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 22, 2008
------------------------------
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))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On January 23, 2008, First Merchants Corporation issued a press release to
report its financial results for the fourth quarter ended December 31, 2007. 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 January 23, 2008, 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: April 22, 2008
EXHIBIT INDEX
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Exhibit No. Description
----------- -----------
99.1 Press Release, dated April 22,2008, issued by
First Merchants Corporation.
First Merchants Corporation
Exhibit No. 99.1
Press Release, dated April 22, 2008
N / E / W / S R / E / L / E / A / S / E
April 22, 2008
FOR IMMEDIATE RELEASE
For more information, contact:
Mark K. Hardwick, Executive Vice President/Chief Financial Officer, 765-751-1857
http://www.firstmerchants.com
SOURCE: First Merchants Corporation, Muncie, Indiana
FIRST MERCHANTS CORPORATION ANNOUNCES 7 PERCENT INCREASE IN FIRST QUARTER
EARNINGS PER SHARE
First Merchants Corporation (NASDAQ - FRME) has reported March 31, 2008 diluted
earnings per share totaling $.45 a 7.1 percent increase over 2007 first quarter
earnings per share of $.42. Net income totaled $8.1 million, a $355,000 increase
over the $7.8 million earned in the first quarter of 2007.
Total assets reached $3.8 billion at quarter-end, an increase of $212 million,
or 6 percent, from March 31, 2007. Loans and investments, the Corporation's
primary earning assets, totaled $3.37 billion, an increase of $157 million, or
4.9 percent over the prior year.
Net-Interest margin expanded by 24 basis points from 3.50 percent in the first
quarter of 2007 to 3.74 percent in 2008. As a result, net-interest income
increased by $3.7 million or 13.8 percent. On March 31, 2008 the Corporation
reported on form 8-K the sale of three prime-based interest rate floors. For the
quarter, $236,000 of the $4.7 million gain was recognized in the Corporation's
net interest margin. Due to the accounting treatment of FASB 133, $277,000 of
the gain was accelerated and recognized in non-interest income.
Total non-interest income increased by $723,000, or 7.4 percent, during the
quarter and total expenses increased by $2.1 million.
Provision expense increased by $2.2 million, or 139 percent, during the quarter
as charge-offs totaled $3.0 million. Non-performing assets increased from 73
basis points to 93 basis points during the quarter and the allowance for loan
losses as a percent of total loans increased to .99 percent.
Michael C. Rechin, President and Chief Executive Officer, stated that, "First
Merchants is a stronger banking company because of the work that has taken place
over the last 12 months. Our company is structurally more efficient, our sales
teams are better equipped to win in the marketplace and our lending discipline
and pricing has improved." Rechin also added that, "Given the volatility in the
banking sector First Merchants management team is pleased with the quarter-end
results. We are managing our loan portfolio rigorously recognizing the softness
in the economy. Our Bankers are working with clients actively to identify
deterioration in cash flow and real estate values. It's our goal to build
earnings momentum while at the same time adding to our allowance for loan
losses."
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m. Eastern
Daylight Time on Tuesday, April 22, 2008. To participate, dial (Toll Free)
800-860-2442 and reference First Merchants Corporation's first quarter earnings.
A replay will be available until April 30, 2008. To access replay, US/Canada
participants should dial (Toll Free) 877-344-7529 or for International
participants, dial 412-317-0088. The replay will require the passcode is 417952.
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,
N.A., First Merchants Bank of Central Indiana, N.A., Lafayette Bank & Trust
Company, N.A., Commerce National Bank and First Merchants Trust Company, N.A.
