SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995 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 (I.R.S. Employer
incorporation or organization) Identification No.)
200 East Jackson
Muncie, Indiana 47305-2814
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 747-1500
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.125 stated value per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value (not necessarily a reliable indication of the
price at which more than a limited number of shares would trade) of the voting
stock held by non-affiliates of the registrant was $117,223,514 as of March 5,
1996.
As of March 5, 1996 there were outstanding 5,057,632 common shares, without
par value, of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K
Documents Into Which Incorporated
--------- -----------------------
1995 Annual Report to Stockholders Part II (Items 5 through 8)
Definitive Proxy Statement for
Annual Meeting of Shareholders
to be held April 4, 1996 Part III (Items 10 through 13)
EXHIBIT INDEX: Page 26 Total Pages 157
FORM 10-K TABLE OF CONTENTS
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Page
Part I
Item 1 - Business . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2 - Properties . . . . . . . . . . . . . . . . . . . . . . 18
Item 3 - Legal Proceedings. . . . . . . . . . . . . . . . . . . 18
Item 4 - Submission of Matters to a Vote of Security Holders. . 18
Supplemental Information - Executive Officers of the Registrant. 19
Part II
Item 5 - Market For the Registrant's Common Equity and
Related Stockholder Matters. . . . . . . . . . . . . . 20
Item 6 - Selected Financial Data. . . . . . . . . . . . . . . . 20
Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . 20
Item 8 - Financial Statements and Supplementary Data. . . . . . 20
Item 9 - Changes In and Disagreements With Accountants on
Accounting and Financial Disclosures . . . . . . . . . 20
Part III
Item 10 - Directors and Executive Officers of the Registrant. . 21
Item 11 - Executive Compensation . . . . . . . . . . . . . . . 21
Item 12 - Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . 21
Item 13 - Certain Relationships and Related Transactions . . . 21
Part IV
Item 14 - Exhibits, Financial Statement Schedules, and
Reports on Form 8-K. . . . . . . . . . . . . . . . . 22
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . 26
Page 2
PART I
ITEM 1. BUSINESS.
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GENERAL
First Merchants Corporation (the "Corporation") was incorporated under Indiana
law on September 20, 1982, as the bank holding company for First Merchants Bank,
National Association ("First Merchants"), a national banking association
incorporated on February 6, 1893. Prior to December 16, 1991, First Merchants'
name was The Merchants National Bank of Muncie. On November 30, 1988, the
Corporation acquired Pendleton Banking Company ("Pendleton"), a state chartered
commercial bank organized in 1872. On July 31, 1991, the Corporation acquired
First United Bank ("First United"), a state chartered commercial bank organized
in 1882.
As of December 31, 1995, the Corporation had consolidated assets of $707.9
million, consolidated deposits of $588.2 million and stockholders' equity of
$80.5 million.
The Corporation is headquartered in Muncie, Indiana, and is presently engaged in
conducting commercial banking business through the 21 offices of its three
banking subsidiaries. As of December 31, 1995, the Corporation and its
subsidiaries had 379 full-time equivalent employees.
Through its subsidiaries, the Corporation offers a broad range of financial
services, including: accepting time and transaction deposits; making consumer,
commercial, agri-business and real estate mortgage loans; issuing credit cards;
renting safe deposit facilities; providing personal and corporate trust
services; and providing other corporate services, letters of credit and
repurchase agreements.
ACQUISITION POLICY AND PENDING TRANSACTIONS
The Corporation anticipates that it will continue its policy of geographic
expansion through consideration of acquisitions of additional financial
institutions. Management of the Corporation periodically engages in reviewing
and analyzing potential acquisitions. The Corporation is a party to a
definitive agreement to merge with Union National Bancorp and thereby acquire
its wholly-owned subsidiary, The Union County National Bank of Liberty. Union
National Bancorp's principal executive offices are located in Liberty, Indiana.
The Corporation is also a party to a definitive agreement to merge with Randolph
County Bancorp and thereby acquire its wholly-owned subsidiary, The Randolph
County Bank. Randolph County Bancorp's principal executive offices are located
in Winchester, Indiana.
COMPETITION
The Corporation's banking subsidiaries are located in Delaware, Madison, and
Henry counties, Indiana. In addition to the competition provided by the lending
and deposit gathering subsidiaries of national manufacturers, retailers,
insurance companies and investment brokers, the banking subsidiaries compete
vigorously with other banks, thrift institutions, credit unions and finance
companies located within their service areas.
SUPERVISION AND REGULATION
The Corporation is a bank holding company ("BHC") subject to regulation under
the Bank Holding Company Act of 1956, as amended (the "Act"). The Act generally
requires a BHC to obtain prior approval of the Federal Reserve Board (the "FRB")
to acquire or hold more than a 5% voting interest in any bank. The Act
restricts the non-banking activities of BHCs to those which are closely related
to banking activities. As a result of the provisions in the Financial
Institutional Reform, Recovery and Enforcement Act of 1989, BHCs may now own and
operate savings and loan
Page 3
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SUPERVISION AND REGULATION (CONTINUED)
associations or savings banks which, in the past, was prohibited. First
Merchants is a national bank and is supervised, regulated and examined by the
Comptroller of the Currency. Pendleton and First United are state banks and are
supervised, regulated and examined by the Indiana Department of Financial
Institutions (the "DFI"). In addition, First Merchants, as a member of the
Federal Reserve System, is supervised and regulated by the Federal Reserve. In
addition, Pendleton and First United, which are not members of the Federal
Reserve System, are supervised and regulated by the Federal Deposit Insurance
Corporation ("FDIC"). The deposits of First Merchants, Pendleton, and First
United (the "Banks") are insured by the FDIC. Each regulator has the authority
to issue cease-and-desist orders if it determines their activities represent an
unsafe and unsound practice or violation of law.
Under the Act and under regulations of the FRB, the Corporation and its
subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with the extension of credit and are subject to limitations as to
certain intercompany transactions.
Subject to certain limitations, an Indiana bank may establish branches de novo
and may establish branches by acquisition in any location or locations within
Indiana. Indiana law permits intrastate bank holding company acquisitions,
subject to certain limitations. Effective July 1, 1992, Indiana bank holding
companies were permitted to acquire banks, and banks and bank holding companies
in Indiana were permitted to be acquired by bank holding companies, located in
any state in the United States which permits reciprocal entry by Indiana bank
holding companies. Prior to July 1, 1992, such interestate bank holding company
acquisitions were permitted only on a regional, as opposed to national, basis.
Neither the Corporation nor its subsidiaries presently contemplate engaging in
any non-banking related business activities.
During 1991, Congress passed the Federal Deposit Insurance Corporation
Improvement Act ("FDICIA"). In addition to addressing the insurance fund's
financial needs, FDICIA expanded the power of the federal banking regulators.
FDICIA introduced a new system of classifying financial institutions with
respect to their capitalization. Effective in 1993, FDICIA also requires
certain financial institutions, such as First Merchants, to have annual audits
and requires management to issue supplemental reports attesting to an
institution's compliance with laws and regulations and to the adequacy of its
internal controls and procedures.
