Company: FRME
Filing Date: 2025-10-30
Form Type: 10-Q
Source: 0000712534-25-000197
Chunk: 137

Company: FIRST MERCHANTS CORP
Filing Date: 2025-10-30
Form: 10-Q
Item: Part I, Item 8
Chunk 137
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$198,314 716 GrossUnrealizedLossesNumber of SecuritiesInvestment securities available for sale at December 31, 2024U.S. Government-sponsored agency securities$16,081 12State and municipal133,386 611U.S. Government-sponsored mortgage-backed securities88,724 127Corporate obligations662 10Total investment securities available for sale$238,853 760 The unrealized losses in the Corporation’s investment portfolio were the result of changes in interest rates and not credit quality.  As a result, the Corporation expects to recover the amortized cost basis over the term of the securities.  The Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.  Certain investment securities available for sale are reported in the financial statements at an amount less than their historical cost as indicated in the table below.September 30, 2025December 31, 2024Investments available for sale reported at less than historical cost:  Historical cost$1,475,226 $1,592,597 Fair value1,276,912 1,353,744 Gross unrealized losses$198,314 $238,853 Percentage of the Corporation's investment securities available for sale in an unrealized loss position92.1 %97.6 %

14

PART I. FINANCIAL INFORMATION ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS(table dollar amounts in thousands, except share data)(Unaudited)

In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level 1 and Level 2 in the fair value hierarchy.  The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs.  From these discussions, the Corporation’s management is comfortable that the classifications are proper.  The Corporation has gained trust in the data for two reasons:  (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis; and (b) actual gains or losses resulting from the sale of certain securities has proven the data to be accurate over time.  Fair value of securities classified as Level 3