<PAGE>
FORM 10-Q
AMENDMENT NO. 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15 (d) of THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997
Commission File Number 0-17071
First Merchants Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Indiana 35-1544218
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
200 East Jackson Street - Muncie, IN 47305-2814
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip code)
(765) 747-1500
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days,
Yes X No
----- -----
As of October 30, 1997, there were outstanding 6,659,602 common shares,
without par value, of the registrant.
The exhibit index appears on page 17.
This report including the cover page contains a total of 21 pages.
Page 1
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page No.
----------
<S> <C> <C>
PART I. Financial information:
Item 1. Financial Statements:
Consolidated Condensed Balance Sheet. . . . . . . . . . . . . . . . .3
Consolidated Condensed Statement of Income. . . . . . . . . . . . . .4
Consolidated Condensed Statement of Changes in
Stockholders' Equity. . . . . . . . . . . . . . . . . . . . . . . . .5
Consolidated Condensed Statement of Cash Flows. . . . . . . . . . . .6
Notes to Consolidated Condensed Financial Statements. . . . . . . . .7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . 11
PART II. Other Information:
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . 17
Item 6. Exhibits and Reports of Form 8-K . . . . . . . . . . . . . . . . . . 17
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
Page 2
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- -------------
<S> <C> <C>
ASSETS:
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . $ 30,860 $ 33,882
Federal funds sold. . . . . . . . . . . . . . . . . . . . . . . . . . 1,150
------------- -------------
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . 30,860 35,032
Interest-bearing deposits . . . . . . . . . . . . . . . . . . . . . . 261 290
Investment securities available for sale. . . . . . . . . . . . . . . 212,374 228,379
Investment securities held to maturity. . . . . . . . . . . . . . . . 36,846 47,227
Mortgage loans held for sale. . . . . . . . . . . . . . . . . . . . . 550 284
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699,495 631,416
Less: Allowance for loan losses. . . . . . . . . . . . . . . . . (6,785) (6,622)
------------- -------------
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 692,710 624,794
Premises and equipment. . . . . . . . . . . . . . . . . . . . . . . . 15,320 15,303
Federal Reserve and Federal Home Loan Bank stock. . . . . . . . . . . 3,361 3,090
Interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . 9,084 8,643
Core deposit intangibles and goodwill . . . . . . . . . . . . . . . . 1,659 1,714
Others assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,686 3,237
------------- -------------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,007,711 $ 967,993
------------- -------------
------------- -------------
LIABILITIES:
Deposits:
Noninterest-bearing. . . . . . . . . . . . . . . . . . . . . . . . . $ 93,285 $ 110,175
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . 696,081 684,276
------------- -------------
Total deposits. . . . . . . . . . . . . . . . . . . . . . . . . 789,366 794,451
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . 72,802 45,037
Federal Home Loan Bank advances. . . . . . . . . . . . . . . . . . . 18,700 9,150
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . 3,720 3,376
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 3,409 3,292
------------- -------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 887,997 855,306
------------- -------------
STOCKHOLDERS' EQUITY:
Preferred stock, no-par value:
Authorized and unissued -- 500,000 shares
Common stock, $.125 stated value:
Authorized -- 20,000,000 shares
Issued and outstanding -- 6,657,016 and 6,603,319 shares. . . . . . 832 825
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 23,918 22,968
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . 93,613 87,978
Net unrealized gain on securities available for sale . . . . . . . . 1,351 916
------------- -------------
Total stockholders' equity. . . . . . . . . . . . . . . . . . . 119,714 112,687
------------- -------------
Total liabilities and stockholders' equity. . . . . . . . . . . $ 1,007,711 $ 967,993
------------- -------------
------------- -------------
</TABLE>
See notes to consolidated condensed financial statements.
