First Merchants Corporation (NASDAQ: FRME) has reported fourth quarter 2011 earnings per share of $.24 compared to $.10 during the same period in 2010. The 140 percent improvement primarily reflects the Corporation's improvement in revenue, credit quality and efficiency. Net income available to common shareholders totaled $6.4 million, an increase of $3.8 million over the $2.6 million earned in the fourth quarter of 2010.

Year-to-date earnings per share for 2011 totaled $.34 per fully diluted common share. When adjusted for the one-time charge of $.46 per share related to CPP repayment during the third quarter, year-to-date core earnings per share totaled $.80. On an adjusted basis earnings per share for the four quarters of 2011 totaled $.17, $.18, $.21 and $.24, respectively.

Michael C. Rechin, President and Chief Executive Officer, stated, "2011 results included numerous positives as the company completed a solid year. The improvement of the Corporation's core earnings, capital levels, credit statistics, loan growth and efficiency provide important foundations for the future of First Merchants." Rechin also stated, "Achieving loan growth in the fourth quarter, while making additional improvements in asset quality, reflects the economic progress evidenced in our marketplace."

Total assets equaled $4.2 billion as of year-end and total loans were $2.7 billion. The Corporation's liquidity is fully deployed in the bond portfolio, as investment securities totaled $946 million. The Corporation's loan-to-deposit ratio is now 87 percent and the loan-to-asset ratio totals 65 percent.

Net-interest income totaled $36.2 million for the quarter and $143.4 million for the year. Net-interest margin remained strong during the quarter totaling 3.99 percent as yields on earning assets totaled 4.83 percent and the cost of supporting liabilities totaled .84 percent. Net-interest margin for the year totaled 3.98 percent, up 11 basis points from 3.87 percent in 2010.

Non-interest income totaled $13.0 million for the quarter and $49.1 million for the full year of 2011. After normalizing for bond gains and losses, non-interest income improved by $393,000 quarter-over-quarter and $399,000 year-over-year. Non-interest expense totaled $33.4 million for the quarter, a decline of $4.8 million from the fourth quarter of 2010. Non-interest expense totaled $135.9 million for the full year 2011, a decline of $6.4 million for the year.

Provision expense totaled $5.9 million for the fourth quarter and $22.6 million for the full year 2011, compared to $7.1 million and $46.5 million of provision expense in 2010. The allowance for loan losses totaled $70.9 million, or 2.6 percent of total loans and 102 percent of non-accrual loans. Non-performing assets (NPA) plus 90 days delinquent loans totaled $100.8 million, or 2.4 percent of total assets. Net charge-offs totaled $8.0 million for the fourth quarter and $34.7 million for the year. Net charge-offs totaled $55.6 million in 2010. Classified loans also declined from $286.2 million to $205.2 million during the year.

As of December 31, 2011, the Corporation's total risk-based capital equaled 16.54 percent, Tier 1 common risk-based capital equaled 8.83 percent, and tangible common equity ratio totaled 6.84 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 2:30 p.m. (EDT) on Thursday, January 26, 2012.

To participate, dial (Toll Free) 877-317-6789 and reference First Merchants Corporation's fourth quarter earnings release. International callers please call +1 412-317-6789. A replay of the call will be available until February 3, 2012. To access a replay of the call, US/Canada participants should dial (Toll Free) 877-344-7529 or for International participants, dial +1 412-317-0088. The replay passcode is 10008694.

