-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CP5HueIfdg/x+yscuvAGBn1QB6xGROwsf7a6dtvChzDFR/MWY2mNCO8khN0GT/FX iYLo7f/FZDsYDdaoD9CHOQ== 0000712534-09-000029.txt : 20090206 0000712534-09-000029.hdr.sgml : 20090206 20090205174139 ACCESSION NUMBER: 0000712534-09-000029 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20081231 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20090206 DATE AS OF CHANGE: 20090205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST MERCHANTS CORP CENTRAL INDEX KEY: 0000712534 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 351544218 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-17071 FILM NUMBER: 09574132 BUSINESS ADDRESS: STREET 1: 200 E JACKSON ST STREET 2: PO BOX 792 CITY: MUNCIE STATE: IN ZIP: 47308-0792 BUSINESS PHONE: 7657471500 MAIL ADDRESS: STREET 1: 200 EAST JACKSON STREET CITY: MUNCIE STATE: IN ZIP: 47305 8-K/A 1 ammendf8kpressrelease020509.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------------ DATE OF REPORT (Date of earliest event reported): February 5, 2009 ------------------------------ FIRST MERCHANTS CORPORATION (Exact name of registrant as specified in its charter) ------------------------------- INDIANA 0-17071 35-1544218 (State or other jurisdiction (Commission file number) (IRS Employer of incorporation) 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) Not Applicable (Former name or former address, if changed since last report) 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: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] 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 February 5, 2009 First Merchants Corporation issued a press release to report its financial results for the fourth quarter ended December 31, 2008. 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. (a) Not applicable. (b) Not applicable. (c) Exhibits. Exhibit 99.1 Press Release, dated February 5, 2008, issued by First Merchants Corporation 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. First Merchants Corporation (Registrant) By: /s/ Mark K. Hardwick -------------------------------------------- Mark K. Hardwick Executive Vice President and Chief Financial Officer (Principal Financial and Principal Accounting Officer) Dated: February 5, 2009 EXHIBIT INDEX ------------- Exhibit No. Description - ----------- ----------- 99.1 Press Release, dated February 5, 2009, issued by First Merchants Corporation. First Merchants Corporation Exhibit No. 99.1 Press Release, dated February 5, 2009 N / E / W / S R / E / L / E / A / S / E February 5, 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 2008 EARNINGS OF $20.6 MILLION. First Merchants Corporation (NASDAQ - FRME) has reported 2008 diluted earnings per share of $1.14, a decline of $.59 from the 2007 total of $1.73. Net Income for the year totaled $20.6 million compared to the 2007 total of $31.6 million. Total assets reached a record $4.8 billion at quarter-end, an increase of $1 billion, from the December 31, 2007 total of $3.8 billion. Of the $1 billion increase, the completion of the merger with Lincoln Bancorp on December 31, 2008 accounted for $876 million of the increase. The completion of the Lincoln Bancorp acquisition continues the corporation's direction of pursuing stronger growth markets. More importantly the board of directors and management of First Merchants Corporation believe the strategic focus on the Indianapolis marketplace through the addition of Lincoln and its 17 banking centers will accelerate First Merchants position in many of the fastest growing counties within Indiana. Lincoln's operating earnings did not impact First Merchants Corporation's net income during 2008 as the acquisition was completed on December 31, 2008. By contrast the December 31, 2008 balance sheet is consolidated to include Lincoln. Loans and investments, the Corporation's primary earning assets, totaled $4.20 billion, an increase of $876 million, or 26.3 percent, over the prior year. Loans accounted for $846 million of