UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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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 28, 2003
FIRST MERCHANTS CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA
(State or other jurisdiction of incorporation)
0-17071 35-1544218
(Commission File Number) (IRS Employer Identification No.)
200 East Jackson Street
P.O. Box 792
Muncie, Indiana 47305-2814
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (765) 747-1500
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit 99 Press Release, dated April 28, 2003, issued by
First Merchants Corporation
ITEM 9. REGULATION FD DISCLOSURE (INFORMATION PROVIDED UNDER ITEM 12 - RESULTS
OF OPERATIONS AND FINANCIAL CONDITION).
The following information is being provided under Item 12 - Results of
Operations and Financial Condition. It is being furnished under Item 9
of this Form 8-K in accordance with interim guidance issued by the SEC
in Release No. 33-8216. Such information, including the Exhibit
attached hereto, shall not be deemed "filed" for purposes of Section 18
of the Securities Exchange Act of 1934.
On April 28, 2003, First Merchants Corporation issued a press release
to report its financial results for the quarter ended March 31, 2003.
The release is furnished as Exhibit 99 hereto.
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.
By: /s/ Larry R. Helms
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Larry R. Helms, Senior Vice President
Dated: April 28, 2003
EXHIBIT INDEX
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Exhibit No.
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99 Description
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Press Release, dated April 28, 2003, issued by
First Merchants Corporation.
First Merchants Corporation
Exhibit No. 99
Press Release, dated April 28, 2003
N / E / W / S R / E / L / E / A / S / E
April 28, 2003
FOR IMMEDIATE RELEASE
For more information, contact:
Mark K. Hardwick, Senior Vice President/Chief Financial Officer, 765-751-1857
http://firstmerchants.com
SOURCE: First Merchants Corporation, Muncie, Indiana
FIRST MERCHANTS ANNOUNCES 1ST QUARTER 2003 EARNINGS
First Merchants Corporation (NASDAQ - FRME) has reported that 1st quarter 2003
diluted earnings per share improved 7.3%, before a special loan loss provision.
The provision, amounting to $2.8 million, increased the allowance for loan
losses in response to declining collateral values of a commercial borrower.
Consequently, diluted earnings per share for the 1st quarter of 2003 were
reduced from $.44 to $.34. First quarter diluted earnings per share in 2002
amounted to $.41.
Michael L. Cox, President and Chief Executive Officer, stated that, "First
Merchants management is pleased with the Corporation's strategic accomplishments
for the 1st quarter of 2003. The previously announced acquisition of CNBC
Bancorp has added Columbus Ohio as a commercial banking market to the
Corporation's regional footprint and increased total assets to $3 billion.
However, the financial deterioration of a long-time valued commercial client and
an assessment of our loan loss adequacy led us to believe a special provision is
warranted."
The acquisitions of Lafayette Bancorporation, effective April 1, 2002 and CNBC
Bancorp, effective March 1, 2003, significantly impacted 1st quarter results.
The acquisitions accounted for increased average earning assets of $821 million
and $1.3 million of the $3.2 million increase in non-interest income.
Non-performing loans as a percentage of total loans increased to 1.19% from
1.09% as of December 31, 2002. The increase in non-performing loans is solely
attributable to the previously mentioned troubled credit. The allowance for loan
losses increased to 1.29%, up from 1.11% as of December 31, 2002.
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m. Indiana
(East) Time on Monday, April 28, 2003. To participate, dial 888-710-8192 and
reference First Merchants Corporation's first quarter earnings release. A
digital recording will be available two hours after the completion of the
conference from April 28, 2003, to April 30, 2003. To access, US/Canada
participants should call 800-642-1687; or for International/Local participants,
call 706-645-9291 and enter the Conference I.D. 9661911.
