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

To participate, dial (Toll Free) 877-317-6789 and reference First Merchants Corporation’s third quarter earnings release. International callers please call [phone]. 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 [phone]. The replay passcode is 10019381.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme121025.html 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 ( http://www.firstmerchants.com).

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)		September 30,
		2012				2011
ASSETS
Cash and cash equivalents		$	57,027			$	60,166
Interest-bearing time deposits			35,324				16,115
Investment securities			928,716				937,828
Mortgage loans held for sale			27,711				12,257
Loans			2,836,324				2,712,938
Less: Allowance for loan losses			(69,493	)			(73,074	)
Net loans			2,766,831				2,639,864
Premises and equipment			51,373				51,432
Federal Reserve and Federal Home Loan Bank stock			32,824				31,381
Interest receivable			17,519				17,770
Core deposit intangibles and goodwill			150,019				151,062
Cash surrender value of life insurance			124,702				123,524
Other real estate owned			13,780				19,425
Tax asset, deferred and receivable			29,344				35,804
Other assets			14,998				21,881
TOTAL ASSETS		$	4,250,168			$	4,118,509
LIABILITIES
Deposits:
Noninterest-bearing		$	679,818			$	598,139
Interest-bearing			2,514,933				2,466,111
Total Deposits			3,194,751				3,064,250
Borrowings:
Federal funds purchased			57,024				27,946
Securities sold under repurchase agreements			153,454				117,097
Federal Home Loan Bank advances			145,467				168,764
Subordinated debentures and term loans			112,169				194,961
Total Borrowings			468,114				508,768
Interest payable			1,591				2,186
Other liabilities			38,857				30,760
Total Liabilities			3,703,313				3,605,964
STOCKHOLDERS' EQUITY
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 shares			90,783				90,783
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding - 125 shares			125				125
Common Stock, $.125 stated value:
Authorized -- 50,000,000 shares
Issued and outstanding - 28,672,177 and 28,538,164 shares			3,584				3,567
Additional paid-in capital			256,290				254,801
Retained earnings			198,094				162,669
Accumulated other comprehensive income (loss)			(2,021	)			600
Total Stockholders' Equity			546,855				512,545
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	4,250,168			$	4,118,509

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In Thousands, Except Per Share Amounts)		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2012				2011				2012				2011
INTEREST INCOME
Loans receivable:
Taxable		$	38,160			$	37,024			$	110,660			$	113,219
Tax-exempt			118				86				358				435
Investment securities:
Taxable			4,176				5,078				13,218				14,665
Tax-exempt			2,532				2,529				7,645				7,617
Federal funds sold															3
Deposits with financial institutions			16				45				69				228
Federal Reserve and Federal Home Loan Bank stock			345				323				1,035				1,005
Total Interest Income			45,347				45,085				132,985				137,172
INTEREST EXPENSE
Deposits			3,517				5,046				11,566				17,776
Federal funds purchased			38				16				62				22
Securities sold under repurchase agreements			211				384				703				1,148
Federal Home Loan Bank advances			492				1,089				2,123				3,067
Subordinated debentures and term loans			1,187				2,699				4,460				7,984
Total Interest Expense			5,445				9,234				18,914				29,997
NET INTEREST INCOME			39,902				35,851				114,071				107,175
Provision for loan losses			4,609				5,556				14,029				16,775
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			35,293				30,295				100,042				90,400
OTHER INCOME
Service charges on deposit accounts			2,913				3,169				8,625				8,945
Fiduciary activities			1,986				1,881				5,907				5,846
Other customer fees			2,740				2,583				8,476				7,452
Commission income			1,618				1,528				4,770				4,440
Earnings on cash surrender value of life insurance			685				644				2,725				1,793
Net gains and fees on sales of loans			2,849				1,768				7,115				4,671
Net realized gains on sales of available for sale securities			843				861				2,134				2,149
Other-than-temporary impairment on available for sale securities															(400	)
Gain on FDIC modified whole bank transaction											9,124
Other income			639				796				1,220				1,253
Total Other Income			14,273				13,230				50,096				36,149
OTHER EXPENSES
Salaries and employee benefits			20,083				19,964				59,078				55,700
Net occupancy			2,568				2,530				7,692				7,690
Equipment			1,798				1,662				5,259				5,122
Marketing			536				534				1,542				1,352
Outside data processing fees			1,413				1,391				4,295				4,294
Printing and office supplies			287				301				848				902
Core deposit amortization			489				755				1,438				2,957
FDIC assessments			792				1,201				2,771				4,756
Other real estate owned and credit-related expenses			2,104				2,007				6,412				8,045
Other expenses			4,334				3,877				13,277				11,684
Total Other Expenses			34,404				34,222				102,612				102,502
INCOME BEFORE INCOME TAX			15,162				9,303				47,526				24,047
Income tax expense			3,926				2,561				12,714				6,356
NET INCOME			11,236				6,742				34,812				17,691
Loss on CPP unamortized discount							(1,401	)							(1,401	)
Loss on extinguishment of trust preferred securities							(10,857	)							(10,857	)
Preferred stock dividends and discount accretion			(1,134	)			(868	)			(3,404	)			(2,846	)
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS		$	10,102			$	(6,384	)		$	31,408			$	2,587
Per Share Data:
Basic Net Income (Loss) Available to Common Stockholders		$	0.35			$	(0.25	)		$	1.09			$	0.10
Diluted Net Income (Loss) Available to Common Stockholders		$	0.35			$	(0.25	)		$	1.09			$	0.10
Cash Dividends Paid		$	0.03			$	0.01			$	0.07			$	0.03
Average Diluted Shares Outstanding (in thousands)			28,888				26,367				28,819				26,019