In order to view the web cast and presentation slides, please go to https://services.choruscall.com/links/frme120126.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) December 31,
2011 2010
ASSETS
Cash and due from banks $ 73,312 $ 50,844
Federal funds sold   7,463
Cash and cash equivalents 73,312 58,307
Interest-bearing time deposits 52,851 65,216
Investment securities 946,400 826,797
Mortgage loans held for sale 17,864 21,469
Loans 2,713,415 2,835,683
Less: Allowance for loan losses (70,898 ) (82,977 )
Net loans 2,642,517 2,752,706
Premises and equipment 51,013 52,450
Federal Reserve and Federal Home Loan Bank stock 31,270 33,884
Interest receivable 17,723 18,674
Core deposit intangibles and goodwill 150,471 154,019
Cash surrender value of life insurance 124,329 96,731
Other real estate owned 16,289 20,927
Tax asset, deferred and receivable 36,424 45,623
Other assets 12,613 24,045
TOTAL ASSETS $ 4,173,076 $ 4,170,848
LIABILITIES
Deposits:
Noninterest-bearing $ 646,508 $ 583,696
Interest-bearing 2,488,147 2,685,184
Total Deposits 3,134,655 3,268,880
Borrowings:
Securities sold under repurchase agreements 156,305 109,871
Federal Home Loan Bank advances 138,095 82,684
Subordinated debentures, revolving credit lines and term loans 194,974 226,440
Total Borrowings 489,374 418,995
Interest payable 2,925 4,262
Other liabilities 31,655 24,303
Total Liabilities 3,658,609 3,716,440
STOCKHOLDERS' EQUITY
Preferred Stock, no-par value:
Authorized -- 500,000 shares
Series A, Issued and outstanding - 0 and 69,600 shares 67,880
Preferred Stock, no-par value, $1,000 liquidation value:
Authorized -- 500,000 shares
Senior Non-Cumulative Perpetual Preferred Stock, Series B
Issued and outstanding - 90,782.94 and 0 shares 90,783
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding - 125 shares 125 125
Common Stock, $.125 stated value:
Authorized -- 50,000,000 shares
Issued and outstanding - 28,559,707 and 25,574,251 shares 3,570 3,197
Additional paid-in capital 254,874 232,503
Retained earnings 168,717 160,860
Accumulated other comprehensive income (loss) (3,602 ) (10,157 )
Total Stockholders' Equity 514,467 454,408
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,173,076 $ 4,170,848
 
       
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts) Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
INTEREST INCOME
Loans receivable:
Taxable $ 36,497 $ 41,497 $ 149,716 $ 174,070
Tax-exempt 93 (250 ) 528 515
Investment securities:
Taxable 4,565 3,680 19,230 12,957
Tax-exempt 2,550 2,573 10,167 10,377
Federal funds sold 3 3 26
Deposits with financial institutions 54 142 282 381
Federal Reserve and Federal Home Loan Bank stock 314 312 1,319 1,252
Total Interest Income 44,073 47,957 181,245 199,578
INTEREST EXPENSE
Deposits 4,505 8,427 22,281 39,876
Federal funds purchased 3 25 5
Securities sold under repurchase agreements 363 383 1,511 1,712
Federal Home Loan Bank advances 1,114 1,146 4,181 5,368
Subordinated debentures, revolving credit lines and term loans 1,908 2,508 9,892 9,048
Total Interest Expense 7,893 12,464 37,890 56,009
NET INTEREST INCOME 36,180 35,493 143,355 143,569
Provision for loan losses 5,855 7,078 22,630 46,483
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 30,325 28,415 120,725 97,086
OTHER INCOME
Service charges on deposit accounts 3,027 3,111 11,972 13,283
Fiduciary activities 1,804 1,881 7,650 7,692
Other customer fees 2,572 2,217 10,024 8,990
Commission income 1,220 1,267 5,660 6,225
Earnings on cash surrender value of life insurance 803 524 2,596 2,098
Net gains and fees on sales of loans 2,747 2,384 7,418 6,806
Net realized gains on sales of available for sale securities 290 1,305 2,439 3,406
Other-than-temporary impairment on available for sale securities (400 ) (1,544 )
Other income 508 904 1,761 1,588
Total Other Income 12,971 13,593 49,120 48,544
OTHER EXPENSES
Salaries and employee benefits 19,035 19,655 74,735 73,253
Net occupancy 2,428 2,452 10,118 9,935
Equipment 1,672 1,812 6,794 7,323
Marketing 650 527 2,002 1,970
Outside data processing fees 1,377 1,154 5,671 5,093
Printing and office supplies 340 317 1,242 1,259
Core deposit amortization 591 1,161 3,548 4,721
FDIC assessments 775 2,044 5,531 8,121
Other real estate owned and credit-related expenses 2,569 5,257 10,614 12,436
Other expenses 3,999 3,814 15,683 18,200
Total Other Expenses 33,436 38,193 135,938 142,311
INCOME BEFORE INCOME TAX 9,860 3,815 33,907 3,319
Income tax expense (benefit) 2,299 (216 ) 8,655 (3,590 )
NET INCOME 7,561 4,031 25,252 6,909
Gain on exchange of preferred stock for trust preferred debt 11,353
Loss on CPP unamortized discount (1,401 ) (1,301 )
Loss on extinguishment of trust preferred securities (10,857 )
Preferred stock dividends and discount accretion (1,135 ) (1,476 ) (3,981 ) (5,239 )
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 6,426 $ 2,555 $ 9,013 $ 11,722

 

Per Share Data:

Basic Net Income Available to Common Stockholders $ 0.24 $ 0.10 $ 0.34 $ 0.48
Diluted Net Income Available to Common Stockholders $ 0.24 $ 0.10 $ 0.34 $ 0.48
Cash Dividends Paid $ 0.01 $ 0.01 $ 0.04 $ 0.04
Average Diluted Shares Outstanding (in thousands) 28,700 25,737 26,694 24,642
 