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., Madison Community Bank, First United Bank, Union County National Bank, The
Randolph County Bank, First National Bank, Decatur Bank & Trust Company, Frances
Slocum Bank, Lafayette Bank & Trust Company, Commerce National Bank and
Merchants Trust Company. The Corporation also operates First Merchants Insurance
Services, a full-service property casualty, personal lines, and healthcare
insurer, 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 and is rated A+ by Standard
& Poor's Corporation. Quotations are carried in daily newspapers and can be
found on the company's Internet web page (http:/www.firstmerchants.com). Ten
brokerage firms make a market in First Merchants Corporation stock: First
Tennessee Securities; Herzog, Heine, Geduld, LLC; Howe Barnes Investments, Inc.;
Keefe, Bruyette & Woods, Inc.; Knight Securities, L.P.; NatCity Investments,
Inc.; RBC Capital Markets; Sandler O'Neill & Partners; Spear, Leeds & Kellog;
and Stifel, Nicolaus & Co.
* * * *
CONSOLIDATED BALANCE SHEET
(in thousands) March 31,
2003 2002
Assets
Cash and due from banks $ 81,789 $ 44,059
Federal funds sold 54,925 21,194
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Cash and cash equivalents 136,714 65,253
Interest-bearing time deposits 5,170 3,818
Investment securities 333,692 220,361
Mortgage loans held for sale 13,558 163
Loans, net of allowance for loan losses of $29,733 and $15,128 2,261,445 1,348,923
Premises and equipment 38,861 28,426
Federal Reserve and Federal Home Loan Bank stock 13,912 8,350
Interest receivable 16,789 11,356
Core deposit intangibles and goodwill 141,226 33,551
Cash surrender value of life insurance 14,567 6,557
Other assets 23,088 9,154
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Total assets $ 2,999,022 $ 1,735,912
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Liabilities
Deposits
Noninterest-bearing $ 289,835 $ 171,825
Interest-bearing 1,996,836 1,201,861
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Total deposits 2,286,671 1,373,686
Borrowings 388,821 164,954
Interest payable 5,694 5,621
Other liabilities 28,212 8,567
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Total liabilities 2,709,398 1,552,828
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 -- 17,507,662 and 13,427,439 shares 2,188 1,678
Additional paid-in capital 143,615 53,259
Retained earnings 139,743 126,842
Accumulated other comprehensive income 4,078 1,305
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Total stockholders' equity 289,624 183,084
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Total liabilities and stockholders' equity $ 2,999,022 $ 1,735,912
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended
(In thousands) March 31,
2003 2002
NET CHARGE OFF'S $ 1,012 $ 1,205
AVERAGE BALANCES
Total Assets $2,733,077 $1,752,413
Total Loans 2,111,056 1,357,781
Total Deposits 2,078,786 1,386,175
Total Stockholders' Equity 272,939 183,370
FINANCIAL RATIOS
Return on Average Assets .83% 1.25%
Return on Avg. Stockholders' Equity 8.29 12.14
Avg. Earning Assets to Avg. Assets 90.17 93.34
Allowance for Loan Losses as %
Of Total Loans 1.29 1.11
Net Charge Off's as % Of Avg. Loans
(Annualized) .19 .35
Dividend Payout Ratio 67.65 53.66
Avg. Stockholders' Equity to Avg. Assets 9.99 10.30
Tax Equivalent Yield on Earning Assets 6.49 6.89
Cost of Supporting Liabilities 2.11 2.50
Net Int. Margin (FTE) on Earning Assets 4.38 4.39
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except share data) Three Months Ended
March 31,
2003 2002
Interest income
Loans receivable
Taxable $ 35,173 $ 24,266
Tax exempt 165 108
Investment securities
Taxable 1,679 1,903
Tax exempt 1,631 987
Federal funds sold 113 181
Deposits with financial institutions 22 22
Federal Reserve and Federal Home Loan Bank stock 198 124
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Total interest income 38,981 27,591
