First Merchants Corporation Announces First Quarter 2026 Results

MUNCIE, Ind., April 22, 2026 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ - FRME) (the "Corporation")

First Quarter 2026 Highlights:

• Net income available to common stockholders was $27.7 million, or $0.45 per diluted share, compared to $56.6 million, or $0.99 per diluted share, in the fourth quarter of 2025. On an adjusted basis¹, net income totaled $63.1 million, or $1.03 per diluted share, compared to $56.4 million, or $0.98 per diluted share, in the prior quarter.
• Completed legal closing on the acquisition of First Savings Financial Group, Inc. ("First Savings") on February 1, 2026.
• Maintained strong capital position with Common Equity Tier 1 Capital Ratio of 11.22%.
• Repurchased 708,856 shares totaling $27.6 million of common stock year-to-date, including 640,486 shares totaling $24.9 million in the first quarter.
• Loans declined $18.8 million, or 0.5% annualized linked quarter, and increased $768.0 million, or 5.9%, during the last twelve months, excluding $1.8 billion of loans added from the First Savings acquisition.
• Deposits declined $499.4 million, or 13.1% annualized linked quarter, and increased $333.5 million, or 2.3%, during the last twelve months, excluding $1.7 billion of deposits added from the First Savings acquisition.
• Nonperforming assets to total assets were 43 basis points compared to 38 basis points in the prior quarter.
• Adjusted efficiency ratio¹ totaled 54.21% for the quarter.

"First Merchants delivered a strong start to 2026, highlighted by solid adjusted earnings growth, expanding net interest margin, and continued strength in commercial loan production," said Mark Hardwick, Chief Executive Officer. "We successfully closed the acquisition of First Savings, adding $2.4 billion in assets and further strengthening our statewide Indiana presence while enhancing our ability to serve clients across Indiana, Ohio, and Michigan. Our capital, liquidity, and credit quality remain very strong, positioning us well for continued growth and long-term shareholder value creation."

First Quarter Financial Results:

The Corporation reported first quarter 2026 net income available to common stockholders of $27.7 million compared to $54.9 million during the same period in 2025. Diluted earnings per common share¹ for the period totaled $0.45 compared to $0.94 in the first quarter of 2025. Current quarter results included acquisition costs of $17.0 million that primarily consist of employee retention bonuses and severance, contract termination charges and professional fees. Current quarter results also included a mark-to-market loss of $29.8 million on $357 million of mortgage loans moved to held-for-sale with a weighted average coupon of 3.46%. The loan sale is expected to close during the second quarter and will create incremental funding capacity. Excluding these non-core charges, adjusted earnings per common share¹ for the first quarter of 2026 totaled $1.03 compared to $0.94 in the prior year period, an increase of 9.6%.

Total assets of the Corporation equaled $21.1 billion as of quarter-end and loans totaled $15.3 billion. Loans increased $2.3 billion during the past twelve months. The acquisition of First Savings contributed $1.8 billion of loans. Excluding acquired loans and the impact of loans moved to held-for-sale, the Corporation experienced organic loan growth of $768.0 million, or 5.9%, during the past twelve months. On a linked quarter basis, loans declined $18.8 million, or 0.5% annualized.

Investment securities, totaling $3.3 billion, decreased $117.2 million, or 3.4%, during the last twelve months and decreased $68.7 million, or 8.1% annualized on a linked quarter basis. Investments declined during the quarter due to principal paydowns and maturities as well as a modest decline in the securities portfolio valuation.

Total deposits equaled $16.5 billion as of quarter-end and increased by $2.0 billion, over the past twelve months. The acquisition of First Savings contributed $1.7 billion in deposits. Excluding acquired deposits, the Corporation experienced an increase in organic deposit growth of $333.5 million, or 2.3%. Deposits decreased $499.4 million, or 13.1% annualized on a linked quarter basis, excluding acquired deposits. The balance sheet growth resulted in an increase in the loan to deposit ratio to 92.6% at period end from 90.3% in the prior quarter.

The Corporation's Allowance for Credit Losses – Loans (ACL) totaled $212.5 million as of quarter-end, or 1.39% of loans, an increase of $16.9 million from prior quarter. The ACL increased $22.3 million for the purchase accounting adjustment for estimated credit losses recorded for the First Savings loan portfolio. Net charge-offs totaled $10.3 million and provision for credit losses of $4.9 million was recorded during the quarter. Reserves for unfunded commitments totaled $18.5 million, an increase of $0.5 million from prior quarter recorded for estimated credit losses on unfunded commitments of First Savings. Non-performing assets to total assets were 0.43% for the first quarter of 2026, an increase of five basis points compared to 0.38% in the prior quarter reflecting stable credit performance.