the increase as investment securities increased by $31 million. Of the $876 million increase, Lincoln accounted for $637 million in loans and $122 million in investments. The Corporation's allowance for loan losses as a percent of total loans increased from .98 percent to 1.31 during the year, a $20.7 million increase. Provision expense exceeded net charge-offs by $12 million and Lincoln Bank added $8.7 million to the Corporation's allowance for loan loss total at year-end. The increased allowance for loan losses total is comprised of a $2.4 million increase specific impairment reserves, $4.1 million in the general historical loss component and a $14.2 million increase in environmental factors. None of the increases in specific reserves were related to Lincoln as all recognized impairments were charged down to the fair value prior to closing the transaction. Total specific impairment reserves are $9.8 million or 20% of the total allowance methodology. Non-performing loans totaled $88 million, including the addition of $34 million from Lincoln. Of the $88 million in non-performing loans, commercial real estate loans totaled $29 million, land and lot development loans totaled $20 million, 1-4 family residential properties totaled $18 million, commercial and industrial loans totaled $16 million and other loans totaled $5 million. The Corporation's exposure to land development, single-family residential development, condominium and duplex development projects is limited to $76 million. Non performing loans totaled $88 million, including the addition of $34 million from Lincoln. The Corporations total deposits increased during the year by $875 million as Lincoln Bank accounted for $655 million of the increase. Total borrowings increased by just $50 million including the $137 million increase from Lincoln Bank. As of December 31, 2008 the Corporation's tangible capital totaled 5.01%, tier 1 leverage ratio totaled 7.86%, tier 1 risk based capital totaled 7.31% and total risk based capital totaled 9.84%. The decrease in the Corporation's capital ratios for the year is primarily attributable to two factors. The first factor of note is the decline in First Merchants other comprehensive income of $12.8 million resulting from investment security write-down's under FASB 115 totaling $1.3 million and the decline in pension plan asset valuations totaling $11.5 million during the year. The second factor is a combination of items related to the Lincoln Bancorp acquisition. The Corporation used cash of $16.8 million as part of the $77.3 million purchase price resulting in increased common equity of $60.1 million to acquire an $876 million institution. Additionally, as a result of the acquisition First Merchants added $32.3 million of intangibles from the closing of Lincoln Bancorp. Core deposit intangibles totaled $12.4 million, while purchase accounting adjustments to Lincoln's assets and liabilities totaled $11.6 million resulting in Goodwill. The remaining $8.3 million is reflective of the premium paid by First Merchants Corporation over Lincoln Bancorp's tangible equity at year-end. The purchase accounting adjustments of $11.6 million reduced total risk based capital by 30 basis points, but they will positively accrete to income over the life of the individual instruments. When combining our thorough due diligence and pre-closing efforts, with our April 2009 integration efforts, First Merchants expects Lincoln to be accretive in year one. The Corporation recognizes the difficulties of the economy and the importance of continuing First Merchants history of being "well capitalized". On November 12, 2008 the Corporation applied for participation in the U.S. Department of Treasury's Capital Purchase Program in an amount totaling $116 million. The application has been approved by the Corporation's primary regulator and was forwarded to the Treasury Department on January 16, 2009. The addition of $116 million in preferred stock would improve the Corporation's Total Risk