Company: FRME
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0000712534-25-000171
Chunk: 91

Company: FIRST MERCHANTS CORP
Filing Date: 2025-07-31
Form: 10-Q
Item: Part I, Item 1
Chunk 91
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2020 joint statement of federal banking regulators, an interim final rule that allowed banking organizations to mitigate the effects of the CECL accounting standard on their regulatory capital was announced.  Banking organizations could elect to mitigate the estimated cumulative regulatory capital effects of CECL for up to two years.  This two-year delay was to be in addition to the three-year transition period that federal banking regulators had already made available.  While the Consolidated Appropriations Act of 2021 provided for a further extension of the mandatory adoption of CECL until January 1, 2022, the federal banking regulators elected to not provide a similar extension to the two year mitigation period applicable to regulatory capital effects.  Instead, the federal banking regulators require that, in order to utilize the additional two-year delay, banking organizations must have adopted the CECL standard no later than December 31, 2020, as required by the Coronavirus Aid, Relief and Economic Security Act, or CARES Act.  As a result, because implementation of the CECL standard was delayed by the Corporation until January 1, 2021, it began phasing in the cumulative effect of the adoption on its regulatory capital, at a rate of 25 percent per year, over a three-year transition period that began on January 1, 2021.  Under that phase-in schedule, the cumulative effect of the adoption was fully reflected in regulatory capital on January 1, 2024.

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PART I: FINANCIAL INFORMATIONITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Corporation's and Bank's actual and required capital ratios as of June 30, 2025 and December 31, 2024 were as follows: 

Prompt Corrective Action ThresholdsActualBasel III Minimum Capital RequiredWell CapitalizedJune 30, 2025AmountRatioAmountRatioAmountRatioTotal risk-based capital to risk-weighted assetsFirst Merchants Corporation$2,059,037 13.06 %$1,655,984 10.50 %N/AN/AFirst Merchants Bank1,995,528 12.64 1,657,330 10.50 $1,578,409 10.00 %Tier 1 capital to risk-weighted assetsFirst Merchants Corporation$1,814,262 11.50 %$1,340,558 8.50 %N/AN/AFirst Merchants Bank1,798,