Net interest income totaling $151.3 million for the quarter, increased $12.2 million, or 8.8%, compared to prior quarter and increased $21.0 million, or 16.1%, compared to the first quarter of 2025. Positively impacting net interest income was an interest recovery of $1.2 million recorded during the quarter from the successful resolution of a nonaccrual multifamily commercial real estate loan. Fully taxable equivalent net interest margin was 3.35%, an increase of six basis points compared to prior quarter and an increase of 13 basis points compared to the first quarter of 2025. The lower day count in the quarter caused a decline of five basis points in net interest margin from the prior quarter. This was more than offset by an improved funding mix and meaningfully lower deposit costs.

Noninterest income totaled $5.8 million for the quarter, a decrease of $27.3 million, compared to prior quarter and a decrease of $24.2 million compared to the first quarter of 2025. The declines were due to a valuation adjustment on mortgage loans that were reclassified to held-for-sale during the current quarter. Customer-related fees increased by $1.8 million from the previous quarter and $4.7 million over the first quarter of 2025. The linked quarter increase was driven by higher wealth management fees and higher gains on the sales of loans offset by a slight reduction in derivative hedge fees.

Noninterest expense totaled $125.1 million for the quarter, an increase of $25.6 million from the fourth quarter of 2025 and an increase of $32.2 million from the first quarter of 2025. Acquisition-related costs totaling $17.0 million were incurred during the quarter, including $5.2 million attributed to salaries and benefits and $11.3 million in professional and other outside services. Contributing to current quarter expenses was an annual benefit plan expense of $1.1 million and a $0.9 million one-time charge for the write-down of a held-for-sale building.

The Corporation's total risk-based capital ratio was 13.05%, common equity tier 1 capital ratio was 11.22%, and the tangible common equity ratio was 9.00%. These ratios continue to reflect the Corporation's strong capital position.

¹ See "Non-GAAP Financial Information" for reconciliation

CONFERENCE CALL

First Merchants Corporation will conduct an earnings conference call and webcast at 9:00 a.m. (ET) on Thursday, April 23, 2026.

To access via phone, participants will need to register using the following link where they will be provided a phone number and access code: (https://register-conf.media-server.com/register/BIea2e66c5a6e240dea7770076185c1054)

To view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/i5u3npdn) during the time of the call. A replay of the webcast will be available until April 23, 2027.

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank. The Bank also operates as First Merchants Private Wealth Advisors (as a division of First Merchants Bank).

First Merchants Corporation's common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company's Internet web page (http://www.firstmerchants.com).

FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.

Forward-Looking Statements

This news release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often, but not always, be identified by the use of words like "believe", "continue", "pattern", "estimate", "project", "intend", "anticipate", "expect" and similar expressions or future or conditional verbs such as "will", "would", "should", "could", "might", "can", "may", or similar expressions. These forward- looking statements include, but are not limited to, statements relating to the expected benefits of the merger between First Merchants and First Savings, including future financial and operating results, cost savings, enhanced revenues, and accretion/dilution to reported earnings that may be realized from the merger, as well as other statements of expectations regarding the merger, and other statements of First Merchants' goals, intentions and expectations; statements regarding the First Merchants' business plan and growth strategies; statements regarding the asset quality of First Merchants' loan and investment portfolios; and estimates of First Merchants' risks and future costs and benefits, whether with respect to the merger or otherwise. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: the risk that the businesses of First Merchants and First Savings will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; expected revenue synergies and cost savings from the merger may not be fully realized or realized within the expected time frame; revenues following the merger may be lower than expected; customer and employee relationships and business operations may be disrupted by the merger; the ability to complete the merger on the expected timeframe; possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit-worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants' affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity (including the ability to grow and maintain core deposits and retain large uninsured deposits), credit and interest rate risks associated with First Merchants' business; the impacts of epidemics, pandemics or other infectious disease outbreaks; and other risks and factors identified in each of First Merchants' filings with the SEC. Neither First Merchants nor First Savings undertakes any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this news release. In addition, the companies' respective past results of operations do not necessarily indicate their anticipated future results, whether or not the merger is completed.

Non-GAAP Financial Measures

This news release contains non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of the registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of Regulation G, First Merchants Corporation has provided reconciliations within this news release, as necessary, of the non-GAAP financial measure to the most directly comparable GAAP financial measure.