Based Capital Ratio to 12.80%, comfortably above the "well capitalized" guidelines. Net-Interest margin expanded by 29 basis points from 3.55 percent in 2007 to 3.84 percent in 2008. As a result, net-interest income increased by $16.3 million, or 14.4 percent. Net interest margin remained strong even during the forth quarter as the Federal Reserve Board lowered the target Fed Funds rate to just 25 basis points. Aggressive deposit pricing and the use of interest rate floors on over $360 million of the Corporation's rate prime indexed loans helped preserve the Corporation's net interest margin. Provision expense totaled $27.6 million in 2008, an increase of $19.1 million over the prior. The increase in provision expense exceeded the expansion of net interest income by $2.9 million. Total non-interest income decreased by $4.2 million in 2008. Income from changes in the cash surrender value of bank owned life insurance (BOLI) declined by $3.9 million. During the fourth quarter the corporation recorded a loss of $2.1 million due to declines in market value below the stable value wrap. BOLI losses are not tax deductible resulting in a $3.9 million decrease in Net Income. On December 18, 2008, management changed the investment elections under the separate account policy structure to more conservative investments. The Corporation also lost $1.5 million on Federal Home Loan Mortgage Corporation preferred stock. The Corporation has no additional equity exposure to FHLMC and FNMA and no remaining exposure to private label mortgage backed investment securities. Additionally, the Corporation elected to expense $1.2 million of its $15.5 million original book balance trust preferred pooled investment exposure. The loss is attributable to a Trapeza IV pool, the only pool deemed to be other than temporarily impaired as of year-end. The remaining $13.5 million of exposure to trust preferred pools is diversified among eight FTN PreTsl investments. Total non-interest expenses for the year increased by $7.2 million or 7% as salary and benefit expense increased by $4.5 million. The remaining increases in other expense include an increase of $1.8 million in other real estate expense and $860,000 of professional services related to loan workouts. First Merchants also sold the assets of Indiana Title Insurance Company, LLC resulting in a $560,000 loss during the month of December. Michael C. Rechin, President and Chief Executive Officer, stated that, "First Merchants Corporation's management team is focused on five objectives in 2009 including capital & liquidity management, asset quality, net interest margin management, expense management and the success of the Lincoln acquisition. We remain confident that our people, strategies, capital, liquidity, and commitment to endure the current environment will prove successful in the short and long-term time horizon." Rechin continued, "As complex and uncertain as the Banking environment has become, First Merchants is pleased to earn more than $20 million in net income, while improving it's allowance to loans recognizing the negative economic trends nationally and in the mid-west." CONFERENCE CALL First Merchants Corporation will conduct a conference call at 2:30 p.m. Eastern Time on Thursday, February 5, 2009. To participate, callers in the US/Canada should dial (Toll Free) 800-860-2442 while international participants should use +1 412-858-4600. Please reference First Merchants Corporation's fourth quarter earnings. A replay will be available until 9:00 AM ET on February 13, 2009. To access replay, US/Canada participants should dial (Toll Free) 877-344-7529, or for International participants, dial +1 412-317-0088. The replay requires a pass code of 426723. 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, N.A., First Merchants Bank of Central Indiana, N.A., Lafayette Bank & Trust Company, N.A., Commerce National Bank, Lincoln Bank and First Merchants Trust Company, N.A. The Corporation also operates First Merchants Insurance Services, 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). * * * *