Page 3
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------- ----------------------
1997 1996 1997 1996
---------- --------- -------- --------
<S> <C> <C> <C> <C>
Interest Income:
Loans receivable
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,288 $ 13,176 $ 44,004 $ 38,326
Tax exempt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 22 87 59
Investment securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,588 3,165 8,395 9,623
Tax exempt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,064 975 3,185 2,831
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . 115 27 502
Deposits with financial institutions . . . . . . . . . . . . . . . . 6 5 12 13
Federal Reserve and Federal Home Loan Bank stock . . . . . . . . . . 68 53 196 159
---------- --------- -------- --------
Total interest income . . . . . . . . . . . . . . . . . . . . . . 19,042 17,511 55,906 51,513
---------- --------- -------- --------
Interest expense:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,157 7,208 23,487 21,713
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . 690 859 2,262 1,982
Federal Home Loan Bank advances. . . . . . . . . . . . . . . . . . . 285 134 627 399
---------- --------- -------- --------
Total interest expense. . . . . . . . . . . . . . . . . . . . . . . 9,132 8,201 26,376 24,094
---------- --------- -------- --------
Net Interest Income. . . . . . . . . . . . . . . . . . . . . . . . . . 9,910 9,310 29,530 27,419
Provision for loan losses. . . . . . . . . . . . . . . . . . . . . . . 375 295 952 875
---------- --------- -------- --------
Net Interest Income After Provision For Loan Losses. . . . . . . . . . 9,535 9,015 28,578 26,544
Other Income:
Net realized gains (losses) on sales of available-for-sale securities (4) 24 (3) 50
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,295 2,016 6,758 5,971
---------- --------- -------- --------
Total other income . . . . . . . . . . . . . . . . . . . . . . . . . . 2,291 2,040 6,755 6,021
Total other expenses . . . . . . . . . . . . . . . . . . . . . . . . . 6,486 6,179 19,104 17,887
---------- --------- -------- --------
Income before income tax . . . . . . . . . . . . . . . . . . . . . . . 5,340 4,876 16,229 14,678
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . 1,804 1,655 5,557 4,997
---------- --------- -------- --------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,536 $ 3,221 $ 10,672 $ 9,681
---------- --------- -------- --------
---------- --------- -------- --------
Per share:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .53 .49 $ 1.61 $ 1.48
Dividends (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 .24 .76 .64
Weighted average shares outstanding. . . . . . . . . . . . . . . . . . 6,649,993 6,591,219 6,624,576 6,575,465
</TABLE>
(1) Dividends per share is for First Merchants Corporation only, not restated
for pooling transactions.
See notes to consolidated condensed financial statements.
Page 4
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
Balances, January 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 112,687 $ 104,967
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,672 9,681
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,038) (3,785)
Net change in unrealized gain (loss) on securities available for sale. . . 435 (1,789)
Stock issued under employee benefit plans . . . . . . . . . . . . . . . . 292 298
Stock issued under dividend reinvestment and stock purchase plan . . . . . 539 384
Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . 127 64
Cash paid in lieu of issuing fractional shares . . . . . . . . . . . . . . (1)
-------------- --------------
Balances, September 30 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 119,714 $ 109,819
-------------- --------------
-------------- --------------
</TABLE>
See notes to consolidated condensed financial statements
Page 5
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
------------------------
1997 1996
-------- --------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,672 $ 9,681
Adjustments to reconcile net income to net cash provided by operating activities
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 952 875
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . 1,312 1,170
Securities amortization, net. . . . . . . . . . . . . . . . . . . . . . . . . . . 245 141
Securities losses (gains), net. . . . . . . . . . . . . . . . . . . . . . . . . . 3 (50)
Mortgage loans originated for sale. . . . . . . . . . . . . . . . . . . . . . . . (3,849) (1,458)
Proceeds from sales of mortgage loans . . . . . . . . . . . . . . . . . . . . . . 3,661 2,211
Change in interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . (441) 102
Change in interest payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 344 171
Other adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (191) (220)
-------- --------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . . 12,708 12,623
Cash Flows From Investing Activities:
Net change in interest-bearing deposits. . . . . . . . . . . . . . . . . . . . . . 29 (289)
Purchases of
Securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . (47,126) (88,457)
Securities held to maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,760) (21,616)
Proceeds from maturities of
Securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . 54,667 78,292
Securities held to maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,649 30,335
Proceeds from sales of
Securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . 8,551 7,407
Net change in loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (71,021) (58,517)
Purchases of premises and equipment. . . . . . . . . . . . . . . . . . . . . . . . (1,329) (1,403)
Other investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310 185
-------- --------
Net cash used by investing activities . . . . . . . . . . . . . . . . . . . . . . (45,030) (54,063)
(continued)
</TABLE>
Page 6
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
------------------------
1997 1996
-------- --------
<S> <C> <C>
Cash Flows From Financing Activities:
Net change in
Demand and savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . $(27,487) $(48,724)
Certificates of deposit and other time deposits . . . . . . . . . . . . . . . . . 22,402 14,521
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,765 46,300
Federal Home Loan Bank advances. . . . . . . . . . . . . . . . . . . . . . . . . . 9,550 7,150
Repayment of Federal Home Loan Bank advances . . . . . . . . . . . . . . . . . . . (7,000)
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,038) (3,785)
Stock issued under employee benefit plans. . . . . . . . . . . . . . . . . . . . . 292 298
Stock issued under dividend reinvestment and stock purchase plan . . . . . . . . . 539 384
Stock options exercised. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 64
Cash paid in lieu of issuing fractional shares . . . . . . . . . . . . . . . . . . (1)
-------- --------
Net cash used by financing activities . . . . . . . . . . . . . . . . . . . . . . 28,150 9,207
-------- --------
Net Change in Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . (4,172) (32,233)
Cash and Cash Equivalents, January 1. . . . . . . . . . . . . . . . . . . . . . . . 35,032 77,874
-------- --------
Cash and Cash Equivalents, September 30 . . . . . . . . . . . . . . . . . . . . . . $ 30,860 $ 45,641
-------- --------
-------- --------
</TABLE>
See notes to consolidated condensed financial statements.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1. General
The significant accounting policies followed by First Merchants Corporation
("Corporation") and its wholly owned subsidiaries for interim financial
reporting are consistent with the accounting policies followed for annual
financial reporting, except for the change in method of accounting discussed
more fully in Note 2. All adjustments which are of a normal recurring nature
and are in the opinion of management necessary for a fair statement of the
results for the periods reported have been included in the accompanying
consolidated condensed financial statements.
