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 22, 2004 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 99.1 Press Release, dated April 22, 2004, issued by First Merchants Corporation ITEM 9. REGULATION FD DISCLOSURE. See "ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION" below. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On April 22, 2004, First Merchants Corporation issued a press release to report its financial results for the first quarter ended March 31, 2004. The press release is attached hereto as Exhibit 99.1, is being furnished by the Registrant pursuant to Regulation FD and is not being filed. 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 22, 2004 EXHIBIT INDEX ------------- Exhibit No. ----------- 99.1 Description ----------- Press Release, dated April 22, 2004, issued by First Merchants Corporation. First Merchants Corporation Exhibit No. 99.1 Press Release, dated April 22, 2004 N / E / W / S R / E / L / E / A / S / E April 22, 2004 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 CORPORATION ANNOUNCES 1st QUARTER 2004 RESULTS First Merchants Corporation (NASDAQ - FRME) has reported first quarter 2004 diluted earnings per share of $.37, a 15.6 percent increase from $.32 recorded in 2003. Net income during the period totaled $6.9 million compared to $5.6 million in 2003. Total assets of the Corporation were $3 billion as of March 31, 2004, a modest increase of $26 million from the prior year. Loans, investments and bank owned life insurance, the Corporation's three primary earning assets totaled $2.8 billion, an increase of $97 million or 3.6 percent, as fed funds sold declined by $55 million resulting in increased earning assets of $42 million. The improvement in earning assets was funded by increases in deposits and capital totaling $46 million. Net interest margin equaled 3.87 percent, a fifty-one basis point decline from the first quarter of 2003 margin of 4.38 percent. Declining margins were mitigated by a reduction in the provision for loan losses of $1.4 million versus the $4.6 million provided in the prior year. The addition of CNBC Bancorporation on March 1, 2003, resulted in an additional two months of 2004 net income totaling $472,000. The additional two months also accounted for $2.0 million of additional net interest income, $133,000 of non-interest income and $1.4 million of additional non-interest expense. Non-performing loans as a percentage of total loans equaled 1.12 percent, down from 1.19 percent in 2003. The Corporation's allowance for loan losses equaled 1.14 percent of average loans for the quarter and net charge-off's equaled .07 percent. Michael L. Cox, President and Chief Executive Officer, stated that, "First Merchants Corporation's first quarter 2004 results reflect positive trends in a number of areas when compared to the fourth quarter of 2003. Earnings per share improved by $.06, net interest margin improved by 9 basis points, return on assets and return on equity improved by 15 and 136 basis points respectively. Most encouraging is the decline in non-performing loans to the lowest level in five quarters." Cox also stated that, "First Merchants Corporation's management team is encouraged by recent progress and remains cautiously optimistic about the economy and the yield curve for the remainder of 2004." CONFERENCE CALL First Merchants Corporation will conduct a conference call at 9:30 a.m. Eastern Standard Time/10:30 a.m. Eastern Daylight Time on Thursday, April 22, 2004. 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 22, 2004, to April 24, 2004. 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. 6682180. 