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Interest expense
Deposits 8,884 8,228
Securities sold under repurchase agreements 449 540
Federal Home Loan Bank advances 2,273 1,423
Trust Preferred Securities 1,206
Other borrowings 159 22
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Total interest expense 12,971 10,213
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Net interest income 26,010 17,378
Provision for loan losses 4,601 1,192
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Net interest income
after provision for loan losses 21,409 16,186
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Other income
Fiduciary activities 1,697 1,369
Service charges on deposit accounts 2,784 1,446
Other customer fees 1,088 904
Net realized gains on
sales of available-for-sale securities 371 118
Commission income 754 542
Other income 1,592 785
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Total other income 8,286 5,164
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Other expenses
Salaries and employee benefits 11,777 7,273
Net occupancy expenses 1,091 734
Equipment expenses 1,844 1,076
Marketing expense 434 308
Deposit insurance expense 72
Outside data processing fees 928 809
Printing and office supplies 407 338
Goodwill and core deposit amortization 828 238
Other expenses 4,132 2,152
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Total other expenses 21,441 13,000
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Income before income tax 8,254 8,350
Income tax expense 2,596 2,871
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Net income $ 5,658 $ 5,479
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Per Share Data
Basic Net Income .34 .41
Diluted Net Income .34 .41
Cash Dividends Paid .23 .22
CONSOLIDATED BALANCE SHEETS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2003 2002 2002 2002 2002
Assets
Cash and due from banks $ 81,789 $ 87,638 $ 73,223 $ 93,420 $ 44,059
Federal funds sold 54,925 31,400 8,750 43,587 21,194
----------- ------------ ----------- ----------- -----------
Cash and cash equivalents 136,714 119,038 81,973 137,007 65,253
Interest-bearing time deposits 5,170 3,568 10,222 14,577 3,818
Investment securities 333,692 342,062 345,452 361,076 220,361
Mortgage loans held for sale 13,558 21,545 14,089 6,518 163
Loans 2,291,178 2,004,377 1,994,038 1,967,859 1,364,051
Less: Allowance for loan losses (29,733) (22,417) (22,147) (21,963) (15,128)
----------- ------------ ---------- ----------- -----------
Net loans 2,261,445 1,981,960 1,971,891 1,945,896 1,348,923
Premises and equipment 38,861 38,645 39,179 39,292 28,426
Federal Reserve and Federal Home Loan Bank stock 13,912 11,409 11,097 11,036 8,350
Interest receivable 16,789 17,346 18,622 17,701 11,356
Core deposit intangibles and goodwill 141,226 107,217 106,753 106,622 33,551
Cash surrender value of life insurance 14,567 14,309 14,143 13,976 6,557
Other assets 23,088 21,588 16,065 10,283 9,154
----------- ------------ ----------- ----------- -----------
Total assets $ 2,999,022 $ 2,678,687 $ 2,629,486 $ 2,663,984 $ 1,735,912
=========== ============ =========== =========== ===========
Liabilities
Deposits
Noninterest-bearing $ 289,835 $ 272,128 $ 246,410 $ 259,353 $ 171,825
Interest-bearing 1,996,836 1,764,560 1,773,325 1,797,188 1,201,861
----------- ------------ ----------- ----------- -----------
Total deposits 2,286,671 2,036,688 2,019,735 2,056,541 1,373,686
Borrowings 388,821 356,927 328,933 337,525 164,954
Interest payable 5,694 6,019 6,813 7,248 5,621
Other liabilities 28,212 17,924 14,132 11,240 8,567
----------- ------------ ----------- ----------- -----------
Total liabilities 2,709,398 2,417,558 2,369,613 2,412,554 1,552,828
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 2,188 2,040 2,039 2,026 1,678
Additional paid-in capital 143,615 116,503 116,204 114,064 53,259
Retained earnings 139,743 138,110 135,266 131,222 126,842
Accumulated other comprehensive income 4,078 4,476 6,364 4,118 1,305
