FRME First Merchants Corporation

NASDAQ
$43.70

First Merchants Corporation Announces Second Quarter 2026 Results

Wednesday, July 22, 2026 · 4:05 PM ET GlobeNewswire

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

Second Quarter 2026 Highlights:

  • Net income available to common stockholders was $43.5 million, or $0.70 per diluted common share, compared to $27.7 million, or $0.45 per diluted common share, in the first quarter of 2026. On an adjusted basis1, net income totaled $46.4 million, or $0.74 per diluted common share, compared to $63.1 million, or $1.03 per diluted common share in the prior quarter.
  • Adjusted pre-tax, pre-provision income1 of $84.6 million, compared to $78.7 million in the prior quarter and $70.7 million in the second quarter of 2025.
  • Net interest margin on a fully taxable equivalent basis1 of 3.38%, up 3 basis points from the prior quarter and up 13 basis points from the second quarter of 2025.
  • Loan growth of $221.7 million, or 5.8% annualized, on a linked quarter basis2.
  • Sold $271.1 million of mortgage loans with a weighted average rate of 3.43% during the current quarter and deployed proceeds to fund loan growth and pay down high-cost funding. The loans had been moved to held-for-sale and marked to fair value in the first quarter.
  • Deposit growth of $267.8 million, or 6.5% annualized, on a linked quarter basis.
  • Robust capital position with Common Equity Tier 1 Capital Ratio of 11.16%.
  • Repurchased 976,631 shares of common stock totaling $38.3 million year-to-date, including 336,145 shares totaling $13.4 million in the second quarter.
  • Nonperforming assets to total assets were 56 basis points compared to 43 basis points on a linked quarter basis. Two commercial lending relationships with outstanding balances totaling $41.8 million were placed in nonaccrual status and associated reserves of $29.7 million were recorded.
  • Adjusted efficiency ratio1 totaled 53.22% for the quarter.
  • Successfully completed systems conversion of First Savings Financial Group, Inc. (“First Savings”) in mid-May.

"First Merchants continued to build momentum during the second quarter with expanding net interest margin, solid loan and deposit growth, and another quarter of strong commercial loan production," said Mark Hardwick, Chief Executive Officer. "While we identified two commercial lending relationships that were placed on nonaccrual, we acted promptly to recognize the associated reserves and believe our balance sheet remains well positioned. We successfully completed the integration of First Savings, further strengthening our statewide Indiana franchise and enhancing our ability to serve clients across Indiana, Ohio and Michigan. Our capital, liquidity and credit quality remain very strong and position us well to execute our long-term growth strategy and continue creating shareholder value."

Second Quarter Financial Results:

The Corporation reported second quarter 2026 net income available to common stockholders of $43.5 million compared to $56.4 million during the same period in 2025. Diluted earnings per common share for the period totaled $0.70 compared to $0.98 in the second quarter of 2025. Current quarter results included acquisition-related costs of $3.8 million that consist primarily of employee salaries, equipment, and professional fees. Excluding these non-core charges, adjusted earnings per common share1 for the second quarter of 2026 totaled $0.74 compared to $0.98 in the prior year period. Subsequent to quarter-end, based on additional information obtained regarding conditions that existed at June 30, 2026, two commercial lending relationships were placed on nonaccrual status and reserve levels were increased, resulting in elevated provision expense for the second quarter. The first was a $28.1 million participation in a shared national credit to a commercial authorized wireless retailer. The second was a credit to a commercial and residential roofing contractor with an outstanding balance of $13.7 million. Associated reserves for these credits totaled $29.7 million.

Total assets of the Corporation equaled $21.3 billion as of quarter-end and loans totaled $15.5 billion. Loans increased $2.2 billion during the last twelve months and $268.8 million on a linked quarter basis. During the second quarter, the Corporation completed the previously announced sale of $271.1 million of mortgage loans that had been transferred to held-for-sale during the first quarter. Additionally, mortgage loans totaling $47.1 million were returned to held-for-investment during the second quarter. Excluding loans acquired through First Savings and the impact of mortgage loan sale activity, the Corporation generated organic loan growth of $697.9 million, or 5.2% during the past twelve months. On a linked quarter basis, organic loan growth totaled $221.7 million, or 5.8% annualized.