NOTE 2. Change in Methods of Accounting
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings Per
Share, is effective for the Corporation's 1997 annual financial statements.
This statement simplifies the calculations of earnings per share. The
Corporation does not expect that the new disclosure from basic earnings per
share will be substantially different from the primary earnings per share as
currently calculated and disclosed. Additional disclosures include diluted
earnings per share, which will reflect the potential dilution that could
occur from unexercised stock options under the Corporation's stock option
plans.
Page 7
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Table dollar amounts in thousands)
(Unaudited)
NOTE 3. Investment Securities
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Available for sale at September 30, 1997:
U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . $ 18,728 $ 92 $ 14 $ 18,806
Federal agencies. . . . . . . . . . . . . . . . . . . . . 72,222 442 59 72,605
State and municipal . . . . . . . . . . . . . . . . . . . 65,111 1,553 66 66,598
Mortgage-backed securities. . . . . . . . . . . . . . . . 33,260 410 128 33,542
Other asset-backed securities . . . . . . . . . . . . . . 566 1 68 499
Corporate obligations . . . . . . . . . . . . . . . . . . 19,978 124 40 20,062
Marketable equity security. . . . . . . . . . . . . . . . 262 262
------------ ------------ ------------ ------------
Total available for sale . . . . . . . . . . . . . . . . 210,127 2,622 375 212,374
------------ ------------ ------------ ------------
Held to maturity at September 30, 1997:
U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . 249 4 245
Federal agencies. . . . . . . . . . . . . . . . . . . . . 3,417 12 2 3,427
State and municipal . . . . . . . . . . . . . . . . . . . 27,905 238 5 28,138
Mortgage-backed securities. . . . . . . . . . . . . . . . 1,303 1 2 1,302
Other asset-backed securities . . . . . . . . . . . . . . 3,972 6 239 3,739
------------ ------------ ------------ ------------
Total held to maturity . . . . . . . . . . . . . . . . . 36,846 257 252 36,851
------------ ------------ ------------ ------------
Total investment securities. . . . . . . . . . . . . . . $ 246,973 $ 2,879 $ 627 $ 249,225
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
Page 8
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Table dollar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Available for sale at December 31, 1996:
U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . $ 21,570 $ 92 $ 46 $ 21,616
Federal agencies. . . . . . . . . . . . . . . . . . . . . 79,130 540 180 79,490
State and municipal . . . . . . . . . . . . . . . . . . . 52,026 1,173 106 53,093
Mortgage-backed securities. . . . . . . . . . . . . . . . 41,441 297 275 41,463
Other asset-backed securities . . . . . . . . . . . . . . 709 709
Corporate obligations . . . . . . . . . . . . . . . . . . 31,470 156 128 31,498
Marketable equity securities. . . . . . . . . . . . . . . 510 510
------------ ------------ ------------ ------------
Total available for sale . . . . . . . . . . . . . . . . 226,856 2,258 735 228,379
------------ ------------ ------------ ------------
Held to maturity at December 31, 1996:
U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . 249 7 242
Federal agencies. . . . . . . . . . . . . . . . . . . . . 5,729 23 5 5,747
State and municipal . . . . . . . . . . . . . . . . . . . 36,405 381 21 36,765
Mortgage-backed securities. . . . . . . . . . . . . . . . 2,730 13 2,717
Other asset-backed securities . . . . . . . . . . . . . . 2,114 17 108 2,023
------------ ------------ ------------ ------------
Total held to maturity . . . . . . . . . . . . . . . . . 47,227 421 154 47,494
------------ ------------ ------------ ------------
Total investment securities. . . . . . . . . . . . . . . $ 274,083 $ 2,679 $ 889 $ 275,873
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
Page 9
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Table dollar amounts in thousands)
(Unaudited)
NOTE 4. Loans and Allowance
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Loans:
Commercial and industrial loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 145,639 $ 132,134
Bankers' acceptances and loans to financial institutions. . . . . . . . . . . . . . . . . . . . 1,020 625
Agricultural production financing and other loans to farmers. . . . . . . . . . . . . . . . . . 19,802 18,906
Real estate loans:
Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,515 13,167
Commercial and farmland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,974 97,596
Residential. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283,476 253,530