FINANCIAL HIGHLIGHTS
(Dollars In Thousands)		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2012				2011				2012				2011
NET CHARGE OFF'S		$	5,259			$	9,615			$	15,434			$	26,678
AVERAGE BALANCES:
Total Assets		$	4,237,590			$	4,113,316			$	4,230,186			$	4,124,697
Total Loans			2,845,398				2,725,449				2,803,706				2,758,635
Total Earning Assets			3,829,127				3,714,401				3,818,805				3,736,503
Total Deposits			3,248,100				3,101,458				3,243,217				3,179,218
Total Stockholders' Equity			540,988				478,836				530,153				466,671
FINANCIAL RATIOS:
Return on Average Assets			0.95	%			-0.62	%			0.99	%			0.08	%
Return on Average Stockholders' Equity			7.47				(5.33	)			7.90				0.74
Return on Average Common Stockholders' Equity			8.98				(6.23	)			9.53				0.86
Average Earning Assets to Average Assets			90.36				90.30				90.28				90.59
Allowance for Loan Losses as % of Total Loans			2.43				2.68				2.43				2.68
Net Charge Off's as % of Average Loans (Annualized)			0.74				1.41				0.73				1.29
Average Stockholders' Equity to Average Assets			12.77				11.64				12.53				11.31
Tax Equivalent Yield on Earning Assets			4.89				5.01				4.79				5.05
Cost of Supporting Liabilities			0.57				0.99				0.66				1.07
Net Interest Margin (FTE) on Earning Assets			4.32				4.02				4.13				3.98

NON-PERFORMING ASSETS
(Dollars In Thousands)		September 30,				June 30,				March 31,				December 31,				September 30,
		2012				2012				2012				2011				2011
Non-Accrual Loans		$	56,999			$	63,127			$	74,456			$	69,592			$	78,933
Renegotiated Loans			6,871				3,921				6,695				14,308				6,701
Non-Performing Loans (NPL)			63,870				67,048				81,151				83,900				85,634
Other Real Estate Owned			13,780				14,183				15,628				16,289				19,425
Non-Performing Assets (NPA)			77,650				81,231				96,779				100,189				105,059
90+ Days Delinquent			1,974				665				253				580				1,595
NPAS & 90 Day Delinquent		$	79,624			$	81,896			$	97,032			$	100,769			$	106,654
Loan Loss Reserve		$	69,493			$	70,143			$	70,369			$	70,898			$	73,074
Quarterly Net Charge-offs			5,259				4,771				5,404				8,031				9,615
NPAs / Actual Assets %			1.83	%			1.92	%			2.28	%			2.40	%			2.55	%
NPAs & 90 Day / Actual Assets %			1.87	%			1.93	%			2.29	%			2.41	%			2.59	%
NPAs / Actual Loans and REO %			2.70	%			2.87	%			3.42	%			3.65	%			3.83	%
Loan Loss Reserves / Actual Loans (%)			2.43	%			2.49	%			2.50	%			2.60	%			2.68	%
Net Charge Off's as % of Average Loans (Annualized)			0.74	%			0.68	%			0.78	%			1.18	%			1.41	%

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)		September 30,				June 30,				March 31,				December 31,				September 30,
		2012				2012				2012				2011				2011
ASSETS
Cash and due from banks		$	57,027			$	68,493			$	60,991			$	73,312			$	60,166
Interest-bearing time deposits			35,324				41,760				34,290				52,851				16,115
Investment securities			928,716				944,321				960,032				946,400				937,828
Mortgage loans held for sale			27,711				15,278				22,138				17,864				12,257
Loans			2,836,324				2,797,634				2,792,989				2,713,415				2,712,938
Less: Allowance for loan losses			(69,493	)			(70,143	)			(70,369	)			(70,898	)			(73,074	)
Net loans			2,766,831				2,727,491				2,722,620				2,642,517				2,639,864
Premises and equipment			51,373				51,335				51,541				51,013				51,432
Federal Reserve and Federal Home Loan Bank stock			32,824				33,033				33,026				31,270				31,381
Interest receivable			17,519				16,506				16,730				17,723				17,770
Core deposit intangibles and goodwill			150,019				150,006				150,486				150,471				151,062
Cash surrender value of life insurance			124,702				124,018				123,355				124,329				123,524
Other real estate owned			13,780				14,183				15,628				16,289				19,425
Tax asset, deferred and receivable			29,344				32,003				32,112				36,424				35,804
Other assets			14,998				13,996				13,417				12,613				21,881
TOTAL ASSETS		$	4,250,168			$	4,232,423			$	4,236,366			$	4,173,076			$	4,118,509
LIABILITIES
Deposits:
Noninterest-bearing		$	679,818			$	684,101			$	677,643			$	646,508			$	598,139
Interest-bearing			2,514,933				2,604,797				2,601,935				2,488,147				2,466,111
Total Deposits			3,194,751				3,288,898				3,279,578				3,134,655				3,064,250
Borrowings:
Federal funds purchased			57,024				652				10,936								27,946
Securities sold under repurchase agreements			153,454				160,127				139,308				156,305				117,097
Federal Home Loan Bank advances			145,467				96,847				131,496				138,095				168,764
Subordinated debentures and term loans			112,169				115,951				115,969				194,974				194,961
Total Borrowings			468,114				373,577				397,709				489,374				508,768
Interest payable			1,591				2,168				2,094				2,925				2,186
Other liabilities			38,857				32,104				29,044				31,655				30,760
Total Liabilities			3,703,313				3,696,747				3,708,425				3,658,609				3,605,964
STOCKHOLDERS' EQUITY
Preferred Stock, no-par value, $1,000 liquidation value:
Authorized -- 500,000 shares
Senior Non-Cumulative Perpetual Preferred Stock, Series B
Issued and outstanding			90,783				90,783				90,783				90,783				90,783
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding			125				125				125				125				125
Common Stock, $.125 stated value:
Authorized -- 50,000,000 shares
Issued and outstanding			3,584				3,580				3,578				3,570				3,567
Additional paid-in capital			256,290				255,632				255,116				254,874				254,801
Retained earnings			198,094				188,863				181,664				168,717				162,669
Accumulated other comprehensive income (loss)			(2,021	)			(3,307	)			(3,325	)			(3,602	)			600
Total Stockholders' Equity			546,855				535,676				527,941				514,467				512,545
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	4,250,168			$	4,232,423			$	4,236,366			$	4,173,076			$	4,118,509

