Company: FRME
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0000712534-25-000058
Chunk: 20

Company: FIRST MERCHANTS CORP
Filing Date: 2025-02-24
Form: 10-K
Item: Item 8
Chunk 20
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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)

GOODWILLGoodwill is maintained by applying the provisions of ASC 350, Intangibles – Goodwill and Other.  For acquisitions, assets acquired, including identified intangible assets, and the liabilities assumed are required to be recorded at their fair value.  These often involve estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analysis or other valuation techniques that may include estimates of attrition, inflation, asset growth rates, or other relevant factors.  In addition, the determination of the useful lives over which the intangible asset will be amortized is subjective.  Under ASC 350, the Corporation is required to evaluate goodwill for impairment on an annual basis, as well as on an interim basis, if events or changes indicate that the asset may be impaired, indicating that the carrying value may not be recoverable.  The Corporation completed its most recent annual goodwill impairment test during the fourth quarter of 2024 and concluded, based on current events and circumstances goodwill is not impaired.  Details of the Corporation’s goodwill are included in NOTE 7. GOODWILL AND OTHER INTANGIBLES of these Notes to Consolidated Financial Statements.BANK OWNED LIFE INSURANCE (“BOLI”)BOLI policies have been purchased, as well as obtained through acquisitions, on certain current and former employees and directors of the Corporation to offset a portion of the employee benefit costs.  The Corporation records the life insurance at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or amounts due that are probable at settlement.  Changes in cash surrender values and death benefits received in excess of cash surrender values are reported in noninterest income.  A corporate policy is in place with defined thresholds that limit the amount of credit, interest rate and liquidity risk inherent in a BOLI portfolio.  The Corporation actively monitors the overall portfolio performance along with the credit quality of the insurance carriers and the credit quality and yield of the underlying investments.  OTHER REAL ESTATE OWNED (“OREO”)OREO consists of assets acquired through, or in lieu of, loan foreclosure and are held for sale.  They are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis.