First Merchants Corporation Announces 3rd Quarter Earnings Per Share of $.35

First Merchants Corporation Announces 3rd Quarter Earnings Per Share of $.35

MUNCIE, Ind.--(BUSINESS WIRE)-- First Merchants Corporation (NAS: FRME) has reported third quarter 2012 earnings per share of $.35 compared to a $.25 per share loss during the same period in 2011. Net income available to common shareholders totaled $10.1 million for the quarter, a $16.5 million increase over the third quarter of 2011. The loss in the third quarter of 2011 was the result of a $.46 per share one-time charge related to the Corporation's exit of the CPP program.

Michael C. Rechin, President and Chief Executive Officer, stated, "Our third quarter 2012 results are gratifying and a source of strength providing flexibility in capital planning, business line investment and acquisition considerations. We continue to effectively create value through this low interest rate cycle by growing loans while maintaining disciplined pricing and credit standards. Our traditionally strong net interest margin should continue to be incrementally supported by yield accretion resulting from our FDIC acquisition in February."

Year-to-date earnings per share totaled $1.09, a $.99 per share increase over the prior year total of $.10 per share. Of the $.99 per share improvement, $.32 is the result of improvements made to our banking model during the year, including business line expansion and consistent market coverage. In addition, $.46 per share is related to the CPP repayment in the third quarter of 2011, and $.21 is related to the one-time gain on the Corporation's FDIC purchase and assumption agreement with SCB Bank in Shelbyville, Indiana, during the first quarter of 2012. Year-to-date net income available to common shareholders totaled $31.4 million compared to $2.6 million earned in the first nine months of 2011.

Total assets equaled $4.3 billion, as loans and investments total $2.8 billion and $929 million, respectively. The Corporation's loan-to-deposit ratio remained steady at 89 percent while the loan-to-asset ratio increased one percentage point to 67 percent.

Net-interest income totaled $39.9 million for the third quarter of 2012 and net-interest margin remained strong totaling 4.32 percent as yields on earning assets totaled 4.89 percent and the cost of supporting liabilities totaled .57 percent. Discount accretion resulting from the SCB transaction added $2.6 million, or 28 basis points, to net-interest income and net-interest margin for the third quarter of 2012. YTD net-interest income totaled $114.1 million, an increase of $6.9 million over the nine months of 2011.

Non-interest income totaled $14.3 million for the third quarter of 2012 and $50.1 million year-to-date. After normalizing for bond gains and losses and the first quarter 2012 FDIC gain, non-interest income improved by $4.4 million, or 13 percent, during the first nine months of the year. Gains from the sale of mortgage loans accounted for $2.4 million of the increase. Non-interest expense increased slightly on both a quarterly and year-to-date basis totaling $34.4 million and $102.6 million, respectively.

Provision expense totaled $4.6 million for the third quarter 2012 and $14.0 million year-to-date, compared to $5.6 million and $16.8 million in 2011. Net charge-offs were $5.3 million for the third quarter 2012 and $15.4 million year-to-date, compared to $9.6 million and $26.7 million in 2011. The allowance for loan losses is $69.5 million, or 2.43 percent of total loans and 122 percent of non-accrual loans, the highest coverage ratio since 2006.

As of September 30, 2012, the Corporation's total risk-based capital equaled 16.62 percent, Tier 1 common risk-based capital equaled 9.71 percent, and tangible common equity ratio totaled 7.51 percent. As of September 30, 2011 the Corporation's total risk-based capital equaled 16.21 percent, Tier 1 common risk-based capital equaled 8.53 percent, and tangible common equity ratio totaled 6.88 percent.


First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, October 25, 2012.

To participate, dial (Toll Free) 877-317-6789 and reference First Merchants Corporation's third quarter earnings release. International callers please call +1 412-317-6789. A replay of the call will be available until October 25, 2013. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529 or for International participants, dial +1 412-317-0088. The replay passcode is 10019381.

In order to view the web cast and presentation slides, please go to during the time of the call.

During the call, Forward-Looking Statements about the relative business outlook may be made. These Forward-Looking Statements and all other statements made during the call that do not concern historical facts, are subject to risks and uncertainties that may materially affect actual results.

Specific Forward-Looking Statements include, but are not limited to, any indications regarding the Financial Services industry, the economy and future growth of the balance sheet or income statement.

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation is comprised of First Merchants Bank, N.A., which also operates as Lafayette Bank & Trust, Commerce National Bank, and First Merchants Trust Company as divisions of First Merchants Bank, N.A. First Merchants Corporation also operates First Merchants Insurance Group, a full-service property casualty, personal lines, and healthcare insurance agency.

First Merchants Corporation's common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company's Internet web page (

(Dollars In Thousands)September 30,
Cash and cash equivalents$57,027$60,166
Interest-bearing time deposits35,32416,115
Investment securities928,716937,828
Mortgage loans held for sale27,71112,257
Less: Allowance for loan losses(69,493)(73,074)
Net loans2,766,8312,639,864
Premises and equipment51,37351,432
Federal Reserve and Federal Home Loan Bank stock32,82431,381
Interest receivable17,51917,770
Core deposit intangibles and goodwill150,019151,062
Cash surrender value of life insurance124,702123,524
Other real estate owned13,78019,425
Tax asset, deferred and receivable29,34435,804
Other assets14,99821,881
TOTAL ASSETS$4,250,168$4,118,509
Total Deposits3,194,7513,064,250
Federal funds purchased57,02427,946
Securities sold under repurchase agreements153,454117,097
Federal Home Loan Bank advances145,467168,764
Subordinated debentures and term loans112,169194,961
Total Borrowings468,114508,768
Interest payable1,5912,186
Other liabilities38,85730,760
Total Liabilities3,703,3133,605,964
Preferred Stock, no-par value, $1,000 liquidation value:
Authorized -- 500,000 shares
Senior Non-Cumulative Perpetual Preferred Stock, Series B
Issued and outstanding - 90,782.94 shares90,78390,783
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding - 125 shares125125
Common Stock, $.125 stated value:
Authorized -- 50,000,000 shares
Issued and outstanding - 28,672,177 and 28,538,164 shares3,5843,567
Additional paid-in capital256,290254,801
Retained earnings198,094162,669
Accumulated other comprehensive income (loss)(2,021)600
Total Stockholders' Equity546,855512,545
(Dollars In Thousands, Except Per Share Amounts) Three Months Ended Nine Months Ended
September 30,September 30,
2012 20112012 2011
Loans receivable:
Investment securities:
Federal funds sold3
Deposits with financial institutions164569228
Federal Reserve and Federal Home Loan Bank stock3453231,0351,005
Total Interest Income45,34745,085132,985137,172
Federal funds purchased38166222
Securities sold under repurchase agreements2113847031,148
Federal Home Loan Bank advances4921,0892,1233,067
Subordinated debentures and term loans1,1872,6994,4607,984
Total Interest Expense5,4459,23418,91429,997
NET INTEREST INCOME39,90235,851114,071107,175
Provision for loan losses4,6095,55614,02916,775
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