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In Thousands, Except Per Share Amounts)		September 30,				June 30,				March 31,				December 31,				September 30,
		2012				2012				2012				2011				2011
INTEREST INCOME
Loans receivable:
Taxable		$	38,160			$	36,652			$	35,848			$	36,497			$	37,024
Tax exempt			118				123				117				93				86
Investment securities:
Taxable			4,176				4,468				4,574				4,565				5,078
Tax exempt			2,532				2,551				2,562				2,550				2,529
Federal funds sold
Deposits with financial institutions			16				28				25				54				45
Federal Reserve and Federal Home Loan Bank stock			345				347				343				314				323
Total Interest Income			45,347				44,169				43,469				44,073				45,085
INTEREST EXPENSE
Deposits			3,517				3,939				4,110				4,505				5,046
Federal funds purchased			38				12				12				3				16
Securities sold under repurchase agreements			211				197				295				363				384
Federal Home Loan Bank advances			492				637				994				1,114				1,089
Subordinated debentures, revolving credit lines and term loans			1,187				1,331				1,942				1,908				2,699
Total Interest Expense			5,445				6,116				7,353				7,893				9,234
NET INTEREST INCOME			39,902				38,053				36,116				36,180				35,851
Provision for loan losses			4,609				4,545				4,875				5,855				5,556
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			35,293				33,508				31,241				30,325				30,295
OTHER INCOME
Service charges on deposit accounts			2,913				2,893				2,819				3,027				3,169
Fiduciary activities			1,986				1,938				1,983				1,804				1,881
Other customer fees			2,740				3,150				2,586				2,572				2,583
Commission income			1,618				1,485				1,667				1,220				1,528
Earnings on cash surrender value of life insurance			685				662				1,378				803				644
Net gains and fees on sales of loans			2,849				2,314				1,952				2,747				1,768
Net realized gains on sales of available for sale securities			843				502				789				290				861
Gain on FDIC modified whole bank transaction											9,124
Other income			639				221				360				508				796
Total Other Income			14,273				13,165				22,658				12,971				13,230
OTHER EXPENSES
Salaries and employee benefits			20,083				19,641				19,354				19,035				19,964
Net occupancy			2,568				2,473				2,651				2,428				2,530
Equipment			1,798				1,656				1,805				1,672				1,662
Marketing			536				564				442				650				534
Outside data processing fees			1,413				1,506				1,376				1,377				1,391
Printing and office supplies			287				294				267				340				301
Core deposit amortization			489				480				469				591				755
FDIC assessments			792				862				1,117				775				1,201
Other real estate owned and credit-related expenses			2,104				2,122				2,186				2,569				2,007
Other expenses			4,334				4,582				4,361				3,999				3,877
Total Other Expenses			34,404				34,180				34,028				33,436				34,222
INCOME BEFORE INCOME TAX			15,162				12,493				19,871				9,860				9,303
Income tax expense			3,926				3,288				5,500				2,299				2,561
NET INCOME			11,236				9,205				14,371				7,561				6,742
Loss on CPP unamortized discount																			(1,401	)
Loss on extinguishment of trust preferred securities																			(10,857	)
Preferred stock dividends and discount accretion			(1,134	)			(1,135	)			(1,135	)			(1,135	)			(868	)
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS		$	10,102			$	8,070			$	13,236			$	6,426			$	(6,384	)
PER SHARE:
Basic Net Income (Loss) Available to Common Stockholders		$	0.35			$	0.28			$	0.46			$	0.24			$	(0.25	)
Diluted Net Income (Loss) Available to Common Stockholders		$	0.35			$	0.28			$	0.46			$	0.24			$	(0.25	)
Cash Dividends Paid		$	0.03			$	0.03			$	0.01			$	0.01			$	0.01
Average Diluted Shares Outstanding (in thousands)			28,888				28,815				28,755				28,700				26,367
FINANCIAL RATIOS:
Return on Average Assets			0.95	%			0.76	%			1.26	%			0.61	%			-0.62	%
Return on Average Stockholders' Equity			7.47				6.07				10.23				5.01				(5.33	)
Return on Average Common Stockholders' Equity			8.98				7.32				12.40				6.08				(6.23	)
Average Earning Assets to Average Assets			90.36				90.30				90.16				89.66				90.30
Allowance for Loan Losses as % of Total Loans			2.43				2.49				2.50				2.60				2.68
Net Charge Off's as % of Average Loans (Annualized)			0.74				0.68				0.78				1.18				1.41
Average Stockholders' Equity to Average Assets			12.77				12.51				12.32				12.22				11.64
Tax Equivalent Yield on Earning Assets			4.89				4.75				4.74				4.83				5.01
Cost of Supporting Liabilities			0.57				0.64				0.78				0.84				0.99
Net Interest Margin (FTE) on Earning Assets			4.32				4.11				3.96				3.99				4.02

LOANS
(Dollars In Thousands)		September 30,				June 30,				March 31,				December 31,				September 30,
		2012				2012				2012				2011				2011
Commercial and industrial loans		$	592,517			$	552,353			$	546,304			$	532,523			$	518,848
Agricultural production financing and other loans to farmers			107,166				106,135				97,165				104,526				106,761
Real estate loans:
Construction			93,610				99,588				92,694				81,780				70,044
Commercial and farm land			1,241,054				1,219,114				1,229,195				1,194,230				1,196,270
Residential			475,272				480,917				498,354				481,493				495,954
Home Equity			204,888				207,250				210,564				191,631				196,191
Individuals' loans for household and other personal expenditures			77,171				83,933				78,711				84,172				90,810
Lease financing receivables, net of unearned income			2,970				2,976				3,112				3,555				4,160
Other loans			41,676				45,368				36,890				39,505				33,900
Loans			2,836,324				2,797,634				2,792,989				2,713,415				2,712,938
Allowance for loan losses			(69,493	)			(70,143	)			(70,369	)			(70,898	)			(73,074	)
NET LOANS		$	2,766,831			$	2,727,491			$	2,722,620			$	2,642,517			$	2,639,864
DEPOSITS
(Dollars In Thousands)		September 30,				June 30,				March 31,				December 31,				September 30,
		2012				2012				2012				2011				2011
Demand deposits		$	1,455,568			$	1,521,194			$	1,470,938			$	1,438,513			$	1,360,174
Savings deposits			837,409				822,299				801,935				757,166				712,545
Certificates and other time deposits of $100,000 or more			256,077				261,156				269,796				264,787				278,115
Other certificates and time deposits			527,304				546,182				566,934				551,247				570,380
Brokered deposits			118,393				138,067				169,975				122,942				143,036
TOTAL DEPOSITS		$	3,194,751			$	3,288,898			$	3,279,578			$	3,134,655			$	3,064,250

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