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): August 3, 2009

 

______________________________

 

FIRST MERCHANTS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

_______________________________

 

(State or other jurisdiction                       (Commission File Number)                (IRS Employer 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)

 

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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

 

On August 3, 2009, First Merchants Corporation issued a press release to report its financial results for the second quarter ended June 30, 2009. 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.

 

 

 

 

 

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.

 

 

 

 

 

Exhibit Index

 

 

 

 

First Merchants Corporation

 

Exhibit No. 99.1

 

Press Release, dated August 3, 2009

 

 

August 3, 2009

 

FOR IMMEDIATE RELEASE

For more information, contact:

Mark K. Hardwick, Executive Vice President/Chief Financial Officer, 765-751-1857

http://www.firstmerchants.com

 

SOURCE: First Merchants Corporation, Muncie, Indiana

 

FIRST MERCHANTS CORPORATION ANNOUNCES 2^nd QUARTER EARNINGS PER SHARE

 

First Merchants Corporation (NASDAQ – FRME) has reported a June 30, 2009, net loss of $31.2 million, or $1.48 per fully diluted common share. The Corporation’s second quarter contributed to year-to-date fully diluted common share loss of $1.31, down from the prior year income of $.81.

 

The decline in net income for the quarter was due to a higher-than-normal provision for loan losses of $59 million. The year-to-date provision was $72 million compared to $11 million during the first half of 2008. The Corporation’s allowance for loan losses, as a percent of total loans, increased to 2.16 percent as of quarter-end from 1.05 percent, as of June 30, 2008, a $45.5 million increase. The increase in the reserve is a result of the provision for loan losses exceeding charge-offs by $34.8 million in the last four quarters coupled with the $10.7 million allowance from the Lincoln acquisition.

 

Loan charge-offs were $40.4 million for the quarter. Commercial real estate charge-offs totaled $6.6 million, land and lot development loans totaled $5.1 million, 1-4 family residential properties totaled $3.1 million, commercial and industrial loans totaled $24.4 million and consumer loans totaled $1.2 million. The single largest charge-off, totaling $10.2 million, was taken as a result of fraudulent financial statements provided by a large commercial and industrial borrower. The Corporation is pursuing all legal actions to recover our exposure. Other losses for the quarter are primarily policy compliant loans resulting from economic pressures in our franchise.

 

Non-performing loans were $116 million, or 2.46 percent of total assets at quarter-end. Of these non-performing loans, commercial real estate loans totaled $42 million, land and lot development loans totaled $26 million, 1-4 family residential properties totaled $17 million, commercial and industrial loans totaled $24 million and other loans totaled $7 million. Other real estate owned (“OREO”) declined at quarter-end by $1.8 million to $20 million. In addition, loans past due 90 days or more fell by more than half from the prior quarter to $3.6 million.

 

As of June 30, 2009, the Corporation’s total risk-based capital totaled 12.56 percent, Tier 1 risk-based capital totaled 10.01 percent, Tier 1 leverage ratio totaled 8.31 percent, and tangible common equity ratio totaled 4.42 percent. All regulatory capital ratios exceed the regulatory definitions of “well capitalized”, in a range of 26 to 38 percent.

 

Net-Interest margin declined slightly by 4 basis points from 3.68 percent in the first quarter of 2009 to 3.64 percent in the second quarter of 2009 as net interest income remained stable at just over $38 million, reflecting the strength of ongoing operations.

 

Total non-interest income, linked quarter-over-quarter, increased by $224,000 when normalized for bond sales activities. Unrealized losses for the quarter included an other-than-temporary impairment charge of $2 million related to pooled trust preferred holdings. The original exposure of $14.9 million now totals $11.1 million.

 

Total non-interest expense, linked quarter-over-quarter, increased by $3.5 million as FDIC assessments increased by $2.9 million, expenses related to OREO write-downs increased by $1.1 million and professional services related to credit losses increased by just over $750,000. Absent credit-related costs and FDIC insurance costs, operating expenses decreased by nearly $1.3 million, reflecting the operational savings related to the Lincoln integration from mid-April. The largest reduction was in base salary expense totaling $950,000.

 

Michael C. Rechin, President and Chief Executive Officer, stated that, “First Merchants Corporation’s management team is disappointed to report a loss quarter and yet keenly focused on our plan of capital and liquidity management, asset quality improvement and operating efficiencies.”

 

Rechin continued, “Asset quality improvement efforts include policy and adjudication modifications, staffing changes, non-performing asset reductions and non-strategic asset reductions. During the quarter, we reduced our overall exposure to construction and development by $46 million to a balance of $162 million. We accomplished the reduction while earning assets grew reflecting our continued activity in our markets. Management will continue to ensure that all our stakeholder groups are well represented by First Merchants’ priority setting during this turbulent time.”

 

CONFERENCE CALL

 

First Merchants Corporation will conduct a second quarter earnings conference call and web cast at 2:30 p.m. (ET) on Tuesday, August 4, 2009. To participate, dial (Toll Free) 800-860-2442 and reference First Merchants Corporation's second quarter earnings release. International callers please call +1 412-858-4600. In order to view the web cast and presentation slides, please go to http://www.snl.com/irweblinkx/corporateprofile.aspx?iid=100283 during the time of the call. A replay of both the call and the web cast will be available until August 12, 2009 at 9:00 a.m. (ET). To access replay, US/Canada participants should dial (Toll Free) 877-344-7529 or for International participants, dial +1 412-317-0088. The replay pass code is 431665.

 

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:

 

About First Merchants Corporation

 

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, Inc., a full-service property casualty, personal lines, and healthcare 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).

 

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