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): July 21, 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 July 21, 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 July 21, 2003, First Merchants Corporation issued a press release
to report its financial results for the quarter ended June 30, 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: July 21, 2003
EXHIBIT INDEX
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Exhibit No.
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99 Description
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Press Release, dated July 21, 2003, issued by
First Merchants Corporation.
First Merchants Corporation
Exhibit No. 99
Press Release, dated July 21, 2003
N / E / W / S R / E / L / E / A / S / E
July 21, 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
FIRST MERCHANTS ANNOUNCES RECORD QUARTER AS EARNINGS PER SHARE REACH $.50
First Merchants Corporation (NASDAQ - FRME) has reported that second quarter
2003 diluted earnings per share increased 4.2% to $.50, up from $.48 in the
prior year. Net income increased $805,000, or 10.1%, from $7,940,000 to
$8,745,000 during the same period.
Year-to-date diluted earnings reached $.84 per share compared to $.89 in 2002.
Year-to-date net income increased $990,000, or 7.4%, from $13,413,000 to
$14,403,000.
Total assets reached $3.1 billion as total loans outstanding reached $2.3
billion, an increase of $365 million, or 18.5%.
Michael L. Cox, President and Chief Executive Officer, commented that, "given a
challenging economic environment, a record-low interest rate environment coupled
with the Corporation's conservative asset sensitive interest rate risk position,
earnings for the quarter are very positive." Cox also added, "Gains from the
sale of fixed rate mortgage loans have exceeded all budget expectations for 2003
and has significantly aided the Corporation's earnings per share."
Total non-performing assets increased from .91% of total loans in the second
quarter of 2002 to 1.30% as of June 30, 2003. The Corporation's allowance for
loan losses also increased to 1.31% versus 1.11% during the same period last
year. The increase in non-performing loans has caused the Corporation to
increase the provision for loan and lease losses from $2,476,000 in 2002 to
$6,724,000. The increase represents $.15 per share.
Merchants Trust Company, in an effort to leverage the Corporation's current
banking relationships, has expand into additional growth markets by opening
offices in Indianapolis and Columbus, Ohio during the quarter.
CONFERENCE CALL
First Merchants Corporation will conduct a conference call at 3:30 p.m. Eastern
Standard Time on Monday, July 21, 2003. To participate dial 888-710-8192 and
reference First Merchants Corporation's second quarter earnings release. A
digital recording will be available two hours after the completion of the
conference from July 21, 2003, to July 23, 2003. To access, US/Canada guests
should call 800-642-1687 or for International/Local guests, call 706-645-9291
and enter the Conference I.D. 1669081.
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 in
Delaware and Hamilton Counties, Madison Community Bank in Madison County, First
United Bank in Henry County, Union County National Bank (with offices in Union,
Fayette, Wayne, and Butler (OH) Counties), The Randolph County Bank, First
National Bank of Portland in Jay County, Decatur Bank & Trust Company in Adams
County, and Frances Slocum Bank (with offices in Wabash, Howard, and Miami
Counties) and Lafayette Bank & Trust Company (with offices in Carrol, Jasper,
White, and Tippecanoe Counties). The Corporation also operates First Merchants
Insurance Services, a full-service property casualty, personal lines, and
healthcare insurance agency, headquartered in Muncie, Indiana, and is a majority
member of Indiana Title Insurance Company, LLC, a title insurance agency.
First Merchants Corporation's common stock is traded over-the-counter on the
NASDAQ National Market System under the symbol FRME 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). Eleven
brokerage firms make a market in First Merchants Corporation stock: Midwest
Research First Tennessee; Keefe, Bruyette & Woods, Inc.; Knight Securities,
L.P.; Herzog, Heine, Geduld, Inc.; Howe Barnes Investments, Inc.; Sandler
O'Neill & Partners; NatCity Investments, Inc.; Sherwood Securities Corp.; Spear,
Leeds & Kellog; RBC Capital Markets; and Stifel, Nicolaus & Company, Inc.