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. First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. Subsidiaries of the Corporation include First Merchants Bank, NA, 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 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). * * * * CONSOLIDATED BALANCE SHEETS (in thousands) March 31, 2004 2003 Assets Cash and due from banks $ 60,366 $ 81,789 Federal funds sold 0 54,925 ----------- ----------- Cash and cash equivalents 60,366 136,714 Interest-bearing time deposits 10,674 5,170 Investment securities 376,974 333,692 Mortgage loans held for sale 3,883 13,558 Loans 2,320,103 2,291,178 Less: Allowance for loan losses (26,459) (29,733) ----------- ----------- Net loans 2,293,644 2,261,445 Premises and equipment 38,972 38,861 Federal Reserve and Federal Home Loan Bank stock 21,956 13,912 Interest receivable 15,061 16,789 Core deposit intangibles and goodwill 141,867 141,226 Cash surrender value of life insurance 40,843 14,567 Other assets 20,901 23,088 ----------- ----------- Total assets $ 3,025,141 $ 2,999,022 =========== =========== Liabilities Deposits Noninterest-bearing $ 303,694 $ 289,835 Interest-bearing 2,009,726 1,996,836 ----------- ----------- Total deposits 2,313,420 2,286,671 Borrowings 372,356 388,821 Interest payable 4,542 5,694 Other liabilities 25,676 28,212 ----------- ----------- Total liabilities 2,715,994 2,709,398 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 -- 18,532,769 and 18,383,045 shares 2,317 2,298 Additional paid-in capital 150,679 143,505 Retained earnings 151,771 139,743 Accumulated other comprehensive income 4,380 4,078 ----------- ----------- Total stockholders' equity 309,147 289,624 ----------- ----------- Total liabilities and stockholders' equity $ 3,025,141 $ 2,999,022 =========== =========== FINANCIAL HIGHLIGHTS Three Months Ended (In thousands) March 31, 2004 2003 NET CHARGE OFF'S $ 406 $ 1,012 AVERAGE BALANCES Total Assets $3,041,837 $2,733,077 Total Loans 2,339,080 2,111,056 Total Deposits 2,312,708 2,078,786 Total Stockholders' Equity 306,592 272,939 FINANCIAL RATIOS Return on Average Assets .91% .83% Return on Avg. Stockholders' Equity 9.05 8.29 Avg. Earning Assets to Avg. Assets 90.05 90.17 Allowance for Loan Losses as % Of Total Loans 1.14 1.29 Net Charge Off's as % Of Avg. Loans (Annualized) .07 .19 Dividend Payout Ratio 62.16 68.75 Avg. Stockholders' Equity to Avg. Assets 10.08 9.99 Tax Equivalent Yield on Earning Assets 5.71 6.49 Cost of Supporting Liabilities 1.84 2.11 Net Int. Margin (FTE) on Earning Assets 3.87 4.38 CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share data) Three Months Ended March 31, 2004 2003 Interest income Loans receivable Taxable $ 34,227 $ 35,173 Tax exempt 163 165 Investment securities Taxable 1,949 1,679 Tax exempt 1,430 1,631 Federal funds sold 18 113 Deposits with financial institutions 109 22 Federal Reserve and Federal Home Loan Bank stock 328 198 -------- -------- Total interest income 38,224 38,981 -------- -------- Interest expense Deposits 8,190 8,884 Securities sold under repurchase agreements 220 449 Federal Home Loan Bank advances 2,442 2,273 Subordinated debentures, revolving credit and term loans 1,234 1,206 Other borrowings 506 159 -------- -------- Total interest expense 12,592 12,971 -------- -------- Net interest income 25,632 26,010 Provision for loan losses 1,372 4,601 -------- -------- Net interest income after provision for loan losses 24,260 21,409 -------- -------- Other income Fiduciary activities 1,810 1,697 Service charges on deposit accounts 2,772 2,784 Other customer fees 1,070 1,088 Net realized gains on sales of available-for-sale securities 37 371 Commission income 953 754 Earnings on cash surrender value of life insurance 429 199 Net gains and fees on sales of loans 801 935 Other income 344 458 -------- -------- Total other income 8,216 8,286 -------- -------- Other expenses Salaries and employee benefits 13,024 11,777 Net occupancy expenses 1,254 1,091 Equipment expenses 1,979 1,844 