Company: FRME
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0000712534-25-000117
Chunk: 86

Company: FIRST MERCHANTS CORP
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 1
Chunk 86
---
-family construction relationship that was in

nonaccrual status as of March 31, 2025.  The payments represented full collection of principal.

Provision and Allowance for Credit Losses on Loans

The CECL model requires the measurement of all expected credit losses for financial assets measured at amortized cost based on historical experiences, current conditions and reasonable and supportable forecasts.  CECL also requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as credit quality and underwriting standards of an organization's portfolio.  Additional details of the Corporation's CECL methodology and allowance calculation are discussed within NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

The CECL allowance is maintained through the provision for credit losses, which is a charge against earnings.  Based on management’s judgment as to the appropriate level of the allowance for credit losses, the amount provided in any period may be greater or less than net loan losses for the same period.  The determination of the provision amount and the adequacy of the allowance in any period is based on management’s continuing review and evaluation of the loan portfolio.

49

PART I: FINANCIAL INFORMATIONITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Corporation’s loan balances, excluding loans held for sale, increased $150.5 million from December 31, 2024 to $13.0 billion at March 31, 2025.  At March 31, 2025, the ACL -loans totaled $192.0 million, which represents a decrease of $0.7 million from December 31, 2024.  As a percentage of loans, the ACL - loans was 1.47 percent and 1.50 percent at March 31, 2025 and December 31, 2024, respectively.  

Net charge-offs totaling $4.9 million were recognized for the three months ended March 31, 2025, and provision for credit losses of $4.2 million was recorded for the same period in 2025.  Net charge-offs totaling $2.3 million were recognized for the three months ended March 31, 2024,  with $2.0 million in provision for credit losses recorded in the same period in 2024. 

The