Individuals' loans for household and other personal expenditures. . . . . . . . . . . . . . . . 126,662 113,507
Tax-exempt loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,235 1,643
Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,796 1,672
Unearned interest on loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (624) (1,364)
------------- ------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 699,495 $ 631,416
------------- ------------
------------- ------------
Nine Months Ended
September 30
--------------------------------
Allowance for loan losses: 1997 1996
------------- ------------
Balances, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,622 $ 6,696
Provision for losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 952 875
Recoveries on loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386 219
Loans charged off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,175) (1,043)
------------- ------------
Balances, September 30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,785 $ 6,747
------------- ------------
------------- ------------
</TABLE>
Page 10
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Corporation's financial data for periods prior to mergers
accounted for as pooling of interests has been restated.
RESULTS OF OPERATIONS
The Corporation has recorded 21 consecutive years of growth in
earnings per share, reaching $2.00 in 1996, an increase of 8.7 per cent over
1995.
Return on assets rose to 1.41 per cent in 1996, from 1.35 per cent
in 1995, and 1.22 per cent in 1994.
Return on equity, was 12.16 per cent in 1996, 12.17 per cent in
1995, and 12.42 per cent in 1994.
Following are the levels achieved in each of these ratios during the
first nine months of 1997, as compared to the same period in 1996.
- Earnings per share were $1.61, up 8.8 per cent from $1.48
- Return on assets was 1.44 per cent increasing from 1.40 per cent
- Return on equity totaled 11.73 per cent compared to 11.59 per cent
for the first nine months of 1996
CAPITAL
The Corporation's capital strength continues to exceed regulatory
minimums and peer group averages. Management believes that strong capital is
a distinct advantage in the competitive environment in which the Corporation
operates and will provide a solid foundation for continued growth.
The Corporation's Tier I capital to average assets ratio was 11.6
per cent at year-end 1996 and 11.7 per cent at September 30, 1997. At
September 30, 1997, the Corporation had a Tier I risk-based capital ratio of
16.5 per cent, total risk-based capital ratio of 17.6 per cent, and a
leverage ratio of 11.7 per cent. Regulatory capital guidelines require a
Tier I risk-based capital ratio of 4.0 per cent and a total risk-based
capital ratio of 8.0 per cent. Banks with Tier I risk-based capital ratios of
6.0 per cent and total risk-based capital ratios of 10.0 per cent are
considered "well capitalized."
ASSET QUALITY/PROVISION FOR LOAN LOSSES
The allowance for loan losses is maintained through the provision
for loan losses, which is a charge against earnings.
The amount provided for loan losses and the determination of the
adequacy of the allowance are based on a continuous review of the loan
portfolio, including an internally administered loan "watch" list and an
independent loan review provided by an outside accounting firm. The
evaluation takes into consideration identified credit problems, as well as
the possibility of losses inherent in the loan portfolio that cannot be
specifically identified.
Page 11
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
<TABLE>
<CAPTION>
The following table summarized the risk elements for the Corporation.
---------------------------------------------------------------------------------------
(Dollars in Thousands) September 30, December 31, December 31,
1997 1996 1995
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Non-accrual loans . . . . . . . . . . $ 1,842 $ 2,777 $ 576
Loans contractually past due 90 days
or more other than nonaccruing . . . 2,025 1,699 1,119
Restructured loans . . . . . . . . . 2,936 1,540 1,075
------- ------- -------
Total . . . . . . . . . . . . $ 6,803 $ 6,016 $ 2,770
------- ------- -------
------- ------- -------
---------------------------------------------------------------------------------------
</TABLE>
The increase in non-performing loans from December 31, 1995, to
December 31, 1996, is primarily attributable to one loan placed in
non-accrual status during 1996. This loan is included in impaired loans at
December 31, 1996, for which an allowance was recorded. Management is in the
process of resolving this loan situation and anticipates that no additional
provision for loan losses will be required.
