v3.25.2
BORROWINGS
 6 Months Ended
Jun. 30, 2025
Debt Disclosure [Abstract]  
BORROWINGS
BORROWINGS

The following table summarizes the Corporation’s borrowings as of June 30, 2025 and December 31, 2024.
June 30, 2025December 31, 2024
Federal funds purchased$85,000 $99,226 
Securities sold under repurchase agreements114,758 142,876 
Federal Home Loan Bank advances898,702 822,554 
Subordinated debentures and other borrowings62,617 93,529 
Total Borrowings$1,161,077 $1,158,185 
Securities sold under repurchase agreements consist of obligations of the Bank to other parties and are secured by U.S. Government-sponsored enterprise obligations. The maximum amount of outstanding agreements at any month-end during the six months ended June 30, 2025 and 2024 totaled $169.1 million and $194.2 million, respectively, and the average balance of such agreements totaled $141.7 million and $144.3 million during the same period of 2025 and 2024, respectively.

The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of June 30, 2025 and December 31, 2024 were:
June 30, 2025
Remaining Contractual Maturity of the Agreements
Overnight and ContinuousUp to 30 Days30-90 DaysGreater Than 90 DaysTotal
U.S. Government-sponsored mortgage-backed securities$114,758 $— $— $— $114,758 
December 31, 2024
Remaining Contractual Maturity of the Agreements
Overnight and ContinuousUp to 30 Days30-90 DaysGreater Than 90 DaysTotal
U.S. Government-sponsored mortgage-backed securities$142,876 $— $— $— $142,876 

Contractual maturities of borrowings as of June 30, 2025, are as follows:
Maturities in Years Ending December 31:Federal Funds PurchasedSecurities Sold
Under Repurchase Agreements		Federal Home
Loan Bank
Advances		Subordinated
Debentures and
Term Loans
2025$85,000 $114,758 $100,000 $1,111 
2026— — 75,000 — 
2027— — 320,000 — 
2028— — 290,000 5,000 
2029— — 50,000 — 
2030 and after— — 63,702 60,566 
ASC 805 fair value adjustments at acquisition— — — (4,060)
$85,000 $114,758 $898,702 $62,617 

At June 30, 2025, the outstanding FHLB advances had interest rates from 0 percent to 4.48 percent and are subject to restrictions or penalties in the event of prepayment. The total available remaining borrowing capacity from the FHLB at June 30, 2025, was $689.2 million. As of June 30, 2025, the Corporation had $305.0 million of putable advances with the FHLB.

Subordinated Debentures and Term Loans. As of June 30, 2025 and December 31, 2024, subordinated debentures and term loans totaled $62.6 million and $93.5 million, respectively.

•First Merchants Capital Trust II (“FMC Trust II”). At June 30, 2025 and December 31, 2024, the Corporation had $41.7 million of subordinated debentures issued to FMC Trust II, a wholly-owned statutory business trust. FMC Trust II was formed in July 2007 for purposes of issuing trust preferred securities to investors. At that time, it simultaneously issued and sold its common securities to the Corporation, which constituted all of the issued and outstanding common securities of FMC Trust II. The subordinated debentures, which were purchased with the proceeds of the sale of the trust’s capital securities, are the sole assets of FMC Trust II and are fully and unconditionally guaranteed by the Corporation. As of June 30, 2025 and December 31, 2024, the subordinated debentures and trust preferred securities bear interest at a variable rate equal to the three-month CME Term SOFR, plus the 0.26161 percent spread adjustment. The interest rate at June 30, 2025 and December 31, 2024 was 6.14 percent and 6.18 percent, respectively. The trust preferred securities are currently redeemable at par and without penalty, subject to the Corporation having first redeemed the related subordinated debentures, with the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies. The trust preferred securities and the subordinated debentures of FMC Trust II will mature on September 15, 2037. The Corporation continues to hold all outstanding common securities of FMC Trust II.