The Corporation also operates First Merchants Insurance Services, a full-service
property casualty, personal lines, and healthcare insurance agency 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) March 31,
2008 2007
Assets
Cash and due from banks $ 89,961 $ 43,629
Interest-bearing time deposits 21,280 6,785
Investment securities 426,055 476,199
Mortgage loans held for sale 3,494 2,732
Loans 2,937,710 2,731,140
Less: Allowance for loan losses (29,094) (26,819)
----------- ----------
Net loans 2,908,616 2,704,321
Premises and equipment 44,526 43,262
Federal Reserve and Federal Home Loan Bank stock 25,345 23,691
Interest receivable 21,212 21,941
Core deposit intangibles and goodwill 135,056 137,847
Cash surrender value of life insurance 71,663 68,360
Other assets 19,950 26,047
---------- -----------
Total assets $ 3,767,158 $ 3,554,814
========== ===========
Liabilities
Deposits
Noninterest-bearing $ 380,364 $ 325,615
Interest-bearing 2,432,763 2,361,773
---------- -----------
Total deposits 2,813,127 2,687,388
Borrowings 574,462 497,188
Interest payable 7,621 10,834
Other liabilities 23,107 30,756
---------- -----------
Total liabilities 3,418,317 3,226,166
Stockholders' equity
Preferred stock, no-par value
Authorized and unissued -- 500,000 shares
Cumulative Preferred Stock, $1,000 par value:
Authorized -- 600 shares
Issued and outstanding -- 125 shares 125
Common stock, $.125 stated value
Authorized -- 50,000,000 shares
Issued and outstanding -- 17,978,263 and
18,002,787 shares 2,247 2,289
Additional paid-in capital 137,633 143,672
Retained earnings 206,710 191,476
Accumulated other comprehensive loss 2,126 (8,789)
---------- -----------
Total stockholders' equity 348,841 328,648
---------- -----------
Total liabilities and stockholders' equity $ 3,767,158 $ 3,554,814
========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended
(In thousands) March 31,
2008 2007
NET CHARGE OFF'S $ 2,957 $ 1,320
AVERAGE BALANCES
Total Assets $3,758,332 $3,522,334
Total Loans 2,908,162 2,703,134
Total Deposits 2,836,174 2,689,908
Total Stockholders' Equity 344,722 328,342
FINANCIAL RATIOS
Return on Average Assets .86 .88
Return on Avg. Stockholders' Equity 9.43 9.47
Avg. Earning Assets to Avg. Assets 90.38 91.13
Allowance for Loan Losses as %
Of Total Loans .99 .98
Net Charge Off's as % Of Avg. Loans
(Annualized) .41 .20
Dividend Payout Ratio 51.10 54.76
Avg. Stockholders' Equity to Avg.
Assets 9.17 9.32
Tax Equivalent Yield on Earning Assets 6.78 7.01
Cost of Supporting Liabilities 3.04 3.51
Net Int. Margin (FTE) on Earning
Assets 3.74 3.50
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended
March 31,
2008 2007
Interest income
Loans receivable
Taxable $ 51,101 $ 49,645
Tax exempt 165 201
Investment securities
Taxable 3,249 3,282
Tax exempt 1,513 1,661
Federal funds sold 8 1
Deposits with financial institutions 282 123
Federal Reserve and Federal Home Loan Bank
stock 335 328
-------- --------
Total interest income 56,653 55,241
-------- --------
Interest expense
Deposits 19,433 21,806
Federal funds purchased 669 854
Securities sold under repurchase agreements 816 569
Federal Home Loan Bank advances 3,036 2,936
Subordinated debentures, revolving credit
lines and term loans 1,890 2,001
-------- --------
Total interest expense 25,844 28,166
-------- --------
Net interest income 30,809 27,075
Provision for loan losses 3,823 1,599
