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): May 1, 2007
------------------------------
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 May 1, 2007, First Merchants Corporation issued a press release to
report its financial results for the first quarter ended March 31, 2007. A copy
of the press release is furnished as Exhibit 99.1 to this Current Report on Form
8-K.
The information in this Current Report on Form 8-K, including Exhibit
No. 99.1 hereto, shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to liability
of that section. The information in this Current Report shall not be
incorporated by reference into any filing or other document pursuant to the
Securities Act of 1933, as amended, except as shall be expressly set forth by
specific reference in such filing or document.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
Exhibit 99.1 Press Release, dated May 1, 2007, 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: May 1, 2007
Page 3 of 11
EXHIBIT INDEX
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Exhibit No. Description
----------- -----------
99.1 Press Release, dated May 1, 2007, issued by
First Merchants Corporation.
Page 4 of 11
First Merchants Corporation
Exhibit No. 99.1
Press Release, dated May 1, 2007
N / E / W / S R / E / L / E / A / S / E
May 1, 2007
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 INCREASE IN FIRST QUARTER EARNINGS PER
SHARE
First Merchants Corporation (NASDAQ - FRME) has reported March 31, 2007 net
income of $7.77 million, a $262,000 or 3.49 percent increase over the $7.51
million earned in the first quarter of 2006. Diluted earnings per share totaled
$.42, a $.01 increase over 2006 first quarter earnings per share of $.41.
Total assets equaled $3.55 billion at year-end, an increase of $285 million, or
8.7 percent from March 31, 2006. Loans and investments, the Corporation's
primary earning assets, totaled $3.21 billion, an increase of $272 million or
9.2 percent over the prior year.
Non-interest income increased by $1,207,000 during the quarter as service
charges on deposits increased by $457,000, earnings on cash surrender value of
bank owned life insurance increased by $262,000 and insurance commission
increased by $134,000.
Net-Interest margin declined by 37 basis points from 3.87 percent in the first
quarter of 2006 to 3.50 percent in 2007. As a result, net-interest income
declined by $514,000 despite strong improvements in earning assets as the
Corporation's volume variance totaled a positive $2.7 million mitigated by a
negative rate variance of $3.2 million. The decline in net-interest margin
represents $.02 in earnings per share for the quarter.
Year-to-date operating expense increased by $406,000, a modest 1.7 percent as
management continues the process of streamlining its operating structure.
The allowance for loan losses increased during the last twelve months by $1.2
million as non-performing loans totaled 1.12 basis points of average total loans
and the allowance for loan losses as a percent of total loans equaled .98
percent.
Michael C. Rechin, President and Chief Executive Officer, stated that, "Growth
in non-interest income of 14 percent reflects managements commitment to customer
acquisition and retention and is reflective of our bankers fulfilling the
service needs of our customers." Rechin also added, "As the Corporation's
non-interest income, balance sheet and talent profile grows in conjunction with
the completion of our strategic structural enhancements, First Merchants will
position itself to meet or exceed stakeholder expectations."
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 2:30 p.m. Eastern
Daylight Time on Tuesday, May 1, 2007. To participate, dial (Toll Free)
877-407-9210 and reference First Merchants Corporation's first quarter earnings.
A replay will be available until May 8, 2007. To access replay, 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 # 238591.
During the call we may make Forward Looking Statements about our relative
business outlook. These Forward Looking Statements and all other statements made
during the call that do not concern historical facts are subject to risks and
uncertainties that may materially affect actual results.
Specific Forward Looking Statements include, but are not limited to, any
indications regarding the Financial Services industry, the economy and future
growth of the balance sheet or income statement.
Detailed financial results are reported on the attached pages:
First Merchants Corporation is a financial holding company headquartered in
Muncie, Indiana. Subsidiaries of the Corporation include First Merchants Bank,
N.A., First Merchants Bank of Central Indiana, N.A., Lafayette Bank & Trust
Company, N.A., Commerce National Bank and First Merchants Trust Company, N.A.
The Corporation also operates First Merchants Insurance Services, a full-service
property casualty, personal lines, and healthcare insurance agency and is a
majority member of Indiana Title Insurance Company, LLC, a title insurance
agency.
First Merchants Corporation's common stock is traded over-the-counter on the
NASDAQ National Market System under the symbol FRME. Quotations are carried in
daily newspapers and can be found on the company's Internet web page
(http:/www.firstmerchants.com).