•Ameriana Capital Trust I. At June 30, 2025 and December 31, 2024, the Corporation had $10.3 million of subordinated debentures issued to Ameriana Capital Trust I. On December 31, 2015, the Corporation acquired Ameriana Capital Trust I in conjunction with its acquisition of Ameriana Bancorp, Inc. With a trust preferred structure substantially similar to that described above for FMC Trust II, the subordinated debentures held by Ameriana Capital Trust I were purchased with the proceeds of the sale of the trust’s capital securities. As of June 30, 2025 and December 31, 2024, the subordinated debentures and trust preferred securities bear interest at a variable rate equal to the three-month CME Term SOFR, plus the 0.26161 percent spread adjustment. The interest rate at June 30, 2025 and December 31, 2024 was 6.08 percent and 6.12 percent, respectively. The trust preferred securities of Ameriana Capital Trust I are currently redeemable at par and without penalty, subject to the Corporation having first redeemed the related subordinated debentures, with the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies. The trust preferred securities and the subordinated debentures of Ameriana Capital Trust I will mature in March 2036. The Corporation continues to hold all of the outstanding common securities of Ameriana Capital Trust I.
•First Merchants Senior Notes and Subordinated Notes. On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $70 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million (the “Senior Debt”) and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due 2028 in the aggregate principal amount of $65 million (the “Subordinated Debt”). The interest rate on the Senior Debt and Subordinated Debt remained fixed for the first ten (10) years and converted to floating on October 30, 2023 at which time the optional redemption provisions of both instruments became effective. During the six months ended June 30, 2024, the Corporation exercised its option to redeem $65.0 million in principal, fully repaying the Subordinated Debt on the scheduled interest payment dates.

As of June 30, 2025 and December 31, 2024, the Senior Debt had an annual floating rate equal to three-month CME Term SOFR, plus the 0.26161 percent spread adjustment plus 2.345 percent, resulting in interest rates of 6.87 percent and 7.18 percent, respectively. The Senior Debt agreement contained certain customary representations and warranties and financial and negative covenants. As of June 30, 2025 and December 31, 2024 the Corporation was in compliance with these covenants. On June 9, 2025, the Corporation issued notice to the holders of the Senior Debt that it intended to exercise its rights to redeem $5.0 million in principal on the next scheduled interest payment date.

•Level One Subordinated Notes. On April 1, 2022, the Corporation assumed certain subordinated notes in conjunction with its acquisition of Level One. The $30.0 million of subordinated notes issued on December 18, 2019 had a fixed interest rate of 4.75 percent per annum, payable semiannually through December 18, 2024. The notes had a floating interest rate equal to the of three-month CME Term SOFR plus 3.11 percent, payable quarterly, after December 18, 2024 through maturity. The Corporation had the option to redeem any or all of the subordinated notes without premium or penalty any time after December 18, 2024 or upon the occurrence of a tier 2 capital event or tax event. During the first quarter of 2025, the Corporation exercised its rights to redeem $30.0 million in principal and paid the debt in full on the scheduled interest payment date. The redemption was permitted under the optional redemption provisions of the subordinated notes. No principal amount remains outstanding related to the subordinated notes as of June 30, 2025.

•Other Borrowings. During the third quarter of 2023, the Corporation acquired a secured borrowing in conjunction with the purchase of the Indianapolis regional headquarters building. The secured borrowing bears a fixed interest rate of 3.41 percent, has a maturity date of March 2035, and had a balance of $7.1 million as of June 30, 2025 and December 31, 2024. On April 1, 2022, the Corporation acquired a secured borrowing in conjunction with its acquisition of Level One. The secured borrowing related to a certain loan participation sold by Level One that did not qualify for sales treatment. The secured borrowing bears a fixed rate of 1.00 percent and had a balance of $1.1 million as of June 30, 2025 and December 31, 2024.

Line of Credit. As of June 30, 2025 and December 31, 2024, there was no outstanding balance on the line of credit.

•U.S. Bank, N.A. On September 30, 2024, the Corporation entered into a Credit Agreement with U.S. Bank, N.A. Under the terms of the Credit Agreement, the Lender has provided the Corporation with a revolving line of credit of up to $75.0 million. The outstanding principal balance under the Credit Facility bears interest at a variable rate equal to the one-month Term SOFR rate plus 2.25 percent. Interest on the outstanding balance is payable quarterly, and the Credit Facility has a maturity date of September 30, 2025. Additionally, the Corporation is subject to a non-refundable facility fee equal to 0.40 percent per annum on the average daily unused amount of the Credit Facility, payable quarterly. The Credit Agreement contains customary representations, warranties and covenants. As of June 30, 2025 and December 31, 2024, the Corporation's outstanding principal balance under the Credit Facility was zero and the Corporation was in compliance with all covenants.