Investment securities, totaling $3.3 billion, decreased $88.9 million, or 2.6% during the last twelve months and decreased $17.8 million, or 2.2% annualized on a linked quarter basis. Investment securities declined during the quarter due to principal paydowns and maturities, offset by an increase in the securities portfolio valuation.

Total deposits equaled $16.8 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. Total deposits increased $267.8 million, or 6.5% annualized, on a linked quarter basis. The loan to deposit ratio of 92.7% at period end remained stable on a linked quarter basis.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $241.6 million as of quarter-end, or 1.56% of loans, an increase of $29.1 million from the prior quarter. Net charge-offs totaled $3.9 million and provision for credit losses of $33.0 million was recorded during the quarter. Reserves for unfunded commitments totaling $18.5 million remained unchanged from the previous quarter. Nonperforming assets to total assets were 0.56% for the second quarter of 2026, an increase of 13 basis points compared to 0.43% in the prior quarter. The increase in nonperforming assets and provision for credit losses reflects the impact of the two commercial lending relationships placed in nonaccrual status.

Net interest income, totaling $158.9 million for the quarter, increased $7.6 million, or 5.0%, compared to prior quarter and increased $25.9 million, or 19.5%, compared to the second quarter of 2025. Fully taxable equivalent net interest margin was 3.38%, an increase of three basis points compared to the prior quarter and an increase of 13 basis points compared to the second quarter of 2025.

Noninterest income totaled $37.2 million for the quarter, an increase of $31.3 million, compared to the prior quarter and an increase of $5.9 million compared to the second quarter of 2025. The linked quarter increase primarily reflects the negative valuation adjustment of $29.8 million recorded in the first quarter on mortgage loans sold in the second quarter. Also contributing to the increase were higher gains on sales of loans and derivative hedge fees.

Noninterest expense totaled $115.3 million for the quarter, a decrease of $9.8 million from the prior quarter and an increase of $21.7 million from the second quarter of 2025. Acquisition-related costs totaling $3.8 million were incurred during the quarter, including $1.4 million in professional and other outside services and $1.0 million in equipment costs. Acquisition-related costs recorded in the prior quarter totaled $17.0 million.

The Corporation’s total risk-based capital ratio equaled 12.98%, the common equity tier 1 capital ratio equaled 11.16%, and the tangible common equity ratio totaled 8.99%. These ratios continue to reflect the Corporation’s strong capital position.

1 See “Non-GAAP Financial Information” for reconciliation
2 Excludes $47.1 million of loans returned to held-for-investment from held-for-sale

CONFERENCE CALL

First Merchants Corporation will conduct an earnings conference call and webcast at 9:00 a.m. (ET) on Thursday, July 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/BIc1f6f98686534d529e7f3d66c4d50b16)

To view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/hqyvbr3q) during the time of the call. A replay of the webcast will be available until July 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; 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. First Merchants undertakes no obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this news release. In addition, First Merchants’ past results of operations do not necessarily indicate their anticipated future results.

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.

CONSOLIDATED BALANCE SHEETS (Unaudited)   
(Dollars In Thousands, Except Per Share Amounts)June 30,
  2026   2025 
ASSETS   
Cash and due from banks$86,665  $81,567 
Interest-bearing deposits 529,432   223,343 
Investment securities available for sale 1,384,392   1,358,130 
Investment securities held to maturity, net of allowance for credit losses of $245 in 2026 and 2025 1,907,684   2,022,826 
Loans held for sale 77,880   28,783 
Loans 15,530,737   13,296,759 
Less: Allowance for credit losses - loans (241,615)  (195,316)
Net loans 15,289,122   13,101,443 
Premises and equipment 148,164   122,808 
Federal Home Loan Bank stock 70,818   47,290 
Interest receivable 101,927   93,258 
Goodwill 788,186   712,002 
Other intangibles 38,972   16,797 
Cash surrender value of life insurance 373,242   305,695 
Other real estate owned 1,562   177 
Tax asset, deferred and receivable 113,975   97,749 
Other assets 436,744   380,909 
TOTAL ASSETS$21,348,765  $18,592,777 
LIABILITIES   
Deposits:   
Noninterest-bearing$3,831,836  $2,197,416 
Interest-bearing 12,921,545   12,600,162 
Total Deposits 16,753,381   14,797,578 
Borrowings:   
Federal funds purchased —   85,000 
Securities sold under repurchase agreements 103,340   114,758 
Federal Home Loan Bank advances 1,414,059   898,702 
Subordinated debentures and other borrowings 86,350   62,617 
Total Borrowings 1,603,749   1,161,077 
Interest payable 17,491   16,174 
Other liabilities 276,967   269,996 
Total Liabilities 18,651,588   16,244,825 
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 - 62,205,528 and 57,272,433 shares 7,776   7,159 
Additional paid-in capital 1,358,975   1,163,170 
Retained earnings 1,438,894   1,342,473 
Accumulated other comprehensive loss (133,593)  (189,975)
Total Stockholders' Equity 2,697,177   2,347,952 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$21,348,765  $18,592,777 
        


