Company: FRME
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0000712534-25-000117
Chunk: 221

Company: FIRST MERCHANTS CORP
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 2
Chunk 221
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 the Bank met all capital adequacy requirements to be considered well capitalized under the fully phased-in Basel III capital rules.  There is no threshold for well capitalized status for bank holding companies.  

As part of a March 27, 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.

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

Prompt Corrective Action ThresholdsActualBasel III Minimum Capital RequiredWell CapitalizedMarch 31, 2025AmountRatioAmountRatioAmountRatioTotal risk-based capital to risk-weighted assetsFirst Merchants Corporation$2,037,746 13.22 %$1,617,920 10.50 %N/AN/AFirst Merchants Bank1,989,507 12.90 1,619,102 10.50 $1,542,002 10.00 %Tier 1 capital to risk-weighted assetsFirst Merchants Corporation$1,797,552 11.67 %$1,309,745 8.