The Corporation adopted SFAS No. 114 and No. 118 ACCOUNTING BY
CREDITORS FOR IMPAIRMENT OF A LOAN AND ACCOUNTING BY CREDITORS FOR IMPAIRMENT
OF A LOAN-INCOME RECOGNITION AND DISCLOSURES on January 1, 1995. Impaired
loans included in the table above, totaled $3,992,000 at December 31, 1996.
An allowance for loan losses was not deemed necessary for impaired loans
totaling $868,000, but an allowance of $1,092,000 was recorded for the
remaining balance of impaired loans of $3,124,000. The average balance of
impaired loans for 1996 was $5,213,000. The balance of impaired loans has
not changed significantly since December 31, 1996.
At December 31, 1996, the allowance for loan losses was $6,622,000,
down slightly from year end 1995. As a per cent of loans, the allowance was
1.05 per cent, down from 1.21 per cent at year end 1995. The provision for
loan losses in 1996 was $1,253,000 compared to $1,388,000 in 1995.
At September 30, 1997, the allowance for loan losses stood at
$6,785,000 or .97 per cent of loans. $952,000 was provided for loan losses
in the first nine months of 1997 compared to $875,000 in the same period of
1996.
The table below presents loan loss experience for the years
indicated and compares the Corporation's loss experience to that of its peer
group, consisting of bank holding companies with assets between $1 billion
and $3 billion.
<TABLE>
<CAPTION>
1997 (1) 1996 1995
---- ---- ----
<S> <C> <C> <C>
(Dollars in Thousands)
Allowance for loan losses:
Balance at January 1 . . . . . . . . . . . . $6,622 $6,696 $6,603
------ ------ ------
Chargeoffs . . . . . . . . . . . . . . . . . 1,175 1,636 1,554
Recoveries . . . . . . . . . . . . . . . . . 386 309 259
------ ------ ------
Net chargeoffs . . . . . . . . . . . . . . . 789 1,327 1,295
Provision for loan losses. . . . . . . . . . 952 1,253 1,388
------ ------ ------
Balance at December 31 . . . . . . . . . . . $6,785 $6,622 $6,696
------ ------ ------
------ ------ ------
Ratio of net chargeoffs during the period to
average loans outstanding during the period . .16%(2) .23% .24%
Peer Group . . . . . . . . . . . . . . . . . . .27%(3) .26% .27%
</TABLE>
(1) Through September 30, 1997
(2) First nine months annualized
(3) Through June 30, 1997
Page 12
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
LIQUIDITY AND INTEREST SENSITIVITY
Asset/Liability management has been an important factor in the
Corporation's ability to record consistent earnings growth through periods of
interest rate volatility and product deregulation. Management and the Board
of Directors monitor the Corporation's liquidity and interest sensitivity
positions at regular meetings to ensure that changes in interest rates will
not adversely affect earnings. Decisions regarding investment and the
pricing of loan and deposit products are made after analysis of reports
designed to measure liquidity, rate sensitivity, the Corporation's exposure
to changes in net interest income given various rate scenarios, and the
economic and competitive environments.
The Corporation's liquidity and interest sensitivity position at
September 30, 1997, remained adequate to meet the Corporation's primary goal
of achieving optimum interest margins while avoiding undue interest rate
risk. The table below presents the Corporation's interest rate sensitivity
analysis as of September 30, 1997.
<TABLE>
<CAPTION>
INTEREST-RATE SENSITIVITY ANALYSIS
At September 30, 1997
(Dollars in Thousands) Beyond
1-180 Days 181-365 Days 1-5 Years 5 Years Total
---------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Rate-Sensitive Assets:
Federal funds sold and
interest-bearing deposits . . . . . . . . . $ 261 $ 261
Investment securities. . . . . . . . . . . . 62,925 $ 35,358 $ 117,099 $ 33,838 249,220
Loans. . . . . . . . . . . . . . . . . . . . 296,339 71,872 264,516 67,318 700,045
Federal Reserve and Federal
Home Loan Bank stock. . . . . . . . . . . . 2,964 397 3,361
---------- ------------ --------- --------- ---------
Total rate-sensitive assets. . . . . . . . 362,489 107,230 381,615 101,553 952,887
Rate-Sensitive Liabilities:
Interest bearing deposits. . . . . . . . . . 296,281 88,852 309,754 1,194 696,081
Short-term borrowings. . . . . . . . . . . . 72,802 72,802
Federal Home Loan Bank
advances. . . . . . . . . . . . . . . . . . 2,149 144 11,578 4,829 18,700
---------- ------------ --------- --------- ---------
Total rate-sensitive liabilities . . . . . 371,232 88,996 321,332 6,023 787,583
Interest rate sensitivity gap by period . . . (8,743) 18,234 60,283 95,530
Cumulative rate sensitivity gap . . . . . . . (8,743) 9,491 69,774 165,304
Cumulative rate sensitivity gap ratio
September 30, 1997 . . . . . . . . . . . . . 97.6% 102.1% 108.9% 121.0%
June 30, 1997. . . . . . . . . . . . . . . . 96.4% 107.0% 109.6% 120.8%
</TABLE>
The Corporation had a cumulative positive gap of $9,491,000 in the
one year horizon at September 30, 1997 or .94 percent of total assets. Net
interest income at financial institutions with positive gaps tends to
increase when rates increase and generally decrease as interest rates decline.