CONSOLIDATED STATEMENTS OF INCOME (Unaudited)Three Months Ended Six Months Ended
(Dollars In Thousands, Except Per Share Amounts)June 30, June 30,
  2026   2025   2026   2025 
INTEREST INCOME        
Loans:        
Taxable$226,531  $195,173  $440,158  $382,901 
Tax-exempt 11,823   10,805   23,412   21,337 
Investment securities:        
Taxable 7,355   8,266   14,902   16,638 
Tax-exempt 12,458   12,516   25,055   25,033 
Deposits with financial institutions 1,147   1,892   2,391   4,264 
Federal Home Loan Bank stock 1,525   1,083   3,490   2,080 
Total Interest Income 260,839   229,735   509,408   452,253 
INTEREST EXPENSE        
Deposits 86,254   84,241   170,347   164,788 
Federal funds purchased 717   965   1,307   1,777 
Securities sold under repurchase agreements 419   663   751   1,405 
Federal Home Loan Bank advances 13,190   9,714   24,238   19,078 
Subordinated debentures and other borrowings 1,318   1,138   2,521   1,921 
Total Interest Expense 101,898   96,721   199,164   188,969 
NET INTEREST INCOME 158,941   133,014   310,244   263,284 
Provision for credit losses 33,000   5,600   37,900   9,800 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 125,941   127,414   272,344   253,484 
NONINTEREST INCOME        
Service charges on deposit accounts 9,372   8,566   18,409   16,638 
Fiduciary and wealth management fees 9,638   8,831   19,406   17,475 
Card payment fees 5,505   4,932   10,780   9,458 
Net gains and fees on sales of loans 7,742   5,849   14,253   10,871 
Derivative hedge fees 1,117   831   1,681   1,235 
Other customer fees 880   401   1,473   816 
Earnings on bank-owned life insurance 2,325   1,913   5,771   4,092 
Net realized losses on sales of available for sale securities —   (1)  —   (8)
Net loss on mortgage loans reclassified to held for sale —   —   (29,755)  — 
Other income (loss) 577   (19)  967   774 
Total Noninterest Income 37,156   31,303   42,985   61,351 
NONINTEREST EXPENSE        
Salaries and employee benefits 65,774   54,527   135,217   109,509 
Net occupancy 8,227   6,845   16,528   14,061 
Equipment 8,603   6,927   16,421   13,935 
Marketing 2,370   1,997   3,971   3,350 
Outside data processing fees 8,045   7,107   15,235   13,036 
Printing and office supplies 491   272   868   619 
Intangible asset amortization 2,706   1,505   5,008   3,031 
FDIC assessments 4,390   3,552   8,283   7,200 
Other real estate owned and foreclosure expenses 1,052   29   2,152   629 
Professional and other outside services 4,979   3,741   19,572   7,002 
Other expenses 8,710   7,096   17,237   14,128 
Total Noninterest Expense 115,347   93,598   240,492   186,500 
Income Before Income Taxes 47,750   65,119   74,837   128,335 
Income tax expense 3,770   8,287   2,701   16,164 
NET INCOME 43,980   56,832   72,136   112,171 
Preferred stock dividends 469   469   938   938 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$43,511  $56,363  $71,198  $111,233 
PER SHARE DATA:        
Basic Net Income Available to Common Stockholders$0.70  $0.98  $1.16  $1.93 
Diluted Net Income Available to Common Stockholders$0.70  $0.98  $1.15  $1.92 
Cash Dividends Paid to Common Stockholders$0.37  $0.36  $0.73  $0.71 
Tangible Common Book Value Per Share1$29.80  $27.90  $29.80  $27.90 
Average Diluted Common Shares Outstanding (in thousands) 62,574   57,773   61,795   58,005 
                