-------- --------
Net interest income
after provision for loan losses 26,986 25,476
-------- --------
Other income
Service charges on deposit accounts 2,931 2,883
Fiduciary activities 2,142 2,036
Other customer fees 1,679 1,491
Commission income 1,669 1,638
Earnings on cash surrender value
of life insurance 738 685
Net gains and fees on sales of loans 643 532
Net realized gains (losses) on sale of
available-for-sale securities 73 (1)
Other income 652 540
Total other income -------- --------
10,527 9,804
-------- --------
Other expenses
Salaries and employee benefits 16,098 14,726
Net occupancy 1,805 1,598
Equipment 1,654 1,722
Marketing 484 487
Outside data processing fees 882 951
Printing and office supplies 281 299
Core deposit amortization 790 791
Other expenses 4,279 3,620
-------- --------
Total other expenses 26,273 24,194
-------- --------
Income before income tax 11,240 11,086
Income tax expense 3,114 3,315
-------- --------
Net income $ 8,126 $ 7,771
======== ========
Per Share Data
Basic Net Income .45 .42
Diluted Net Income .45 .42
Cash Dividends Paid .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,055 18,497
CONSOLIDATED BALANCE SHEETS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2008 2007 2007 2007 2007
Assets
Cash and due from banks $ 89,961 $ 134,683 $ 85,645 $ 80,921 $ 43,629
Interest-bearing time deposits 21,280 24,931 22,295 8,898 6,785
Investment securities 451,167 474,613 479,281 476,199
426,055
Mortgage loans held for sale 3,494 3,735 4,328 2,842 2,732
Loans 2,937,710 2,876,843 2,869,001 2,806,068 2,731,140
Less: Allowance for loan losses (29,094) (28,228) (27,635) (27,608) (26,819)
----------- ----------- ----------- ----------- ---------
Net loans 2,908,616 2,848,615 2,841,366 2,778,460 2,704,321
Premises and equipment 44,526 44,445 44,255 44,126 43,262
Federal Reserve and Federal Home Loan Bank
stock 25,345 25,250 25,050 23,822 23,691
Interest receivable 21,212 23,402 25,954 21,615 21,941
Core deposit intangibles and goodwill 135,056 135,856 136,266 137,056 137,847
Cash surrender value of life insurance 71,663 70,970 70,082 69,111 68,360
Other assets 19,950 19,033 24,446 23,383 26,047
----------- ----------- ----------- ----------- ----------
Total assets $ 3,767,158 $ 3,782,087 $ 3,754,300 $ 3,669,515 $3,554,814
=========== =========== =========== =========== ==========
Liabilities
Deposits
Noninterest-bearing $ 380,364 $ 370,397 $ 355,339 $ 362,083 $ 325,615
Interest-bearing 2,432,763 2,473,724 2,403,836 2,357,518 2,361,773
----------- ----------- ----------- ----------- -----------
Total deposits 2,813,127 2,844,121 2,759,175 2,719,601 2,687,388
Borrowings 574,462 568,774 620,469 587,574 497,188
Interest payable 7,621 8,325 9,170 10,417 10,834
Other liabilities 23,107 20,931 32,745 24,543 30,756
----------- ----------- ----------- ----------- -----------
Total liabilities 3,418,317 3,442,151 3,421,559 3,342,135 3,226,166
Stockholders' equity
Preferred stock, no-par value
Authorized and unissued -- 500,000 shares
Cumulative Preferred Stock, $1,000 par value:
Authorized -- 600 shares
Issued and outstanding 125
Common stock, $.125 stated value
Authorized -- 50,000,000 shares
Issued and outstanding 2,247 2,250 2,269 2,286 2,289
Additional paid-in capital 137,633 137,801 140,642 143,317 143,672
Retained earnings 206,710 202,750 197,609 193,460 191,476
Accumulated other comprehensive loss 2,126 (2,865) (7,779) (11,683) (8,789)
