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 19, 2006
------------------------------
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 11
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On April 19, 2006, First Merchants Corporation issued a press
release to report its financial results for the first quarter ended March 31,
2006. 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 April 19, 2006, issued by
First Merchants Corporation
Page 2 of 11
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 19, 2006
Page 3 of 11
EXHIBIT INDEX
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Exhibit No.
- -----------
99.1 Description
-----------
Press Release, dated April 19, 2006, issued by
First Merchants Corporation.
Page 4 of 11
First Merchants Corporation
Exhibit No. 99.1
Press Release, dated April 19, 2006
N / E / W / S R / E / L / E / A / S / E
April 19, 2006
FOR IMMEDIATE RELEASE
For more information, contact:
Mark K. Hardwick, Executive Vice President/Chief Financial Officer, 765-751-1857
http://firstmerchants.com
SOURCE: First Merchants Corporation, Muncie, Indiana
FIRST MERCHANTS CORPORATION ANNOUNCES FIRST QUARTER EARNINGS PER SHARE INCREASE
OF 17%
First Merchants Corporation (NASDAQ - FRME) has reported first quarter diluted
earnings per share totaling $.41, a 17.1 percent increase over $.35 recorded in
the first quarter of 2005. Net income during the period totaled $7.5 million
compared to $6.6 million in 2005.
Quarterly net interest income improved $647,000 and the provision for loan
losses decreased $941,000 improving net interest income after the provision for
loan losses by $1,588,000 or 6.5 percent. Total other income declined by
$449,000 and total other expenses declined by $443,000.
As of March 31, 2006, non-performing loans totaled 80 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 $3.3 billion as of quarter-end, an increase of $82 million
from March 31, 2005. Loans, investments and bank owned life insurance, the
Corporation's three primary earning assets, totaled $3.0 billion, an increase of
$113 million over the prior year.
In order to resolve overlapping market issues and solidify sales efforts, the
Corporation merged First United Bank, Middletown into First Merchants Bank,
Muncie on January 1, 2006.
Michael L. Cox, President and Chief Executive Officer, stated that, "Management
is pleased with the Corporation's improved quarterly earnings per share of 17
percent." Cox also stated that, "Given the inversion of the yield curve and
resulting margin compression, continued focus on sales and expense management
will be required to attain our Corporate financial goals for the year."
Page 5 of 11
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m. Eastern
Daylight Time on Wednesday, April 19, 2006. To participate dial (Toll Free)
877-407-9210 and reference First Merchants Corporation's first quarter earnings
release. A replay will be available until April 26, 2006. 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 # 197638.
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, 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).
* * * *
Page 6 of 11
CONSOLIDATED BALANCE SHEETS
(in thousands) March 31,
2006 2005
Assets
Cash and due from banks $ 59,176 $ 67,904
Federal funds sold 22,075
----------- -----------
Cash and cash equivalents 59,176 89,979
Interest-bearing time deposits 9,104 10,737
Investment securities 441,651 409,820
Mortgage loans held for sale 5,170 3,084
Loans 2,491,488 2,414,099
Less: Allowance for loan losses (25,623) (24,488)
----------- -----------
Net loans 2,465,865 2,389,611
Premises and equipment 39,029 37,525
Federal Reserve and Federal Home Loan Bank stock 23,421 22,883
Interest receivable 19,035 16,606
Core deposit intangibles and goodwill 138,174 140,578
Cash surrender value of life insurance 43,964 42,426
Other assets 25,346 24,337
----------- -----------
Total assets $ 3,269,935 $ 3,187,586
=========== ===========
Liabilities
Deposits