       
FINANCIAL HIGHLIGHTS
(Dollars in thousands) Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
NET CHARGE OFF'S $ 8,031 $ 7,761 $ 34,709 $ 55,637
 
AVERAGE BALANCES:
Total Assets $ 4,200,685 $ 4,249,194 $ 4,143,850 $ 4,271,715
Total Loans 2,719,155 2,893,657 2,748,684 3,050,850
Total Earning Assets 3,766,352 3,835,814 3,744,027 3,862,493
Total Deposits 3,165,505 3,323,209 3,175,762 3,337,747
Total Stockholders' Equity 513,366 464,250 478,440 470,379
 
FINANCIAL RATIOS:
Return on Average Assets 0.61 % 0.24 % 0.22 % 0.27 %
Return on Average Stockholders' Equity 5.01 2.20 1.88 2.49
Average Earning Assets to Average Assets 89.66 90.27 90.35 90.42
Allowance for Loan Losses as % of Total Loans 2.60 2.90 2.60 2.90
Net Charge Off's as % of Average Loans (Annualized) 1.18 1.07 1.26 1.82
Average Stockholders' Equity to Average Assets 12.22 10.93 11.55 11.01
Tax Equivalent Yield on Earning Assets 4.83 5.13 4.99 5.32
Cost of Supporting Liabilities 0.84 1.30 1.01 1.45
Net Interest Margin (FTE) on Earning Assets 3.99 3.83 3.98 3.87
 
         
NON-PERFORMING ASSETS
(Dollars in thousands) December 31, September 30, June 30, March 31, December 31,
2011 2011 2011 2011 2010
Non-Accrual Loans $ 69,592 $ 78,933 $ 87,583 $ 87,712 $ 90,591
Renegotiated Loans 14,308 6,701 6,269 2,125 7,139
Non-Performing Loans (NPL) 83,900 85,634 93,852 89,837 97,730
Real Estate Owned and Repossessed Assets 16,289 19,425 15,437 17,056 20,927
Non-Performing Assets (NPA) 100,189 105,059 109,289 106,893 118,657
90+ Days Delinquent 580 1,595 227 752 1,330
NPAS & 90 Day Delinquent $ 100,769 $ 106,654 $ 109,516 $ 107,645 $ 119,987

 

 

Loan Loss Reserve

$ 70,898 $ 73,074 $ 77,133 $ 80,936 $ 82,977
YTD Charge-offs 34,709 26,678 17,063 7,635 55,637
NPAs / Actual Assets % 2.40 % 2.55 % 2.67 % 2.60 % 2.84 %
NPAs & 90 Day / Actual Assets % 2.41 % 2.59 % 2.67 % 2.61 % 2.88 %
NPAs / Actual Loans and REO % 3.65 % 3.83 % 3.98 % 3.84 % 4.12 %
Loan Loss Reserves / Actual Loans (%) 2.60 % 2.68 % 2.83 % 2.93 % 2.90 %
NCOs / YTD Average Loans (%) 1.26 % 0.97 % 0.61 % 0.27 % 1.82 %
 