* * * *
CONSOLIDATED BALANCE SHEETS
(in thousands) June 30,
2003 2002
Assets
Cash and due from banks $ 89,126 $ 93,420
Federal funds sold 14,150 43,587
----------- -----------
Cash and cash equivalents 103,276 137,007
Interest-bearing time deposits 8,777 14,577
Investment securities 363,103 361,076
Mortgage loans held for sale 15,151 203
Loans, net of allowance for loan losses
of $30,639 and $21,963 2,293,937 1,952,211
Premises and equipment 39,313 39,292
Federal Reserve and Federal Home Loan Bank stock 13,933 11,036
Interest receivable 16,592 17,701
Core deposit intangibles and goodwill 144,663 106,622
Cash surrender value of life insurance 34,575 13,976
Other assets 23,641 10,283
----------- -----------
Total assets $ 3,056,961 $ 2,663,984
=========== ===========
Liabilities
Deposits
Noninterest-bearing $ 324,735 $ 259,353
Interest-bearing 1,988,593 1,797,188
----------- -----------
Total deposits 2,313,328 2,056,541
Borrowings 417,669 337,525
Interest payable 5,494 7,248
Other liabilities 19,460 11,240
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Total liabilities 2,755,951 2,412,554
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 - 17,531,597 and 16,209,538 2,191 2,026
Additional paid-in capital 148,406 114,064
Retained earnings 144,457 131,222
Accumulated other comprehensive income 5,956 4,118
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Total stockholders' equity 301,010 251,430
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Total liabilities and stockholders' equity $ 3,056,961 $ 2,663,984
=========== ===========
FINANCIAL HIGHLIGHTS
Three Months Ended Six Months Ended
(In thousands) June 30, June 30,
2003 2002 2003 2002
NET CHARGE OFF'S $ 1,217 $ 1,351 $ 2,229 $ 2,556
AVERAGE BALANCES
Total Assets $3,001,760 $2,559,421 $2,868,161 $2,158,146
Total Loans 2,313,688 1,951,648 2,212,932 1,656,355
Total Deposits 2,278,743 1,991,318 2,179,316 1,690,418
Total Stockholders' Equity 297,214 247,652 285,143 214,754
FINANCIAL RATIOS
Return on Average Assets 1.17% 1.24% 1.00% 1.24%
Return on Avg. Stockholders' Equity 11.77 12.82 10.10 12.49
Avg. Earning Assets to Avg. Assets 90.14 90.46 90.15 91.63
Allowance for Loan Losses as %
Of Total Loans 1.31 1.11 1.31 1.11
Net Charge Off's as % Of Avg. Loans
(Annualized) .21 .28 .20 .31
Dividend Payout Ratio 46.00 45.83 54.76 49.44
Avg. Stockholders' Equity to Avg. Assets 9.90 9.68 9.94 9.95
Tax Equivalent Yield on Earning Assets 5.99 7.02 6.23 6.96
Cost of Supporting Liabilities 2.01 2.52 2.06 2.51
Net Int. Margin (FTE) on Earning Assets 3.98 4.50 4.17 4.45
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data) Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Interest Income
Loans receivable
Taxable $ 35,759 $ 34,875 $ 70,932 $ 59,142
Tax exempt 162 126 327 234
Investment securities
Taxable 1,600 2,641 3,279 4,544
Tax exempt 1,626 1,670 3,257 2,657
Federal funds sold 177 84 290 265
Deposits with financial institutions 19 84 41 106
Federal Reserve and Federal Home Loan Bank stock 211 198 409 322
-------- -------- -------- --------
Total interest income 39,554 39,678 78,535 67,269
-------- -------- -------- --------
Interest expense
Deposits 9,048 10,842 17,932 19,070
Securities sold under repurchase agreements 454 501 903 1,041
Federal Home Loan Bank advances 2,395 2,101 4,668 3,524
Trust preferred securities 1,259 962 2,465 962
Other borrowings 443 190 602 212
-------- -------- -------- --------
Total interest expense 13,599 14,596 26,570 24,809
-------- -------- -------- --------
Net interest income 25,955 25,082 51,965 42,460
Provision for loan losses 2,123 1,284 6,724 2,476
-------- -------- -------- --------
Net interest income
after provision for loan losses 23,832 23,798 45,241 39,984
-------- -------- -------- --------