Noninterest-bearing $ 325,548 $ 333,614
Interest-bearing 2,120,524 2,118,605
----------- -----------
Total deposits 2,446,072 2,452,219
Borrowings 469,002 391,193
Interest payable 6,412 6,562
Other liabilities 31,711 27,014
----------- -----------
Total liabilities 2,953,197 2,876,988
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 -- 18,440,316 and 18,497,462 shares 2,305 2,312
Additional paid-in capital 146,374 148,347
Retained earnings 177,975 163,761
Accumulated other comprehensive loss (9,916) (3,822)
----------- -----------
Total stockholders' equity 316,738 310,598
----------- -----------
Total liabilities and stockholders' equity $ 3,269,935 $ 3,187,586
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended
(In thousands) March 31,
2006 2005
NET CHARGE OFF'S $ 1,291 $ 727
AVERAGE BALANCES
Total Assets $3,235,933 $3,163,548
Total Loans 2,474,759 2,414,050
Total Deposits 2,407,646 2,418,910
Total Stockholders' Equity 316,629 315,326
FINANCIAL RATIOS
Return on Average Assets .93% .83%
Return on Avg. Stockholders' Equity 9.49 8.33
Avg. Earning Assets to Avg. Assets 91.27 90.61
Allowance for Loan Losses as %
Of Total Loans 1.03 1.01
Net Charge Off's as % Of Avg. Loans
(Annualized) .21 .12
Dividend Payout Ratio 56.10 65.71
Avg. Stockholders' Equity to Avg. Assets 9.78 9.97
Tax Equivalent Yield on Earning Assets 6.64 5.90
Cost of Supporting Liabilities 2.77 2.01
Net Int. Margin (FTE) on Earning Assets 3.87 3.89
Page 7 of 11
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended
March 31,
2006 2005
Interest income
Loans receivable
Taxable $ 43,079 $ 36,822
Tax exempt 168 134
Investment securities
Taxable 2,726 2,329
Tax exempt 1,647 1,553
Federal funds sold 17 27
Deposits with financial institutions 114 142
Federal Reserve and Federal Home Loan Bank stock 311 308
-------- --------
Total interest income 48,062 41,315
-------- --------
Interest expense
Deposits 14,419 9,806
Federal funds purchased 489
Securities sold under repurchase agreements 835 249
Federal Home Loan Bank advances 2,656 2,375
Subordinated debentures, revolving credit lines
and term loans 1,991 1,789
Other borrowings 83 154
-------- --------
Total interest expense 20,473 14,373
-------- --------
Net interest income 27,589 26,942
Provision for loan losses 1,726 2,667
-------- --------
Net interest income
after provision for loan losses 25,863 24,275
-------- --------
Other income
Fiduciary activities 1,951 1,962
Service charges on deposit accounts 2,426 2,723
Other customer fees 1,355 1,085
Net realized gains on
sales of available-for-sale securities 9
Commission income 1,504 1,504
Earnings on cash surrender value
of life insurance 423 401
Net gains and fees on sales of loans 554 677
Other income 375 694
-------- --------
Total other income 8,597 9,046
-------- --------
Other expenses
Salaries and employee benefits 14,392 14,821
Net occupancy expenses 1,434 1,376
Equipment expenses 1,949 1,857
Marketing expense 400 415
Outside data processing fees 883 1,009
Printing and office supplies 304 337
Core deposit amortization 762 787
Other expenses 3,664 3,629
-------- --------
Total other expenses 23,788 24,231
-------- --------
Income before income tax 10,672 9,090
Income tax expense 3,163 2,523
-------- --------
Net income $ 7,509 $ 6,567
======== ========
Per Share Data
Basic Net Income .41 .35
Diluted Net Income .41 .35
Cash Dividends Paid .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,526 18,697
Page 8 of 11
CONSOLIDATED BALANCE SHEETS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2006 2005 2005 2005 2005
Assets
Cash and due from banks $ 59,176 $ 70,417 $ 81,310 $ 71,498 $ 67,904
Federal funds sold 22,075
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents 59,176 70,417 81,310 71,498 89,979
Interest-bearing time deposits 9,104 8,748 10,708 9,255 10,737
Investment securities 441,651 434,266 436,794 420,685 409,820
Mortgage loans held for sale 5,170 4,910 5,026 1,356 3,084
Loans 2,491,488 2,457,427 2,443,931 2,440,906 2,414,099
