News Release Details

First Merchants Corporation Announces 5.9 Percent Increase in Second Quarter Earnings Per Share

07/23/2008

MUNCIE, Ind.--(BUSINESS WIRE)--

First Merchants Corporation (NASDAQ: FRME) has reported second quarter 2008 diluted earnings per share of $.36, a 5.9 percent increase over 2007 second quarter earnings per share of $.34. Net Income for the quarter totaled $6.5 million, an increase of $334,000.

Year-to-date diluted earnings per share totaled $.81, a 6.6 percent increase over 2007 first half earnings per share of $.76. Net Income totaled $14.7 million, an increase of $689,000.

Total assets reached $3.8 billion at quarter-end, an increase of $153 million, or 4.2 percent, from June 30, 2007. Loans and investments, the Corporation's primary earning assets, totaled $3.43 billion, an increase of $142 million, or 4.3 percent over the prior year. Loans accounted for $213 million of the increase as investment securities declined by $71 million as spreads between investment securities and borrowings remain below historical levels.

Net-Interest margin expanded by 35 basis points from 3.50 percent in the second quarter of 2007 to 3.85 percent in 2008. As a result, net-interest income increased by $4.6 million or 16.5 percent. On March 21, 2008 the Corporation reported on form 8-K the sale of three prime-based interest rate floors. For the quarter, $561,000 of the $4.7 million gain was recognized in the Corporation's net interest margin. The remaining $3.6 million will be recognized over the 13 months of the original contracts.

Total non-interest income increased by $568,000, or 5.8 percent, during the quarter and total expenses declined by $1.3 million. In the second quarter of 2007 the Corporation expensed $1.8 million of underwriting expense related to the early redemption of the Corporation's trust preferred securities and $601,000 of expense related to integration and re-branding initiatives.

Provision expense increased by $5.4 million, during the quarter as net charge-offs totaled $4.6 million. Non-performing assets increased from 93 basis points of total assets to 135 basis points during the quarter and the allowance for loan losses as a percent of total loans increased to 1.05 percent.

Michael C. Rechin, President and Chief Executive Officer, stated that, "Despite the state of the banking industry and the continuation of negative press regarding peer institutions, First Merchants remains confident in its ability to produce net income sufficient to maintain adequate capital levels, dividend payouts and a growing balance sheet." Rechin also added that, "We continue to manage our loan portfolio rigorously recognizing that declines in client cash flows require current valuations of collateral and guarantee positions of our secondary sources of repayment. As we identify deficiencies in primary and secondary sources of repayment the loans are placed on non-accrual and specific reserves are applied to match the shortfall. First Merchants continues to maintain its earnings momentum while at the same time very prudently addressing any required credit costs as reflected in our year-to-date results."

CONFERENCE CALL

First Merchants Corporation will conduct a conference call at 2:30 p.m. Eastern Daylight Time on Wednesday, July 23, 2008. To participate, dial (Toll Free) 800-860-2442 and reference First Merchants Corporation's second quarter earnings. A replay will be available until July 30, 2008. To access replay, US/Canada participants should dial (Toll Free) 877-344-7529 or for International participants, dial 412-317-0088. The replay will require the passcode is 420850.

During the call, we may make Forward Looking Statements about our relative business outlook. 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:

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. Subsidiaries of the Corporation include First Merchants Bank, N.A., First Merchants Bank of Central Indiana, N.A., Lafayette Bank & Trust Company, N.A., Commerce National Bank and First Merchants Trust Company, N.A. The Corporation also operates First Merchants Insurance Services, a full-service property casualty, personal lines, and healthcare insurance agency and is a majority member of Indiana Title Insurance Company, LLC, a title insurance agency.