* * * *
CONSOLIDATED BALANCE SHEETS
(in thousands) March 31,
2007 2006
Assets
Cash and due from banks $ 43,629 $ 59,176
Interest-bearing time deposits 6,785 9,104
Investment securities 476,199 441,651
Mortgage loans held for sale 2,732 5,170
Loans 2,731,140 2,491,488
Less: Allowance for loan losses (26,819) (25,623)
---------- -----------
Net loans 2,704,321 2,465,865
Premises and equipment 43,262 39,029
Federal Reserve and Federal Home Loan Bank stock 23,691 23,421
Interest receivable 21,941 19,035
Core deposit intangibles and goodwill 137,847 138,174
Cash surrender value of life insurance 68,360 43,964
Other assets 26,047 25,346
----------- -----------
Total assets $ 3,554,814 $ 3,269,935
=========== ===========
Liabilities
Deposits
Noninterest-bearing $ 325,615 $ 325,548
Interest-bearing 2,361,773 2,120,524
----------- -----------
Total deposits 2,687,388 2,446,072
Borrowings 497,188 469,002
Interest payable 10,834 6,412
Other liabilities 30,756 31,711
----------- -----------
Total liabilities 3,226,166 2,953,197
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 -- 18,315,624 and 18,440,316 shares 2,289 2,305
Additional paid-in capital 143,672 146,374
Retained earnings 191,476 177,975
Accumulated other comprehensive loss (8,789) (9,916)
----------- -----------
Total stockholders' equity 328,648 316,738
----------- -----------
Total liabilities and stockholders' equity $ 3,554,814 $ 3,269,935
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended
(In thousands) March 31,
2007 2006
NET CHARGE OFF'S $ 1,320 $ 1,291
AVERAGE BALANCES
Total Assets $3,522,334 $3,235,933
Total Loans 2,703,134 2,474,759
Total Deposits 2,689,908 2,407,646
Total Stockholders' Equity 328,342 316,629
FINANCIAL RATIOS
Return on Average Assets .88% .93
Return on Avg. Stockholders' Equity 9.47 9.49
Avg. Earning Assets to Avg. Assets 91.13 91.27
Allowance for Loan Losses as %
Of Total Loans .98 1.03
Net Charge Off's as % Of Avg. Loans
(Annualized) .20 .21
Dividend Payout Ratio 54.76 56.10
Avg. Stockholders' Equity to Avg. Assets 9.32 9.78
Tax Equivalent Yield on Earning Assets 7.01 6.64
Cost of Supporting Liabilities 3.51 2.77
Net Int. Margin (FTE) on Earning Assets 3.50 3.87
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended
March 31,
2007 2006
Interest income
Loans receivable
Taxable $ 49,645 $ 43,079
Tax exempt 201 168
Investment securities
Taxable 3,282 2,726
Tax exempt 1,661 1,647
Federal funds sold 1 17
Deposits with financial institutions 123 114
Federal Reserve and Federal Home Loan Bank stock 328 311
-------- --------
Total interest income 55,241 48,062
-------- --------
Interest expense
Deposits 21,806 14,419
Federal funds purchased 854 489
Securities sold under repurchase agreements 569 835
Federal Home Loan Bank advances 2,936 2,656
Subordinated debentures, revolving credit lines
and term loans 2,001 1,991
Other borrowings 83
-------- --------
Total interest expense 28,166 20,473
-------- --------
Net interest income 27,075 27,589
Provision for loan losses 1,599 1,726
-------- --------
Net interest income
after provision for loan losses 25,476 25,863
-------- --------
Other income
Fiduciary activities 2,036 1,951
Service charges on deposit accounts 2,883 2,426
Other customer fees 1,491 1,355
Net realized gains on
sales of available-for-sale securities (1) 9
Commission income 1,638 1,504
Earnings on cash surrender value
of life insurance 685 423
Net gains and fees on sales of loans 532 554
Other income 540 375
-------- --------
Total other income 9,804 8,597
-------- --------
Other expenses
Salaries and employee benefits 14,726 14,392
Net occupancy expenses 1,598 1,434
Equipment expenses 1,722 1,949
Marketing expense 487 400
Outside data processing fees 951 883
Printing and office supplies 299 304
Core deposit amortization 791 762
Other expenses 3,620 3,664
-------- --------
Total other expenses 24,194 23,788
-------- --------
Income before income tax 11,086 10,672
Income tax expense 3,315 3,163
-------- --------
Net income $ 7,771 $ 7,509
======== ========
Per Share Data
Basic Net Income .42 .41
Diluted Net Income .42 .41
Cash Dividends Paid .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,497 18,526