Marketing expense 440 434 Outside data processing fees 1,223 928 Printing and office supplies 398 407 Goodwill and core deposit amortization 892 828 Other expenses 3,354 4,232 -------- -------- Total other expenses 22,564 21,541 -------- -------- Income before income tax 9,912 8,154 Income tax expense 2,977 2,496 -------- -------- Net income $ 6,935 $ 5,658 ======== ======== Per Share Data (1) Basic Net Income .37 .32 Diluted Net Income .37 .32 Cash Dividends Paid .23 .22 Average Diluted Shares Outstanding (in thousands) 18,646 17,676 (1) Restated for a five percent (5%) stock dividend distributed September 2003. CONSOLIDATED BALANCE SHEETS (in thousands) March 31, December 31, September 30, June 30, March 31, 2004 2003 2003 2003 2003 Assets Cash and due from banks $ 60,366 $ 77,112 $ 87,619 $ 89,126 $ 81,789 Federal funds sold 0 32,415 0 14,150 54,925 ----------- ----------- ----------- ----------- ----------- Cash and cash equivalents 60,366 109,527 87,619 103,276 136,714 Interest-bearing time deposits 10,674 8,141 3,789 8,777 5,170 Investment securities 376,974 356,797 316,852 363,103 333,692 Mortgage loans held for sale 3,883 3,043 12,042 15,151 13,558 Loans 2,320,103 2,353,503 2,351,405 2,324,576 2,291,178 Less: Allowance for loan losses (26,459) (25,493) (29,842) (30,639) (29,733) ----------- ---------- ---------- ----------- ----------- Net loans 2,293,644 2,328,010 2,321,563 2,293,937 2,261,445 Premises and equipment 38,972 39,639 39,475 39,313 38,861 Federal Reserve and Federal Home Loan Bank stock 21,956 15,502 14,057 13,933 13,912 Interest receivable 15,061 16,840 17,139 16,592 16,789 Core deposit intangibles and goodwill 141,867 142,723 143,648 144,663 141,226 Cash surrender value of life insurance 40,843 37,927 37,536 34,575 14,567 Other assets 20,901 18,663 18,000 23,641 23,088 ----------- ----------- ----------- ----------- ----------- Total assets $ 3,025,041 $ 3,076,812 $ 3,011,720 $ 3,056,961 $ 2,999,022 =========== =========== =========== =========== =========== Liabilities Deposits Noninterest-bearing $ 303,694 $ 338,201 $ 316,058 $ 324,735 $ 289,835 Interest-bearing 2,009,726 2,023,900 1,994,146 1,988,593 1,996,836 ----------- ----------- ----------- ----------- ----------- Total deposits 2,313,420 2,362,101 2,310,204 2,313,328 2,286,671 Borrowings 372,356 383,170 374,051 417,669 388,821 Interest payable 4,542 4,680 5,200 5,494 5,694 Other liabilities 25,676 22,896 21,064 19,460 28,212 ----------- ----------- ----------- ----------- ----------- Total liabilities 2,715,994 2,772,847 2,710,519 2,755,951 2,709,398 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 2,317 2,314 2,311 2,301 2,298 Additional paid-in capital 150,679 150,310 149,810 148,296 143,505 Retained earnings 151,771 149,096 147,559 144,457 139,743 Accumulated other comprehensive income 4,380 2,245 1,521 5,956 4,078 ----------- ----------- ----------- ----------- ----------- Total stockholders' equity 309,147 303,965 301,201 301,010 289,624 ----------- ----------- ----------- ----------- ----------- Total liabilities and stockholders' equity $ 3,025,141 $ 3,076,812 $ 3,011,720 $ 3,056,961 $ 2,999,022 =========== =========== =========== =========== =========== NON-PERFORMING ASSETS (In thousands) March 31, December 31, September 30, June 30, March 31, 2004 2003 2003 2003 2003 90 days past due $ 4,770 $ 6,530 $ 4,790 $ 5,295 $ 3,552 Non-accrual loans 19,914 19,453 20,093 22,532 19,747 Other real estate 1,571 1,399 1,547 2,351 1,841 ---------- ------------ ------------ ---------- ---------- Total non-performing assets $ 26,255 $ 27,382 $ 26,430 $ 30,178 $ 25,140 ========== ============ ============ ========== ========== Average total loans for the quarter $2,339,080 $ 2,349,536 $ 2,348,817 $2,313,688 $2,111,056 Total non-performing assets as a percent of average total loans 1.12% 1.17% 1.13% 1.30% 