First Merchants Corporation's common stock is traded over-the-counter on the NASDAQ National 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

(in thousands)                                         June 30,
                                                   2008       2007
Assets
   Cash and due from banks                      $   80,996 $   80,264
   Federal funds sold                                             657
                                                 ---------  ---------
   Cash and cash equivalents                        80,996     80,921
   Interest-bearing time deposits                    7,267      8,898
   Investment securities                           408,324    479,281
   Mortgage loans held for sale                      3,234      2,842
   Loans                                         3,018,596  2,806,068
      Less: Allowance for loan losses              (31,597)   (27,608)
                                                 ---------  ---------
        Net loans                                2,986,999  2,778,460
   Premises and equipment                           44,232     44,126
   Federal Reserve and Federal Home Loan Bank
    stock                                           25,455     23,822
   Interest receivable                              19,680     21,615
   Core deposit intangibles and goodwill           136,230    137,056
   Cash surrender value of life insurance           72,948     69,111
   Other real estate owned                          17,243      2,274
   Other assets                                     19,852     21,109
                                                 ---------  ---------
           Total assets                         $3,822,460 $3,669,515
                                                 =========  =========
Liabilities
   Deposits
     Noninterest-bearing                        $  403,152 $  362,083
     Interest-bearing                            2,460,483  2,357,518
                                                 ---------  ---------
           Total deposits                        2,863,635  2,719,601
   Borrowings
     Fed funds purchased                           151,356    125,650
     Securities sold under repurchase agreements    90,872     91,038
     Federal Home Loan Bank advances               228,196    268,680
     Subordinated debentures, revolving credit
      lines and term loans                         115,826    102,206
                                                 ---------  ---------
           Total borrowings                        586,250    587,574
   Interest payable                                  6,658     10,417
   Other liabilities                                18,525     24,543
                                                 ---------  ---------
           Total liabilities                     3,475,068  3,342,135
Stockholders' equity
   Preferred stock, no-par value
      Authorized and unissued -- 500,000 shares
   Cumulative Preferred Stock, $1,000 par value:
     Authorized -- 600 shares
     Issued and outstanding -- 125 shares              125
   Common stock, $.125 stated value
     Authorized -- 50,000,000 shares
     Issued and outstanding -- 18,062,701 and
     18,285,359 shares                               2,258      2,286
   Additional paid-in capital                      140,258    143,317
   Retained earnings                               209,059    193,460
   Accumulated other comprehensive loss             (4,308)   (11,683)
                                                 ---------  ---------
        Total stockholders' equity                 347,392    327,380
                                                 ---------  ---------
        Total liabilities and stockholders'
         equity                                 $3,822,460 $3,669,515
                                                 =========  =========
FINANCIAL HIGHLIGHTS

                         Three Months Ended       Six Months Ended
(In thousands)                June 30,                June 30,
                          2008        2007        2008        2007

NET CHARGE OFF'S       $    4,567  $      859  $    7,524  $    2,179

AVERAGE BALANCES
  Total Assets         $3,770,260  $3,601,473  $3,764,296  $3,562,122
  Total Loans           2,973,270   2,764,209   2,940,716   2,733,840
  Total Deposits        2,835,076   2,729,145   2,835,625   2,709,635
  Total Stockholders'
   Equity                 350,800     329,613     347,761     328,981

FINANCIAL RATIOS
  Return on Average
   Assets                     .69%        .69%        .78%        .78%
  Return on Avg.
   Stockholders' Equity      7.46        7.53        8.44        8.50
  Avg. Earning Assets
   to Avg. Assets           90.94       90.96       90.66       91.04
  Allowance for Loan
   Losses as %
   Of Total Loans            1.05         .98        1.05         .98
  Net Charge Off's as %
   Of Avg. Loans
   (Annualized)               .61         .12         .51         .16
  Dividend Payout Ratio     63.85       67.65       56.79       60.53
  Avg. Stockholders'
   Equity to Avg.
   Assets                    9.30        9.15        9.24        9.24
  Tax Equivalent Yield
   on Earning Assets         6.41        7.09        6.60        7.05
  Cost of Supporting
   Liabilities               2.56        3.59        2.80        3.55
  Net Int. Margin (FTE)
   on Earning Assets         3.85        3.50        3.80        3.50
CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share
 data)                           Three Months Ended  Six Months Ended
                                      June 30,           June 30,
                                    2008      2007    2008     2007
Interest income
   Loans receivable
     Taxable                      $ 49,023  $51,204 $100,124 $100,849
     Tax exempt                        178      249      343      450
   Investment securities
     Taxable                         2,947    3,394    6,196    6,676
     Tax exempt                      1,452    1,651    2,965    3,312
   Federal funds sold                    3       91       11       92
   Deposits with financial
    institutions                       133      120      415      243
   Federal Reserve and Federal
    Home Loan Bank stock               370      299      705      627
                                   -------   ------  -------  -------
        Total interest income       54,106   57,008  110,759  112,249
                                   -------   ------  -------  -------
Interest expense
   Deposits                         16,297   22,390   35,730   44,196
   Federal funds purchased             577    1,047    1,246    1,901
   Securities sold under
    repurchase agreements              632      910    1,448    1,479
   Federal Home Loan Bank
    advances                         2,825    3,009    5,861    5,945
   Subordinated debentures,
    revolving credit lines and
    term loans                       1,602    2,037    3,492    4,038
                                   -------   ------  -------  -------
        Total interest expense      21,933   29,393   47,777   57,559
                                   -------   ------  -------  -------
Net interest income                 32,173   27,615   62,982   54,690
   Provision for loan losses         7,070    1,648   10,893    3,247
                                   -------   ------  -------  -------