FINANCIAL HIGHLIGHTS       
(Dollars In Thousands)Three Months Ended Six Months Ended
 June 30, June 30,
  2026   2025   2026   2025 
NET CHARGE-OFFS$3,905  $2,315  $14,161  $7,241 
        
AVERAGE BALANCES:       
Assets$21,253,171  $18,508,785  $20,832,683  $18,425,723 
Loans 15,423,286   13,211,729   15,175,407   13,077,288 
Earning Assets 19,583,204   17,158,984   19,215,138   17,060,278 
Deposits 16,638,273   14,632,113   16,360,912   14,526,314 
Stockholders' Equity 2,702,249   2,340,010   2,679,131   2,340,440 
        
FINANCIAL RATIOS:       
Return on Average Assets 0.83%  1.23%  0.69%  1.22%
Return on Average Stockholders' Equity 6.44   9.63   5.32   9.51 
Return on Tangible Common Stockholders' Equity1 9.80   14.49   8.10   14.30 
Average Earning Assets to Average Assets 92.14   92.71   92.24   92.59 
Allowance for Credit Losses - Loans as % of Loans 1.56   1.47   1.56   1.47 
Net Charge-offs as % of Average Loans (Annualized) 0.10   0.07   0.19   0.11 
Average Stockholders' Equity to Average Assets 12.71   12.64   12.86   12.70 
Fully Taxable Equivalent (FTE) Yield on Average Earning Assets 5.46   5.50   5.43   5.45 
Interest Expense/Average Earning Assets 2.08   2.25   2.07   2.22 
Net Interest Margin FTE1 3.38   3.25   3.36   3.23 
Efficiency Ratio1 55.11   53.99   63.75   54.26 
                


ASSET QUALITY         
(Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
  2026   2026   2025   2025   2025 
Nonaccrual Loans$118,203  $89,592  $71,773  $65,740  $67,358 
Other Real Estate Owned and Repossessions 1,562   1,264   658   1,270   177 
Nonperforming Assets (NPA) 119,765   90,856   72,431   67,010   67,535 
Accruing Loans 90+ Days Delinquent 9,738   4,078   2,042   1,925   4,443 
NPAs & 90+ Days Delinquent$129,503  $94,934  $74,473  $68,935  $71,978 
          
Allowance for Credit Losses - Loans$241,615  $212,520  $195,597  $194,468  $195,316 
Quarterly Net Charge-offs 3,905   10,256   6,021   5,148   2,315 
NPAs / Assets % 0.56%  0.43%  0.38%  0.36%  0.36%
NPAs & 90 Day / Assets % 0.61%  0.45%  0.39%  0.37%  0.39%
NPAs / Loans and OREO % 0.77%  0.60%  0.52%  0.49%  0.51%
Allowance for Credit Losses - Loans as % of Loans 1.56%  1.39%  1.42%  1.43%  1.47%
Quarterly Net Charge-offs as % of Average Loans (Annualized) 0.10%  0.27%  0.18%  0.15%  0.07%
                    