For more information, contact:

Nicole M. Weaver, First Vice President and Director of Corporate Administration

765-521-7619

http://www.firstmerchants.com 

CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars In Thousands, Except Per Share Amounts)	March 31,
		2026				2025
ASSETS
Cash and due from banks	$	98,083			$	86,113
Interest-bearing deposits		175,354				331,534
Investment securities available for sale		1,372,417				1,378,489
Investment securities held to maturity, net of allowance for credit losses of $245 in 2026 and 2025		1,937,485				2,048,632
Loans held for sale		401,839				23,004
Loans		15,261,889				13,004,905
Less: Allowance for credit losses - loans		(212,520	)			(192,031	)
Net loans		15,049,369				12,812,874
Premises and equipment		146,013				128,749
Federal Home Loan Bank stock		70,835				45,006
Interest receivable		97,026				88,352
Goodwill		782,789				712,002
Other intangibles		41,678				18,302
Cash surrender value of life insurance		371,238				304,918
Other real estate owned		1,264				4,966
Tax asset, deferred and receivable		116,814				87,665
Other assets		410,317				369,181
TOTAL ASSETS	$	21,072,521			$	18,439,787
LIABILITIES
Deposits:
Noninterest-bearing	$	3,748,279			$	2,185,057
Interest-bearing		12,737,338				12,276,921
Total Deposits		16,485,617				14,461,978
Borrowings:
Federal funds purchased		170,000				185,000
Securities sold under repurchase agreements		89,458				122,947
Federal Home Loan Bank advances		1,299,192				972,478
Subordinated debentures and other borrowings		86,345				62,619
Total Borrowings		1,644,995				1,343,044
Interest payable		18,890				13,304
Other liabilities		250,454				289,247
Total Liabilities		18,399,956				16,107,573
STOCKHOLDERS' EQUITY
Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 cumulative shares
Issued and outstanding - 125 cumulative shares		125				125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized -- 10,000 non-cumulative perpetual shares
Issued and outstanding - 10,000 non-cumulative perpetual shares		25,000				25,000
Common Stock, $0.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding - 62,508,055 and 57,810,232 shares		7,813				7,226
Additional paid-in capital		1,369,879				1,183,263
Retained earnings		1,418,609				1,306,911
Accumulated other comprehensive loss		(148,861	)			(190,311	)
Total Stockholders' Equity		2,672,565				2,332,214
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	21,072,521			$	18,439,787

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)	Three Months Ended
(Dollars In Thousands, Except Per Share Amounts)	March 31,
		2026				2025
INTEREST INCOME
Loans:
Taxable	$	213,627			$	187,728
Tax-exempt		11,589				10,532
Investment securities:
Taxable		7,547				8,372
Tax-exempt		12,597				12,517
Deposits with financial institutions		1,244				2,372
Federal Home Loan Bank stock		1,965				997
Total Interest Income		248,569				222,518
INTEREST EXPENSE
Deposits		84,093				80,547
Federal funds purchased		590				812
Securities sold under repurchase agreements		332				742
Federal Home Loan Bank advances		11,048				9,364
Subordinated debentures and other borrowings		1,203				783
Total Interest Expense		97,266				92,248
NET INTEREST INCOME		151,303				130,270
Provision for credit losses		4,900				4,200
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		146,403				126,070
NONINTEREST INCOME
Service charges on deposit accounts		9,037				8,072
Fiduciary and wealth management fees		9,768				8,644
Card payment fees		5,275				4,526
Net gains and fees on sales of loans		6,511				5,022
Derivative hedge fees		564				404
Other customer fees		593				415
Earnings on bank-owned life insurance		3,446				2,179
Net realized losses on sales of available for sale securities		—				(7	)
Net loss on mortgage loans reclassified to held for sale		(29,755	)			—
Other income		390				793
Total Noninterest Income		5,829				30,048
NONINTEREST EXPENSE
Salaries and employee benefits		69,443				54,982
Net occupancy		8,301				7,216
Equipment		7,818				7,008
Marketing		1,601				1,353
Outside data processing fees		7,190				5,929
Printing and office supplies		377				347
Intangible asset amortization		2,302				1,526
FDIC assessments		3,893				3,648
Other real estate owned and foreclosure expenses		1,100				600
Professional and other outside services		14,593				3,261
Other expenses		8,527				7,032
Total Noninterest Expense		125,145				92,902
Income Before Income Taxes		27,087				63,216
Income tax expense (benefit)		(1,069	)			7,877
NET INCOME		28,156				55,339
Preferred stock dividends		469				469
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	27,687			$	54,870
PER SHARE DATA:
Basic Net Income Available to Common Stockholders	$	0.46			$	0.95
Diluted Net Income Available to Common Stockholders	$	0.45			$	0.94
Cash Dividends Paid to Common Stockholders	$	0.36			$	0.35
Tangible Common Book Value Per Share	$	29.34			$	27.34
Average Diluted Common Shares Outstanding (in thousands)		61,008				58,242