The Riegle Community Development and Regulatory Improvement Act of 1994 (Act)
was signed into law in 1994. The Act contains seven titles pertaining to
community development and home ownership protection, small business capital
formation, paperwork reduction and regulatory improvement, money laundering and
flood insurance. The Act grants the authority to several agencies to promulgate
regulations under the Act. No regulations have yet been promulgated. The
Corporation cannot predict with certainty the impact of the Act on the banking
industry.
In September, 1994, the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (Interstate Act) was enacted into law. The Interstate Act
authorized interstate acquisitions, mergers and bank branching and agency
banking with affiliates in different states. The Interstate Act amends the Bank
Holding Company Act to allow adequately capitalized and managed bank holding
companies to acquire a bank located in another state beginning in September,
1995. The new act permits full interstate branching after June 1, 1997. After
that date, BHCs may merge
Page 4
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SUPERVISION AND REGULATION (CONTINUED)
existing bank subsidiaries into one bank, with banks also permitted to merge
unaffiliated banks across state lines. States may permit interstate branching
earlier than June 1, 1997, where both states involved with a bank merger
expressly permit it by statute. The Interstate Act permits states to enact a
law expressly prohibiting interstate mergers. Such laws must apply equally to
all out-of-state banks and be passed before June 1, 1997.
The monetary policies of regulatory authorities, including the Federal Reserve
Board, have a significant effect on the operating results of banks and bank
holding companies. The nature of future monetary policies and the effect of
such policies on the future business and earnings of the Corporation and its
subsidiary banks cannot be predicted.
The Corporation is under the jurisdiction of the Securities and Exchange
Commission and state securities commission for matters relating to the offering
and sale of its securities and is subject to the Securities and Exchange
Commission's rules and regulations relating to periodic reporting, reporting to
stockholders, proxy solicitation, and insider trading.
The Corporation's income is principally derived from dividends paid on the
common stock of its subsidiaries. The payment of these dividends are subject to
certain regulatory restrictions.
CAPITAL REQUIREMENTS
The Corporation and its subsidiary banks must meet certain minimum capital
requirements mandated by the FRB, the FDIC and DFI. These regulatory agencies
require BHCs and banks to maintain certain minimum ratios of primary capital to
total assets and total capital to total assets. As of January 1, 1991, the FRB
required bank holding companies to maintain a minimum Tier 1 leverage ratio to 3
per cent capital to total assets; however, for all but the most highly rated
institutions which do not anticipate significant growth, the minimum Tier 1
ratio is 3 per cent plus an additional cushion of 100 to 200 basis points. As
of December 31, 1995, the Corporation's leverage ratio of capital to total
assets was 11.13 per cent.
The FRB and FDIC each have approved the imposition of "risk-adjusted" capital
ratios on BHCs and financial institutions. The Corporation and its subsidiaries
had capital to assets ratios and risk-adjusted capital ratios at December 31,
1995, in excess of the applicable regulatory minimum requirements.
The following table summarizes the Corporation's risk-adjusted capital ratios
under FRB guidelines at December 31, 1995:
Corporation's Regulatory
Consolidated Minimum
Ratio Requirement
----- -----------
Tier 1 Capital to Risk-Weighted
Assets Ratio . . . . . . . . . . . . . . . . 16.99% 4.00%
Total Capital to Risk-Weighted
Assets Ratio . . . . . . . . . . . . . . . . 18.07% 8.00%
Page 5
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STATISTICAL DATA
The following tables set forth statistical data relating the Corporation and its
subsidiaries.
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
The daily average balance sheet amounts, the related interest income or expense,
and average rates earned or paid are presented in the following table.
1995 1994 1993
--------------------------- ------------------------- --------------------------
Interest Interest Interest
Average Income/ Average Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate Balance Expense Rate
------- ------- ---- ------- ------- ---- ------- ------- ----
(Dollars in Thousands on Fully Taxable Equivalent Basis)
Assets:
Federal funds sold . . . . . . . . . . . . . $ 16,426 $ 907 5.5% $ 4,808 $ 217 4.5% $ 15,653 $ 454 2.9%
Interest-bearing time deposits . . . . . . . 87 4 4.6 35 2 5.7 648 35 5.4
Federal Reserve and
Federal Home Loan Bank stock . . . . . . . 1,888 149 7.9 1,879 103 5.5 522 29 5.6
Securities:
Taxable . . . . . . . . . . . . . . . . . . 146,140 8,624 5.9 149,063 8,552 5.7 163,006 10,265 6.3
Tax-exempt . . . . . . . . . . . . . . . . . 51,303 3,807 7.4 52,678 3,690 7.0 50,152 3,631 7.2
------- --------- -------- -------- ------- -------
Total Securities . . . . . . . . . . . . . 197,443 12,431 6.3 201,741 12,242 6.1 213,158 13,896 6.5
Mortgage loans held for sale . . . . . . . . 281 22 7.8
Loans:*
Commercial . . . . . . . . . . . . . . . . . 169,608 16,339 9.6 156,465 12,861 8.2 148,657 10,919 7.3
Bankers' acceptance and commercial paper
purchased . . . . . . . . . . . . . . . . 2,590 149 5.8 454 22 4.8 112 4 3.6
Real estate mortgage. . . . . . . . . . . . . 150,933 13,062 8.7 143,568 11,711 8.2 132,932 11,364 8.5
Installment . . . . . . . . . . . . . . . . . 89,692 8,179 9.1 86,824 7,128 8.2 73,226 6,418 8.8
Tax-exempt loans. . . . . . . . . . . . . . . 836 86 10.3 1,328 127 9.6 2,101 185 8.8
------- --------- -------- -------- ------- -------
Total loans . . . . . . . . . . . . . . . 413,659 37,815 9.1 388,639 31,849 8.2 357,028 28,890 8.1
------- --------- -------- -------- ------- -------
Total earning assets. . . . . . . . . . . 629,784 51,328 8.2 597,102 44,413 7.4 587,009 43,304 7.4
--------- -------- -------
Net unrealized loss on securities
available for sale . . . . . . . . . . . . ( 1,462) (1,387)
Allowance for loan losses . . . . . . . . . . ( 5,074) (4,936) (4,584)
Cash and due from banks . . . . . . . . . . . 22,049 23,316 23,373
Premises and equipment . . . . . . . . . . . 9,957 9,318 8,634
Other assets . . . . . . . . . . . . . . . . 10,093 11,455 11,966
-------- -------- --------
Total assets . . . . . . . . . . . . . . $665,347 $634,868 $626,398
-------- -------- --------
-------- -------- --------
Liabilities:
Interest-bearing deposits:
NOW accounts . . . . . . . . . . . . . . . $ 85,532 1,931 2.3 $ 85,973 1,786 2.1 $ 79,106 1,811 2.3
Money market deposit accounts. . . . . . . 94,710 3,675 3.9 105,083 3,101 3.0 111,136 3,112 2.8
Savings deposits . . . . . . . . . . . . . 53,202 1,434 2.7 55,755 1,429 2.6 51,697 1,414 2.7
Certificates and other time deposits . . . 230,659 12,525 5.4 195,475 7,978 4.1 206,833 9,094 4.4
-------- ------- -------- ------- -------- ------
Total interest-bearing deposits . . . . . 464,103 19,565 4.2 442,286 14,294 3.2 448,772 15,431 3.4
Short-term borrowings . . . . . . . . . . . 44,799 2,490 5.6 45,639 1,837 4.0 35,317 1,067 3.0
Federal Home Loan Bank advance . . . . . . . 515 28 5.4
-------- ------- -------- ------- -------- ------
Total interest-bearing liabilities. . . . 509,417 22,083 4.3 487,925 16,131 3.3 484,089 16,498 3.4
Noninterest-bearing deposits . . . . . . . . 74,436 71,743 69,054
Other liabilities . . . . . . . . . . . . . 5,493 5,096 6,368
-------- -------- --------
Total liabilities . . . . . . . . . . . . 589,346 564,764 559,511
Stockholders' equity . . . . . . . . . . . . 76,001 70,104 66,887
-------- -------- --------
Total liabilities and stockholders' equity $665,347 22,083 3.5**$634,868 16,131 2.7** $626,398 16,498 2.8**
-------- ------ -------- ------- -------- ------
-------- -------- --------
Net interest income . . . . . . . . . . . $ 29,245 4.6 $ 28,282 4.7 $26,806 4.6
-------- -------- -------
-------- -------- -------
*Nonaccruing loans have been included in the average balances.
