SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities and Exchange Act of 1934
October 22, 1996
Date of Report (Date of earliest event reported)
First Merchants Acceptance Corporation
(Exact name of registrant a specified in its charter)
Delaware 0-24686 36-3759045
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
570 Lake Cook Road, Suite 126, Deerfield, Illinois 60015
(Address of principal executive offices) (Zip Code)
847-948-9300
(Registrant's telephone number)
Item 5. Other Events.
On October 22, 1996 First Merchants Acceptance Corporation issued a press
release announcing its operating results with respect to the third quarter of
1996. A copy of the release is attached hereto as Exhibit 99.1.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 99.1: Press Release issued by First Merchants Acceptance
Corporation on October 22, 1996.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and 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 Acceptance Corporation
By: s/Mitchell C Kahn
-----------------
Mitchell C Kahn
President and Chief Executive Officer
Dated: October 22, 1996
<PAGE>
EXHIBIT INDEX
Sequentially-
Exhibit Numbered
NO. Description Page
99.1 Press Release issued by First Merchants
Acceptance Corporation October 22, 1996.....................
CONTACTS: Thomas R. Ehmann
Vice President & Chief Financial Officer
(847) 948-9300
FOR IMMEDIATE RELEASE
Michele Katz/Jason Langer
Press: Brian Maddox/Alison Hersh
Morgen-Walke Associates
(212) 850-5600
FIRST MERCHANTS REPORTS 32% INCREASE
IN THIRD QUARTER NET EARNINGS PER SHARE
DEERFIELD, ILLINOIS, October 22, 1996 -- First Merchants Acceptance
Corporation (Nasdaq:FMAC) today announced significant increases in total
revenues and net earnings for the third quarter and nine months ended
September 30, 1996.
Net earnings for the recent quarter increased 97% to $3.3 million,
compared to $1.7 million for the 1995 third quarter. On a per share basis,
1996 third quarter net earnings increased 32% to $0.49 per share on a 50%
increase in weighted average shares outstanding.
Finance contracts purchased during the third quarter were $130 million,
a 121% increase over the $59 million purchased during the comparable period in
1995. Average finance receivables serviced during the third quarter were $527
million, up significantly from $185 million in the year-ago quarter. Total
revenues were $26.2 million in the third quarter of 1996, a 147% increase over
total revenues of $10.6 million reported for the three months ended September
30, 1995. The increase in revenues primarily reflects a 69% increase in
interest income earned on finance contracts and a gain on sale of finance
receivables. During the quarter the Company completed a $117.5 million
off-balance sheet securitization.
Mitchell Kahn, President and Chief Executive Officer of First Merchants,
commented, "During this quarter First Merchants surpassed one-half billion
dollars in serviced finance receivables. Secondly, First Merchants received
an initial implied senior unsecured debt rating of "BB+" from Duff & Phelps, a
leading credit rating agency. In developing its rating of First Merchants
Duff & Phelps cited the Company's conservative underwriting
criteria, consistent historical static pool loss performance, and conservative
capital structure. We also completed our first public asset-backed receivable
transaction, utilizing our $625 million shelf registration filed with the SEC
earlier this quarter."
The Company noted that credit quality trends for the quarter were in
line with management's expectations. Net charge-offs as a percentage of
average serviced finance receivables were 5.8%, unchanged from the second
quarter of 1996. At September 30, 1996 total accounts 31 or more days past
due were 3.4% of serviced finance receivables compared to 3.2% at June 30,
1996.
Total credit loss reserves, including the allowance for credit losses and
reserves attributable to contracts sold or held for sale, increased to 7.6% of
serviced finance receivables compared with 7.0% of serviced finance
receivables at June 30, 1996.
For the nine months ended September 30, 1996, total revenues increased
significantly to $71.6 million, up from $25.6 million in the first nine
months of 1995. Net earnings for the 1996 nine-month period totaled $9.5
million, or $1.41 per share, as compared to $4.2 million, or $0.94 per share
for the prior year period.
First Merchants Acceptance Corporation is a national specialty finance
company primarily engaged in financing the purchase of used automobiles for
consumers who have limited access to traditional sources of credit. The
Company acquires dealer-originated retail installment contracts from
franchised and independent automobile dealers in 37 states. First Merchants
operates regional dealer service centers located in Alabama, Arizona,
California, Colorado, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland,
Massachusetts, Minnesota, Missouri, New Jersey, North Carolina, Ohio,
Oklahoma, Oregon, Tennessee, Texas, Utah, Virginia and Washington.
(Tables to follow)
First Merchants Acceptance Corporation
Unaudited Financial Highlights
(Amounts in thousands, except net earnings per share
and number of installment contracts)
Three Months Ended Nine Months Ended
Sepember 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Interest income -
finance contracts $ 17,292 $ 10,256 $ 52,771 $ 24,744
Other portfolio income 520 337 1,486 816
Gain on sale of finance
receibables 6,795 --- 14,887 --
Servicing fee and other
income 1,574 --- 2,443 --
-------- ------- -------- -------
Total revenues: 26,181 10,593 71,587 25,560
-------- ------- -------- -------
Expenses:
Interest expense 5,353 3,092 15,024 7,460
Provision for credit losses 4,300 525 12,000 650
Operating expenses:
Employee compensation and
related costs 6,655 2,761 17,424 6,769
Other 4,467 1,512 11,549 3,892
------- ------- -------- -------
Total expenses: 20,775 7,890 55,997 18,771
------- ------- -------- -------
Earnings before income taxes 5,406 2,703 15,590 6,789
Income taxes 2,108 1,026 6,080 2,579
------- ------- -------- -------
Net earnings $3,298 $1,677 $9,510 $4,210
======= ======= ======== =======
Net earnings per share $0.49 $0.37 $1.41 $0.94
======= ======= ======== =======
Weighted average common
and common equivalent shares
outstanding 6,727 4,489 6,743 4,471
======= ======= ======= =======
Other Operating Data
Average finance receivables
- - serviced 526,709 184,595 431,907 146,937
Average finance receivables
- - owned 329,723 184,595 322,126 146,937
Installment contracts purchased:
Dollar amount 129,946 58,852 395,281 157,816
Number 10,830 5,907 34,788 15,786
(More tables to follow)
First Merchants Acceptance Corporation
Unaudited Financial Highlights
(Amounts in thousands, except number of installment contracts)
September 30, December 31,
1996 1995
------------- ------------
Financial Position
Total assets $ 349,383 $ 282,274
Finance receivables - owned 284,571 251,908
Allowance for credit losses (17,096) (14,301)
---------- ----------
Net receivables $ 267,475 $ 237,607
Finance receivables held for sale, net 32,712 32,265
Excess servicing receivable 22,162 ---
Borrowing under senior revolving
credit facility 73,125 104,000
Notes payable-securitized pools, net 153,109 70,378
Subordinated notes, net 13,982 13,896
Stockholders' equity $ 93,765 $ 84,279
Receivable Portfolio Data
Finance receivables - serviced $ 565,240 $ 284,173
Number of installment contracts
outstanding - serviced 56,736 31,082
Credit Quality Data
Accounts with payments
31 or more days past due - serviced: 3.4% 2.5%
Net charge-offs for the period and as a percentage
of average finance receivables - serviced
- last three months $ 7,691 $ 3,463
(annualized rate) 5.8% 5.7%
Credit loss reserves as a
percentage of finance receivables - serviced 7.6% 5.2%
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