FINANCIAL HIGHLIGHTS
(Dollars In Thousands)	Three Months Ended
	March 31,
		2026				2025
NET CHARGE-OFFS	$	10,256			$	4,926
AVERAGE BALANCES:
Total Assets	$	20,407,523			$	18,341,738
Total Loans		14,995,685				12,941,353
Total Earning Assets		18,842,984				16,960,475
Total Deposits		16,080,470				14,419,338
Total Stockholders' Equity		2,655,756				2,340,874
FINANCIAL RATIOS:
Return on Average Assets		0.55	%			1.21	%
Return on Average Stockholders' Equity		4.17				9.38
Return on Tangible Common Stockholders' Equity		6.39				14.12
Average Earning Assets to Average Assets		92.33				92.47
Allowance for Credit Losses - Loans as % of Total Loans		1.39				1.47
Net Charge-offs as % of Average Loans (Annualized)		0.27				0.15
Average Stockholders' Equity to Average Assets		13.01				12.76
Fully Taxable Equivalent (FTE) Yield on Average Earning Assets		5.41				5.39
Interest Expense/Average Earning Assets		2.06				2.17
Net Interest Margin FTE		3.35				3.22
Efficiency Ratio		74.45				54.54

ASSET QUALITY
(Dollars In Thousands)	March 31,				December 31,				September 30,				June 30,				March 31,
		2026				2025				2025				2025				2025
Nonaccrual Loans	$	89,592			$	71,773			$	65,740			$	67,358			$	81,922
Other Real Estate Owned and Repossessions		1,264				658				1,270				177				4,966
Nonperforming Assets (NPA)		90,856				72,431				67,010				67,535				86,888
90+ Days Delinquent		4,078				2,042				1,925				4,443				4,280
NPAs & 90+ Days Delinquent	$	94,934			$	74,473			$	68,935			$	71,978			$	91,168
Allowance for Credit Losses - Loans	$	212,520			$	195,597			$	194,468			$	195,316			$	192,031
Quarterly Net Charge-offs		10,256				6,021				5,148				2,315				4,926
NPAs / Assets %		0.43	%			0.38	%			0.36	%			0.36	%			0.47	%
NPAs & 90 Day / Assets %		0.45	%			0.39	%			0.37	%			0.39	%			0.49	%
NPAs / Loans and OREO %		0.60	%			0.52	%			0.49	%			0.51	%			0.67	%
Allowance for Credit Losses - Loans / Loans (%)		1.39	%			1.42	%			1.43	%			1.47	%			1.47	%
Quarterly Net Charge-offs as % of Average Loans (Annualized)		0.27	%			0.18	%			0.15	%			0.07	%			0.15	%

CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars In Thousands, Except Per Share Amounts)	March 31,				December 31,				September 30,				June 30,				March 31,
		2026				2025				2025				2025				2025
ASSETS
Cash and due from banks	$	98,083			$	84,158			$	88,079			$	81,567			$	86,113
Interest-bearing deposits		175,354				196,300				168,706				223,343				331,534
Investment securities available for sale		1,372,417				1,407,102				1,386,903				1,358,130				1,378,489
Investment securities held to maturity, net of allowance for credit losses		1,937,485				1,971,539				1,995,488				2,022,826				2,048,632
Loans held for sale		401,839				20,079				23,190				28,783				23,004
Loans		15,261,889				13,791,707				13,591,174				13,296,759				13,004,905
Less: Allowance for credit losses - loans		(212,520	)			(195,597	)			(194,468	)			(195,316	)			(192,031	)
Net loans		15,049,369				13,596,110				13,396,706				13,101,443				12,812,874
Premises and equipment		146,013				121,058				121,771				122,808				128,749
Federal Home Loan Bank stock		70,835				47,245				47,264				47,290				45,006
Interest receivable		97,026				93,374				89,102				93,258				88,352
Goodwill		782,789				712,002				712,002				712,002				712,002
Other intangibles		41,678				13,800				15,298				16,797				18,302
Cash surrender value of life insurance		371,238				308,438				306,583				305,695				304,918
Other real estate owned		1,264				658				1,270				177				4,966
Tax asset, deferred and receivable		116,814				78,664				89,758				97,749				87,665
Other assets		410,317				374,574				369,509				380,909				369,181
TOTAL ASSETS	$	21,072,521			$	19,025,101			$	18,811,629			$	18,592,777			$	18,439,787
LIABILITIES
Deposits:
Noninterest-bearing	$	3,748,279			$	2,137,262			$	2,100,570			$	2,197,416			$	2,185,057
Interest-bearing		12,737,338				13,157,593				12,769,409				12,600,162				12,276,921
Total Deposits		16,485,617				15,294,855				14,869,979				14,797,578				14,461,978
Borrowings:
Federal funds purchased		170,000				40,000				199,370				85,000				185,000
Securities sold under repurchase agreements		89,458				103,755				122,226				114,758				122,947
Federal Home Loan Bank advances		1,299,192				798,549				798,626				898,702				972,478
Subordinated debentures and other borrowings		86,345				57,630				57,632				62,617				62,619
Total Borrowings		1,644,995				999,934				1,177,854				1,161,077				1,343,044
Interest payable		18,890				18,235				18,240				16,174				13,304
Other liabilities		250,454				245,410				333,154				269,996				289,247
Total Liabilities		18,399,956				16,558,434				16,399,227				16,244,825				16,107,573
STOCKHOLDERS' EQUITY
Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 cumulative shares
Issued and outstanding - 125 cumulative shares		125				125				125				125				125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized -- 10,000 non-cumulative perpetual shares
Issued and outstanding - 10,000 non-cumulative perpetual shares		25,000				25,000				25,000				25,000				25,000
Common Stock, $0.125 stated value:
Authorized -- 100,000,000 shares
Issued and outstanding		7,813				7,119				7,149				7,159				7,226
Additional paid-in capital		1,369,879				1,150,816				1,158,026				1,163,170				1,183,263
Retained earnings		1,418,609				1,413,742				1,377,966				1,342,473				1,306,911
Accumulated other comprehensive loss		(148,861	)			(130,135	)			(155,864	)			(189,975	)			(190,311	)
Total Stockholders' Equity		2,672,565				2,466,667				2,412,402				2,347,952				2,332,214
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	21,072,521			$	19,025,101			$	18,811,629			$	18,592,777			$	18,439,787