**Total interest expense divided by total earning assets
Adjustment to convert tax exempt investment
securities to fully taxable equivalent basis,
using marginal rate of 35% for 1995 and 34%
for 1994 and 1993 .................. $ 1,364 $ 1,299 $ 1,298
-------- -------- -------
-------- -------- -------
Page 6
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STATISTICAL DATA (Continued)
ANALYSIS OF CHANGES IN NET INTEREST INCOME
The following table presents net interest income components on a tax-equivalent
basis and reflects changes between periods attributable to movement in either
the average balance or average interest rate for both earning assets and
interest-bearing liabilities. The volume differences were computed as the
difference in volume between the current and prior year times the interest rate
of the prior year, while the interest rate changes were computed as the
difference in rate between the current and prior year times the volume of the
prior year. Volume/rate variances have been allocated on the basis of the
absolute relationship between volume variances and rate variances.
1995 Compared to 1994 1994 Compared to 1993
Increase (Decrease) Due To Increase (Decrease) Due To
--------------------------------- --------------------------
Volume Rate Total Volume Rate Total
------ ---- ----- ------ ---- -----
(Dollars in Thousands on Fully Taxable Equivalent Basis)
Interest income:
Federal funds sold . . . . . . . $ 632 $ 58 $ 690 $ (411) $ 174 $ (237)
Interest-bearing time
deposits. . . . . . . . . . . . 2 2 (35) 2 (33)
Federal Reserve and Federal
Home Loan Bank stock. . . . . . 46 46 75 (1) (74)
Securities . . . . . . . . . . . (243) 432 189 (769) (885) (1,654)
Mortgage loans held for sale . . 22 22
Loans. . . . . . . . . . . . . . 2,206 3,760 5,966 2,597 362 2,959
------- ------- ------- ------- ------- -------
Totals. . . . . . . . . . . . . 2,619 4,296 6,915 1,457 (348) 1,109
------- ------- ------- ------- ------- -------
Interest expense:
NOW accounts . . . . . . . . . . ( 10) 155 145 145 (170) (25)
Money market deposit
accounts. . . . . . . . . . . . ( 326) 900 574 (197) 186 (11)
Savings deposits . . . . . . . . ( 58) 63 5 81 (66) 15
Certificates and other
time deposits . . . . . . . . . 1,647 2,900 4,547 (498) (618) (1,116)
Short-term borrowings. . . . . . ( 36) 689 653 360 410 770
Federal Home Loan Bank advance . 28 28
------- ------- ------- ------- ------- -------
Totals. . . . . . . . . . . . . 1,245 4,707 5,952 (109) (258) (367)
------- ------- ------- ------- ------- -------
Change in net interest
income (fully taxable
equivalent basis). . . . . . . . $1,374 $ (411) 963 $1,566 $ (90) 1,476
------- ------- ------- -------
------- ------- ------- -------
Tax equivalent adjustment
using marginal rate
of 35% for 1995 and 34% for
1994 and 1993. . . . . . . . . . ( 65) (1)
------- -------
Change in net interest
income . . . . . . . . . . . . . $ 898 $1,475
------- -------
------- -------
Page 7
STATISTICAL DATA (Continued)
INVESTMENT SECURITIES
The amortized cost, gross unrealized gains, gross unrealized losses and
approximate market value of the investment securities at the dates
indicated were:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ------------ ------------ ----------
(Dollars in Thousands)
Available for sale at December 31, 1995:
U.S. Treasury. . . . . . . . . . . . $ 4,531 $ 26 $ 3 $ 4,554
Federal agencies . . . . . . . . . . 67,518 1,299 72 68,745
State and municipal. . . . . . . . . 18,769 398 37 19,130
Mortgage and other
asset-backed securities. . . . . . . 24,023 210 121 24,112
Corporate obligations. . . . . . . . 26,120 264 55 26,329
Marketable equity securities . . . . 250 250
----------- ------------ ------------ ----------
Total available for sale . . . . . . 141,211 2,197 288 143,120
Held to maturity at December 31, 1995:
U.S. Treasury. . . . . . . . . . . . 3,103 8 2 3,109
Federal agencies . . . . . . . . . . 11,645 69 21 11,693
State and municipal. . . . . . . . . 40,013 483 57 40,439
Mortgage and other
asset-backed securities. . . . . . . 2,953 8 1 2,961
Corporate obligations. . . . . . . . 500 499
----------- ------------ ------------ ----------
Total held to maturity . . . . . . . 58,214 568 81 58,701
----------- ------------ ------------ ----------
Total investment securities. . . . . $ 199,425 $ 2,765 $ 369 $ 201,821
----------- ------------ ------------ ----------
----------- ------------ ------------ ----------
Available for sale at December 31, 1994:
U.S. Treasury. . . . . . . . . . . . $ 11,817 $ 550 $ 11,267
Federal agencies . . . . . . . . . . 35,565 1,271 34,294
State and municipal. . . . . . . . . 9,762 $ 31 385 9,408
Mortgage and other
asset-backed securities. . . . . . . 22,171 29 836 21,364
Corporate obligations. . . . . . . . 24,221 4 1,195 23,030
----------- ------------ ------------ ----------
Total available for sale . . . . . 103,536 64 4,237 99,363
Held to maturity at December 31, 1994:
U.S. Treasury. . . . . . . . . . . . 12,630 21 222 12,429
Federal agencies . . . . . . . . . . 24,529 29 469 24,089
State and municipal. . . . . . . . . 38,117 211 680 37,648
Mortgage and other
asset-backed securities. . . . . . . 370 370
Corporate obligations. . . . . . . . 2,031 45 1,986
----------- ------------ ------------ ----------
Total held to maturity . . . . . . . 77,677 261 1,416 76,522
----------- ------------ ------------ ----------
Total investment securities. . . . . $ 181,213 $ 325 $ 5,653 $ 175,885
----------- ------------ ------------ ----------
----------- ------------ ------------ ----------
Page 8
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STATISTICAL DATA (Continued)
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ----------- ---------- ---------
Held to maturity at December 31, 1993:
U.S. Treasury. . . . . . . . . . . . $ 45,397 $ 654 $ 1 $ 46,050
Federal agencies . . . . . . . . . . 53,452 691 62 54,081
State and municipal. . . . . . . . . 44,866 1,211 55 46,022
Mortgage and other
asset-backed securities. . . . . . 23,690 219 93 23,816
Corporate obligations. . . . . . . . 36,958 582 87 37,453
--------- -------- --------- ---------
Total investment securities. . . $ 204,363 $ 3,357 $ 298 $ 207,422
--------- -------- --------- ---------
--------- -------- --------- ---------
Cost
----------------------------------------
1995 1994 1993
----------- ---------- ------------
Federal Reserve and Federal Home Loan
Bank stock at December 31:
Federal Reserve Bank stock . . . . . $ 307 $ 307 $ 307
Federal Home Loan Bank stock . . . . 1,585 1,572 1,572
--------- --------- ---------
Total. . . . . . . . . . . . . . $ 1,892 $ 1,879 $ 1,879
--------- --------- ---------
--------- --------- ---------
The Fair Value of Federal Reserve and Federal Home Loan Bank stock
approximates cost.