Page 13
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
EARNING ASSETS
Earning assets increased by $30.3 million during 1996, and $41.2
million during the first nine months of 1997.
The following table presents the earning asset mix for the years
ended 1996 and 1995 and at September 30, 1997.
Loans grew by more than $79 million during 1996 while short-term
investments and securities declined, reflecting the Corporation's intent to
change the balance sheet mix to emphasize loans which generally carry higher
yields than federal funds sold, interest-bearing deposits and investment
securities, and often provide collateral business. The same trend continued
during the first nine months of 1997. Loans grew by more than $68 million,
accounting for all of the growth in earning assets. Maturities in the
investment portfolio helped fund the loan growth.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
EARNING ASSETS
(Dollars in Millions) September 30, December 31, December 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
Federal funds sold and interest-bearing deposits . . . . . . . . . . . . . $ .3 $ 1.4 $ 39.2
Investment securities available for sale . . . . . . . . . . . . . . . . . 212.4 228.4 225.9
Investment securities held to maturity . . . . . . . . . . . . . . . . . . 36.8 47.2 60.7
Mortgage loans held for sale . . . . . . . . . . . . . . . . . . . . . . . .6 0.3 0.7
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699.5 631.4 552.3
Federal Reserve and Federal Home Loan Bank stock . . . . . . . . . . . . . 3.4 3.1 2.7
------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $953.0 $911.8 $881.5
------ ------ ------
------ ------ ------
- --------------------------------------------------------------------------------
</TABLE>
DEPOSITS, SHORT-TERM BORROWINGS AND FEDERAL HOME LOAN BANK ADVANCES
The following table presents the level of deposits and borrowed
funds (Federal funds purchased, repurchase agreements with customers, U.S.
Treasury demand notes and Federal Home Loan Bank advances) for the years
ended 1996 and 1995 and at September 30, 1997. Lack of deposit growth
coupled with loan growth has resulted in a greater reliance on borrowed
funds. The Corporation plans to place further emphasis on deposit growth
going forward through advertising and product development.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DEPOSITS, SHORT-TERM BORROWINGS AND
FEDERAL HOME LOAN BANK ADVANCES
(Dollars in Millions) September 30, December 31, December 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 789.4 $ 794.5 $ 783.9
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . 72.8 45.0 37.4
Federal Home Loan Bank advances. . . . . . . . . . . . . . . . . . . . . . 18.7 9.2 9.0
</TABLE>
Page 14
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
NET INTEREST INCOME
Net Interest Income is the primary source of the Corporation's
earnings. It is a function of net interest margin and the level of average
earning assets.
Asset yields improved slightly in 1996 (.04 per cent FTE) due to
strong loan growth. Interest costs declined by a like amount, primarily due
to rate reductions to three interest-bearing deposit products: interest
checking, Money Market investment account and regular savings.
The resulting "spread" increase of .08 per cent combined with
earning asset growth of $35.5 million accounted for the growth in net
interest income (FTE) of $2.2 million.
During the first nine months of 1997, both interest yields and
interest costs remained stable, increasing by .09 per cent. All of the
increase in net interest income is attributable to earning asset growth which
amounted to nearly $54.3 million.
The table below presents the Corporation's asset yields, interest
expense, and net interest income as a per cent of average earning assets for
the three-year period ending in 1996 and the first nine months of 1997.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
Interest Income Interest Expense Net Interest Income Net Interest Income
(FTE) as a Per Cent as a Per Cent (FTE) as a Per Cent Average on a
of Average of Average of Average Earning Fully Taxable
Earning Assets Earning Assets Earning Assets Assets Equivalent Basis
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 (1) 8.22 % 3.76 % 4.46 % $ 935,023 $ 41,724
1996 8.13 3.67 4.46 880,729 39,258
1995 8.09 3.71 4.38 845,198 37,049
1994 7.42 2.96 4.46 805,987 35,909
</TABLE>
Average earning assets include the average balance of securities classified
as available for sale, computed based on the average of the historical
amortized cost balances without the effects of the fair value adjustment.