----------- ----------- ----------- ----------- -----------
Total stockholders' equity 348,841 339,936 332,741 327,380 328,648
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders' $ 3,767,158 $ 3,782,087 $ 3,754,300 $ 3,669,515 $ 3,554,814
equity
=========== =========== =========== =========== ===========
NON-PERFORMING ASSETS
March 31, December September June 30, March 31,
2008 31, 2007 30, 2007 2007 2007
Non Accrual Loans $ 27,465 $ 29,031 $ 30,165 $ 30,820 $ 22,704
Renegotiated Loans 142 145 58 58 59
---------- ----------- ---------- ---------- ----------
Non Performing Loans (NPL) 27,607 29,176 30,223 30,878 22,763
Real Estate Owned and Repossessed Assets 7,372 2,573 2,081 2,274 3,102
---------- ----------- ----------- ----------- ----------
Non Performing Assets (NPA) 34,979 31,749 32,304 33,152 25,865
90+ Days Delinquent 4,996 3,578 3,132 5,203 4,554
---------- ----------- ----------- ----------- -----------
NPAs & 90 Day Delinquent 39,975 35,327 35,436 38,355 30,419
Loan Loss Reserve 29,094 28,228 27,635 27,608 26,819
YTD Charge-offs 2,957 6,819 4,962 2,179 1,320
NPAs / Actual Assets % 0.93% 0.84% 0.86% 0.90% 0.73%
NPAs & 90 day / Actual Assets %
1.06% 0.93% 0.94% 1.05% 0.86%
NPAs / Actual Loans & REO (%)
1.19% 1.10% 1.12% 1.18% 0.95%
Loan Loss Reserves / Actual Loans (%)
0.99% 0.98% 0.96% 0.98% 0.98%
NCOs / YTD Average Loans (%)
0.10% 0.24% 0.18% 0.08% 0.05%
CONSOLIDATED STATEMENTS OF INCOME
March 31, December September June 30, March 31,
(in thousands, except share data) 2008 31, 2007 30, 2007 2007 2007
Loans receivable
Taxable $51,101 $ 53,338 $ 53,081 $ 51,204 $ 49,645
Tax exempt 165 302 368 249 201
Investment securities
Taxable 3,249 3,487 3,581 3,394 3,282
Tax exempt 1,513 1,623 1,613 1,651 1,661
Federal funds sold 8 39 41 91 1
Deposits with financial institutions 282 194 145 120 123
Federal Reserve and Federal Home Loan
Bank stock 335 344 328 299 328
-------- -------- -------- -------- --------
Total interest income 56,653 59,327 59,157 57,008 55,241
-------- -------- -------- -------- --------
Interest expense
Deposits 19,433 22,398 23,327 22,390 21,806
Federal funds purchased 669 692 996 1,047 854
Securities sold under repurchase agreements 816 1,182 1,195 910 569
Federal Home Loan Bank advances 3,036 3,250 3,302 3,009 2,936
Subordinated debentures, revolving credit
lines and term loans 1,890 1,910 1,802 2,037 2,001
-------- -------- -------- -------- --------
Total interest expense 25,844 29,432 30,622 29,393 28,166
-------- -------- -------- -------- --------
Net interest income 30,809 29,895 28,535 27,615 27,075
Provision for loan losses 3,823 2,450 2,810 1,648 1,599
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses 26,986 27,445 25,725 25,967 25,476
-------- -------- -------- -------- --------
Other income
Service charges on deposit accounts 2,931 3,206 3,241 3,091 2,883
Fiduciary activities 2,142 2,094 1,985 2,257 2,036
Other customer fees 1,679 1,686 1,767 1,535 1,491
Commission income 1,669 1,031 1,175 1,269 1,638
Earnings on cash surrender value
of life insurance 738 1,186 998 782 685
Net gains and fees on sales of loans 643 546 749 611 532
Net realized gains (losses) on sales of
available-for-sale securities 73 1 (1)
Other income 652 383 933 221 540
-------- -------- -------- -------- --------
Total other income 10,527 10,133 10,848 9,766 9,804