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars In Thousands, Except Per Share Amounts)	March 31,				December 31,				September 30,				June 30,				March 31,
		2026				2025				2025				2025				2025
INTEREST INCOME
Loans:
Taxable	$	213,627			$	203,120			$	200,406			$	195,173			$	187,728
Tax-exempt		11,589				10,905				11,173				10,805				10,532
Investment securities:
Taxable		7,547				7,736				8,288				8,266				8,372
Tax-exempt		12,597				12,459				12,460				12,516				12,517
Deposits with financial institutions		1,244				2,187				1,676				1,892				2,372
Federal Home Loan Bank stock		1,965				1,037				1,092				1,083				997
Total Interest Income		248,569				237,444				235,095				229,735				222,518
INTEREST EXPENSE
Deposits		84,093				88,670				90,821				84,241				80,547
Federal funds purchased		590				218				224				965				812
Securities sold under repurchase agreements		332				405				654				663				742
Federal Home Loan Bank advances		11,048				8,047				8,638				9,714				9,364
Subordinated debentures and other borrowings		1,203				1,040				1,093				1,138				783
Total Interest Expense		97,266				98,380				101,430				96,721				92,248
NET INTEREST INCOME		151,303				139,064				133,665				133,014				130,270
Provision for credit losses		4,900				7,150				4,300				5,600				4,200
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		146,403				131,914				129,365				127,414				126,070
NONINTEREST INCOME
Service charges on deposit accounts		9,037				8,704				8,921				8,566				8,072
Fiduciary and wealth management fees		9,768				9,175				8,842				8,831				8,644
Card payment fees		5,275				5,325				5,007				4,932				4,526
Net gains and fees on sales of loans		6,511				5,421				4,983				5,849				5,022
Derivative hedge fees		564				1,053				1,097				831				404
Other customer fees		593				315				414				401				415
Earnings on bank-owned life insurance		3,446				1,854				1,667				1,913				2,179
Net realized losses on sales of available for sale securities		—				—				—				(1	)			(7	)
Net loss on mortgage loans reclassified to held for sale		(29,755	)			—				—				—				—
Other income (loss)		390				1,259				1,546				(19	)			793
Total Noninterest Income		5,829				33,106				32,477				31,303				30,048
NONINTEREST EXPENSE
Salaries and employee benefits		69,443				58,254				57,317				54,527				54,982
Net occupancy		8,301				7,283				7,057				6,845				7,216
Equipment		7,818				7,681				6,998				6,927				7,008
Marketing		1,601				2,324				2,120				1,997				1,353
Outside data processing fees		7,190				7,509				6,943				7,107				5,929
Printing and office supplies		377				450				311				272				347
Intangible asset amortization		2,302				1,498				1,499				1,505				1,526
FDIC assessments		3,893				2,684				3,526				3,552				3,648
Other real estate owned and foreclosure expenses		1,100				775				121				29				600
Professional and other outside services		14,593				3,774				3,718				3,741				3,261
Other expenses		8,527				7,290				6,951				7,096				7,032
Total Noninterest Expense		125,145				99,522				96,561				93,598				92,902
Income Before Income Taxes		27,087				65,498				65,281				65,119				63,216
Income tax expense (benefit)		(1,069	)			8,433				8,516				8,287				7,877
NET INCOME		28,156				57,065				56,765				56,832				55,339
Preferred stock dividends		469				469				468				469				469
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	27,687			$	56,596			$	56,297			$	56,363			$	54,870
PER SHARE DATA:
Basic Net Income Available to Common Stockholders	$	0.46			$	0.99			$	0.98			$	0.98			$	0.95
Diluted Net Income Available to Common Stockholders	$	0.45			$	0.99			$	0.98			$	0.98			$	0.94
Cash Dividends Paid to Common Stockholders	$	0.36			$	0.36			$	0.36			$	0.36			$	0.35
Tangible Common Book Value Per Share	$	29.34			$	30.18			$	29.08			$	27.90			$	27.34
Average Diluted Common Shares Outstanding (in thousands)		61,008				57,442				57,448				57,773				58,242
FINANCIAL RATIOS:
Return on Average Assets		0.55	%			1.20	%			1.22	%			1.23	%			1.21	%
Return on Average Stockholders' Equity		4.17				9.23				9.51				9.63				9.38
Return on Tangible Common Stockholders' Equity		6.39				13.57				14.21				14.49				14.12
Average Earning Assets to Average Assets		92.33				92.69				92.73				92.71				92.47
Allowance for Credit Losses - Loans as % of Total Loans		1.39				1.42				1.43				1.47				1.47
Net Charge-offs as % of Average Loans (Annualized)		0.27				0.18				0.15				0.07				0.15
Average Stockholders' Equity to Average Assets		13.01				12.88				12.71				12.64				12.76
Fully Taxable Equivalent (FTE) Yield on Average Earning Assets		5.41				5.52				5.58				5.50				5.39
Interest Expense/Average Earning Assets		2.06				2.23				2.34				2.25				2.17
Net Interest Margin FTE		3.35				3.29				3.24				3.25				3.22
Efficiency Ratio		74.45				54.52				55.09				53.99				54.54