CONSOLIDATED BALANCE SHEETS (in thousands) December 31, 2008 2007 Assets Cash and due from banks $ 84,249 $ 134,188 Federal funds sold 66,237 495 ----------- ----------- Cash and cash equivalents 150,486 134,683 Interest-bearing time deposits 38,823 24,931 Investment securities 481,984 451,167 Mortgage loans held for sale 4,295 3,735 Loans 3,721,952 2,876,843 Less: Allowance for loan losses (48,946) (28,228) ----------- ----------- Net loans 3,673,006 2,848,615 Premises and equipment 59,641 44,445 Federal Reserve and Federal Home Loan Bank stock 34,319 25,250 Interest receivable 23,976 23,402 Core deposit intangibles and goodwill 165,974 135,856 Cash surrender value of life insurance 93,222 70,970 Other real estate owned 18,458 2,573 Other assets 40,568 16,460 ----------- ----------- Total assets $ 4,784,752 $ 3,782,087 =========== =========== Liabilities Deposits Noninterest-bearing 460,519 370,397 Interest-bearing 3,258,292 2,473,724 ----------- ----------- Total deposits 3,718,811 2,844,121 Borrowings Fed funds purchased 52,350 Securities sold under repurchase agreements 122,311 106,497 Federal Home Loan Bank advances 360,217 294,101 Subordinated debentures, revolving credit lines and term loans 135,826 115,826 ----------- ----------- Total borrowings 618,354 568,774 Interest payable 8,844 8,325 Other liabilities 42,840 20,931 ----------- ----------- Total liabilities 4,388,849 3,442,151 Stockholders- equity Preferred stock, no-par value Authorized and unissued - 500,000 shares Cumulative Preferred Stock, $1,000 par value: Authorized - 600 shares Issued and outstanding - 125 shares 125 Common stock, $.125 stated value Authorized - 50,000,000 shares Issued and outstanding - 21,178,123 and 18,002,787 shares 2,647 2,250 Additional paid-in capital 202,299 137,801 Retained earnings 206,496 202,750 Accumulated other comprehensive loss (15,664) (2,865) ----------- ----------- Total stockholders' equity 395,903 339,936 ----------- ----------- Total liabilities and stockholders' equity $ 4,784,752 $ 3,782,087 =========== ===========
FINANCIAL HIGHLIGHTS Three Months Ended Twelve Months Ended (in thousands) December 31, December 31, 2008 2007 2008 2007 NET CHARGE OFF'S $ 4,372 $ 1,857 $ 15,602 $ 6,819 AVERAGE BALANCES Total Assets $ 3,870,159 $ 3,735,931 $ 3,811,169 $ 3,639,772 Total Loans 3,082,061 2,873,989 3,002,628 2,794,824 Total Deposits 3,009,123 2,812,760 2,902,902 2,752,443 Total Stockholders' Equity 353,164 335,649 349,594 330,786 FINANCIAL RATIOS Return on Average Assets .02% 1.00% .54% .87% Return on Avg. Stockholders' Equity 0.25 11.10 5.90 9.56 Avg. Earning Assets to Avg. Assets 91.15 90.70 90.88 90.91 Allowance for Loan Losses as % of Total Loans 1.31 .98 1.31 .98 Net Charge Off's as % of Avg. Loans (Annualized) .57 .26 .52 .24 Dividend Payout Ratio 2,300.00 45.10 80.70 53.18 Avg. Stockholders' Equity to Avg. Assets 9.13 8.98 9.17 9.09 Tax Equivalent Yield on Earning Assets 6.21 7.13 6.44 7.10 Cost of Supporting Liabilities 2.33 3.47 2.60 3.55 Net Int. Margin (FTE) on Earning Assets 3.88 3.66 3.84 3.55 CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share data) Three Months Ended Twelve Months Ended December 31, December 31, 2008 2007 2008 2007 Interest income Loans receivable Taxable $ 48,433 $ 53,338 $198,385 $207,268 Tax exempt 349 302 1,013 1,120 Investment securities Taxable 2,907 3,487 12,046 13,744 Tax exempt 1,511 1,623 5,855 6,548 Federal funds sold 7 39 28 172 Deposits with financial institutions 194 194 755 582 Federal Reserve and Federal Home Loan Bank stock 335 344 1,391 1,299 ----------- ----------- ----------- ----------- Total interest income 53,736 59,327 219,473 230,733 ----------- ----------- ----------- ----------- Interest expense Deposits 15,638 22,398 67,581 89,921 Federal funds purchased 108 692 1,856 3,589 Securities sold under repurchase agreements 502 1,182 2,600 3,856 Federal Home Loan Bank advances 2,583 3,250 11,168 12,497 Subordinated