         
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) December 31, September 30, June 30, March 31, December 31,
2011 2011 2011 2011 2010
ASSETS
Cash and due from banks $ 73,312 $ 60,166 $ 50,874 $ 44,283 $ 50,844
Federal funds sold       6,092 7,463
Cash and cash equivalents 73,312 60,166 50,874 50,375 58,307
Interest-bearing time deposits 52,851 16,115 15,865 61,843 65,216
Investment securities 946,400 937,828 938,366 886,029 826,797
Mortgage loans held for sale 17,864 12,257 4,846 2,111 21,469
Loans 2,713,415 2,712,938 2,724,022 2,764,128 2,835,683
Less: Allowance for loan losses (70,898 ) (73,074 ) (77,133 ) (80,936 ) (82,977 )
Net loans 2,642,517 2,639,864 2,646,889 2,683,192 2,752,706
Premises and equipment 51,013 51,432 51,851 51,818 52,450
Federal Reserve and Federal Home Loan Bank stock 31,270 31,381 31,384 33,801 33,884
Interest receivable 17,723 17,770 17,001 17,583 18,674
Core deposit intangibles and goodwill 150,471 151,062 151,817 152,918 154,019
Cash surrender value of life insurance 124,329 123,524 102,880 102,309 96,731
Other real estate owned 16,289 19,425 15,437 17,056 20,927
Tax asset, deferred and receivable 36,424 35,804 36,790 38,224 45,623
Other assets 12,613 21,881 30,218 19,916 24,045
TOTAL ASSETS $ 4,173,076 $ 4,118,509 $ 4,094,218 $ 4,117,175 $ 4,170,848
LIABILITIES
Deposits:
Noninterest-bearing $ 646,508 $ 598,139 $ 590,199 $ 586,973 $ 583,696
Interest-bearing 2,488,147 2,466,111 2,552,334 2,565,363 2,685,184
Total Deposits 3,134,655 3,064,250 3,142,533 3,152,336 3,268,880
Borrowings:
Federal funds purchased 27,946 22,978
Securities sold under repurchase agreements 156,305 117,097 124,236 115,684 109,871
Federal Home Loan Bank advances 138,095 168,764 74,050 104,697 82,684
Subordinated debentures, revolving credit lines and term loans 194,974 194,961 226,580 226,400 226,440
Total Borrowings 489,374 508,768 447,844 446,781 418,995
Interest payable 2,925 2,186 3,601 3,117 4,262
Other liabilities 31,655 30,760 31,762 52,419 24,303
Total Liabilities 3,658,609 3,605,964 3,625,740 3,654,653 3,716,440
STOCKHOLDERS' EQUITY
Preferred Stock, no-par value:
Authorized -- 500,000 shares
Series A, Issued and outstanding 68,118 67,998 67,880
Preferred Stock, no-par value, $1,000 liquidation value:
Authorized -- 500,000 shares
Senior Non-Cumulative Perpetual Preferred Stock, Series B
Issued and outstanding 90,783 90,783
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding 125 125 125 125 125
Common Stock, $.125 stated value:
Authorized -- 50,000,000 shares
Issued and outstanding 3,570 3,567 3,211 3,206 3,197
Additional paid-in capital 254,874 254,801 233,544 233,032 232,503
Retained earnings 168,717 162,669 169,313 165,075 160,860
Accumulated other comprehensive income (loss) (3,602 ) 600 (5,833 ) (6,914 ) (10,157 )
Total Stockholders' Equity 514,467 512,545 468,478 462,522 454,408
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,173,076 $ 4,118,509 $ 4,094,218 $ 4,117,175 $ 4,170,848
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)   December 31,   September 30,   June 30,   March 31,   December 31,
2011 2011 2011 2011 2010
INTEREST INCOME
Loans receivable:
Taxable $ 36,497 $ 37,024 $ 37,457 $ 38,738 $ 41,497
Tax exempt 93 86 247 102 (250 )
Investment securities:
Taxable 4,565 5,078 5,040 4,547 3,680
Tax exempt 2,550 2,529 2,535 2,553 2,573
Federal funds sold 1 2 3
Deposits with financial institutions 54 45 100 83 142
Federal Reserve and Federal Home Loan Bank stock 314   323 341   341   312
Total Interest Income 44,073   45,085 45,721   46,366   47,957
INTEREST EXPENSE
Deposits 4,505 5,046 5,864 6,866 8,427
Federal funds purchased 3 16 3 3
Securities sold under repurchase agreements 363 384 386 378 383
Federal Home Loan Bank advances 1,114 1,089 977 1,001 1,146
Subordinated debentures, revolving credit lines and term loans 1,908   2,699 2,644   2,641   2,508
Total Interest Expense 7,893   9,234 9,874   10,889   12,464
NET INTEREST INCOME 36,180 35,851 35,847 35,477 35,493
Provision for loan losses 5,855   5,556 5,625   5,594   7,078
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 30,325   30,295 30,222   29,883   28,415
OTHER INCOME
Service charges on deposit accounts 3,027 3,169 2,997 2,779 3,111
Fiduciary activities 1,804 1,881 1,929 2,036 1,881
Other customer fees 2,572 2,583 2,634 2,235 2,217
Commission income 1,220 1,528 1,024 1,888 1,267
Earnings on cash surrender value of life insurance 803 644 571 578 524
Net gains and fees on sales of loans 2,747 1,768 1,030 1,873 2,384
Net realized gains on sales of available for sale securities 290 861 825 463 1,305
Other-than-temporary impairment on available for sale securities (400 )
Other income 508   796 51   406   904
Total Other Income 12,971   13,230 11,061   11,858   13,593
OTHER EXPENSES
Salaries and employee benefits 19,035 19,964 18,560 17,176 19,655
Net occupancy 2,428 2,530 2,415 2,745 2,452
Equipment 1,672 1,662 1,677 1,783 1,812
Marketing 650 534 436 382 527
Outside data processing fees 1,377 1,391 1,458 1,445 1,154
Printing and office supplies 340 301 313 288 317
Core deposit amortization 591 755 1,101 1,101 1,161
FDIC assessments 775 1,201 1,451 2,104 2,044
Other real estate owned and credit-related expenses 2,569 2,007 2,843 3,195 5,257
Other expenses 3,999   3,877 4,145   3,662   3,814
Total Other Expenses 33,436   34,222 34,399   33,881   38,193
INCOME BEFORE INCOME TAX 9,860 9,303 6,884 7,860 3,815
Income tax expense (benefit) 2,299   2,561 1,396   2,399   (216 )
NET INCOME 7,561 6,742 5,488 5,461 4,031
Loss on CPP unamortized discount (1,401 )
Loss on extinguishment of trust preferred securities (10,857 )
Preferred stock dividends and discount accretion (1,135 )   (868 ) (990 )   (988 )   (1,476 )
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS $ 6,426 $ (6,384 ) $ 4,498 $ 4,473 $ 2,555
 