CONSOLIDATED BALANCE SHEETS (Unaudited)         
(Dollars In Thousands, Except Per Share Amounts)June 30, March 31, December 31, September 30, June 30,
  2026   2026   2025   2025   2025 
ASSETS         
Cash and due from banks$86,665  $98,083  $84,158  $88,079  $81,567 
Interest-bearing deposits 529,432   175,354   196,300   168,706   223,343 
Investment securities available for sale 1,384,392   1,372,417   1,407,102   1,386,903   1,358,130 
Investment securities held to maturity, net of allowance for credit losses 1,907,684   1,937,485   1,971,539   1,995,488   2,022,826 
Loans held for sale 77,880   401,839   20,079   23,190   28,783 
Loans 15,530,737   15,261,889   13,791,707   13,591,174   13,296,759 
Less: Allowance for credit losses - loans (241,615)  (212,520)  (195,597)  (194,468)  (195,316)
Net loans 15,289,122   15,049,369   13,596,110   13,396,706   13,101,443 
Premises and equipment 148,164   146,013   121,058   121,771   122,808 
Federal Home Loan Bank stock 70,818   70,835   47,245   47,264   47,290 
Interest receivable 101,927   97,026   93,374   89,102   93,258 
Goodwill 788,186   782,789   712,002   712,002   712,002 
Other intangibles 38,972   41,678   13,800   15,298   16,797 
Cash surrender value of life insurance 373,242   371,238   308,438   306,583   305,695 
Other real estate owned 1,562   1,264   658   1,270   177 
Tax asset, deferred and receivable 113,975   116,814   78,664   89,758   97,749 
Other assets 436,744   410,317   374,574   369,509   380,909 
TOTAL ASSETS$21,348,765  $21,072,521  $19,025,101  $18,811,629  $18,592,777 
LIABILITIES         
Deposits:         
Noninterest-bearing$3,831,836  $3,748,279  $2,137,262  $2,100,570  $2,197,416 
Interest-bearing 12,921,545   12,737,338   13,157,593   12,769,409   12,600,162 
Total Deposits 16,753,381   16,485,617   15,294,855   14,869,979   14,797,578 
Borrowings:         
Federal funds purchased —   170,000   40,000   199,370   85,000 
Securities sold under repurchase agreements 103,340   89,458   103,755   122,226   114,758 
Federal Home Loan Bank advances 1,414,059   1,299,192   798,549   798,626   898,702 
Subordinated debentures and other borrowings 86,350   86,345   57,630   57,632   62,617 
Total Borrowings 1,603,749   1,644,995   999,934   1,177,854   1,161,077 
Interest payable 17,491   18,890   18,235   18,240   16,174 
Other liabilities 276,967   250,454   245,410   333,154   269,996 
Total Liabilities 18,651,588   18,399,956   16,558,434   16,399,227   16,244,825 
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 7,776   7,813   7,119   7,149   7,159 
Additional paid-in capital 1,358,975   1,369,879   1,150,816   1,158,026   1,163,170 
Retained earnings 1,438,894   1,418,609   1,413,742   1,377,966   1,342,473 
Accumulated other comprehensive loss (133,593)  (148,861)  (130,135)  (155,864)  (189,975)
Total Stockholders' Equity 2,697,177   2,672,565   2,466,667   2,412,402   2,347,952 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$21,348,765  $21,072,521  $19,025,101  $18,811,629  $18,592,777 
          


