.08 1.14 1.08
Net Charge Off's as % Of Avg. Loans
(Annualized) .65 .34 .46 .07 .92
Dividend Payout Ratio 57.50 56.10 57.50 62.16 74.19
Avg. Stockholders' Equity to Avg. Assets 9.92 9.89 10.00 10.08 9.86
Tax Equivalent Yield on Earning Assets 5.74 5.79 5.65 5.71 5.62
Cost of Supporting Liabilities 1.89 1.85 1.78 1.84 1.84
Net Int. Margin (FTE) on Earning Assets 3.85 3.94 3.87 3.87 3.78