Company: FRME
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0000712534-25-000058
Chunk: 51

Company: FIRST MERCHANTS CORP
Filing Date: 2025-02-24
Form: 10-K
Item: Item 8
Chunk 51
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 Loans are reclassified to a non-accruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest.  At the time the accrual is discontinued, all unpaid accrued interest is reversed against earnings.  Interest income accrued in the prior year, if any, is charged to the allowance for credit losses.  Payments subsequently received on non-accrual loans are applied to principal.  A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance.The following table summarizes the Corporation’s non-accrual loans by loan class as of the dates indicated:December 31, 2024December 31, 2023Nonaccrual LoansNonaccrual Loans with no Allowance for Credit LossesNonaccrual LoansNonaccrual Loans with no Allowance for Credit LossesCommercial and industrial loans$8,090 $4,937 $9,050 $1,015 Agricultural land, production and other loans to farmers75 — 58 — Real estate loans:Construction24,629 22,650 520 — Commercial real estate, non-owner occupied12,118 10,153 11,932 11,095 Commercial real estate, owner occupied2,440 1,904 3,041 2,257 Residential21,491 — 25,140 — Home equity4,924 — 3,820 — Individuals' loans for household and other personal expenditures6 — 19 — Loans$73,773 $39,644 $53,580 $14,367 

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PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATANOTES TO CONSOLIDATED FINANCIAL STATEMENTS(table dollar amounts in thousands, except share data)

Interest income on non-accrual loans is recognized only to the extent that cash payments are received in excess of principal due.  There was no interest income recognized on non-accrual loans for the twelve months ended December 31, 2024 and 2023. Determining fair value for collateral dependent loans requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value.  The fair value of real estate is