CONSOLIDATED STATEMENTS OF INCOME (Unaudited)         
(Dollars In Thousands, Except Per Share Amounts)June 30, March 31, December 31, September 30, June 30,
  2026   2026   2025   2025   2025 
INTEREST INCOME         
Loans:         
Taxable$226,531  $213,627  $203,120  $200,406  $195,173 
Tax-exempt 11,823   11,589   10,905   11,173   10,805 
Investment securities:         
Taxable 7,355   7,547   7,736   8,288   8,266 
Tax-exempt 12,458   12,597   12,459   12,460   12,516 
Deposits with financial institutions 1,147   1,244   2,187   1,676   1,892 
Federal Home Loan Bank stock 1,525   1,965   1,037   1,092   1,083 
Total Interest Income 260,839   248,569   237,444   235,095   229,735 
INTEREST EXPENSE         
Deposits 86,254   84,093   88,670   90,821   84,241 
Federal funds purchased 717   590   218   224   965 
Securities sold under repurchase agreements 419   332   405   654   663 
Federal Home Loan Bank advances 13,190   11,048   8,047   8,638   9,714 
Subordinated debentures and other borrowings 1,318   1,203   1,040   1,093   1,138 
Total Interest Expense 101,898   97,266   98,380   101,430   96,721 
NET INTEREST INCOME 158,941   151,303   139,064   133,665   133,014 
Provision for credit losses 33,000   4,900   7,150   4,300   5,600 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 125,941   146,403   131,914   129,365   127,414 
NONINTEREST INCOME         
Service charges on deposit accounts 9,372   9,037   8,704   8,921   8,566 
Fiduciary and wealth management fees 9,638   9,768   9,175   8,842   8,831 
Card payment fees 5,505   5,275   5,325   5,007   4,932 
Net gains and fees on sales of loans 7,742   6,511   5,421   4,983   5,849 
Derivative hedge fees 1,117   564   1,053   1,097   831 
Other customer fees 880   593   315   414   401 
Earnings on bank-owned life insurance 2,325   3,446   1,854   1,667   1,913 
Net realized losses on sales of available for sale securities —   —   —   —   (1)
Net loss on mortgage loans reclassified to held for sale —   (29,755)  —   —   — 
Other income (loss) 577   390   1,259   1,546   (19)
Total Noninterest Income 37,156   5,829   33,106   32,477   31,303 
NONINTEREST EXPENSE         
Salaries and employee benefits 65,774   69,443   58,254   57,317   54,527 
Net occupancy 8,227   8,301   7,283   7,057   6,845 
Equipment 8,603   7,818   7,681   6,998   6,927 
Marketing 2,370   1,601   2,324   2,120   1,997 
Outside data processing fees 8,045   7,190   7,509   6,943   7,107 
Printing and office supplies 491   377   450   311   272 
Intangible asset amortization 2,706   2,302   1,498   1,499   1,505 
FDIC assessments 4,390   3,893   2,684   3,526   3,552 
Other real estate owned and foreclosure expenses 1,052   1,100   775   121   29 
Professional and other outside services 4,979   14,593   3,774   3,718   3,741 
Other expenses 8,710   8,527   7,290   6,951   7,096 
Total Noninterest Expense 115,347   125,145   99,522   96,561   93,598 
Income Before Income Taxes 47,750   27,087   65,498   65,281   65,119 
Income tax expense (benefit) 3,770   (1,069)  8,433   8,516   8,287 
NET INCOME 43,980   28,156   57,065   56,765   56,832 
Preferred stock dividends 469   469   469   468   469 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$43,511  $27,687  $56,596  $56,297  $56,363 
PER SHARE DATA:         
Basic Net Income Available to Common Stockholders$0.70  $0.46  $0.99  $0.98  $0.98 
Diluted Net Income Available to Common Stockholders$0.70  $0.45  $0.99  $0.98  $0.98 
Cash Dividends Paid to Common Stockholders$0.37  $0.36  $0.36  $0.36  $0.36 
Tangible Common Book Value Per Share1$29.80  $29.34  $30.18  $29.08  $27.90 
Average Diluted Common Shares Outstanding (in thousands) 62,574   61,008   57,442   57,448   57,773 
FINANCIAL RATIOS:         
Return on Average Assets 0.83%  0.55%  1.20%  1.22%  1.23%
Return on Average Stockholders' Equity 6.44   4.17   9.23   9.51   9.63 
Return on Tangible Common Stockholders' Equity1 9.80   6.39   13.57   14.21   14.49 
Average Earning Assets to Average Assets 92.14   92.33   92.69   92.73   92.71 
Allowance for Credit Losses - Loans as % of Total Loans 1.56   1.39   1.42   1.43   1.47 
Net Charge-offs as % of Average Loans (Annualized) 0.10   0.27   0.18   0.15   0.07 
Average Stockholders' Equity to Average Assets 12.71   13.01   12.88   12.71   12.64 
Fully Taxable Equivalent (FTE) Yield on Average Earning Assets 5.46   5.41   5.52   5.58   5.50 
Interest Expense/Average Earning Assets 2.08   2.06   2.23   2.34   2.25 
Net Interest Margin FTE1 3.38   3.35   3.29   3.24   3.25 
Efficiency Ratio1 55.11   74.45   54.52   55.09   53.99 
                    


LOANS         
(Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
  2026   2026   2025   2025   2025 
Commercial and industrial loans$4,720,441  $4,611,596  $4,478,282  $4,604,895  $4,440,924 
Agricultural land, production and other loans to farmers 323,348   310,788   283,125   275,817   265,172 
Real estate loans:         
Construction 874,419   899,895   804,775   789,021   836,033 
Commercial real estate, non-owner occupied 3,271,620   3,192,337   2,338,666   2,304,889   2,171,092 
Commercial real estate, owner occupied 1,368,627   1,334,959   1,237,100   1,232,117   1,226,797 
Residential 2,361,480   2,273,860   2,420,310   2,412,783   2,397,094 
Home equity 1,118,662   1,104,739   710,980   687,021   673,961 
Individuals' loans for household and other personal expenditures 149,878   153,283   155,436   138,703   141,045 
Public finance and other commercial loans 1,342,262   1,380,432   1,363,033   1,145,928   1,144,641 
Loans 15,530,737   15,261,889   13,791,707   13,591,174   13,296,759 
Allowance for credit losses - loans (241,615)  (212,520)  (195,597)  (194,468)  (195,316)
NET LOANS$15,289,122  $15,049,369  $13,596,110  $13,396,706  $13,101,443 
                    


