First Merchants Corp announces $100 million subordinated notes offering

First Merchants Corp, a bank with a market capitalization of $2.57 billion, has announced the issuance of $100 million in 6.750% fixed-to-floating rate subordinated notes due in 2036. The notes will initially bear interest at a fixed rate of 6.750% per annum, payable semi-annually, beginning April 1, 2027. Starting October 1, 2031, the interest rate will be adjustable, based on the Three-Month Term SOFR benchmark plus 202 basis points, payable quarterly.

The notes can be redeemed at the company's discretion, with the principal amount plus accrued interest, on or after October 1, 2031. Redemption is permitted under certain conditions, such as a tax event, regulatory capital requirement, or registration as an investment company, subject to prior Federal Reserve approval. The offering was made under an effective shelf registration statement on Form S-3ASR.

First Merchants' current stock price appears undervalued according to InvestingPro analysis, suggesting potential upside for investors. Despite a recent earnings miss, the bank reported improvements in core banking trends, including stronger net interest income, wider margins, and solid loan growth.