Net interest income
 after provision for loan
 losses                             25,103   25,967   52,089   51,443
                                   -------   ------  -------  -------
Other income
   Service charges on deposit
    accounts                         3,157    3,091    6,088    5,974
   Fiduciary activities              2,126    2,257    4,268    4,293
   Other customer fees               1,767    1,535    3,446    3,026
   Commission income                 1,427    1,269    3,096    2,907
   Earnings on cash surrender
    value of life insurance            606      782    1,344    1,467
   Net gains and fees on sales
    of loans                           668      611    1,311    1,143
   Net realized gains (losses)
    on
    sale of available-for-sale
    securities                          13                86       (1)
   Other income                        570      221    1,222      761
                                   -------   ------  -------  -------
        Total other income          10,334    9,766   20,861   19,570
                                   -------   ------  -------  -------
Other expenses
   Salaries and employee
    benefits                        15,698   14,796   31,796   29,522
   Net occupancy                     1,750    1,612    3,555    3,210
   Equipment                         1,643    1,783    3,297    3,505
   Marketing                           612      653    1,096    1,140
   Outside data processing fees      1,009    1,036    1,891    1,987
   Printing and office supplies        291      388      572      687
   Core deposit amortization           808      790    1,598    1,581
   Write-off of unamortized
    underwriting expense                      1,771             1,771
   Other expenses                    4,593    4,910    8,872    8,530
                                   -------   ------  -------  -------
        Total other expenses        26,404   27,739   52,677   51,933
                                   -------   ------  -------  -------

Income before income tax             9,033    7,994   20,273   19,080
   Income tax expense                2,491    1,786    5,605    5,101
                                   -------   ------  -------  -------
Net income                        $  6,542  $ 6,208 $ 14,668 $ 13,979
                                   =======   ======  =======  =======

Per Share Data

   Basic Net Income               $    .37  $   .34 $    .82 $    .76
   Diluted Net Income                  .36      .34      .81      .76
   Cash Dividends Paid                 .23      .23      .46      .46
   Average Diluted Shares
     Outstanding (in thousands)     18,159   18,369   18,108   18,432
CONSOLIDATED BALANCE SHEETS

