First Merchants (FRME) in Muncie, Ind., has reduced its ties to the Treasury Department's Small Business Lending Fund.

The $4.2 billion-asset company redeemed $34 million of preferred stock it issued to the Treasury through the SBLF, it said Wednesday in a regulatory filing. The Treasury still holds $34 million of First Merchants preferred stock through the program, the company said.

The SBLF provides community banks with capital to lend to small businesses. The Treasury said the fund had increased small-business lending by $8.9 billion since it began in mid-2011.

The Treasury has invested more than $4 billion in 332 community banks that have participated in the program. As of April, 12 banks had completely repaid their SBLF funds and nine had partially repaid them, the department said in its latest quarterly report.

In May, First Merchants agreed to buy CFS Bancorp (CITZ) in Munster, Ind., for $115 million.

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