Fee income and better credit quality helped First Merchants Corp. (FRME) in Muncie, Ind., beat its second-quarter estimates.
The $4.3 billion-asset company reported Thursday a quarterly profit of $10 million, up 23% from the second quarter of 2012. Earnings per share were 34 cents, two cents higher than average estimates of analysts polled by Bloomberg.
Net interest income fell 4%, to $36.7 million, as its net interest margin declined by 23 basis points, to 3.88%. Total loans increased 4%, to $2.9 billion.
The bank's provision for loan losses dropped to $2 million, down from $4.5 million, and net chargeoffs fell 20%, to $2.3 million.
Noninterest income rose 7%, to $14.1 million, as service charges on deposit accounts and fiduciary fees rose.
Earlier this month, First Merchants redeemed $34 million of preferred stock it had issued to the Treasury Department through the agency's Small Business Lending Fund. In May, it agreed to buy CFS Bancorp (CITZ) in Munster, Ind., for $114.7 million in stock. The deal would help First Merchants expand toward the Chicago market.