First Merchants Corporation FRME Derivative liabilities

The Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation fails to maintain its status as a well or adequately capitalized institution, then the Corporation could be required to terminate or fully collateralize all outstanding derivative contracts. Additionally, the Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations. As of March 31, 2026, the termination value of derivatives in a net liability position related to these agreements was $6.7 million, which resulted in $0.1 million of collateral pledged to counterparties as of March 31, 2026. While the Corporation did not breach any of these provisions as of March 31, 2026, if it had, the Corporation could have been required to settle its obligations under the agreements at their termination value.