(in thousands)                    June 30,    March 31,  December 31,
                                    2008        2008         2007
Assets
  Cash and due from banks        $   80,996  $   89,961   $  134,188
  Federal funds sold                                             495
                                  ---------   ---------    ---------
  Cash and cash equivalents          80,996      89,961      134,683
  Interest-bearing time deposits      7,267      21,280       24,931
  Investment securities             408,324     426,055      451,167
  Mortgage loans held for sale        3,234       3,494        3,735
  Loans                           3,018,596   2,937,710    2,876,843
    Less: Allowance for loan
     losses                         (31,597)    (29,094)     (28,228)
                                  ---------   ---------    ---------
       Net loans                  2,986,999   2,908,616    2,848,615
  Premises and equipment             44,232      44,526       44,445
  Federal Reserve and Federal
   Home Loan Bank stock              25,455      25,345       25,250
  Interest receivable                19,680      21,212       23,402
  Core deposit intangibles and
   goodwill                         136,230     135,056      135,856
  Cash surrender value of life
   insurance                         72,948      71,663       70,970
  Other real estate owned            17,243       7,372        2,573
  Other assets                       19,852      12,578       16,460
                                  ---------   ---------    ---------
       Total assets              $3,822,460  $3,767,158   $3,782,087
                                  =========   =========    =========
Liabilities
  Deposits
    Noninterest-bearing          $  403,152  $  380,364   $  370,397
    Interest-bearing              2,460,483   2,432,763    2,473,724
                                  ---------   ---------    ---------
       Total deposits             2,863,635   2,813,127    2,844,121
  Borrowings
    Fed funds purchased             151,356     111,144       52,350
    Securities sold under
     repurchase agreements           90,872     103,024      106,497
    Federal Home Loan Bank
     advances                       228,196     244,468      294,101
    Subordinated debentures,
     revolving credit lines and
     term loans                     115,826     115,826      115,826
                                  ---------   ---------    ---------
       Total borrowings             586,250     574,462      568,774
  Interest payable                    6,658       7,621        8,325
  Other liabilities                  18,525      23,107       20,931
                                  ---------   ---------    ---------
       Total liabilities          3,475,068   3,418,317    3,442,151
Stockholders' equity
  Preferred stock, no-par value
     Authorized and unissued --
      500,000 shares
  Cumulative Preferred Stock,
   $1,000 par value:
    Authorized -- 600 shares
    Issued and outstanding              125         125
  Common stock, $.125 stated
   value
     Authorized -- 50,000,000
      shares
     Issued and outstanding           2,258       2,247        2,250
  Additional paid-in capital        140,258     137,633      137,801
  Retained earnings                 209,059     206,710      202,750
  Accumulated other comprehensive
   loss                              (4,308)      2,126       (2,865)
                                  ---------   ---------    ---------
       Total stockholders' equity   347,392     348,841      339,936
                                  ---------   ---------    ---------
       Total liabilities and
        stockholders' equity     $3,822,460  $3,767,158   $3,782,087
                                  =========   =========    =========

CONSOLIDATED BALANCE SHEETS

(in thousands)                               September 30,  June 30,
                                                 2007         2007
Assets
  Cash and due from banks                      $   83,845  $   80,264
  Federal funds sold                                1,800         657
                                                ---------   ---------
  Cash and cash equivalents                        85,645      80,921
  Interest-bearing time deposits                   22,295       8,898
  Investment securities                           474,613     479,281
  Mortgage loans held for sale                      4,328       2,842
  Loans                                         2,869,001   2,806,068
    Less: Allowance for loan losses               (27,635)    (27,608)
                                                ---------   ---------
       Net loans                                2,841,366   2,778,460
  Premises and equipment                           44,255      44,126
  Federal Reserve and Federal Home Loan
   Bank stock                                      25,050      23,822
  Interest receivable                              25,954      21,615
  Core deposit intangibles and goodwill           136,266     137,056
  Cash surrender value of life insurance           70,082      69,111
  Other real estate owned                           2,081       2,274
  Other assets                                     22,365      21,109
                                                ---------   ---------
       Total assets                            $3,754,300  $3,669,515
                                                =========   =========
Liabilities
  Deposits
    Noninterest-bearing                        $  355,339  $  362,083
    Interest-bearing                            2,403,836   2,357,518
                                                ---------   ---------
       Total deposits                           2,759,175   2,719,601
  Borrowings
    Fed funds purchased                            95,697     125,650
    Securities sold under repurchase
     agreements                                   103,846      91,038
    Federal Home Loan Bank advances               310,100     268,680
    Subordinated debentures, revolving
     credit lines and term loans                  110,826     102,206
                                                ---------   ---------
       Total borrowings                           620,469     587,574
  Interest payable                                  9,170      10,417
  Other liabilities                                32,745      24,543
                                                ---------   ---------
       Total liabilities                        3,421,559   3,342,135
Stockholders' equity
  Preferred stock, no-par value
     Authorized and unissued -- 500,000
      shares
  Cumulative Preferred Stock, $1,000 par
   value:
    Authorized -- 600 shares
    Issued and outstanding
  Common stock, $.125 stated value
     Authorized -- 50,000,000 shares
     Issued and outstanding                         2,269       2,286
  Additional paid-in capital                      140,642     143,317
  Retained earnings                               197,609     193,460
  Accumulated other comprehensive loss             (7,779)    (11,683)
                                                ---------   ---------
       Total stockholders' equity                 332,741     327,380
                                                ---------   ---------
       Total liabilities and stockholders'
        equity                                 $3,754,300  $3,669,515
                                                =========   =========
NON PERFORMING ASSETS
                                  June 30,   March 31,  December 31,
                                    2008        2008        2007

Non Accrual Loans               $    34,410 $    27,465 $     29,031
Renegotiated Loans                      136         142          145
                                 ----------  ----------  -----------
Non Performing Loans (NPL)           34,546      27,607       29,176
Real Estate Owned and                17,243       7,372        2,573
 Repossessed Assets              ----------  ----------  -----------
Non Performing Assets (NPA)          51,789      34,979       31,749
90+ Days Delinquent                   3,538       4,996        3,578
                                 ----------  ----------  -----------
NPAs & 90 Day Delinquent             55,327      39,975       35,327

Loan Loss Reserve                    31,597      29,094       28,228
YTD Charge-offs                       7,524       2,957        6,819
NPAs / Actual Assets %                 1.35%       0.93%        0.84%
NPAs & 90 day / Actual Assets %        1.45%       1.06%        0.93%
NPAs / Actual Loans & REO (%)          1.70%       1.19%        1.10%
Loan Loss Reserves / Actual
 Loans (%)                             1.05%       0.99%        0.98%
NCOs / YTD Average Loans (%)           0.26%       0.10%        0.24%

NON PERFORMING ASSETS
                                            September 30,  June 30,
                                                2007         2007

Non Accrual Loans                           $     30,165 $     30,820
Renegotiated Loans                                    58           58
                                              ----------   ----------
Non Performing Loans (NPL)                        30,223       30,878
Real Estate Owned and Repossessed Assets           2,081        2,274
                                             -----------  -----------
Non Performing Assets (NPA)                       32,304       33,152
90+ Days Delinquent                                3,132        5,203
                                             -----------  -----------
NPAs & 90 Day Delinquent                          35,436       38,355

Loan Loss Reserve                                 27,635       27,608
YTD Charge-offs                                    4,962        2,179
NPAs / Actual Assets %                              0.86%        0.90%
NPAs & 90 day / Actual Assets %                     0.94%        1.05%
NPAs / Actual Loans & REO (%)                       1.12%        1.18%
Loan Loss Reserves / Actual Loans (%)               0.96%        0.98%
NCOs / YTD Average Loans (%)                        0.18%        0.08%
CONSOLIDATED STATEMENTS OF INCOME

                                             Three Months Ended
(in thousands, except share data)     June 30, March 31, December 31,
                                        2008     2008        2007
   Loans receivable
     Taxable                          $49,023   $51,101      $53,338
     Tax exempt                           178       165          302
   Investment securities
     Taxable                            2,947     3,249        3,487
     Tax exempt                         1,452     1,513        1,623
   Federal funds sold                       3         8           39
   Deposits with financial
    institutions                          133       282          194
   Federal Reserve and Federal Home
    Loan Bank stock                       370       335          344
                                       ------  --------       ------
       Total interest income           54,106    56,653       59,327
                                       ------  --------       ------
Interest expense
   Deposits                            16,297    19,433       22,398
   Federal funds purchased                577       669          692
   Securities sold under repurchase
    agreements                            632       816        1,182
   Federal Home Loan Bank advances      2,825     3,036        3,250
   Subordinated debentures, revolving
    credit
     lines and term loans               1,602     1,890        1,910
                                       ------  --------       ------
        Total interest expense         21,933    25,844       29,432
                                       ------  --------       ------
Net interest income                    32,173    30,809       29,895
   Provision for loan losses            7,070     3,823        2,450
                                       ------  --------       ------

Net interest income
   after provision for loan losses     25,103    26,986       27,445
                                       ------  --------       ------
Other income
   Service charges on deposit accounts  3,157     2,931        3,206
   Fiduciary activities                 2,126     2,142        2,094
   Other customer fees                  1,767     1,679        1,686
   Commission income                    1,427     1,669        1,031
   Earnings on cash surrender value
     of life insurance                    606       738        1,186
   Net gains and fees on sales of
    loans                                 668       643          546
   Net realized gains (losses) on
    sales of available-for-sale
    securities                             13        73            1
   Other income                           570       652          383
                                       ------  --------       ------
        Total other income             10,334    10,527       10,133
                                       ------  --------       ------

Other expenses
   Salaries and employee benefits      15,698    16,098       14,738
   Net occupancy                        1,750     1,805        1,619
   Equipment                            1,643     1,654        1,619
   Marketing                              612       484          505
   Outside data processing fees         1,009       882          872
   Printing and office supplies           291       281          329
   Core deposit amortization              808       790          789
   Write-off of unamortized
     underwriting expense
   Other expenses                       4,593     4,279        4,776
                                       ------  --------       ------
        Total other expenses           26,404    26,273       25,247
                                       ------  --------       ------

Income before income tax                9,033    11,240       12,331
   Income tax expense                   2,491     3,114        3,021
                                       ------  --------       ------
Net income                            $ 6,542    $8,126      $ 9,310
                                       ======  ========       ======

Per Share Data

   Basic Net Income                       .37      $.45      $   .51
   Diluted Net Income                     .36       .45          .51
   Cash Dividends Paid                    .23       .23          .23
   Average Diluted Shares
     Outstanding (in thousands)        18,159    18,055       18,138

FINANCIAL RATIOS
  Return on Average Assets                .69%      .86%        1.00%
  Return on Avg. Stockholders' Equity    7.46      9.43        11.10
  Avg. Earning Assets to Avg. Assets    90.94     90.38        90.70
  Allowance for Loan Losses as %
  Of Total Loans                         1.05       .99          .98
  Net Charge Off's as % Of Avg. Loans
  (Annualized)                            .61       .41          .26
  Dividend Payout Ratio                 63.85     51.10        45.10
  Avg. Stockholders' Equity to Avg.
   Assets                                9.30      9.17         8.98
  Tax Equivalent Yield on Earning
   Assets                                6.41      6.78         7.13
  Cost of Supporting Liabilities         2.56      3.04         3.47
  Net Int. Margin (FTE) on Earning
   Assets                                3.85      3.74         3.66

CONSOLIDATED STATEMENTS OF INCOME

                                                 Three Months Ended
(in thousands, except share data)               September 30, June 30,
                                                    2007        2007
   Loans receivable
     Taxable                                         $53,081  $51,204
     Tax exempt                                          368      249
   Investment securities
     Taxable                                           3,581    3,394
     Tax exempt                                        1,613    1,651
   Federal funds sold                                     41       91
   Deposits with financial institutions                  145      120
   Federal Reserve and Federal Home Loan Bank
    stock                                                328      299
                                                      ------   ------
       Total interest income                          59,157   57,008
                                                      ------   ------
Interest expense
   Deposits                                           23,327   22,390
   Federal funds purchased                               996    1,047
   Securities sold under repurchase agreements         1,195      910
   Federal Home Loan Bank advances                     3,302    3,009
   Subordinated debentures, revolving credit
     lines and term loans                              1,802    2,037
                                                      ------   ------
        Total interest expense                        30,622   29,393
                                                      ------   ------
Net interest income                                   28,535   27,615
   Provision for loan losses                           2,810    1,648
                                                      ------   ------

Net interest income
   after provision for loan losses                    25,725   25,967
                                                      ------   ------
Other income
   Service charges on deposit accounts                 3,241    3,091
   Fiduciary activities                                1,985    2,257
   Other customer fees                                 1,767    1,535
   Commission income                                   1,175    1,269
   Earnings on cash surrender value
     of life insurance                                   998      782
   Net gains and fees on sales of loans                  749      611
   Net realized gains (losses) on sales of
    available-for-sale securities
   Other income                                          933      221
                                                      ------   ------
        Total other income                            10,848    9,766
                                                      ------   ------

Other expenses
   Salaries and employee benefits                     14,583   14,796
   Net occupancy                                       1,818    1,612
   Equipment                                           1,645    1,783
   Marketing                                             560      653
   Outside data processing fees                          972    1,036
   Printing and office supplies                          394      388
   Core deposit amortization                             789      790
   Write-off of unamortized
     underwriting expense                                       1,771
   Other expenses                                      4,241    4,910
                                                      ------   ------
        Total other expenses                          25,002   27,739
                                                      ------   ------

Income before income tax                              11,571    7,994
   Income tax expense                                  3,221    1,786
                                                      ------   ------
Net income                                           $ 8,350  $ 6,208
                                                      ======   ======

Per Share Data

   Basic Net Income                                  $   .46  $   .34
   Diluted Net Income                                    .46      .34
   Cash Dividends Paid                                   .23      .23
   Average Diluted Shares
     Outstanding (in thousands)                       18,276   18,369