The maturity distribution (dollars in thousands) and average yields for the
securities portfolio at December 31, 1995 were:
Securities available for sale December 31, 1995:
Within 1 Year 1-5 Years 5 - 10 Years
--------------------- --------------------- ------------------
Amount Yield* Amount Yield* Amount Yield*
--------- ------- --------- -------- -------- ------
U.S. Treasury. . . . . . . . . . $ 1,519 5.37% $ 3,035 5.69%
Federal Agencies . . . . . . . . 17,194 6.26 50,452 6.37 $ 1,099 8.12%
State and Municipal. . . . . . . 11,891 7.29 7,239 7.76
Corporate Obligations. . . . . . 5,923 5.12 18,826 5.89 1,580 6.93
Marketable Equity Security . . . 250
Mortgage and other
asset-backed . . . . . . . . .
-------- -------- -------
Total . . . . . . . . . . . . $ 24,886 5.87 $ 84,204 6.37 $ 9,918 7.67
-------- -------- -------
-------- -------- -------
Mortgage and other
Due After Ten Years asset-backed Total
------------------- ------------ -----
Amount Yield* Amount Yield* Amount Yield*
------ ----- ------ ----- ------ ------
U.S. Treasury. . . . . . . . . . $ 4,554 5.59%
Federal Agencies . . . . . . . . 68,745 6.37
State and Municipal. . . . . . . 19,130 7.46
Corporate Obligations. . . . . . 26,329 5.78
Marketable Equity Security . . . 250
Mortgage and other
asset-backed. . . . . . . . . . $ 24,112 6.12% 24,112 6.12
-------- --------
-------- --------
Total . . . . . . . . . . . . $ 24,112 6.12 $143,120 6.34
-------- --------
-------- --------
Page 9
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STATISTICAL DATA (Continued)
Securities held to maturity at December 31, 1995:
Within 1 Year 1-5 Years 5 - 10 Years
--------------------- --------------------- ------------------
Amount Yield* Amount Yield* Amount Yield*
--------- ------- --------- -------- -------- ------
U.S. Treasury. . . . . . . $ 3,103 5.87%
Federal Agencies . . . . . 6,898 6.13 $ 4,747 6.00%
State and Municipal. . . . 8,692 7.44 27,835 7.02 $ 2,866 8.27%
Corporate Obligations. . . 500 4.45
Mortgage and other
asset-backed . . . . . . ------- -------
Total . . . . . . . . . $19,193 6.64 $32,582 6.87 $ 2,866 8.27
------- ------- -------
------- ------- -------
Mortgage and other
Due After Ten Years asset-backed Total
------------------- ------------ ------------------
Amount Yield* Amount Yield* Amount Yield*
------ ----- ------ ----- -------- ------
U.S. Treasury. . . . . . . $ 3,103 5.87%
Federal Agencies . . . . . 11,645 6.08
State and Municipal. . . . $ 620 8.95% 40,013 7.23
Corporate Obligations. . . 500 4.45
Mortgage and other
asset-backed . . . . . . $ 2,953 6.85% 2,953 6.85
------- ------- -------
------- ------- -------
Total . . . . . . . . $ 620 8.95 $ 2,953 6.85 $58,214 6.88
------- ------- -------
------- ------- -------
*Interest yields on state and municipal securities are presented on a fully
taxable equivalent basis using a 35% rate.
Federal Reserve and Federal Home Loan Bank stock at December 31, 1995:
Amount Yield
------ -----
Federal Reserve Bank stock. . . . . . . $ 307 6.00%
Federal Home Loan Bank stock. . . . . . 1,585 8.00
-------
Total . . . . . . . . . . . . . . . . $ 1,892 7.68
-------
-------
Page 10
STATISTICAL DATA (Continued)
LOAN PORTFOLIO
Types of Loans
- --------------
The loan portfolio at the dates indicated is presented below:
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
(Dollars in Thousands)
Loans at December 31:
Commercial and
industrial loans.. . . . . . . . $ 85,690 $ 78,943 $ 76,760 $ 70,959 $ 76,245
Bankers acceptances and loans
to financial institutions. . . . 2,925 3,000 9,496 2,092
Agricultural production
financing and other loans
to farmers.. . . . . . . . . . . 5,796 5,310 5,591 6,240 6,887
Real estate loans:
Construction.. . . . . . . . . . 9,913 8,126 8,127 2,619 3,191
Commercial and farmland. . . . . 66,749 64,110 58,235 52,402 51,323
Residential. . . . . . . . . . . 166,414 164,760 150,572 140,526 120,281
Individuals' loans for
household and other
personal expenditures. . . . . . 79,993 78,041 70,347 60,625 58,000
Tax-exempt loans . . . . . . . . . 863 1,204 1,474 2,402 2,309
Other loans. . . . . . . . . . . . 651 1,111 2,766 5,039 3,054
-------- -------- -------- -------- --------
Total loans . . . . . . . . . . $418,994 $401,605 $376,872 $350,308 $323,382
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
At December 31, 1995, the Corporation had Residential Real Estate Loans Held
for Sale of $735,522.
MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES
Presented in the table below are the maturities of loans (excluding commercial
real estate, farmland, residential real estate and individuals' loans)
outstanding as of December 31, 1995. Also presented are the amounts due after
one year classified according to the sensitivity to changes in interest rates.