-------- -------- -------- -------- --------
Other expenses
Salaries and employee benefits 16,098 14,738 14,583 14,796 14,726
Net occupancy 1,805 1,619 1,818 1,612 1,598
Equipment 1,654 1,619 1,645 1,783 1,722
Marketing 484 505 560 653 487
Outside data processing fees 882 872 972 1,036 951
Printing and office supplies 281 329 394 388 299
Core deposit amortization 790 789 789 790 791
Write-off of unamortized
underwriting expense 1,771
Other expenses 4,279 4,776 4,241 4,910 3,620
-------- -------- -------- -------- --------
Total other expenses 26,273 25,247 25,002 27,739 24,194
-------- -------- -------- -------- --------
Income before income tax 11,240 12,331 11,571 7,994 11,086
Income tax expense 3,114 3,021 3,221 1,786 3,315
-------- -------- -------- -------- --------
Net income $8,126 $9,310 $8,350 $ 6,208 $7,771
======== ======== ======== ======== ========
Per Share Data
Basic Net Income $ .45 $ .51 $ .46 $ .34 $ .42
Diluted Net Income .45 .51 .46 .34 .42
Cash Dividends Paid .23 .23 .23 .23
.23
Average Diluted Shares
Outstanding (in thousands) 18,055 18,138 18,276 18,369 18,497
FINANCIAL RATIOS
Return on Average Assets .86% 1.00% .90% .69% .88%
Return on Avg. Stockholders' Equity 9.43 11.10 10.14 7.53 9.47
Avg. Earning Assets to Avg. Assets 90.38 90.70 90.88 90.96 91.13
Allowance for Loan Losses as %
Of Total Loans .99 .98 .96 .98 .98
Net Charge Off's as % Of Avg. Loans
(Annualized) .41 .26 .39 .23 .20
Dividend Payout Ratio 51.10 45.10 50.00 67.65 54.76
Avg. Stockholders' Equity to Avg. Assets 9.17 8.98 8.91 9.15 9.32
Tax Equivalent Yield on Earning Assets 6.78 7.13 7.17 7.09 7.01
Cost of Supporting Liabilities 3.04 3.47 3.65 3.59 3.51
Net Int. Margin (FTE) on Earning Assets 3.74 3.66 3.52 3.50 3.50
LOANS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2008 2007 2007 2007 2007
Commercial and industrial loans $ 724,643 $662,701 $626,301 $590,345 $557,304
Agricultural production financing and
other loans to farmers 123,314 114,324 113,132 103,713 97,784
Real estate loans:
Construction 178,171 165,425 160,624 172,247 151,782
Commercial and farmland 961,431 947,234 912,063 895,301 906,726
Residential 728,956 744,627 769,890 768,392 756,316
Individuals' loans for household and other
personal expenditures
174,857 187,880 194,181 206,435 210,578
Tax exempt loans 11,646 16,423 28,726 23,181 15,306
Lease financing receivables, net of
unearned income 8,438 8,351 8,932 7,906 7,648
Other loans 26,254 29,878 55,152 38,548 27,696
---------- ------------ ----------- ---------- ----------
2,937,710 2,876,843 2,869,001 2,806,068 2,731,140
Allowance for loan losses (29,094) (28,228) (27,635) (27,608) (26,819)
---------- ------------ ----------- ---------- ----------
Total loans $2,908,616 $2,848,615 $2,841,366 $2,778,460 $2,704,321
========== ============= =========== ========== ==========
DEPOSITS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2008 2007 2007 2007 2007
Demand deposits $881,498 $903,380 $825,185 $ 855,458 $787,538
Savings deposits 562,942 552,379 508,139 494,738 530,692
Certificates and other time deposits of
$100,000 or more 459,038 470,733 472,842 443,355 398,061
Other certificates and time deposits 909,649 917,629 953,009 926,050 971,097
------------ ----------- ----------- ---------- ----------
Total deposits $2,813,127 $2,844,121 $2,759,175 $2,719,601 $2,687,388
============ =========== =========== ========== ==========