First Merchants Corporation (NASDAQ: FRME) has reported improved core earnings per share for the 3 rd Quarter off-set by a one-time charge due to the repayment of its participation in the Treasury’s TARP program as communicated in a press release and 8-K on September 9, 2011.

September 30, 2011, year-to-date earnings per share totaled $.10 per fully diluted common share. When adjusted for the one-time charge of $.47 per share related to CPP repayment, year-to-date core earnings per share would have totaled $.57. Quarter-to-date earnings per share, including the one-time charge, resulted in a loss of $.25 per fully diluted common share. Before the one-time charge, the normalized core earnings totaled $.22 per fully diluted common share.

Michael C. Rechin, President and Chief Executive Officer, stated, “Management is pleased with the continued upward trajectory of the Corporation’s core earnings improvement and pleased to have repaid all shares related to the TARP program.” Rechin also stated, “The combination of continued margin management, loan balance stabilization, improving asset quality trends and a newly positioned capital structure positions First Merchants well for the future.”

Total assets were $4.1 billion as of quarter end and total loans were $2.7 billion. The Corporation’s liquidity is fully deployed in the bond portfolio as investment securities totaled $938 million for the quarter. The Corporation’s loan-to-deposit ratio is now 89 percent and the loan-to-asset ratio totals 66 percent.

The balance sheet and resulting net interest income were virtually identical to the second quarter of 2011 as net interest income totaled $35.8 million in each of the last two quarters. Net-interest margin remained strong during the quarter totaling 4.02 percent as yields on earning assets totaled 5.01 percent and the cost of supporting liabilities totaled .99 percent.

Non-interest income increased to $13.2 million for the quarter an improvement of $2.2 million over the second quarter of 2011. Net gains from the sale of mortgage loans improved by $738,000 and insurance commission income improved by $504,000. Other income improved by $745,000 due primarily to the sale of back-to-back hedging activity on commercial loans. The hedges provide fixed rates to our customers while maintaining a variable rate loan on the Bank’s books.

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