First Merchants Corporation Announces Improved Second Quarter 2013 Earnings

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First Merchants Corporation Announces Improved Second Quarter 2013 Earnings

MUNCIE, Ind.--(BUSINESS WIRE)-- First Merchants Corporation (NAS: FRME) has reported second quarter 2013 earnings per share of $0.34 compared to $0.28 during the same period in 2012. Net income available to common stockholders increased by $1.9 million totaling $10.0 million compared to $8.1 million during the same period in 2012. Year-to-date earnings per share totaled $0.72 compared to core earnings of $0.53 in the first half of 2012. Reported earnings for the first half of 2012 totaled $0.74 as the Corporation recorded a gain on its FDIC purchase of SCB Bank in Shelbyville, Indiana of $0.21 per share in the first quarter of 2012.

Michael C. Rechin, President and Chief Executive Officer, stated, "First Merchants continues to maintain earnings momentum despite modest margin compression. Loan volume growth is steady, all credit related metrics, including non-accrual assets, continue to show improvement and core net income is progressively better quarter-after-quarter. The quality of First Merchants credit statistics when combined with our earnings strength has allowed us to improve our capital structure as evidenced by the July redemption of $34.0 million in SBLF preferred stock."


Total assets equaled $4.3 billion as of quarter-end and loans were $2.9 billion, an increase of $122.4 million or 4.4 percent over the same period in 2012. The Corporation's commercial and industrial loans and commercial real estate loans increased by $105.4 million and $53.6 million, respectively. Residential real estate loans declined by $20.8 million during the same period as the Corporation continues to focus this line of business on fee for service mortgage loans. The Corporation's loan-to-deposit ratio is 87.6 percent and the loan-to-asset ratio is 67.3 percent.

Net-interest income totaled $36.7 million for the quarter as net-interest margin totaled 3.88 percent. Yields on earning assets totaled 4.29 percent and the cost of supporting liabilities totaled 0.41 percent. Net-interest income totaled $38.1 million during the same quarter in 2012 as net interest margin totaled 4.11 percent. Of the $1.4 million reduction in net interest income, $314,000 was related to a reduction in fair value accounting in 2013. Year-to-date net-interest income totaled $76.1 million compared to $74.2 million during the first half of 2012. The $2.5 million interest recapture recognized in the first quarter of 2013 accounted for all of the increase.

Provision expense totaled $2.0 million for the second quarter of 2013, compared to $4.5 million in 2012. Net charge-offs totaled $2.3 million for the second quarter, down from $4.8 million in the second quarter of 2012. Due to the adequacy of the allowance for loan losses, year-to-date provision expense totaled $4.1 million versus $5.3 million of net charge-off's. The allowance for loan losses totaled $68.2 million, or 2.32 percent of total loans and 175 percent of non-accrual loans. Non-performing assets declined by $26.1 million, or 32.1 percent year-over-year, and now total $55.1 million.

Non-interest income totaled $14.1 million for the quarter, an increase over the second quarter 2012 total of $13.2 million. Year-to-date non-interest income totaled $27.9 million compared to $35.8 in 2012, which included a $9.1 million gain on the FDIC modified whole bank transaction in the first quarter of 2012. Non-interest expense totaled $33.7 million for the quarter, down $438,000 from the second quarter of 2012. Year-to-date non-interest expense totaled $68.4 million up just one third of a percent from the first half of 2012.

As of June 30, 2013, the Corporation's total risk-based capital equaled 15.69 percent, Tier 1 common risk-based capital equaled 10.13 percent, and tangible common equity ratio totaled 7.74 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, July 25, 2013.

To participate, dial (Toll Free) 888-317-6016 and reference First Merchants Corporation's second quarter earnings release. International callers please call +1 412-317-6016. A replay of the call will be available until July 25, 2014. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529 or for International participants, dial +1 412-317-0088. The replay passcode is 10030162.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme130725.html during the time of the call.

During the call, Forward-Looking Statements about the relative business outlook may be made. 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.

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation is comprised of First Merchants Bank, N.A., which also operates as Lafayette Bank & Trust, Commerce National Bank, and First Merchants Trust Company as divisions of First Merchants Bank, N.A. First Merchants Corporation also operates First Merchants Insurance Group, a full-service property casualty, personal lines, and healthcare insurance agency.