LOANS
(Dollars In Thousands)	March 31,				December 31,				September 30,				June 30,				March 31,
		2026				2025				2025				2025				2025
Commercial and industrial loans	$	4,611,596			$	4,478,282			$	4,604,895			$	4,440,924			$	4,306,597
Agricultural land, production and other loans to farmers		310,788				283,125				275,817				265,172				243,864
Real estate loans:
Construction		899,895				804,775				789,021				836,033				793,175
Commercial real estate, non-owner occupied		3,192,337				2,338,666				2,304,889				2,171,092				2,177,869
Commercial real estate, owner occupied		1,334,959				1,237,100				1,232,117				1,226,797				1,214,739
Residential		2,273,860				2,420,310				2,412,783				2,397,094				2,389,852
Home equity		1,104,739				710,980				687,021				673,961				650,499
Individuals' loans for household and other personal expenditures		153,283				155,436				138,703				141,045				140,954
Public finance and other commercial loans		1,380,432				1,363,033				1,145,928				1,144,641				1,087,356
Loans		15,261,889				13,791,707				13,591,174				13,296,759				13,004,905
Allowance for credit losses - loans		(212,520	)			(195,597	)			(194,468	)			(195,316	)			(192,031	)
NET LOANS	$	15,049,369			$	13,596,110			$	13,396,706			$	13,101,443			$	12,812,874

DEPOSITS
(Dollars In Thousands)	March 31,			December 31,			September 30,			June 30,			March 31,
		2026			2025			2025			2025			2025
Demand deposits	$	8,009,548		$	7,770,473		$	7,645,698		$	7,798,695		$	7,786,554
Savings deposits		6,204,526			5,481,785			5,164,707			4,984,659			4,791,874
Certificates and other time deposits of $100,000 or less		665,639			603,690			627,828			617,857			625,203
Certificates and other time deposits of $100,000 or more		1,012,922			915,293			910,337			891,139			896,143
Brokered certificates of deposits (1)		592,982			523,614			521,409			505,228			362,204
TOTAL DEPOSITS	$	16,485,617		$	15,294,855		$	14,869,979		$	14,797,578		$	14,461,978

⁽¹⁾ Total brokered deposits of $1.5 billion, which includes brokered CD's of $593.0 million at March 31, 2026.

