Company: FRME
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0000712534-25-000058
Chunk: 222

Company: FIRST MERCHANTS CORP
Filing Date: 2025-02-24
Form: 10-K
Item: Item 7
Chunk 222
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1.5 million related to the allowance for unfunded commitments, resulting in a net provision expense for the year ended December 31, 2024 of $35.7 million.  In 2023, the Corporation recorded a $7.3 million provision for credit losses - loans, which was offset by a release in reserve of $3.8 million related to the allowance for unfunded commitments, resulting in a net provision expense for the year ended December 31, 2023 of $3.5 million. 

Net charge-offs totaling $49.4 million, $25.6 million, and $2.7 million were recognized for the years ended December 31, 2024, 2023, and 2022, respectively. The increase in net charge-offs was primarily related to two commercial relationships that accounted for $42.7 million of charge-offs during the year ended December 31, 2024. One borrower experienced a sudden change in revenue from the cancellation and inability to renegotiate their contracts with the U.S. Government. This negatively impacted the value of the borrower’s business and resulted in their inability to repay principal and interest. The second borrower provided notification of its plans to cease operations, which resulted in their inability to repay principal and interest and a charge-off for the Corporation. The Corporation does not believe these charge-offs are indicative of the portfolio as a whole. The distribution of the net charge-offs (recoveries) for the twelve months ended December 31, 2024, 2023, and 2022 are reflected in the following table.

(Dollars in Thousands)December 31, 2024December 31, 2023December 31, 2022Net charge-offs:   Commercial and industrial loans$47,046 $22,269 $347 Agricultural land, production and other farm loans — — (4)Real estate loansConstruction— — (863)Commercial real estate, non-owner occupied193 20 2,817 Commercial real estate, owner occupied(77)36 (896)Residential1,235 471 (4)Home equity(405)1,856 526 Individuals loans for household and other personal expenditures1,385 991 751 Total net charge-offs$49,377 $25,643 $2,674 

Management continually evaluates the commercial loan portfolio by including consideration of specific borrower cash flow analysis and estimated collateral values,