(1) First Nine Months Annualized
- --------------------------------------------------------------------------------
OTHER INCOME
The Corporation has placed emphasis on the growth of non-interest
income in recent years by offering a wide range of fee-based services. Fee
schedules are regularly reviewed by a pricing committee to ensure that the
products and services offered by the Corporation are priced to be competitive
and profitable.
Other income in 1996 amounted to $8,342,000 or 9.9 per cent higher
than in 1995. The increase of $750,000 is primarily attributable to the
following five factors:
1. Trust revenues increased $166,000 (5.9 per cent) due to stronger
business activity and investment returns.
2. Deposit service charges increased $195,000 (6.9 per cent) primarily
due to changes in pricing.
3. Interchange fees for the Corporation's credit and debit card
programs grew by $169,000 (142 per cent) due to increased product
offerings.
4. The Corporation recorded securities gains of $148,000 compared to
losses of $30,000 last year, an increase of $178,000 as shorter
maturity, available for sale securities were sold at gains and
longer maturity, higher yielding investments were purchased.
5. Postal money order agent fees increased $79,000 (19.4 per cent) due
to an increased client base.
Page 15
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
Other income in the first nine months of 1997 exceeded the same
period in the prior year by $734,000 or 12.2 per cent. Three categories
accounted for most of this increase:
1. Trust fees grew by $260,000 or 12.0 per cent, again due to new
business and positive investment returns.
2. Deposit service charges increased by $226,000 or 9.9 per cent due
primarily to changes in pricing.
3. Other customer fees increased by $282,000 or 24.4 per cent due
primarily to an increase in sales of personal money orders.
OTHER EXPENSE
Total "other expenses" represent non-interest operating expenses of
the Corporation. Those expenses amounted to $24,135,000 in 1996, an increase
of 5.0 per cent from the prior year, or $1,142,000.
Including an $813,000 reduction in deposit insurance premiums,
remaining operating expenses grew by $1,955,000. Four major areas account
for most of this increase:
1. Salary and benefit expenses, which account for over one-half of the
Corporation's non-interest operating expenses, increased by $640,000
(5.0 per cent) due to normal salary increases.
2. Equipment expense rose $223,000, reflecting the Corporation's
investment in technology to increase productivity and improve
customer service.
3. Expenses related to mergers with Union National Bancorp and Randolph
County Bancorp amounted to $258,000.
4. The previous year included a $238,000 refund from the State of
Indiana for intangibles taxes paid in 1988 and 1989.
Other expense in the first nine months of 1997 exceeded the same
period of the prior year by $1,217,000 or 6.8 per cent. Five primary areas
account for this increase:
1. Salaries and benefits grew by $427,000 or 4.2 per cent due primarily
to normal annual salary adjustments.
2. Business supply expense grew by $95,000 or nearly 14.3 per cent
primarily due to increased use of data processing supplies and
personal money order forms.
3. Equipment expense grew $184,000 or 12.0 per cent, again reflecting
the Corporation's investment in technology to increase productivity
and improve customer service.
4. Deposit insurance expense increased $61,000 (610 per cent) due to
higher insurance premiums.
5. Marketing expense increased $82,000 or 13.5 per cent due primarily
to the promotion of deposit products and and home banking services.
INCOME TAXES
1996 income tax expense increased by $698,000 due to a $1,792,000
increase in net pre-tax income. Likewise, the increase of $560,000 in the
first nine months of 1997, as compared to the same period in 1996, results
from a $1,551,000 increase in pre-tax net income, mitigated somewhat by a
$382,000 increase in tax exempt income.
OTHER
The Securities and Exchange Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission, including
the Corporation, and that the address is (http://www.sec.gov).
Page 16
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
FORM 10-Q
PAGE
EXHIBIT NO.: DESCRIPTION OF EXHIBIT: NUMBER
------------ ----------------------- ---------
<S> <C> <C>
27.1 Financial Data Schedule, Period
Ending September 30, 1997 . . . . . . . . 19
27.2 Restated Financial Data Schedule, Period
Ending September 30, 1996 . . . . . . . . 20
27.3 Restated Financial Data Schedule, Period
Ending September 30, 1995 . . . . . . . . 21
</TABLE>
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter ended
September 30, 1997.