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars In Thousands)
	Three Months Ended
	March 31, 2026									March 31, 2025
	Average Balance			Interest  Income / Expense			Average Rate			Average Balance			Interest  Income / Expense			Average Rate
ASSETS
Interest-bearing deposits	$	212,164		$	1,244		2.35	%		$	294,016		$	2,372		3.23	%
Federal Home Loan Bank stock		62,720			1,965		12.53				43,980			997		9.07
Investment Securities: (1)
Taxable		1,510,344			7,547		2.00				1,634,452			8,372		2.05
Tax-exempt (2)		2,062,071			15,946		3.09				2,046,674			15,844		3.10
Total Investment Securities		3,572,415			23,493		2.63				3,681,126			24,216		2.63
Loans held for sale		70,911			1,427		8.05				20,965			319		6.09
Loans: (3)
Commercial		10,234,765			164,765		6.44				8,770,282			147,772		6.74
Real estate mortgage		2,369,115			27,915		4.71				2,191,384			24,446		4.46
HELOC and installment		1,123,844			19,520		6.95				828,874			15,191		7.33
Tax-exempt (2)		1,197,050			14,634		4.89				1,129,848			13,332		4.72
Total Loans		14,995,685			228,261		6.09				12,941,353			201,060		6.21
Total Earning Assets		18,842,984			254,963		5.41	%			16,960,475			228,645		5.39	%
Total Non-Earning Assets		1,564,539									1,381,263
TOTAL ASSETS	$	20,407,523								$	18,341,738
LIABILITIES
Interest-Bearing Deposits:
Interest-bearing deposits	$	5,430,190		$	29,781		2.19	%		$	5,522,434		$	34,606		2.51	%
Money market deposits		4,566,275			32,048		2.81				3,437,998			25,952		3.02
Savings deposits		1,371,796			2,233		0.65				1,299,405			2,445		0.75
Certificates and other time deposits		2,243,417			20,031		3.57				1,947,854			17,544		3.60
Total Interest-Bearing Deposits		13,611,678			84,093		2.47				12,207,691			80,547		2.64
Borrowings		1,408,233			13,173		3.74				1,262,926			11,701		3.71
Total Interest-Bearing Liabilities		15,019,911			97,266		2.59				13,470,617			92,248		2.74
Noninterest-bearing deposits		2,468,792									2,211,647
Other liabilities		263,064									318,600
Total Liabilities		17,751,767									16,000,864
STOCKHOLDERS' EQUITY		2,655,756									2,340,874
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	20,407,523								$	18,341,738
Net Interest Income (FTE)				$	157,697								$	136,397
Net Interest Spread (FTE) (4)							2.82	%								2.65	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets							5.41	%								5.39	%
Interest Expense / Average Earning Assets							2.06	%								2.17	%
Net Interest Margin (FTE) (5)							3.35	%								3.22	%
(1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed using a 30/360 day basis.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2026 and 2025. These totals equal $6.4 million and $6.1 million for the three months ended March 31, 2026 and 2025, respectively.
(3)   Non accruing loans have been included in the average balances.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

ADJUSTED NET INCOME AND DILUTED EARNINGS PER COMMON SHARE (NON-GAAP)
(Dollars In Thousands, Except Per Share Amounts)	Three Months Ended
	March 31,				December 31,				September 30,				June 30,			March 31,
		2026				2025				2025				2025			2025
Net Income Available to Common Stockholders (GAAP)	$	27,687			$	56,596			$	56,297			$	56,363		$	54,870
Adjustments:
Net realized losses on sales of available for sale securities		—				—				—				1			7
Net loss on mortgage loans reclassified to held for sale		29,755				—				—				—			—
Acquisition-related expenses		16,968				524				276				—			—
Non-core expenses (1)(2)		—				(743	)			633				—			—
Tax on adjustments		(11,279	)			53				(220	)			—			(2	)
Adjusted Net Income Available to Common Stockholders (non-GAAP)	$	63,131			$	56,430			$	56,986			$	56,364		$	54,875
Average Diluted Common Shares Outstanding (in thousands)		61,008				57,442				57,448				57,773			58,242
Diluted Earnings Per Common Share (GAAP)	$	0.45			$	0.99			$	0.98			$	0.98		$	0.94
Adjustments:
Net realized losses on sales of available for sale securities		—				—				—				—			—
Net loss on mortgage loans reclassified to held for sale		0.49				—				—				—			—
Acquisition-related expenses		0.28				—				—				—			—
Non-core expenses (1)(2)		—				(0.01	)			0.01				—			—
Tax on adjustments		(0.19	)			—				—				—			—
Adjusted Diluted Earnings Per Common Share (non-GAAP)	$	1.03			$	0.98			$	0.99			$	0.98		$	0.94
(1) Non-core expenses in the Three Months Ended December 31, 2025 included a $0.7 million reduction in the FDIC special assessment
(2) Non-core expenses in the Three Months Ended September 30, 2025 included $0.6 million of severance costs