FINANCIAL RATIOS
  Return on Average Assets                               .90%     .69%
  Return on Avg. Stockholders' Equity                  10.14     7.53
  Avg. Earning Assets to Avg. Assets                   90.88    90.96
  Allowance for Loan Losses as %
  Of Total Loans                                         .96      .98
  Net Charge Off's as % Of Avg. Loans
  (Annualized)                                           .39      .12
  Dividend Payout Ratio                                50.00    67.65
  Avg. Stockholders' Equity to Avg. Assets              8.91     9.15
  Tax Equivalent Yield on Earning Assets                7.17     7.09
  Cost of Supporting Liabilities                        3.65     3.59
  Net Int. Margin (FTE) on Earning Assets               3.52     3.50
LOANS

(in thousands)                     June 30,    March 31,  December 31,
                                     2008        2008         2007

Commercial and industrial loans   $  815,137  $  724,643   $  662,701
Agricultural production financing
 and other loans to farmers          125,125     123,314      114,324
Real estate loans:
   Construction                      181,598     178,171      165,425
   Commercial and farmland           954,672     961,431      947,234
   Residential                       718,065     728,956      744,627
Individuals' loans for household
 and other personal expenditures     161,387     174,857      187,880
Tax exempt loans                      22,553      11,646       16,423
  Lease financing receivables, net
   of unearned income                  9,158       8,438        8,351
Other loans                           30,901      26,254       29,878
                                   ---------   ---------    ---------
                                   3,018,596   2,937,710    2,876,843
Allowance for loan losses            (31,597)    (29,094)     (28,228)
                                   ---------   ---------    ---------
        Total loans               $2,986,999  $2,908,616   $2,848,615
                                   =========   =========    =========

LOANS

(in thousands)                               September 30,  June 30,
                                                 2007         2007

Commercial and industrial loans                $  626,301  $  590,345
Agricultural production financing and other
 loans to farmers                                 113,132     103,713
Real estate loans:
   Construction                                   160,624     172,247
   Commercial and farmland                        912,063     895,301
   Residential                                    769,890     768,392
Individuals' loans for household and other
 personal expenditures                            194,181     206,435
Tax exempt loans                                   28,726      23,181
  Lease financing receivables, net of
   unearned income                                  8,932       7,906
Other loans                                        55,152      38,548
                                                ---------   ---------
                                                2,869,001   2,806,068
Allowance for loan losses                         (27,635)    (27,608)
                                                ---------   ---------
        Total loans                            $2,841,366  $2,778,460
                                                =========   =========
DEPOSITS

(in thousands)                      June 30,  March 31,  December 31,
                                      2008       2008        2007

Demand deposits                    $  932,017 $  881,498   $  903,380
Savings deposits                      546,951    562,942      552,379
Certificates and other time
 deposits of
   $100,000 or more                   444,967    459,038      470,733
Other certificates and time
 deposits                             939,700    909,649      917,629
                                    ---------  ---------    ---------
        Total deposits             $2,863,635 $2,813,127   $2,844,121
                                    =========  =========    =========

DEPOSITS

(in thousands)                                September 30,  June 30,
                                                  2007         2007

Demand deposits                                  $  825,185 $  855,458
Savings deposits                                    508,139    494,738
Certificates and other time deposits of
   $100,000 or more                                 472,842    443,355
Other certificates and time deposits                953,009    926,050
                                                  ---------  ---------
        Total deposits                           $2,759,175 $2,719,601
                                                  =========  =========

Source: First Merchants Corporation

Contact: First Merchants Corporation Mark K. Hardwick, Executive Vice President/ Chief Financial Officer, 765-751-1857 http://www.firstmerchants.com
  • First Merchants Corporation

    200 East Jackson Street
    P.O. Box 792
    Muncie, IN 47305-2814

    (765) 747-1500

  • Investor Relations Contact

    Nicole M. Weaver
    765.521.7619 or
    800.262.4261, Ext. 47619

    nweaver@firstmerchants.com

  • Shareholder Relations Contact

    Cindy Holaday
    765.741.7278 or
    800.262.4261, Ext. 27278

    shareholderrelations
    @firstmerchants.com

  • Transfer Agent

    Broadridge
    PO Box 1342
    Brentwood, NY 11717-0718
    (888) 401-4448