1.19% Restructured loans $ 957 $ 641 $ 647 $ 899 $ 2,194 CONSOLIDATED STATEMENTS OF INCOME Three Months Ended (in thousands, except share data) March 31, December 31, September 30, June 30, March 31, 2004 2003 2003 2003 2003 Interest Income Loans receivable Taxable $ 34,227 $ 34,697 $ 35,607 $ 35,759 $ 35,173 Tax exempt 163 195 185 162 165 Investment securities Taxable 1,949 1,484 1,342 1,600 1,679 Tax exempt 1,430 1,451 1,562 1,626 1,631 Federal funds sold 18 148 49 177 113 Deposits with financial institutions 109 22 13 19 22 Federal Reserve and Federal Home Loan Bank stock 328 39 201 211 198 -------- -------- -------- -------- -------- Total interest income 38,224 38,036 38,959 39,554 38,981 -------- -------- -------- -------- -------- Interest expense Deposits 8,190 8,303 8,623 9,048 8,884 Securities sold under repurchase agreements 220 248 370 454 449 Federal Home Loan Bank advances 2,442 2,362 2,409 2,395 2,273 Subordinated debentures, revolving credit and term loans 1,234 1,234 1,232 1,259 1,206 Other borrowings 506 586 451 443 159 -------- -------- -------- -------- -------- Total interest expense 12,592 12,733 13,085 13,599 12,971 -------- -------- -------- -------- -------- Net interest income 25,632 25,303 25,874 25,955 26,010 Provision for loan losses 1,372 1,047 1,706 2,123 4,601 -------- -------- -------- -------- -------- Net interest income after provision for loan losses 24,260 24,256 24,168 23,832 21,409 -------- -------- -------- -------- -------- Other income Fiduciary activities 1,810 1,603 1,547 1,889 1,697 Service charges on deposit accounts 2,772 2,717 2,861 2,743 2,784 Other customer fees 1,070 1,039 961 1,036 1,088 Net realized gains on sales of available-for-sale securities 37 0 512 67 371 Commission income 953 569 638 707 754 Earnings on cash surrender value of life insurance 429 446 498 204 199 Net gains and fees on sales of loans 801 770 1,332 3,351 935 Other income 344 443 527 1,156 458 -------- -------- -------- -------- -------- Total other income 8,216 7,587 8,876 11,153 8,286 -------- -------- -------- -------- -------- Other expenses Salaries and employee benefits 13,024 12,599 13,206 12,902 11,777 Net occupancy expenses 1,254 1,414 1,189 1,200 1,091 Equipment expenses 1,979 2,217 1,996 2,016 1,844 Marketing expense 440 538 414 411 434 Outside data processing fees 1,223 1,063 1,025 1,102 928 Printing and office supplies 398 466 401 432 407 Goodwill and core deposit amortization 892 923 958 991 828 Other expenses 3,354 4,623 3,771 3,881 4,232 -------- -------- -------- -------- -------- Total other expenses 22,564 23,843 22,960 22,935 21,541 -------- -------- -------- -------- -------- Income before income tax 9,912 8,000 10,084 12,050 8,154 Income tax expense 2,977 2,181 2,735 3,305 2,496 -------- -------- -------- -------- -------- Net income $ 6,935 $ 5,819 $ 7,349 $ 8,745 $ 5,658 ======== ======== ======== ======== ======== Per Share Data(1) Basic Net Income $ .37 $ .31 $ .40 $ .48 $ .32 Diluted Net Income .37 .31 .39 .48 .32 Cash Dividends Paid .23 .23 .23 .22 .22 Average Diluted Shares Outstanding (in thousands) 18,646 18,666 18,622 18,519 17,676 FINANCIAL RATIOS Return on Average Assets .91% .76% .97% 1.17% .83% Return on Avg. Stockholders' Equity 9.05 7.69 9.76 11.77 8.29 Avg. Earning Assets to Avg. Assets 90.05 90.19 89.48 90.14 90.17 Allowance for Loan Losses as % Of Total Loans 1.14 1.08 1.26 1.31 1.29 Net Charge Off's as % Of Avg. Loans (Annualized) .07 .92 .43 .21 .19 Dividend Payout Ratio 62.16 74.19 58.97 46.00 68.75 Avg. Stockholders' Equity to Avg. Assets 10.08 9.86 9.93 9.90 9.99 Tax Equivalent Yield on Earning Assets 5.71 5.62 5.89 5.99 6.49 Cost of Supporting Liabilities 1.84 1.84 1.93 2.01 2.11 Net Int. Margin (FTE) on Earning Assets 3.87 3.78 3.96 3.98 4.38 (1) Restated for a five percent (5%) stock dividend distributed September 2003.