CONSOLIDATED BALANCE SHEETS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2007 2006 2006 2006 2006
Assets
Cash and due from banks $ 43,629 $ 89,957 $ 65,641 $ 71,275 $ 59,176
Interest-bearing time deposits 6,785 11,284 8,717 8,529 9,104
Investment securities 476,199 465,217 468,074 466,882 441,651
Mortgage loans held for sale 2,732 5,413 3,395 5,338 5,170
Loans 2,731,140 2,692,601 2,641,644 2,591,440 2,491,488
Less: Allowance for loan losses (26,819) (26,540) (26,975) (25,884) (25,623)
----------- ----------- ----------- ----------- -----------
Net loans 2,704,321 2,666,061 2,614,669 2,565,556 2,465,865
Premises and equipment 43,262 42,393 40,511 41,122 39,029
Federal Reserve and Federal Home Loan Bank stock 23,691 23,691 23,620 23,889 23,421
Interest receivable 21,941 24,345 23,946 19,539 19,035
Core deposit intangibles and goodwill 137,847 138,638 136,666 137,429 138,174
Cash surrender value of life insurance 68,360 64,213 63,539 44,358 43,964
Other assets 26,047 23,658 23,261 24,346 25,346
----------- ----------- ----------- ----------- -----------
Total assets $ 3,554,814 $ 3,554,870 $ 3,472,039 $ 3,408,263 $ 3,269,935
=========== =========== =========== =========== ===========
Liabilities
Deposits
Noninterest-bearing $ 325,615 $ 362,058 $ 324,601 $ 340,046 $ 325,548
Interest-bearing 2,361,773 2,388,480 2,369,690 2,195,354 2,120,524
----------- ----------- ----------- ----------- -----------
Total deposits 2,687,388 2,750,538 2,694,291 2,535,400 2,446,072
Borrowings 497,188 440,764 419,146 527,347 469,002
Interest payable 10,834 9,326 10,236 6,927 6,412
Other liabilities 30,756 26,917 26,075 25,585 31,711
----------- ----------- ----------- ----------- -----------
Total liabilities 3,226,166 3,227,545 3,149,748 3,095,259 2,953,197
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 2,289 2,305 2,292 2,282 2,305
Additional paid-in capital 143,672 146,460 143,688 142,037 146,374
Retained earnings 191,476 187,965 184,555 181,042 177,975
Accumulated other comprehensive loss (8,789) (9,405) (8,244) (12,357) (9,916)
----------- ----------- ----------- ----------- -----------
Total stockholders' equity 328,648 327,325 322,291 313,004 316,738
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 3,554,814 $ 3,554,870 $ 3,472,039 $ 3,408,263 $ 3,269,935
=========== =========== =========== =========== ===========
NON-PERFORMING ASSETS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2007 2006 2006 2006 2006
90 days past due $ 4,554 $ 2,870 $ 4,253 $ 8,818 $ 5,188
Non-accrual loans 22,704 17,926 16,524 12,611 11,424
Other real estate 3,102 2,160 2,194 2,497 3,209
---------- ---------- ---------- ---------- ----------
Total non-performing assets $ 30,360 $ 22,956 $ 22,971 $ 23,926 $ 19,821
========== ========== ========== ========== ==========
Average total loans for the quarter $2,703,134 $2,653,700 $2,613,805 $2,534,675 $2,474,759
Total non-performing assets as a
percent of average total loans 1.12% .87% .87% .94% .80%
Restructured loans $ 59 $ 84 $ 93 $ 111 $ 114
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands, except share data) March 31, December 31, September 30, June 30, March 31,
2007 2006 2006 2006 2006
Interest Income
Loans receivable
Taxable $ 49,645 $ 49,293 $ 48,738 $ 45,658 $ 43,079
Tax exempt 201 240 189 231 168
Investment securities
Taxable 3,282 3,219 3,289 3,082 2,726
Tax exempt 1,661 1,660 1,645 1,613 1,647
Federal funds sold 1 332 13 11 17
Deposits with financial institutions 123 110 144 132 114
Federal Reserve and Federal Home Loan Bank stock 328 318 307 320 311
-------- -------- -------- -------- --------
Total interest income 55,241 55,172 54,325 51,047 48,062
-------- -------- -------- -------- --------
Interest expense
Deposits 21,806 22,690 20,291 16,914 14,419
Federal funds purchased 854 93 635 625 489
Securities sold under repurchase agreements 569 488 852 1,053 835
Federal Home Loan Bank advances 2,936 2,672 2,796 2,610 2,656
Subordinated debentures, revolving credit
lines and term loans 2,001 2,046 2,067 2,020 1,991
Other borrowings 67 60 59 83
-------- -------- -------- -------- --------
Total interest expense 28,166 28,056 26,701 23,281 20,473
-------- -------- -------- -------- --------