debentures, revolving credit lines and term loans 1,757 1,910 6,884 7,750 ----------- ----------- ----------- ----------- Total interest expense 20,588 29,432 90,089 117,613 ----------- ----------- ----------- ----------- Net interest income 33,148 29,895 129,384 113,120 Provision for loan losses 9,654 2,450 27,641 8,507 ----------- ----------- ----------- ----------- Net interest income After provision for loan losses 23,494 27,445 101,743 104,613 ----------- ----------- ----------- ----------- Other income Services charges on deposit accounts 3,346 3,206 13,002 12,421 Fiduciary activities 1,831 2,094 8,031 8,372 Other customer fees 1,634 1,686 6,776 6,479 Commission income 1,271 1,031 5,824 5,113 Earnings on cash surrender value of life insurance (2,130) 1,186 (267) 3,651 Net gains and fees on sales of loans 531 546 2,490 2,438 Net realized gains (losses) on sale of available-for-sale securities (914) 1 (2,083) Other income 717 383 2,594 2,077 ----------- ----------- ----------- ----------- Total other income 6,286 10,133 36,367 40,551 ----------- ----------- ----------- ----------- Other expenses Salaries and employee benefits 16,219 14,738 63,345 58,843 Net occupancy 2,299 1,619 7,711 6,647 Equipment 1,713 1,619 6,659 6,769 Marketing 610 505 2,311 2,205 Outside data processing fees 1,128 872 4,087 3,831 Printing and office supplies 361 329 1,214 1,410 Core deposit amortization 809 789 3,216 3,159 Write-off of unamortized underwriting expense 1,771 Other expenses 6,458 4,776 20,846 17,547 ----------- ----------- ----------- ----------- Total other expenses 29,597 25,247 109,389 102,182 ----------- ----------- ----------- ----------- Income before income tax 183 12,331 28,721 42,982 Income tax expense (38) 3,021 8,083 11,343 ----------- ----------- ----------- ----------- Net income $ 221 $ 9,310 $ 20,638 $ 31,639 =========== =========== =========== =========== Per Share Data Basic Net Income .01 .51 1.14 1.73 Diluted Net Income .01 .51 1.14 1.73 Cash Dividends Paid .23 .23 .92 .92 Average Diluted Shares Outstanding (in thousands) 18,257 18,138 18,162 18,314
CONSOLIDATED BALANCE SHEETS (in thousands) December 31, September 30, June 30, March 31, December 31, 2008 2008 2008 2008 2007 Assets Cash and due from banks $ 84,249 $ 69,846 $ 80,996 $ 89,961 $ 134,188 Federal funds sold 66,237 7,818 495 ----------- ----------- ----------- ----------- ----------- Cash and cash equivalents 150,486 77,664 80,996 89,961 134,683 Interest-bearing time deposits 38,823 15,623 7,267 21,280 24,931 Investment securities 481,984 388,808 408,324 426,055 451,167 Mortgage loans held for sale 4,295 2,062 3,234 3,494 3,735 Loans 3,721,952 3,078,768 3,018,596 2,937,710 2,876,843 Less: Allowance for loan losses (48,946) (34,985) (31,597) (29,094) (28,228) ----------- ----------- ----------- ----------- ----------- Net loans 3,673,006 3,043,783 2,986,999 2,908,616 2,848,615 Premises and equipment 59,641 44,402 44,232 44,526 44,445 Federal Reserve and Federal Home Loan Bank Stock 34,319 25,494 25,455 25,345 25,250 Interest receivable 23,976 21,569 19,680 21,212 23,402 Core deposit intangibles and goodwill 165,974 135,701 136,230 135,056 135,856 Cash surrender value of life insurance 93,222 73,448 72,948 71,663 70,970 Other real estate owned 18,458 16,916 17,243 7,372 2,573 Other assets 40,568 18,604 19,852 12,578 16,460 ----------- ----------- ----------- ----------- ----------- Total assets $ 4,784,752 $ 3,864,074 $ 3,822,460 $ 3,767,158 $ 3,782,087 =========== =========== =========== =========== =========== Liabilities Deposits Noninterest-bearing 460,519 384,928 403,152 380,364 370,397 Interest-bearing 3,258,292 2,529,355 2,460,483 2,432,763 2,473,724 ----------- ----------- ----------- ----------- ----------- Total deposits 3,718,811 2,914,283 2,863,635 2,813,127 2,844,121 Borrowings Fed funds purchased 57,600 151,356 111,144 52,350 Securities sold under repurchase agreements 122,311 100,227 90,872 103,024 106,497 Federal Home Loan Bank advances 360,217 237,225 228,196 244,468 294,101 Subordinated debentures, revolving credit, lines and term loans 135,826 176,256 115,826 115,826 115,826 ----------- ----------- ----------- ----------- ----------- Total borrowings 618,354 571,308 586,250 574,462 568,774 Interest payable 8,844 6,529 6,658 7,621 8,325 Other liabilities 42,840 19,861 18,525 23,107 20,931 ----------- ----------- ----------- ----------- ----------- Total liabilities 4,388,849 3,511,981 3,475,068 3,418,317 3,442,151 Stockholders' equity Preferred stock, no-par value Authorized and unissued - 500,000 shares Cumulative Preferred Stock, $1,000 par value: Authorized - 600 shares 125 125 125 125 Issued and outstanding Common stock, $.125 stated value Authorized - 50,000,000 shares Issued and outstanding 2,647 2,266 2,258 2,247 2,250 Additional paid-in capital 202,299 141,777 140,258 137,633 137,801 Retained earnings 206,496 210,605 206,059 206,710 202,750 Accumulated other comprehensive loss (15,664) (2,680) (4,308) (2,126) (2,865) ----------- ----------- ----------- ----------- ----------- Total stockholders' equity 395,903 352,093 347,392 348,841 339,936 ----------- ----------- ----------- ----------- ----------- Total liabilities and stockholders' equity $ 4,784,752 $ 3,864,074 $ 3,822,460 $ 3,767,158 $ 3,782,087 =========== =========== =========== =========== =========== NON-PERFORMING ASSETS December 31, September 30, June 30, March 31, December 31, 2008 2008 2008 2008 2007 Non Accrual Loans 87,546 37,879 34,410 27,465 29,031 Renegotiated Loans 130 135 136 142 145 ----------- ----------- ----------- ----------- ----------- Non Performing Loans (NPL) 87,676 38,014 34,546 27,607 29,176 Real Estate Owned and Repossessed Assets 18,458 16,916 17,243 7,372 2,573 ----------- ----------- ----------- ----------- ----------- Non Performing Assets (NPA) 106,134 54,930 51,789 34,979 31,749 90+ Days Delinquent 5,982 8,056 3,538 4,996 3,578 ----------- ----------- ----------- ----------- ----------- NPAs & 90 Day Delinquent 112,116 62,986 55,327 39,975 35,327 Loan Loss Reserve 48,946 34,985 31,597 29,094 28,228 YTD Charge-offs 15,602 11,230 7,524 2,957 6,819 NPAs / Actual Assets % 2.22% 1.42% 1.35% 0.93% 0.84% NPAs & 90 Day / Actual Assets % 2.34% 1.63% 1.45% 1.06% 0.93% NPAs / Actual Loans & REO (%) 2.83% 1.77% 1.70% 1.19% 1.10% Loan Loss Reserves / Actual Loans (%) 1.31% 1.14% 1.05% 0.99% 0.98% NCOs / YTD Average Loans (%) 0.52% 0.38% 0.26% 0.10% 0.24% CONSOLIDATED STATEMENTS OF INCOME December 31, September 30, June 30, March 31, December 31, (in thousands, except share data) 2008 2008 2008 2008 2007 Loans receivable Taxable $ 48,433 $ 49,828 $ 49,023 $ 51,101 $ 53,338 Tax exempt 349 321 178 165 302 Investment securities Taxable 2,907 2,943 2,947 3,249 3,487 Tax exempt 1,511 1,379 1,452 1,513 1,623 Federal funds sold 7 10 3 8 39 Deposits with financial institutions 194 146 133 282 194 Federal Reserve and Federal Home Loan Bank stock 335 351 370 335 344 ----------- ----------- ----------- ----------- ----------- Total interest income 53,736 54,978 54,106 56,653 59,327 ----------- ----------- ----------- ----------- ----------- Interest expense Deposits 15,638 16,213 16,297 19,433 23,398 Federal funds purchased 108 502 577 669 692 Securities sold under repurchase agreements 502 650 632 816 1,182 Federal Home Loan Bank advances 2,583 2,724 2,825 3,036 3,250 Subordinated debentures, revolving credit lines and term loans 1,757 1,635 1,602 1,890 1,910 ---------- ----------- ----------- ----------- ----------- Total interest expense 20,588 21,724 21,933 25,844 29,432 ---------- ----------- ----------- ----------- ----------- Net interest income 33,148 33,254 32,173 30,809 29,895 Provision for loan losses 9,654 7,094 7,070 3,823 2,450 ---------- ----------- ----------- ----------- ----------- Net interest income After provision for loan losses 23,494 26,160 25,103 26,986 27,445 Other income Service charges on deposit accounts 3,346 3,568 3,157 2,931 3,206 Fiduciary activities 1,831 1,932 2,126 2,142 2,094 Other customer fees 