NET INTEREST MARGIN (FTE) (NON-GAAP)
(Dollars in Thousands)
	Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
		2026				2025				2025				2025				2025
Net Interest Income (GAAP)	$	151,303			$	139,064			$	133,665			$	133,014			$	130,270
Fully Taxable Equivalent ("FTE") Adjustment		6,394				6,185				6,209				6,199				6,127
Net Interest Income (FTE) (Non-GAAP)	$	157,697			$	145,249			$	139,874			$	139,213			$	136,397
Average Earning Assets (GAAP)	$	18,842,984			$	17,648,233			$	17,282,901			$	17,158,984			$	16,960,475
Net Interest Margin (GAAP)		3.21	%			3.15	%			3.09	%			3.10	%			3.07	%
FTE Adjustment		0.14	%			0.14	%			0.15	%			0.15	%			0.15	%
Net Interest Margin (FTE) (Non-GAAP)		3.35	%			3.29	%			3.24	%			3.25	%			3.22	%

RETURN ON TANGIBLE COMMON EQUITY (NON-GAAP)
(Dollars In Thousands)	Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
		2026				2025				2025				2025				2025
Total Average Stockholders' Equity (GAAP)	$	2,655,756			$	2,452,005			$	2,367,971			$	2,340,010			$	2,340,874
Less: Average Preferred Stock		(25,125	)			(25,125	)			(25,125	)			(25,125	)			(25,125	)
Less: Average Intangible Assets, Net of Tax		(784,490	)			(723,466	)			(724,619	)			(725,813	)			(726,917	)
Average Tangible Common Equity, Net of Tax (non-GAAP)	$	1,846,141			$	1,703,414			$	1,618,227			$	1,589,072			$	1,588,832
Net Income Available to Common Stockholders (GAAP)	$	27,687			$	56,596			$	56,297			$	56,363			$	54,870
Plus: Intangible Asset Amortization, Net of Tax		1,819				1,183				1,185				1,188				1,206
Tangible Net Income (Non-GAAP)	$	29,506			$	57,779			$	57,482			$	57,551			$	56,076
Return on Tangible Common Equity (non-GAAP)		6.39	%			13.57	%			14.21	%			14.49	%			14.12	%

EFFICIENCY RATIO (NON-GAAP)
(Dollars In Thousands)	Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
		2026				2025				2025				2025				2025
Noninterest Expense (GAAP)	$	125,145			$	99,522			$	96,561			$	93,598			$	92,902
Less: Intangible Asset Amortization		(2,302	)			(1,498	)			(1,499	)			(1,505	)			(1,526	)
Less: OREO and Foreclosure Expenses		(1,100	)			(775	)			(121	)			(29	)			(600	)
Adjusted Noninterest Expense (non-GAAP)	$	121,743			$	97,249			$	94,941			$	92,064			$	90,776
Net Interest Income (GAAP)	$	151,303			$	139,064			$	133,665			$	133,014			$	130,270
Plus: Fully Taxable Equivalent Adjustment		6,394				6,185				6,209				6,199				6,127
Net Interest Income on a Fully Taxable Equivalent Basis (non-GAAP)	$	157,697			$	145,249			$	139,874			$	139,213			$	136,397
Noninterest Income (GAAP)	$	5,829			$	33,106			$	32,477			$	31,303			$	30,048
Less: Investment Securities (Gains) Losses		—				—				—				1				7
Adjusted Noninterest Income (non-GAAP)	$	5,829			$	33,106			$	32,477			$	31,304			$	30,055
Adjusted Revenue (non-GAAP)	$	163,526			$	178,355			$	172,351			$	170,517			$	166,452
Efficiency Ratio (non-GAAP)		74.45	%			54.52	%			55.09	%			53.99	%			54.54	%
Adjusted Noninterest Expense (non-GAAP)	$	121,743			$	97,249			$	94,941			$	92,064			$	90,776
Less: Acquisition-related Expenses		(16,968	)			(524	)			(276	)			—				—
Less: Non-core Expenses (1)(2)		—				743				(633	)			—				—
Adjusted Noninterest Expense Excluding Non-core Expenses (non-GAAP)	$	104,775			$	97,468			$	94,032			$	92,064			$	90,776
Adjusted Revenue (non-GAAP)	$	163,526			$	178,355			$	172,351			$	170,517			$	166,452
Add: Net loss on mortgage loans reclassified to held for sale		29,755				—				—				—				—
Adjusted Revenue Excluding Net loss on mortgage loans reclassified to held to sale (non-GAAP)	$	193,281			$	178,355			$	172,351			$	170,517			$	166,452
Adjusted Efficiency Ratio (non-GAAP)		54.21	%			54.65	%			54.56	%			53.99	%			54.54	%
(1) Non-core expenses in the Three Months Ended December 31, 2025 included a $0.7 million reduction in the FDIC special assessment
(2) Non-core expenses in the Three Months Ended September 30, 2025 included $0.6 million of severance costs

SOURCE: First Merchants Corporation, Muncie, Indiana