8-K 1 k8042803.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------------- FORM 8-K --------------------------------- CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 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 -------------------------------------------- Larry R. Helms, Senior Vice President Dated: April 28, 2003 EXHIBIT INDEX ------------- Exhibit No. ----------- 99 Description ----------- 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 ----------- ----------- 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 ----------- ----------- Total assets $ 2,999,022 $ 1,735,912 =========== =========== Liabilities Deposits Noninterest-bearing $ 289,835 $ 171,825 Interest-bearing 1,996,836 1,201,861 ----------- ----------- 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 ----------- ----------- 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 ----------- ----------- Total stockholders' equity 289,624 183,084 ----------- ----------- 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 -------- -------- Total interest income 38,981 27,591 -------- -------- 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 -------- -------- Total interest expense 12,971 10,213 -------- -------- Net interest income 26,010 17,378 Provision for loan losses 4,601 1,192 -------- -------- Net interest income after provision for loan losses 21,409 16,186 -------- -------- 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 -------- -------- Total other income 8,286 5,164 -------- -------- 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 -------- -------- Total other expenses 21,441 13,000 -------- -------- Income before income tax 8,254 8,350 Income tax expense 2,596 2,871 -------- -------- Net income $ 5,658 $ 5,479 ======== ======== 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.