Company: FRME
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0000712534-25-000058
Chunk: 36

Company: FIRST MERCHANTS CORP
Filing Date: 2025-02-24
Form: 10-K
Item: Item 8
Chunk 36
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 a component of the provision for credit losses.  The Corporation measures expected credit losses on investment securities held to maturity on a collective basis by major security type with each 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 December 31, 2024, 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 December 31, 2024 and December 31, 2023 based on applying the long-term historical credit rate, as published by Moody’s, for similar rated securities. 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 December 31, 2024, aggregated by credit quality indicator. Held to MaturityU.S. Government-sponsored agency securities (1)State and municipalU.S. Government-sponsored mortgage-backed securities (1)Foreign investmentTotalCredit Rating:Aaa$345,531 $120,801 $641,513 $— $1,107,845 Aa1— 148,923 — — 148,923 Aa2— 184,341 — — 184,341 Aa3— 185,166 — — 185,166 A1— 65,665 — — 65,665 A2— 20,317 — —