Maturing
--------------------------------------------
Within 1-5 Over 5
1 Year Years Years Total
-------- ------- -------- -------
(Dollars in Thousands)
Commercial and industrial loans . . . $ 45,440 $ 18,497 $ 21,753 $ 85,690
Agricultural production financing
and other loans to farmers. . . . . 4,342 835 619 5,796
Real estate - Construction. . . . . . 8,075 13 1,825 9,913
Tax-exempt loans. . . . . . . . . . . 122 329 412 863
Other loans . . . . . . . . . . . . . 651 651
-------- -------- -------- --------
Total $ 58,630 $ 19,674 $ 24,609 $102,913
-------- -------- -------- --------
-------- -------- -------- --------
Page 11
STATISTICAL DATA (Continued)
Maturing
----------------------
1 - 5 Over
Years 5 Years
------- ---------
(Dollars in Thousands)
Loans maturing after one
year with:
Fixed rates. . . . . . . $ 5,625 $ 10,190
Variable rate. . . . . . 14,049 14,419
-------- --------
Total. . . . . . . . . $ 19,674 $ 24,609
-------- --------
-------- --------
RISK ELEMENTS
December 31
---------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(Dollars in Thousands)
Nonaccruing loans . . . . . . . . . . $ 133 $ 326 $ 527 $ 493 $1,434
Loans contractually past due 90
days or more other than
nonaccruing. . . . . . . . . . . . . 863 703 616 949 1,356
Restructured loans. . . . . . . . . . 625 754 879 548 828
Nonaccruing loans are loans which are reclassified to a nonaccruing status when
in management's judgment the collateral value and financial condition of the
borrower do not justify accruing interest. Interest previously recorded but not
deemed collectible is reversed and charged against current income. Interest
income on these loans is then recognized when collected.
Restructured loans are loans for which the contractual interest rate has been
reduced or other concessions are granted to the borrower because of a
deterioration in the financial condition of the borrower resulting in the
inability of the borrower to meet the original contractual terms of the loans.
Interest income of $55,601 for the year ended December 31, 1995, was recognized
on the nonaccruing and restructured loans listed in the table above, whereas
interest income of $59,168 would have been recognized under their original loan
terms.
Potential problem loans:
Management has identified certain other loans totaling $3,122,000 as of
December 31, 1995, not included in the risk elements table, which are current as
to principal and interest, about which there are doubts as to the to the
borrowers' ability to comply with present repayment terms.
Page 12
STATISTICAL DATA (Continued)
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes the loan loss experience for the years indicated.
1995 1994 1993 1992 1991
-------- -------- -------- -------- -------
(Dollars in Thousands)
Allowance for loan losses:
Balance at January 1 . . . . . . $ 4,998 $ 4,800 $ 4,351 $ 3,867 $ 3,254
Addition resulting from
acquisition. . . . . . . . . . 252
Chargeoffs:
Commercial . . . . . . . . . . 586 526 391 588 806
Real estate mortgage . . . . . 41 129 100 41
Installment. . . . . . . . . . 296 346 388 552 511
------- ------ ------ ------- -------
Total chargeoffs. . . . . . . 882 913 908 1,240 1,358
------- ------ ------ ------- -------
Recoveries:
Commercial . . . . . . . . . . 89 216 240 215 227
Real estate mortgage . . . . . 4 30 5 38 7
Installment. . . . . . . . . . 108 83 98 114 84
------- ------ ------ ------- -------
Total recoveries. . . . . . . 201 329 343 367 318
------- ------ ------ ------- -------
Net chargeoffs . . . . . . . . . 681 584 565 873 1,040
------- ------ ------ ------- -------
Provisions for loan losses . . . 640 782 1,014 1,357 1,401
------- ------ ------ ------- -------
Balance at December 31 . . . . . $ 4,957 $ 4,998 $ 4,800 $ 4,351 $ 3,867
------- ------ ------ ------- -------
------- ------ ------ ------- -------
Ratio of net chargeoffs during the
period to average loans
outstanding during the period. . .16% .15% .16% .26% .35%
Peer Group . . . . . . . . . . . . N/A .25% .49% .65% .95%
Page 13
STATISTICAL DATA (Continued)
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES AT DECEMBER 31:
Presented below is an analysis of the composition of the allowance for loan
losses and per cent of loans in each category to total loans:
1995 1994
--------------------- ---------------------
Amount Per Cent Amount Per Cent
--------- ---------- -------- -----------
(Dollars in Thousands)
Balance at December 31:
Commercial, financial and
agricultural. . . . . . . . . $ 2,212 22.7% $ 2,261 21.3%
Real estate - construction. . . 2.4 2.0
Real estate - mortgage. . . . . 587 55.6 560 57.0
Installment . . . . . . . . . . 1,200 19.1 1,263 19.4
Tax-exempt loans. . . . . . . . .2 .3
Unallocated . . . . . . . . . . 958 N/A 914 N/A
------- ------ ------- -----
Totals. . . . . . . . . . . . . $ 4,957 100.0% $ 4,998 100.0%
------- ------ ------- -----
------- ------ ------- -----
1993 1992
--------------------- ---------------------
Amount Per Cent Amount Per Cent
--------- ---------- -------- -----------
(Dollars in Thousands)
Balance at December 31:
Commercial, financial and
agricultural. . . . . . . . $ 2,187 23.4% $ 2,193 26.2%
Real estate - construction. . 2.2 .7
Real estate - mortgage. . . . 384 55.4 435 55.1
Installment . . . . . . . . . 1,266 18.6 1,473 17.3
Tax-exempt loans. . . . . . . .4 .7
Unallocated . . . . . . . . . 963 N/A 250 N/A
------- ------ ------- -----
Totals $ 4,800 100.0% $ 4,351 100.0%
------- ----- ------- -----
------- ----- ------- -----
1991
------------------------
Amount Per Cent
-------- -----------
(Dollars in Thousands)
Balance at December 31:
Commercial, financial and
agricultural. . . . . . . . $ 2,127 27.3%
Real estate - construction. . 1.0
Real estate - mortgage. . . . 193 53.1
Installment . . . . . . . . . 1,547 17.9
Tax-exempt loans. . . . . . . 0.7
Unallocated . . . . . . . . . N/A
------- -----
Totals $ 3,867 100.0%
------- -----
------- -----
Page 14
STATISTICAL DATA (Continued)
LOAN LOSS CHARGEOFF PROCEDURES
The Banks have weekly meetings at which loan delinquencies, maturities and
problems are reviewed. The Board of Directors receive and review reports on
loans monthly.
The Executive Committee of First Merchants' Board meets bimonthly to approve or
disapprove all new loans in excess of $1,000,000 and the Board reviews all
commercial loans in excess of $50,000 which were made or renewed during the
preceding month. Pendleton's and First United's loan committees, consisting of
all loan officers and the president, meet as required to approve or disapprove
any loan which is in excess of an individual loan officer's lending limit.
All chargeoffs are approved by the senior loan officer and are reported to the
Banks' Boards. The Banks charge off loans when a determination is made that all
or a portion of a loan is uncollectible or as a result of examinations by
regulators and the independent auditors.
PROVISION FOR LOAN LOSSES
In banking, loan losses are one of the costs of doing business. Although the
Banks' management emphasize the early detection and chargeoff of loan losses, it
is inevitable that at any time certain losses exist in the portfolio which have
not been specifically identified. Accordingly, the provision for loan losses is
charged to earnings on an anticipatory basis, and recognized loan losses are
deducted from the allowance so established. Over time, all net loan losses must
be charged to earnings. During the year, an estimate of the loss experience for
the year serves as a starting point in determining the appropriate level for the
provision. However, the amount actually provided in any period may be greater
or less than net loan losses, based on management's judgment as to the
appropriate level of the allowance for loan losses. The determination of the
provision in any period is based on management's continuing review and
evaluation of the loan portfolio, and its judgment as to the impact of current
economic conditions on the portfolio. The evaluation by management includes
consideration of past loan loss experience, changes in the composition of the
loan portfolio, and the current condition and amount of loans outstanding.
Impaired loans are measured by the present value of expected future cash flows,
or the fair value of the collateral of the loans, if collateral dependent.
Impaired loans totaled $3,122,000 at December 31, 1995. An allowance for losses
at December 31, 1995, was not deemed necessary for impaired loans totaling
$1,900,000, but an allowance of $559,000 was recorded for the remaining balance
of impaired loans of $1,222,000. The average balance of impaired loans for 1995
was $1,682,000.
Page 15
STATISTICAL DATA (Continued)
DEPOSITS
The following table shows the average amount of deposits and average rate of
interest paid thereon for the years indicated.
1995 1994 1993
------------------- ------------------- --------------------
Amount Rate Amount Rate Amount Rate
-------- -------- --------- ------- ---------- --------
(Dollars in Thousands)
Balance at December 31:
Noninterest bearing deposits. . . . $ 74,436 $ 71,743 $ 69,054
NOW accounts. . . . . . . . . . . . 85,532 2.3% 85,973 2.1% 79,106 2.3%
Money market deposit accounts . . . 94,710 3.9 105,083 3.0 111,136 2.8
Savings deposits. . . . . . . . . . 53,202 2.7 55,755 2.6 51,697 2.7
Certificates of deposit and
other time deposits. . . . . . . . 230,659 5.4 195,475 4.1 206,833 4.4
-------- -------- --------
Total deposits . . . . . . . . . $538,539 3.6 $514,029 2.8 $517,826 3.0
-------- -------- --------
-------- -------- --------
As of December 31, 1995, certificates of deposit and other time deposits of
$100,000 or more mature as follows:
Maturing
-------------------------------------------------------------
3 Months 3-6 6-12 Over
or less Months Months 12 Months Total
---------- --------- ---------- ------------ ---------
(Dollars in Thousands)
Certificates of deposit and
other time deposits. . . . . $18,517 $ 9,969 $ 5,513 $15,217 $49,216
Per cent . . . . . . . . . . . 38% 20% 11% 31%
RETURN ON EQUITY AND ASSETS
1995 1994 1993
--------- --------- --------
Return on assets (net income divided by
average total assets) . . . . . . . . . . . 1.48% 1.44% 1.39%
Return on equity (net income divided by
average equity). . . . . . . . . . . . . . 2.97 13.06 13.01
Dividend payout ratio (dividends per
share divided by net income per share) . . 39.49 39.44 37.06
Equity to assets ratio (average equity
divided by average total assets) . . . . . 11.42 11.04 10.68
Page 16
STATISTICAL DATA (Continued)
SHORT-TERM BORROWINGS
1995 1994 1993
--------- --------- -------
(Dollars in Thousands)
Balance at December 31:
Federal funds purchased. . . . . . . . . $ 100 $ 12,198 $ 5,300
Securities sold under repurchase
agreements . . . . . . . . . . . . . . 27,293 17,776 26,363
U.S. Treasury demand notes . . . . . . . 6,582 9,215 15,227
--------- --------- --------
Total short-term borrowings. . . . . $ 33,975 $ 39,189 $ 46,890
--------- --------- --------
--------- --------- --------
Securities sold under repurchase agreements are borrowings maturing within
one year and are secured by U. S. Treasury and Federal agency obligations.
Pertinent information with respect to short-term borrowings is summarized below:
1995 1994 1993
--------- --------- --------
(Dollars in Thousands)
Weighted average interest rate on outstanding
balance at December 31:
Securities sold under repurchase
agreements . . . . . . . . . . . . . . . 5.29% 4.86% 2.86%
Total short-term borrowings . . . . . . . . . 5.27 5.42 2.88
Weighted average interest rate during the year:
Securities sold under repurchase
agreements . . . . . . . . . . . . . . . 5.57 3.91 2.94
Total short-term borrowings . . . . . . . . . 5.56 4.03 3.02
Highest amount outstanding at any month end
during the year:
Securities sold under repurchase
agreements . . . . . . . . . . . . . . . $ 54,670 $ 29,115 $ 33,949
Total short-term borrowings . . . . . . . . . 64,443 68,609 51,130
Average amount outstanding during the year:
Securities sold under repurchase
agreements . . . . . . . . . . . . . . . 33,632 23,389 22,882
Total short-term borrowings . . . . . . . . . 44,799 45,639 35,317
Page 17
ITEM 2. PROPERTIES.
The headquarters of the Corporation and First Merchants are located in a five-
story building at 200 East Jackson Street, Muncie, Indiana. This building and
eight branch buildings are owned by First Merchants; five remaining branches of
First Merchants are located in leased premises. Ten automated cash dispensers
are located in leased premises; one cash dispenser is located in premises that
are provided free of charge. All of the Corporation's and First Merchants'
facilities are located in Delaware and Madison Counties of Indiana.
The principal offices of Pendleton are located at 100 West State Street,
Pendleton, Indiana. Pendleton also operates three branches. All of Pendleton's
properties are owned by Pendleton and are located in Madison County, Indiana.
One automated dispenser is located in leased premises.
The principal offices of First United are located at 790 West Mill Street,
Middletown, Indiana. First United also operates two branches. All of First
United's properties are owned by First United and are located in Henry County,
Indiana.
None of the properties owned by the banks are subject to any major
encumbrances. The net investment of the Corporation and subsidiaries in real
estate and equipment at December 31, 1995 was $10,475,935.
ITEM 3. LEGAL PROCEEDINGS.
There is no pending legal proceeding, other than ordinary routine litigation
incidental to the business of the Corporation or its subsidiaries, of a material
nature to which the Corporation or its subsidiaries is a party or of which any
of their properties are subject. Further, there is no material legal proceeding
in which any director, officer, principal shareholder, or affiliate of the
Corporation, or any associate of any such director, officer or principal
shareholder, is a party, or has a material interest, adverse to the Corporation.
None of the routine legal proceedings, individually or in the aggregate, in
which the Corporation or its affiliates are involved are expected to have a
material adverse impact on the financial position or the results of operations
of the Corporation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted during the fourth quarter of 1995 to a vote of
security holders, through the solicitation of proxies or otherwise.
Page 18
SUPPLEMENTAL INFORMATION - EXECUTIVE OFFICERS OF THE REGISTRANT.
