Company: FRME
Filing Date: 2025-10-10
Form Type: S-4
Source: 0001193125-25-237211
Chunk: 39

Company: FIRST MERCHANTS CORP
Filing Date: 2025-10-10
Form: S-4
Chunk 39
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 residential loans in economic downturns. The underwriting, review and monitoring that will be performed by the merged company’s officers and directors cannot eliminate all of the risks related to these loans. Each of First Merchants and First Savings makes various assumptions and judgments about the collectability of their respective loan portfolios and provide an allowance for losses based on a number of factors. If the assumptions are wrong or the facts and circumstances subsequently and materially change, the allowance for credit losses and Merger-related credit marks may not be sufficient to cover the merged company’s loan losses. The merged company may have to increase its allowance for credit losses in the future, which could decrease its net income. Deterioration in loan quality will adversely affect the merged company’s results of operations and financial condition. Each of First Merchants and First Savings seeks to mitigate the risks inherent in their respective loan portfolios by adhering to sound underwriting practices. Their lending strategies also include emphasizing diversification on a geographic, industry, and customer level, regular credit quality reviews, and management reviews of large credit exposures and loans experiencing deterioration of credit quality. There is continuous review of their loan portfolios, including internally administered loan “watch” lists and independent loan reviews. These evaluations take into consideration identified credit problems, as well as the possibility of losses inherent in the loan portfolio that are not specifically identified. Although First Merchants and First Savings believe their underwriting and loan review procedures are appropriate for the various kinds of loans they make, the merged company’s results of operation and financial condition will be adversely affected in the event the quality of their respective loan portfolios deteriorates. As of June 30, 2025, First Merchants had $67.5 million in non-performingassets and First Savings had $16.3 million in non-performingassets. Changes in interest rates may reduce the merged company’s net interest income. Like other financial institutions, the merged company’s net interest income is its primary revenue source. Net interest income is the difference between interest earned on loans and investments and interest expense incurred on deposits and other borrowings. The merged company’s net interest income will be affected by changes in market rates of interest, the interest rate sensitivity of its assets and liabilities, prepayments on its loans and investments, and limits on increases in the rates of interest charged on its residential real estate loans. The merged company will not be able to predict or control changes in market rates of interest. Market rates of interest are affected by regional and local economic conditions, as well as monetary policies of the Federal Reserve Board