Page 17
<PAGE>
FIRST MERCHANTS CORPORATION
FORM 10-Q
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 thereunto duly authorized.
First Merchants Corporation
(Registrant)
Date November 10, 1997 By /s/ Michael L. Cox
--------------------------------
Michael L. Cox
Executive Vice President
and Director
Date November 10, 1997 By /s/ James L. Thrash
---------------------------------
James L. Thrash
Chief Financial & Principal
Accounting Officer
Page 18
e
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FIRST
MERCHANTS CORPORATION'S CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
FOR QUARTER ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 30,860
<INT-BEARING-DEPOSITS> 261
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 212,374
<INVESTMENTS-CARRYING> 36,846
<INVESTMENTS-MARKET> 36,851
<LOANS> 700,045
<ALLOWANCE> 6,785
<TOTAL-ASSETS> 1,007,711
<DEPOSITS> 789,366
<SHORT-TERM> 72,802
<LIABILITIES-OTHER> 7,129
<LONG-TERM> 18,700
0
0
<COMMON> 832
<OTHER-SE> 118,882
<TOTAL-LIABILITIES-AND-EQUITY> 1,007,711
<INTEREST-LOAN> 44,091
<INTEREST-INVEST> 11,580
<INTEREST-OTHER> 235
<INTEREST-TOTAL> 55,906
<INTEREST-DEPOSIT> 23,487
<INTEREST-EXPENSE> 26,376
<INTEREST-INCOME-NET> 29,530
<LOAN-LOSSES> 952
<SECURITIES-GAINS> (3)
<EXPENSE-OTHER> 19,104
<INCOME-PRETAX> 16,229
<INCOME-PRE-EXTRAORDINARY> 10,672
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,672
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 1.61
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FIRST MERCHANTS CORPORATION FOR QUARTER ENDED SEPTEMBER 30, 1996
RESTATES AS A REQUEST OF POOLING OF INTEREST TRANSACTIONS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 43,391
<INT-BEARING-DEPOSITS> 444
<FED-FUNDS-SOLD> 2,250
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 229,297
<INVESTMENTS-CARRYING> 51,809
<INVESTMENTS-MARKET> 52,285
<LOANS> 605,960
<ALLOWANCE> 6,747
<TOTAL-ASSETS> 959,409
<DEPOSITS> 749,733
<SHORT-TERM> 83,677
<LIABILITIES-OTHER> 7,030
<LONG-TERM> 9,150
0
0
<COMMON> 825
<OTHER-SE> 108,994
<TOTAL-LIABILITIES-AND-EQUITY> 959,409
<INTEREST-LOAN> 38,385
<INTEREST-INVEST> 12,454
<INTEREST-OTHER> 674
<INTEREST-TOTAL> 51,513
<INTEREST-DEPOSIT> 21,713
<INTEREST-EXPENSE> 24,094
<INTEREST-INCOME-NET> 27,419
<LOAN-LOSSES> 875
<SECURITIES-GAINS> 50
<EXPENSE-OTHER> 17,887
<INCOME-PRETAX> 14,678
<INCOME-PRE-EXTRAORDINARY> 9,681
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,681
<EPS-PRIMARY> 1.48
<EPS-DILUTED> 1.48
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FIRST MERCHANTS CORPORATION FOR QUARTER ENDED SEPTEMBER 30, 1995
RESTATED AS A RESULT OF POOLING OF INTEREST TRANSACTIONS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 30,663
<INT-BEARING-DEPOSITS> 259
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 165,103
<INVESTMENTS-CARRYING> 128,791
<INVESTMENTS-MARKET> 129,820
<LOANS> 543,141
<ALLOWANCE> 6,708
<TOTAL-ASSETS> 914,367
<DEPOSITS> 727,859
<SHORT-TERM> 69,939
<LIABILITIES-OTHER> 6,990
<LONG-TERM> 8,000
0
0
<COMMON> 821
<OTHER-SE> 100,758
<TOTAL-LIABILITIES-AND-EQUITY> 914,367
<INTEREST-LOAN> 36,378
<INTEREST-INVEST> 11,960
<INTEREST-OTHER> 676
<INTEREST-TOTAL> 49,014
<INTEREST-DEPOSIT> 20,781
<INTEREST-EXPENSE> 23,073
<INTEREST-INCOME-NET> 25,941
<LOAN-LOSSES> 857
<SECURITIES-GAINS> (50)
<EXPENSE-OTHER> 17,318
<INCOME-PRETAX> 13,625
<INCOME-PRE-EXTRAORDINARY> 8,991
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,991
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.37
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