Less: Allowance for loan losses (25,623) (25,188) (25,149) (25,091) (24,488)
----------- ----------- ----------- ----------- -----------
Net loans 2,465,865 2,432,239 2,418,782 2,415,815 2,389,611
Premises and equipment 39,029 39,417 38,473 37,240 37,525
Federal Reserve and Federal Home Loan Bank stock 23,421 23,200 23,165 23,054 22,883
Interest receivable 19,035 19,690 19,561 16,950 16,606
Core deposit intangibles and goodwill 138,174 138,833 139,597 139,799 140,578
Cash surrender value of life insurance 43,964 43,579 43,230 42,827 42,426
Other assets 25,346 21,780 21,792 22,819 24,337
----------- ----------- ----------- ----------- -----------
Total assets $ 3,269,935 $ 3,237,079 $ 3,238,438 $ 3,201,298 $ 3,187,586
=========== =========== =========== =========== ===========
Liabilities
Deposits
Noninterest-bearing $ 325,548 $ 314,335 $ 346,318 $ 363,654 $ 333,614
Interest-bearing 2,120,524 2,068,241 2,118,975 2,040,624 2,118,605
----------- ----------- ----------- ----------- -----------
Total deposits 2,446,072 2,382,576 2,465,293 2,404,278 2,452,219
Borrowings 469,002 508,236 423,959 454,400 391,193
Interest payable 6,412 5,874 5,643 5,068 6,562
Other liabilities 31,711 26,997 25,153 24,194 27,014
----------- ----------- ----------- ----------- -----------
Total liabilities 2,953,197 2,923,683 2,920,048 2,887,940 2,876,988
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 2,305 2,302 2,313 2,302 2,312
Additional paid-in capital 146,374 145,682 148,004 146,057 148,347
Retained earnings 177,975 174,717 171,419 167,452 163,761
Accumulated other comprehensive loss (9,916) (9,305) (3,346) (2,453) (3,822)
----------- ----------- ----------- ----------- -----------
Total stockholders' equity 316,738 313,396 318,390 313,358 310,598
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 3,269,935 $ 3,237,079 $ 3,238,438 $ 3,201,298 $ 3,187,586
=========== =========== =========== =========== ===========
NON-PERFORMING ASSETS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2006 2005 2005 2005 2005
90 days past due $ 5,188 $ 3,965 $ 3,560 $ 3,696 $ 1,948
Non-accrual loans 11,424 10,030 11,757 11,626 13,272
Other real estate 3,209 2,835 3,023 1,804 2,003
---------- ---------- ---------- ---------- ----------
Total non-performing assets $ 19,821 $ 16,830 $ 18,340 $ 17,126 $ 17,223
========== ========== ========== ========== ==========
Average total loans for the quarter $2,474,759 $2,447,794 $2,444,131 $2,430,081 $2,414,050
Total non-performing assets as a
percent of average total loans .80% .69% .75% .70% .71%
Restructured loans $ 114 $ 310 $ 454 $ 531 $ 337
Page 9 of 11
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands, except share data) March 31, December 31, September 30, June 30, March 31,
2006 2005 2005 2005 2005
Interest Income
Loans receivable
Taxable $ 43,079 $ 41,930 $ 40,853 $ 38,831 $ 36,822
Tax exempt 168 160 160 189 134
Investment securities
Taxable 2,726 2,480 2,427 2,376 2,329
Tax exempt 1,647 1,672 1,595 1,554 1,553
Federal funds sold 17 74 51 112 27
Deposits with financial institutions 114 202 185 166 142
Federal Reserve and Federal Home Loan Bank stock 311 296 296 285 308
-------- -------- -------- -------- --------
Total interest income 48,062 46,814 45,567 43,513 41,315
-------- -------- -------- -------- --------
Interest expense
Deposits 14,419 13,414 12,172 10,729 9,806
Federal funds purchased 489
Securities sold under repurchase agreements 835 647 523 193 249
Federal Home Loan Bank advances 2,656 2,410 2,549 2,443 2,375
Subordinated debentures, revolving credit
lines and term loans 1,991 1,910 1,894 1,839 1,789
Other borrowings 83 307 289 388 154
-------- -------- -------- -------- --------
Total interest expense 20,473 18,688 17,427 15,592 14,373
-------- -------- -------- -------- --------
Net interest income 27,589 28,126 28,140 27,921 26,942
Provision for loan losses 1,726 1,945 1,794 1,948 2,667
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses 25,863 26,181 26,346 25,973 24,275