First Merchants Corporation's common stock is traded on the NASDAQ Global Select 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
(Dollars In Thousands)June 30,
20132012
ASSETS
Cash and cash equivalents$69,404$68,493
Interest-bearing time deposits59,89841,760
Investment securities908,992944,321
Mortgage loans held for sale14,53115,278
Loans2,920,0802,797,634
Less: Allowance for loan losses(68,202)(70,143)
Net loans2,851,8782,727,491
Premises and equipment54,16551,335
Federal Reserve and Federal Home Loan Bank stock32,79033,033
Interest receivable15,18616,506
Core deposit intangibles and goodwill148,759150,006
Cash surrender value of life insurance126,710124,018
Other real estate owned11,76514,183
Tax asset, deferred and receivable30,95932,003
Other assets13,227 13,996 
TOTAL ASSETS$4,338,264 $4,232,423 
LIABILITIES
Deposits:
Noninterest-bearing$741,095$684,101
Interest-bearing2,591,698 2,604,797 
Total Deposits3,332,7933,288,898
Borrowings:
Federal funds purchased57,085652
Securities sold under repurchase agreements161,779160,127
Federal Home Loan Bank advances92,74396,847
Subordinated debentures and term loans111,778 115,951 
Total Borrowings423,385373,577
Interest payable1,1502,168
Other liabilities41,643 32,104 
Total Liabilities3,798,9713,696,747
STOCKHOLDERS' EQUITY
Preferred Stock, no-par value, $1,000 liquidation value:
Authorized -- 500,000 shares
Senior Non-Cumulative Perpetual Preferred Stock, Series B
Issued and outstanding - 68,087 and 90,782.94 shares68,08790,783
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding - 125 shares125125
Common Stock, $.125 stated value:
Authorized -- 50,000,000 shares
Issued and outstanding - 28,801,848 and 28,643,264 shares3,6003,580
Additional paid-in capital257,626255,632
Retained earnings225,034188,863
Accumulated other comprehensive loss(15,179)(3,307)
Total Stockholders' Equity539,293 535,676 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$4,338,264 $4,232,423 
  
CONSOLIDATED STATEMENTS OF INCOMEThree Months EndedSix Months Ended
(Dollars In Thousands, Except Per Share Amounts)June 30,June 30,
2013 20122013 2012
INTEREST INCOME
Loans receivable:
Taxable$34,018$36,652$71,177$72,500
Tax-exempt113123230240
Investment securities:
Taxable3,5774,4687,1959,042
Tax-exempt2,5152,5514,9695,113
Deposits with financial institutions62288153
Federal Reserve and Federal Home Loan Bank stock368 347 739 690 
Total Interest Income40,653 44,169 84,391 87,638 
INTEREST EXPENSE
Deposits2,5993,9395,4908,049
Federal funds purchased1121224
Securities sold under repurchase agreements208197402492
Federal Home Loan Bank advances4626379211,631
Subordinated debentures and term loans733 1,331 1,458 3,273 
Total Interest Expense4,003 6,116 8,283 13,469 
NET INTEREST INCOME36,65038,05376,10874,169
Provision for loan losses1,997 4,545 4,099 9,420 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES34,653 33,508 72,009 64,749 
OTHER INCOME
Service charges on deposit accounts2,9122,8935,6415,712
Fiduciary activities2,2641,9384,3713,921
Other customer fees2,8163,1505,5965,736
Commission income1,7481,4853,9203,152
Earnings on cash surrender value of life insurance6106621,3102,040
Net gains and fees on sales of loans2,4572,3144,8354,266
Net realized gains on sales of available for sale securities2395024871,291
Gain on FDIC modified whole bank transaction9,124
Other income1,013 221 1,776 581 
Total Other Income14,059 13,165 27,936 35,823 
OTHER EXPENSES
Salaries and employee benefits20,53619,64141,32738,995
Net occupancy2,2672,4734,8695,124
Equipment1,7421,6563,5163,461
Marketing5355641,0021,006
Outside data processing fees1,3911,5062,8712,882
Printing and office supplies311294642561
Core deposit amortization383480770949
FDIC assessments6748621,4181,979
Other real estate owned and credit-related expenses1,4792,1223,3454,308
Other expenses4,424 4,582 8,682 8,943 
Total Other Expenses33,742 34,180 68,442 68,208 
INCOME BEFORE INCOME TAX14,97012,49331,50332,364
Income tax expense4,155 3,288 8,823 8,788 
NET INCOME10,8159,20522,68023,576
Preferred stock dividends(852)(1,135)(1,709)(2,270)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$9,963 $8,070 $20,971 $21,306 
Per Share Data:
Basic Net Income Available to Common Stockholders$0.35$0.28$0.73$0.74
Diluted Net Income Available to Common Stockholders$0.34$0.28$0.72$0.74
Cash Dividends Paid$0.05$0.03$0.08$0.04
Average Diluted Shares Outstanding (in thousands)29,02428,81528,99728,782
    
FINANCIAL HIGHLIGHTS
(Dollars in thousands)Three Months EndedSix Months Ended
June 30,June 30,
2013 Read Full Story

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