PER SHARE:
Basic Net Income (Loss) Available to Common Stockholders $ 0.24 $ (0.25 ) $ 0.18 $ 0.17 $ 0.10
Diluted Net Income (Loss) Available to Common Stockholders $ 0.24 $ (0.25 ) $ 0.18 $ 0.17 $ 0.10
Cash Dividends Paid $ 0.01 $ 0.01 $ 0.01 $ 0.01 $ 0.01
Average Diluted Shares Outstanding (in thousands) 28,700 26,367 25,783 25,763 25,737
FINANCIAL RATIOS:
Return on Average Assets 0.61 % -0.62 % 0.43 % 0.43 % 0.24 %
Return on Average Stockholders' Equity 5.01 (5.33 ) 3.87 3.92 2.20
Average Earning Assets to Average Assets 89.66 90.30 90.64 90.83 90.27
Allowance for Loan Losses as % of Total Loans 2.60 2.68 2.83 2.93 2.90
Net Charge Off's as % of Average Loans (Annualized) 1.18 1.41 1.37 1.09 1.07
Average Stockholders' Equity to Average Assets 12.22 11.64 11.23 11.07 10.93
Tax Equivalent Yield on Earning Assets 4.83 5.01 5.04 5.11 5.13
Cost of Supporting Liabilities 0.84 0.99 1.05 1.16 1.30
Net Interest Margin (FTE) on Earning Assets 3.99 4.02 3.99 3.95 3.83
 
LOANS
(Dollars in thousands) December 31, September 30, June 30, March 31, December 31,
2011 2011 2011 2011 2010
Commercial and industrial loans $ 532,523 $ 518,848 $ 529,742 $ 529,110 $ 530,322
Agricultural production financing and other loans to farmers 104,526 106,761 99,360 89,032 95,516
Real estate loans:
Construction 81,780 70,044 96,308 103,956 106,615
Commercial and farm land 1,194,230 1,196,270 1,171,901 1,199,078 1,229,037
Residential 481,493 495,954 495,256 504,538 522,051
Home Equity 191,631 196,191 191,839 195,235 201,969
Individuals' loans for household and other personal expenditures 84,172 90,810 94,123 104,701 115,295
Lease financing receivables, net of unearned income 3,555 4,160 4,399 4,706 5,157
Other loans 39,505   33,900 41,094   33,772   29,721
Loans 2,713,415 2,712,938 2,724,022 2,764,128 2,835,683
Allowance for loan losses (70,898 )   (73,074 ) (77,133 )   (80,936 )   (82,977 )
NET LOANS $ 2,642,517 $ 2,639,864 $ 2,646,889 $ 2,683,192 $ 2,752,706
 
DEPOSITS
(Dollars in thousands) December 31, September 30, June 30, March 31, December 31,
2011 2011 2011 2011 2010
Demand deposits $ 1,438,513 $ 1,360,174 $ 1,363,621 $ 1,318,188 $ 1,362,927
Savings deposits 757,166 712,545 750,337 765,138 763,949
Certificates and other time deposits of $100,000 or more 264,787 278,115 292,613 318,663 334,748
Other certificates and time deposits 551,247 570,380 597,330 624,032 661,569
Brokered deposits 122,942   143,036 138,632   126,315   145,687
TOTAL DEPOSITS $ 3,134,655 $ 3,064,250 $ 3,142,533 $ 3,152,336 $ 3,268,880

First Merchants Corporation
David L. Ortega, First Vice President/Director of Investor Relations
765-378-8937
http://www.firstmerchants.com/