Net interest income 27,075 27,116 27,624 27,766 27,589
Provision for loan losses 1,599 1,245 1,558 1,729 1,726
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses 25,476 25,871 26,066 26,037 25,863
-------- -------- -------- -------- --------
Other income
Fiduciary activities 2,036 1,862 1,863 1,949 1,951
Service charges on deposit accounts 2,883 3,010 3,055 2,771 2,426
Other customer fees 1,491 1,387 1,386 1,389 1,355
Net realized gains (losses) on sales of
available-for-sale securities (1) (4) (9) 9
Commission income 1,638 881 971 946 1,504
Earnings on cash surrender value
of life insurance 685 712 719 432 423
Net gains and fees on sales of loans 532 613 493 511 554
Other income 540 309 348 422 375
-------- -------- -------- -------- --------
Total other income 9,804 8,770 8,835 8,411 8,597
-------- -------- -------- -------- --------
Other expenses
Salaries and employee benefits 14,726 14,157 14,033 13,543 14,392
Net occupancy expenses 1,598 1,498 1,477 1,477 1,434
Equipment expenses 1,722 1,956 2,035 2,007 1,949
Marketing expense 487 508 586 438 400
Outside data processing fees 951 804 841 921 883
Printing and office supplies 299 401 367 424 304
Core deposit amortization 791 781 762 761 762
Other expenses 3,620 4,315 3,854 4,323 3,664
-------- -------- -------- -------- --------
Total other expenses 24,194 24,420 23,955 23,894 23,788
-------- -------- -------- -------- --------
Income before income tax 11,086 10,221 10,946 10,554 10,672
Income tax expense 3,315 2,562 3,207 3,263 3,163
-------- -------- -------- -------- --------
Net income $ 7,771 $ 7,659 $ 7,739 $ 7,291 $ 7,509
======== ======== ======== ======== ========
Per Share Data
Basic Net Income $ .42 $ .42 $ .42 $ .39 $ .41
Diluted Net Income .42 .42 .42 .39 .41
Cash Dividends Paid .23 .23 .23 .23 .23
Average Diluted Shares
Outstanding (in thousands) 18,497 18,498 18,381 18,463 18,526
FINANCIAL RATIOS
Return on Average Assets .88% .88% .90% .88% .93%
Return on Avg. Stockholders' Equity 9.47 9.39 9.72 9.20 9.49
Avg. Earning Assets to Avg. Assets 91.13 90.87 91.26 91.21 91.27
Allowance for Loan Losses as %
Of Total Loans .98 .99 1.02 1.00 1.03
Net Charge Off's as % Of Avg. Loans
(Annualized) .20 .25 .07 .23 .21
Dividend Payout Ratio 54.76 56.10 54.76 58.97 56.10
Avg. Stockholders' Equity to Avg. Assets 9.32 9.32 9.30 9.54 9.78
Tax Equivalent Yield on Earning Assets 7.01 7.07 7.08 6.87 6.64
Cost of Supporting Liabilities 3.51 3.53 3.42 3.07 2.77
Net Int. Margin (FTE) on Earning Assets 3.50 3.54 3.66 3.80 3.87
LOANS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2007 2006 2006 2006 2006
Commercial and industrial loans $ 557,304 $ 537,305 $ 497,280 $ 501,238 $ 486,411
Agricultural production financing and
other loans to farmers 97,784 100,098 104,147 95,352 87,433
Real estate loans:
Construction 151,782 169,491 175,753 178,254 175,784
Commercial and farmland 906,726 861,429 835,403 813,171 743,905
Residential 756,316 749,921 757,116 744,552 746,410
Individuals' loans for household and other
personal expenditures 210,578 223,504 215,237 208,768 202,478
Tax exempt loans 15,306 14,423 16,550 13,656 13,656
Lease financing receivables, net of unearned income 7,648 8,010 8,543 8,589 8,193
Other loans 27,696 28,420 31,615 27,860 27,218
----------- ------------ ---------- ---------- -----------
2,731,140 2,692,601 2,641,644 2,591,440 2,491,488
Allowance for loan losses (26,819) (26,540) (26,975) (25,884) (25,623)
----------- ------------ ---------- ---------- -----------
Total loans $2,704,321 $2,666,061 $2,614,669 $2,565,556 $2,465,865
=========== ============ ========== ========== ===========
DEPOSITS
(in thousands) March 31, December 31, September 30, June 30, March 31,
2007 2006 2006 2006 2006
Demand deposits $ 787,538 $ 883,294 $ 743,154 $ 758,132 $ 671,027
Savings deposits 530,692 507,431 512,112 510,878 526,554
Certificates and other time deposits of
$100,000 or more 398,061 408,910 394,724 313,751 320,213
Other certificates and time deposits 971,097 950,903 1,044,301 952,639 928,278
----------- ----------- ----------- ----------- -----------
$2,687,388 $2,750,538 $2,694,291 $2,535,400 $2,446,072
=========== =========== =========== =========== ===========