The names, ages, and positions with the Corporation and subsidiary banks of all
executive officers of the Corporation are listed below.
Name and Age Offices with the Corporation Principal Occupation
And Subsidiary Banks During Past Five Years
- -------------------- -------------------------------- --------------------------
Stefan S. Anderson Chairman of the Board and Chairman of the Board of
61 President, Corporation and the Corporation and First
First Merchants Merchants since 1987;
President of First
Merchants since 1979 and
of the Corporation since
1982
Thomas E. Buczek First Vice President, First Vice President,
49 First Merchants First Merchants since May
1995; Vice President
prior to May 1995
Michael L. Cox Executive Vice President, Executive Vice President
51 Chief Operating Officer and and Chief Operating
Director, Corporation; Officer, Corporation
Executive Vice President and since May, 1994;
Director, First Merchants Executive Vice President,
First Merchants, since
May, 1994; Director,
Corporation and First
Merchants since December,
1984; President, Information
Systems Group, Ontario Corporation
prior to May 1994.
Jack L. Demaree Senior Vice President and Senior Vice President,
47 Senior Commercial Loan First Merchants since
Officer, First Merchants March 1992, Senior
Commercial Loan Officer,
First Merchants since
1987; Vice President,
First Merchants prior to
March 1992
Roger W. Gilcrest Executive Vice President and Executive Vice President
58 Director, First Merchants First Merchants since
July, 1988; Director of
First Merchants since
July 1992
Paul R. Hoover Senior Vice President, Senior Vice President,
54 First Merchants First Merchants since
1987
Larry R. Helms Senior Vice President and Senior Vice President,
55 General Counsel, Corporation; Corporation since 1982 and
Senior Vice President, Senior Vice President and
First Merchants; General Counsel First
Director of First United; Merchants since 1979;
Director of Pendleton Director of First United
and Pendleton since 1992
Rodney A. Medler First Vice President, First Vice President,
59 First Merchants First Merchants since
May 1995; Vice President
and Cashier, First
Merchants prior to
May 1995
Page 19
SUPPLEMENTAL INFORMATION - EXECUTIVE OFFICERS OF THE REGISTRANT.
Name and Age Offices with the Corporation Principal Occupation
And Subsidiary Banks During Past Five Years
- -------------------- -------------------------------- --------------------------
Michael G. Richardson First Vice President, First Vice President
40 First Merchants since May 1995; Vice
President prior to May
1995
James L. Thrash Senior Vice President and Senior Vice President and
46 Chief Financial Officer, Chief Financial Officer
Corporation; Senior Vice of the Corporation since
President, First Merchants 1990; Chief Financial
Officer, Corporation
prior to May 1990; Senior
Vice President, First
Merchants since 1990
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required under this item is incorporated by reference to page 2
of the Corporation's 1995 Annual Report to Stockholders under the caption
"Stockholder Information," Exhibit 13.
ITEM 6. SELECTED FINANCIAL DATA.
The information required under this item is incorporated by reference to page 1
of the Corporation's 1995 Annual Report to Stockholders under the caption "Five-
Year Summary of Selected Financial Data," Exhibit 13.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information required under this item is incorporated by reference to page 2
through 7 of the Corporation's 1995 Annual Report to Stockholders under the
caption "Management's Discussion and Analysis," Exhibit 13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary data required under this item are
incorporated herein by reference to inside cover and pages 8 through 24 of the
Corporation's 1995 Annual Report to Stockholders, Exhibit 13.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
In connection with its audits for the two most recent fiscal years ended
December 31, 1995, there have been no disagreements with the Corporation's
independent certified public accountants on any matter of accounting principles
or practices, financial statement disclosure or audit scope or procedure, nor
have there been any changes in accountants.
Page 20
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required under this item relating to directors is
incorporated by reference to the Corporation's 1996 Proxy Statement furnished
to its stockholders in connection with an annual meeting to be held April 4,
1996 (the "1996 Proxy Statement"), under the caption "Election of Directors,"
which Proxy Statement has been filed with the Commission. The information
required under this item relating to executive officers is set forth in Part
I, "Supplemental Information - Executive Officers of the Registrant" of this
annual report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
The information required under this item is incorporated by reference to the
Corporation's 1996 Proxy Statement, under the captions, "Compensation of
Directors" and "Compensation of Executive Officers," which Proxy Statement has
been filed with the Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required under this item is incorporated by reference to the
Corporation's 1996 Proxy Statement, under the caption, "Security Ownership of
Certain Beneficial Owners and Management," which Proxy Statement has been
filed with the Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required under this item is incorporated by reference to the
Corporation's 1996 Proxy Statement, under the caption "Interest of Management
in Certain Transactions," which Proxy Statement has been filed with the
Commission.
Page 21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Annual Report Form 10-K
Page Page
Number Number
------------- ----------
(a)1. Financial Statements:
Independent auditor's report . . . . . . . . Inside 130
Cover
Consolidated balance sheet at December 31,
1995 and 1994 . . . . . . . . . . . . . . . 8 138
Consolidated statement of income, years
ended December 31, 1995, 1994 and 1993 . . 9 139
Consolidated statement of changes in
stockholders' equity, years ended
December 31, 1995, 1994 and 1993 . . . . . 10 140
Consolidated statement of cash flows, years
ended December 31, 1995, 1994 and 1993 . . 10-11 140-141
Notes to consolidated financial statements . 12-24 142-154
(a)2. Financial statement schedules:
All schedules are omitted because they are
not applicable or not required, or because
the required information is included in the
consolidated financial statements or
related notes.
(a)3. Exhibits:
Exhibit No: Description of Exhibit:
----------- -----------------------
3.1 Articles of Incorporation and the Articles
of Amendment thereto . . . . . . . . . . . . (F)
3.2 Bylaws and amendments thereto. . . . . . . . . 30-42
10.1 First Merchants Bank, National Association
Management Incentive Plan. . . . . . . . . . (A)
10.2 Unfunded Deferred Compensation Plan,
as Amended . . . . . . . . . . . . . . . . . (D)
10.3 Employee Stock Purchase Plan, (1989) . . . . . (B)
10.4 1989 Stock Option Plan . . . . . . . . . . . . (C)
10.5 Employee Stock Purchase Plan (1994). . . . . . (E)
10.6 1994 Stock Option Plan . . . . . . . . . . . . (E)
10.7 Agreement of Reorganization and Merger by and
between First Merchants Corporation and
Randolph County Bancorp dated January 17,
1996 . . . . . . . . . . . . . . . . . . . . 43-72
10.8 Agreement of Reorganization and Merger by and
between First Merchants Corporation and
Union National Bancorp dated January 24,
1996 . . . . . . . . . . . . . . . . . . . . 73-106
Page 22
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(Continued)
Form 10-K
Page
Exhibit No: Description of Exhibit: Number
----------- ----------------------- ----------
13 1995 Annual Report to Stockholders (except
for the Pages and information thereof
expressly incorporated by reference in this
Form 10-K, the Annual Report to Stockholders
is provided solely for the information of
the Securities and Exchange Commission and
is not deemed "filed" as part of this Form
10-K). . . . . . . . . . . . . . . . . . . . 107-154
21 Subsidiaries of Registrant . . . . . . . . . 27
23 Consent of Independent Auditors . . . . . . . 28
27 Financial Data Schedule . . . . . . . . . . . 157
99.1 Financial statements and independent
auditor's report for First Merchants
Corporation Employee Stock Purchase Plan . . 29
(A) Incorporated by reference to Registrant's Registration Statement on Form
S-4 (SEC File No. 33-110) ordered effective on September 30, 1988.