----------- ------------ ----------- ----------- -----------
Total stockholders' equity 289,624 261,129 259,873 251,430 183,084
----------- ------------ ----------- ----------- -----------
Total liabilities and stockholders' equity $ 2,999,022 $ 2,678,687 $ 2,629,486 $ 2,663,984 $ 1,735,912
=========== ============ =========== =========== ===========
NON-PERFORMING ASSETS
(In thousands) March 31, December 31, September 30, June 30, March 31,
2003 2002 2002 2002 2002
90 days past due $ 3,552 $ 6,676 $ 9,786 $ 6,030 $ 4,292
Non-accrual loans 19,747 14,134 13,285 10,911 8,043
Other real estate 1,841 1,691 868 898 659
---------- ------------ ------------ ---------- ----------
Total non-performing assets $ 25,140 $ 22,501 $ 23,939 $ 17,839 $ 12,994
========== ============ ============ ========== ==========
Average total loans for the quarter $2,111,056 $ 2,066,616 $ 1,984,323 $1,951,648 $1,357,781
Total non-performing assets as a
percent of average total loans 1.19% 1.09% 1.21% .91% 0.96%
Restructured loans $ 2,194 $ 2,508 $ 2,326 $ 2,771 $ 1,900
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands, except share data) March 31, December 31, September 30, June 30, March 31,
2003 2002 2002 2002 2002
Interest Income
Loans receivable
Taxable $ 35,173 $ 34,775 $ 35,362 $ 34,875 $ 24,266
Tax exempt 165 235 169 126 108
Investment securities
Taxable 1,679 2,100 2,442 2,641 1,903
Tax exempt 1,631 1,740 1,793 1,670 987
Federal funds sold 113 169 123 84 181
Deposits with financial institutions 22 38 53 84 22
Federal Reserve and Federal Home Loan Bank stock 198 208 206 198 124
-------- -------- -------- -------- --------
Total interest income 38,981 39,265 40,148 39,678 27,591
-------- -------- -------- -------- --------
Interest expense
Deposits 8,884 9,934 10,696 10,842 8,228
Securities sold under repurchase agreements 449 502 517 501 540
Federal Home Loan Bank advances 2,273 2,359 2,283 2,101 1,423
Trust preferred securities 1,206 1,181 1,181 962
Other borrowings 159 154 143 190 22
-------- -------- -------- -------- --------
Total interest expense 12,971 14,130 14,820 14,596 10,213
-------- -------- -------- -------- --------
Net interest income 26,010 25,135 25,328 25,082 17,378
Provision for loan losses 4,601 2,877 1,821 1,284 1,192
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses 21,409 22,258 23,507 23,798 16,186
-------- -------- -------- -------- --------
Other income
Fiduciary activities 1,697 1,487 1,651 1,751 1,369
Service charges on deposit accounts 2,784 2,695 2,626 2,563 1,446
Other customer fees 1,088 993 957 1,064 904
Net realized gains on sales of
available-for-sale securities 371 169 162 290 118
Commission income 754 586 557 518 542
Other income 1,592 1,286 1,693 865 785
-------- -------- -------- -------- --------
Total other income 8,286 7,216 7,646 7,051 5,164
-------- -------- -------- -------- --------
Other expenses
Salaries and employee benefits 11,777 10,849 10,606 10,422 7,273
Net occupancy expenses 1,091 933 999 966 734
Equipment expenses 1,844 1,861 1,880 1,892 1,076
Marketing expense 434 416 415 356 308
Deposit insurance expense 104 143 75 72
Outside data processing fees 928 940 1,018 897 809
Printing and office supplies 407 442 388 429 338
Goodwill and core deposit amortization 828 750 786 815 238
Other expenses 4,132 3,591 2,952 3,086 2,152
-------- -------- -------- -------- --------
Total other expenses 21,441 19,886 19,187 18,938 13,000
-------- -------- -------- -------- --------
Income before income tax 8,254 9,588 11,966 11,911 8,350
Income tax expense 2,596 2,998 4,139 3,971 2,871
-------- -------- -------- -------- --------
Net income $ 5,658 $ 6,590 $ 7,827 $ 7,940 $ 5,479
======== ======== ======== ======== ========
Per Share Data(1)
Basic Net Income $ .34 $ .40 $ .49 $ .49 $ .41
Diluted Net Income .34 .40 .48 .48 .41
Cash Dividends Paid .23 .23 .23 .22 .22
(1) Restated for a five percent (5%) stock dividend distributed September 2002.