Other income
Fiduciary activities 1,889 1,751 3,586 3,120
Service charges on deposit accounts 2,743 2,563 5,527 4,009
Other customer fees 1,036 1,064 2,124 1,968
Net realized gains on
sales of available-for-sale securities 67 290 438 408
Commission income 707 518 1,461 1,060
Other income 4,711 865 6,303 1,650
-------- -------- -------- --------
Total other income 11,153 7,051 19,439 12,215
-------- -------- -------- --------
Other expenses
Salaries and employee benefits 12,902 10,422 24,679 17,695
Net occupancy expenses 1,200 966 2,291 1,700
Equipment expenses 2,016 1,892 3,860 2,968
Marketing expense 411 356 845 664
Deposit insurance expense 75 147
Outside data processing fees 1,102 897 2,030 1,706
Printing and office supplies 432 429 839 767
Goodwill and core deposit amortization 991 815 1,819 1,053
Other expenses 3,881 3,086 8,013 5,242
-------- -------- -------- --------
Total other expenses 22,935 18,938 44,376 31,942
-------- -------- -------- --------
Income before income tax 12,050 11,911 20,304 20,257
Income tax expense 3,305 3,971 5,901 6,844
-------- -------- -------- --------
Net income $ 8,745 $ 7,940 $ 14,403 $ 13,413
======== ======== ======== ========
Per Share Data
Basic Net Income .50 .49 .84 .90
Diluted Net Income .50 .48 .84 .89
Cash Dividends Paid .23 .22 .46 .44
CONSOLIDATED BALANCE SHEETS
(in thousands) June 30, March 31, December 31, September 30, June 30,
2003 2003 2002 2002 2002
Assets
Cash and due from banks $ 89,126 $ 81,789 $ 87,638 $ 73,223 $ 93,420
Federal funds sold 14,150 54,925 31,400 8,750 43,587
----------- ----------- ------------ ----------- -----------
Cash and cash equivalents 103,276 136,714 119,038 81,973 137,007
Interest-bearing time deposits 8,777 5,170 3,568 10,222 14,577
Investment securities 363,103 333,692 342,062 345,452 361,076
Mortgage loans held for sale 15,151 13,558 21,545 14,089 6,518
Loans 2,324,576 2,291,178 2,004,377 1,994,038 1,967,859
Less: Allowance for loan losses (30,639) (29,733) (22,417) (22,147) (21,963)
----------- ----------- ------------ ---------- -----------
Net loans 2,293,937 2,261,445 1,981,960 1,971,891 1,945,896
Premises and equipment 39,313 38,861 38,645 39,179 39,292
Federal Reserve and Federal Home Loan Bank stock 13,933 13,912 11,409 11,097 11,036
Interest receivable 16,592 16,789 17,346 18,622 17,701
Core deposit intangibles and goodwill 144,663 141,226 107,217 106,753 106,622
Cash surrender value of life insurance 34,575 14,567 14,309 14,143 13,976
Other assets 23,641 23,088 21,588 16,065 10,283
----------- ----------- ------------ ----------- -----------
Total assets $ 3,056,961 $ 2,999,022 $ 2,678,687 $ 2,629,486 $ 2,663,984
=========== =========== ============ =========== ===========
Liabilities
Deposits
Noninterest-bearing $ 324,735 $ 289,835 $ 272,128 $ 246,410 $ 259,353
Interest-bearing 1,988,593 1,996,836 1,764,560 1,773,325 1,797,188
----------- ----------- ------------ ----------- -----------
Total deposits 2,313,328 2,286,671 2,036,688 2,019,735 2,056,541
Borrowings 417,669 388,821 356,927 328,933 337,525
Interest payable 5,494 5,694 6,019 6,813 7,248
Other liabilities 19,460 28,212 17,924 14,132 11,240
----------- ----------- ------------ ----------- -----------
Total liabilities 2,755,951 2,709,398 2,417,558 2,369,613 2,412,554
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 2,191 2,188 2,040 2,039 2,026
Additional paid-in capital 148,406 143,615 116,503 116,204 114,064
Retained earnings 144,457 139,743 138,110 135,266 131,222
Accumulated other comprehensive income 5,956 4,078 4,476 6,364 4,118
----------- ----------- ------------ ----------- -----------
Total stockholders' equity 301,010 289,624 261,129 259,873 251,430
----------- ----------- ------------ ----------- -----------