(B) Incorporated by reference to Registrant's Registration Statement on Form
S-8 (SEC File No. 33-28900) effective on May 24, 1989.
(C) Incorporated by reference to Registrant's Registration Statement on Form
S-8 (SEC File No. 33-28901) effective on May 24, 1989.
(D) Incorporated by reference to Registrant's Form 10-K for year ended
December 31, 1990.
(E) Incorporated by reference to Registrant's Form 10-K for year ended
December 31, 1993.
(F) Incorporated by reference to Registrant's Form 10-K for year ended
December 31, 1994.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the three months ended December 31,
1995.
Page 23
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on this 12th day of
March, 1996.
FIRST MERCHANTS CORPORATION
By /s/ Stefan S. Anderson
----------------------------------------
Stefan S. Anderson, Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report on Form 10-K has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Capacity Date
- ----------------------------- ------------------------------ --------------
/s/ Stefan S. Anderson
- ----------------------------- Director and Chairman, March 12, 1996
Stefan S. Anderson Principal Executive Officer
/s/ Michael L. Cox Director, Executive Vice March 12, 1996
- ----------------------------- President and Chief Operating
Michael L. Cox Officer
/s/ James L. Thrash March 12, 1996
- ----------------------------- Principal Financial and
James L. Thrash Principal Accounting Officer
/s/ Frank A. Bracken
- ----------------------------- Director March 12, 1996
Frank A. Bracken
- ----------------------------- Director March 12, 1996
Thomas B. Clark
/s/ David A. Galliher
- ----------------------------- Director March 12, 1996
David A. Galliher
/s/ Thomas K. Gardiner
- ----------------------------- Director March 12, 1996
Dr. Thomas K. Gardiner
/s/ Hurley C. Goodall
- ----------------------------- Director March 12, 1996
Hurley C. Goodall
/s/ John W. Hartmeyer
- ----------------------------- Director March 12, 1996
John W. Hartmeyer
/s/ Nelson W. Heinrichs
- ----------------------------- Director March 12, 1996
Nelson W. Heinrichs
Page 24
Signature Capacity Date
- ----------------------------- ------------------------------ --------------
/s/ Jon H. Moll
- ----------------------------- Director March 12, 1996
Jon H. Moll
/s/ George A. Sissel
- ----------------------------- Director March 12, 1996
George A. Sissel
/s/ Robert M. Smitson
- ----------------------------- Director March 12, 1996
Robert M. Smitson
/s/ Joseph E. Wilson
- ----------------------------- Director March 12, 1996
Joseph E. Wilson
/s/
- ----------------------------- Director March 12, 1996
Robert F. Wisehart
/s/ John E. Worthen
- ----------------------------- Director March 12, 1996
John E. Worthen
Page 25
INDEX TO EXHIBITS
Form 10-K
Page
Exhibit No: Description of Exhibit: Number
----------- ----------------------- ----------
3.1 Articles of Incorporation and the Articles of
Amendment thereto . . . . . . . . . . . . . . (F)
3.2 Bylaws and amendments thereto . . . . . . . . . 30-42
10.1 First Merchants Bank, National Association
Management Incentive Plan . . . . . . . . . (A)
10.2 Unfunded Deferred Compensation Plan,
as Amended . . . . . . . . . . . . . . . . . (D)
10.3 Employee Stock Purchase Plan (1989) . . . . . . (B)
10.4 1989 Stock Option Plan . . . . . . . . . . . . (C)
10.5 Employee Stock Purchase Plan (1994) . . . . . . (E)
10.6 1994 Stock Option Plan . . . . . . . . . . . . (E)
10.7 Agreement of Reorganization and Merger by and
between First Merchants Corporation and
Randolph County Bancorp dated January 17,
1996 . . . . . . . . . . . . . . . . . . . . 43-72
10.8 Agreement of Reorganization and Merger by and
between First Merchants Corporation and
Union National Bancorp dated January 24,
1996 . . . . . . . . . . . . . . . . . . . . 73-106
13 1995 Annual Report to Stockholders (except
for the Pages and information thereof
expressly incorporated by reference in this
Form 10-K, the Annual Report to Stockholders
is provided solely for the information of
the Securities and Exchange Commission and
is not deemed "filed" as part of this Form
10-K) . . . . . . . . . . . . . . . . . . . . 107-154
21 Subsidiaries of Registrant . . . . . . . . . . 27
23 Consent of Independent Auditors . . . . . . . . 28
27 Financial Data Schedule . . . . . . . . . . . . 157
99.1 Financial statements and independent
auditor's report for First Merchants
Corporation Employee Stock Purchase Plan. . . 29
(A) Incorporated by reference to Registrant's Registration Statement on Form
S-4 (SEC File No. 33-110) ordered effective on September 30, 1988.
(B) Incorporated by reference to Registrant's Registration Statement on Form
S-8 (SEC File No. 33-28900) effective on May 24, 1989.
(C) Incorporated by reference to Registrant's Registration Statement on Form
S-8 (SEC File No. 33-28901) effective on May 24, 1989.
(D) Incorporated by reference to Registrant's Form 10-K for year ended
December 31, 1990.
(E) Incorporated by reference to Registrant's Form 10-K for year ended
December 31, 1993.
(F) Incorporated by reference to Registrant's Form 10-K for year ended
December 31, 1994.
Page 26
EXHIBIT 21--SUBSIDIARIES OF THE REGISTRANT
State of
Name Incorporation
---- -------------
First Merchants Bank, National Association. . . . . . . . . U.S.
Pendleton Banking Company . . . . . . . . . . . . . . . . . Indiana
First United Bank . . . . . . . . . . . . . . . . . . . . . Indiana
Page 27
EXHIBIT 23--CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference to Registration
Statements on Form S-8, File Numbers 33-28900 and 33-28901, of our report
dated January 19, 1996, except for Note 2 as to which the date is January 24,
1996 on the consolidated financial statements of First Merchants Corporation,
which report is incorporated by reference in the Annual Report on Form 10-K
of First Merchants Corporation.
/s/ Geo. S. Olive & Co. LLC
Indianapolis, Indiana
March 18, 1996
Page 28
EXHIBIT 99.1--FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT FOR
FIRST MERCHANTS CORPORATION EMPLOYEE STOCK PURCHASE PLAN
The annual financial statements and independent auditor's report thereon for
First Merchants Corporation Employee Stock Purchase Plan for the year ending
June 30, 1996, will be filed as an amendment to the 1995 Annual Report on
Form 10-K no later than October 28, 1996.
Page 29