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First Merchants terminates three interest rate floor agreements

Banking group First Merchants has received $5.2 million 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.

The company said that it has 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.