Total liabilities and stockholders' equity $ 3,056,961 $ 2,999,022 $ 2,678,687 $ 2,629,486 $ 2,663,984
=========== =========== ============ =========== ===========
NON-PERFORMING ASSETS
(In thousands) June 30, March 31, December 31, September 30, June 30,
2003 2003 2002 2002 2002
90 days past due $ 5,295 $ 3,552 $ 6,676 $ 9,786 $ 6,030
Non-accrual loans 22,532 19,747 14,134 13,285 10,911
Other real estate 2,351 1,841 1,691 868 898
---------- ---------- ------------ ------------ ----------
Total non-performing assets $ 30,178 $ 25,140 $ 22,501 $ 23,939 $ 17,839
========== ========== ============ ============ ==========
Average total loans for the quarter $2,313,688 $2,111,056 $ 2,066,616 $ 1,984,323 $1,951,648
Total non-performing assets as a
percent of average total loans 1.30% 1.19% 1.09% 1.21% .91%
Restructured loans $ 899 $ 2,194 $ 2,508 $ 2,326 $ 2,771
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(in thousands, except share data) June 30, March 31, December 31, September 30, June30,
2003 2003 2002 2002 2002
Interest Income
Loans receivable
Taxable $ 35,759 $ 35,173 $ 34,775 $ 35,362 $ 34,875
Tax exempt 162 165 235 169 126
Investment securities
Taxable 1,600 1,679 2,100 2,442 2,641
Tax exempt 1,626 1,631 1,740 1,793 1,670
Federal funds sold 177 113 169 123 84
Deposits with financial institutions 19 22 38 53 84
Federal Reserve and Federal Home Loan Bank stock 211 198 208 206 198
-------- -------- -------- -------- --------
Total interest income 39,554 38,981 39,265 40,148 39,67
-------- -------- -------- -------- --------
Interest expense
Deposits 9,048 8,884 9,934 10,696 10,842
Securities sold under repurchase agreements 454 449 502 517 501
Federal Home Loan Bank advances 2,395 2,273 2,359 2,283 2,101
Trust preferred securities 1,259 1,206 1,181 1,181 962
Other borrowings 443 159 154 143 190
-------- -------- -------- -------- --------
Total interest expense 13,599 12,971 14,130 14,820 14,596
-------- -------- -------- -------- --------
Net interest income 25,123 26,010 25,135 25,328 25,082
Provision for loan losses 2,123 4,601 2,877 1,821 1,284
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses 23,832 21,409 22,258 23,507 23,798
-------- -------- -------- -------- --------
Other income
Fiduciary activities 1,889 1,697 1,487 1,651 1,751
Service charges on deposit accounts 2,743 2,784 2,695 2,626 2,563
Other customer fees 1,036 1,088 993 957 1,064
Net realized gains on sales of
available-for-sale securities 67 371 169 162 290
Commission income 707 754 586 557 518
Other income 4,711 1,592 1,286 1,693 865
-------- -------- -------- -------- --------
Total other income 11,153 8,286 7,216 7,646 7,051
-------- -------- -------- -------- --------
Other expenses
Salaries and employee benefits 12,902 11,777 10,849 10,606 10,422
Net occupancy expenses 1,200 1,091 933 999 966
Equipment expenses 2,016 1,844 1,861 1,880 1,892
Marketing expense 411 434 416 415 356
Deposit insurance expense 104 143 75
Outside data processing fees 1,102 928 940 1,018 897
Printing and office supplies 432 407 442 388 429
Goodwill and core deposit amortization 991 828 750 786 815
Other expenses 3,881 4,132 3,591 2,952 3,086
-------- -------- -------- -------- --------
Total other expenses 22,935 21,441 19,886 19,187 18,938
-------- -------- -------- -------- --------
Income before income tax 12,050 8,254 9,588 11,966 11,911
Income tax expense 3,305 2,596 2,998 4,139 3,971
-------- -------- -------- -------- --------
Net income $ 8,745 $ 5,658 $ 6,590 $ 7,827 $ 7,940
======== ======== ======== ======== ========
Per Share Data(1)
Basic Net Income $ .50 $ .34 $ .40 $ .49 $ .49
Diluted Net Income .50 .34 .40 .48 .48
Cash Dividends Paid .23 .23 .23 .23 .22
(1) Restated for a five percent (5%) stock dividend distributed September 2002.