1,634 1,696 1,767 1,679 1,686 Commission income 1,271 1,457 1,427 1,669 1,031 Earnings on cash surrender value of life insurance (2,130) 519 606 738 1,186 Net gains and fees on sales of loans 531 648 668 643 546 Net realized gains (losses) on sales of available-for-sale securities (914) (1,255) 13 73 1 Other income 717 655 570 652 383 ----------- ----------- ----------- ----------- ----------- Total other income 6,286 9,220 10,334 10,527 10,133 ----------- ----------- ----------- ----------- ----------- Other expenses Salaries and employee benefits 16,219 15,330 15,698 16,098 14,738 Net occupancy 2,299 1,857 1,750 1,805 1,619 Equipment 1,713 1,649 1,643 1,654 1,619 Marketing 610 605 612 484 505 Outside data processing fees 1,128 1,068 1,009 882 872 Printing and office supplies 361 281 291 281 329 Core deposit amortization 809 809 808 790 789 Other expenses 6,458 5,516 4,593 4,279 4,776 ----------- ----------- ----------- ----------- ----------- Total other expenses 29,597 27,115 26,404 26,273 25,247 ----------- ----------- ----------- ----------- ----------- Income before income tax 183 8,265 9,033 11,240 12,331 Income tax expense (38) 2,516 2,491 3,114 3,021 ----------- ----------- ----------- ----------- ----------- Net income $ 221 $ 5,749 $ 6,542 $ 8,126 $ 9,310 =========== =========== =========== =========== =========== Per Share Data Basic Net Income .01 .32 .37 .45 .51 Diluted Net Income .01 .32 .36 .45 .51 Cash Dividends Paid .23 .23 .23 .23 .23 Average Diluted Shares Outstanding (in thousands) 18,257 18,196 18,159 18,055 18,138 FINANCIAL RATIOS Return on Average Assets .02% .60% .69% .86% 1.00% Return on Average Stockholders' Equity 0.25 6.58 7.46 9.43 11.10 Avg. Earning Assets to Avg. Assets 91.15 91.02 90.94 90.38 90.70 Allowance for Loan Losses as % of Total Loans 1.31 1.14 1.05 .99 .98 Net Charge Off's as % of Average Loans (Annualized) .57 .49 .61 .41 .26 Dividend Payout Ratio 2,300.00 71.88 63.85 51.10 45.10 Average Stockholders' Equity to Average Assets 9.13 9.09 9.30 9.17 8.98 Tax Equivalent Yield on Earning Assets 6.21 6.39 6.41 6.78 7.13 Cost of Supporting Liabilities 2.33 2.48 2.56 3.04 3.47 Net Interest Margin (FTE) on Earning Assets 3.88 3.91 3.85 3.74 3.66 LOANS December 31, September 30, June 30, March 31, December 31, (in thousands, except share data) 2008 2008 2008 2008 2007 Commercial and industrial loans $ 904,646 $ 851,233 $ 815,137 $ 724,643 $662,701 Agricultural production financing and other loans to farmers 135,099 136,176 125,125 123,314 114,324 Real estate loans: Construction 252,487 167,512 181,598 178,171 165,425 Commercial and farmland 1,202,372 966,259 954,672 961,431 947,234 Residential 956,245 731,065 718,065 728,956 744,627 Individuals' loans for household and other personal expenditures 201,632 145,345 161,387 174,857 187,880 Tax exempt loans 28,070 34,010 22,553 11,646 16,423 Lease financing receivables, net of unearned income 8,996 9,262 9,158 8,438 8,351 Other loans 32,405 37,906 30,901 26,254 29,878 ----------- ----------- ----------- ----------- ----------- 3,721,952 3,078,768 3,018,596 2,937,710 2,876,843 Allowance for loan losses (48,946) (34,985) (31,597) (29,094) (28,228) ----------- ----------- ----------- ----------- ----------- Total loans $ 3,673,006 $ 3,043,783 $ 2,986,999 $ 2,908,616 $ 2,848,615 =========== =========== =========== =========== =========== DEPOSITS December 31, September 30, June 30, March 31, December 30, 2008 2008 2008 2008 2007 (in thousands) Demand deposits $1,136,267 $921,034 $932,017 $881,498 $903,380 Savings deposits 721,387 540,596 546,951 562,942 552,379 Certificates and other time deposits of $100,000 or more 509,730 469,426 444,967 459,038 470,733 Other certificates and time deposits 1,351,427 983,227 939,700 909,649 917,629 ----------- ----------- ----------- ----------- ----------- Total deposits $ 3,718,811 $ 2,914,283 $ 2,863,635 $ 2,813,127 $ 2,844,121 =========== =========== =========== =========== ===========
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