Company: FRME
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0000712534-25-000171
Chunk: 20

Company: FIRST MERCHANTS CORP
Filing Date: 2025-07-31
Form: 10-Q
Item: Part I, Item 1
Chunk 20
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$— Gross losses(1)(49)(8)(51)Net gains (losses) on sales and redemptions of investment securities available for sale$(1)$(49)$(8)$(51)

NOTE 4

LOANS AND ALLOWANCE FOR CREDIT LOSSESLoan Portfolio and Credit QualityThe Corporation's primary lending focus is small business and middle market commercial, commercial real estate, public finance and residential real estate, which results in portfolio diversification.  The following tables show the composition of the loan portfolio and credit quality characteristics by collateral classification, excluding loans held for sale.  Loans held for sale at June 30, 2025 and December 31, 2024, were $28.8 million and $18.7 million, respectively.The following table illustrates the composition of the Corporation’s loan portfolio by loan class as of the dates indicated.June 30, 2025December 31, 2024Commercial and industrial loans$4,440,924 $4,114,292 Agricultural land, production and other loans to farmers265,172 256,312 Real estate loans:Construction836,033 792,144 Commercial real estate, non-owner occupied2,171,092 2,274,016 Commercial real estate, owner occupied1,226,797 1,157,944 Residential2,397,094 2,374,729 Home equity673,961 659,811 Individuals' loans for household and other personal expenditures141,045 166,028 Public finance and other commercial loans1,144,641 1,059,083 Loans$13,296,759 $12,854,359 

15

PART I. FINANCIAL INFORMATION ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS(table dollar amounts in thousands, except share data)(Unaudited)

Credit QualityAs part of the ongoing monitoring of the credit quality of the Corporation's loan portfolio, management tracks certain credit quality indicators including trends related to: (i) the level of criticized commercial loans, (ii) net charge-offs, (iii) nonperforming loans, (iv) covenant failures and (v) the general national and local economic conditions.The Corporation utilizes a risk grading of pass, special mention, substandard, doubtful and loss to assess the overall credit quality of large commercial loans.  All large commercial credit grades are reviewed at