UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT (Date of earliest event reported): March 21, 2008
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FIRST MERCHANTS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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INDIANA 0-17071 35-1544218
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
200 East Jackson Street
P.O. Box 792
Muncie, IN 47305-2814
(Address of Principal Executive Offices, including Zip Code)
(765) 747-1500
(Registrant's Telephone Number, including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
N / E / W / S R / E / L / E / A / S / E
March 21, 2008
FOR IMMEDIATE RELEASE
For more information, contact:
Mark K. Hardwick, Executive Vice President/Chief Financial Officer, 765-751-1857
http://www.firstmerchants.com
SOURCE: First Merchants Corporation (Nasdaq: FRME), Muncie, Indiana
FIRST MERCHANTS CORPORATION ANNOUNCES SALE OF INTEREST RATE FLOOR AGREEMENTS
On March 19, 2008, First Merchants Corporation received $5,216,000 in connection
with the termination of its three interest rate floor agreements. The three
interest rate floors, which had an aggregate notional amount of $250 million and
strike rates ranging from 6% to 7%, were purchased on August 1, 2006 for
$553,500. The contractual maturity of the floors was August 1, 2009. During the
life of the floors, pre-tax gains of approximately $4,662,500 were deferred in
accumulated other comprehensive income (AOCI) in accordance with cash flow hedge
accounting rules established by SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities (as amended). The amounts deferred in AOCI
will be reclassified out of equity into earnings over the remaining sixteen
months of the original contract. SFAS 133 requires that amounts deferred in AOCI
be reclassified into earnings in the same periods during which the originally
hedged cash flows (prime-based interest payments on loan assets) affects
earnings, as long as the originally hedged cash flows remain probable of
occurring (i.e. the principal amount of designated prime-based loans match or
exceed the notional amount of the terminated floor through August 1, 2009). If
the principal amount of the originally hedged loans falls below the notional
amount of the terminate floors, then amounts in AOCI could be accelerated. The
Corporation decided to terminate the interest rate floor agreements only after
considering the impact of the transaction on its risk management objectives and
after alternative strategies were in place to mitigate the adverse impact of
falling interest rates on its net interest margin.
About First Merchants Corporation
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).
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