Company: FRME
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0000712534-25-000171
Chunk: 131

Company: FIRST MERCHANTS CORP
Filing Date: 2025-07-31
Form: 10-Q
Item: Part I, Item 8
Chunk 131
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 type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.  The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities held to maturity from the estimate of credit losses.  With regard to U.S. Government-sponsored agency and U.S. Government-sponsored mortgage-backed securities, all these securities are issued by a U.S. Government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities.  With regard to securities issued by states and municipalities and other investment securities held to maturity, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities.  Historical loss rates associated with securities having similar grades as those in the Corporation's portfolio have been insignificant.  Furthermore, as of June 30, 2025, there were no past due principal and interest payments associated with these securities.  The balance of the allowance for credit losses on investment securities held to maturity remained unchanged at $245,000 as of June 30, 2025 and December 31, 2024 based on applying the long-term historical credit rate, as published by Moody's, for similar rated securities.

12

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

On a quarterly basis, the Corporation monitors the credit quality of investment securities held to maturity through the use of credit ratings. The following table summarizes the amortized cost of investment securities held to maturity at June 30, 2025 and December 31, 2024, aggregated by credit quality indicator. June 30, 2025U.S. Government-sponsored agency securities (1)State and municipalU.S. Government-sponsored mortgage-backed securities (1)Foreign investmentTotalCredit Rating:Aaa$334,970 $96,739 $609,828 $— $1,041,537 Aa1— 179,548 — — 179,548 Aa2— 176,970 — — 176,970 Aa3— 183,941 — — 183,941 A1— 65,652