-------- -------- -------- -------- --------
Other income
Fiduciary activities 1,951 1,762 1,794 1,963 1,962
Service charges on deposit accounts 2,426 2,691 2,836 3,048 2,723
Other customer fees 1,355 1,432 1,389 1,188 1,085
Net realized gains (losses) on sales of
available-for-sale securities 9 (24) 16 6
Commission income 1,504 690 870 757 1,504
Earnings on cash surrender value
of life insurance 423 386 441 439 401
Net gains and fees on sales of loans 554 676 770 779 677
Other income 375 516 664 582 694
-------- -------- -------- -------- --------
Total other income 8,597 8,129 8,780 8,762 9,046
-------- -------- -------- -------- --------
Other expenses
Salaries and employee benefits 14,392 12,596 13,384 13,258 14,821
Net occupancy expenses 1,434 1,428 1,570 1,422 1,376
Equipment expenses 1,949 1,952 1,901 1,852 1,857
Marketing expense 400 625 446 526 415
Outside data processing fees 883 989 979 1,033 1,009
Printing and office supplies 304 400 328 304 337
Core deposit amortization 762 767 770 778 787
Other expenses 3,664 4,469 3,923 4,026 3,629
-------- -------- -------- -------- --------
Total other expenses 23,788 23,226 23,301 23,199 24,231
-------- -------- -------- -------- --------
Income before income tax 10,672 11,084 11,825 11,536 9,090
Income tax expense 3,163 3,553 3,605 3,615 2,523
-------- -------- -------- -------- --------
Net income $ 7,509 $ 7,531 $ 8,220 $ 7,921 $ 6,567
======== ======== ======== ======== ========
Per Share Data
Basic Net Income $ .41 $ .41 $ .45 $ .43 $ .35
Diluted Net Income .41 .41 .44 .43 .35
Cash Dividends Paid .23 .23 .23 .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,526 18,558 18,590 18,536 18,697
FINANCIAL RATIOS
Return on Average Assets .93% .95% 1.03% .99% .83%
Return on Avg. Stockholders' Equity 9.49 9.49 10.38 10.13 8.33
Avg. Earning Assets to Avg. Assets 91.27 91.47 90.83 90.81 90.61
Allowance for Loan Losses as %
Of Total Loans 1.03 1.02 1.03 1.03 1.01
Net Charge Off's as % Of Avg. Loans
(Annualized) .21 .31 .28 .22 .12
Dividend Payout Ratio 56.10 56.10 52.27 53.49 65.71
Avg. Stockholders' Equity to Avg. Assets 9.78 10.05 9.89 9.80 9.97
Tax Equivalent Yield on Earning Assets 6.64 6.62 6.40 6.14 5.90
Cost of Supporting Liabilities 2.77 2.59 2.40 2.15 2.01
Net Int. Margin (FTE) on Earning Assets 3.87 4.03 4.00 3.99 3.89
Page 10 of 11
LOANS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2006 2005 2005 2005 2005
Commercial and industrial loans $ 486,411 $ 461,102 $ 476,010 $ 463,002 $ 447,552
Agricultural production financing and
other loans to farmers 87,433 95,130 94,262 93,274 83,800
Real estate loans:
Construction 175,784 174,783 171,667 166,367 170,498
Commercial and farmland 743,905 734,865 719,154 723,099 726,345
Residential 746,410 751,217 746,777 759,003 760,560
Individuals' loans for household and other
personal expenditures 202,478 200,139 186,792 182,362 187,552
Tax exempt loans 13,656 8,263 12,439 14,135 10,592
Lease financing receivables, net of unearned income 8,193 8,713 9,538 10,533 10,704
Other loans 27,218 23,215 27,292 29,131 16,496
----------- ----------- ---------- ----------- -----------
2,491,488 2,457,427 2,443,931 2,440,906 2,414,099
Allowance for loan losses (25,623) (25,188) (25,149) (25,091) (24,488)
----------- ----------- ---------- ----------- -----------
Total loans $2,465,865 $2,432,239 $2,418,782 $2,415,815 $2,389,611
=========== =========== ========== =========== ===========
DEPOSITS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2006 2005 2005 2005 2005
Demand deposits $ 671,027 $ 690,923 $ 697,597 $ 720,263 $ 686,695
Savings deposits 526,554 566,212 568,366 593,770 655,643
Certificates and other time deposits of
$100,000 or more 320,213 264,665 320,640 234,988 285,878
Other certificates and time deposits 928,278 860,776 878,690 855,257 824,003
----------- ----------- ----------- ----------- -----------
$2,446,072 $2,382,576 $2,465,293 $2,404,278 $2,452,219
=========== =========== =========== =========== ===========
Page 11 of 11