DEPOSITS              
(Dollars In Thousands)June 30, March 31, December 31, September 30, June 30,
  2026   2026   2025   2025   2025 
Demand deposits$8,570,517  $8,009,548  $7,770,473  $7,645,698  $7,798,695 
Savings deposits 6,043,560   6,204,526   5,481,785   5,164,707   4,984,659 
Certificates and other time deposits of $100,000 or less 666,369   665,639   603,690   627,828   617,857 
Certificates and other time deposits of $100,000 or more 1,054,075   1,012,922   915,293   910,337   891,139 
Brokered certificates of deposits (1) 418,860   592,982   523,614   521,409   505,228 
TOTAL DEPOSITS$16,753,381  $16,485,617  $15,294,855  $14,869,979  $14,797,578 
                    

(1) Total brokered deposits of $1.3 billion, which includes brokered CD's of $418.9 million at June 30, 2026.

CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars In Thousands)
 Three Months Ended
 June 30, 2026 June 30, 2025
 Average Balance Interest
Income /
Expense		 Average
Rate		 Average Balance Interest
Income /
Expense		 Average
Rate
ASSETS           
Interest-bearing deposits$228,468 $1,147 2.01% $252,613 $1,892 3.00%
Federal Home Loan Bank stock 70,826  1,525 8.61   46,598  1,083 9.30 
Investment Securities: (1)           
Taxable 1,457,179  7,355 2.02   1,605,718  8,266 2.06 
Tax-exempt (2) 2,024,323  15,769 3.12   2,042,326  15,843 3.10 
Total Investment Securities 3,481,502  23,124 2.66   3,648,044  24,109 2.64 
Loans held for sale 379,122  4,541 4.79   25,411  389 6.12 
Loans: (3)           
Commercial 10,809,590  172,562 6.39   9,006,650  154,108 6.84 
Real estate mortgage 2,133,638  26,859 5.04   2,200,521  25,062 4.56 
HELOC and installment 1,281,529  22,569 7.04   834,901  15,614 7.48 
Tax-exempt (2) 1,198,529  14,903 4.97   1,144,246  13,677 4.78 
Total Loans, including loans held for sale 15,802,408  241,434 6.11   13,211,729  208,850 6.32 
Total Earning Assets 19,583,204  267,230 5.46%  17,158,984  235,934 5.50%
Total Non-Earning Assets 1,669,967      1,349,801    
TOTAL ASSETS$21,253,171     $18,508,785    
LIABILITIES           
Interest-Bearing Deposits:           
Interest-bearing deposits$4,515,106 $31,239 2.77% $5,545,158 $35,303 2.55%
Money market deposits 4,731,251  33,269 2.81   3,613,952  28,714 3.18 
Savings deposits 1,424,566  2,279 0.64   1,282,951  2,513 0.78 
Certificates and other time deposits 2,241,647  19,467 3.47   2,003,682  17,711 3.54 
Total Interest-Bearing Deposits 12,912,570  86,254 2.67   12,445,743  84,241 2.71 
Borrowings 1,640,431  15,644 3.81   1,250,519  12,480 3.99 
Total Interest-Bearing Liabilities 14,553,001  101,898 2.80   13,696,262  96,721 2.82 
Noninterest-bearing deposits 3,725,703      2,186,370    
Other liabilities 272,218      286,143    
Total Liabilities 18,550,922      16,168,775    
STOCKHOLDERS' EQUITY 2,702,249      2,340,010    
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$21,253,171     $18,508,785    
Net Interest Income (FTE)  $165,332     $139,213  
Net Interest Spread (FTE) (4)    2.66%     2.68%
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    5.46%     5.50%
Interest Expense / Average Earning Assets    2.08%     2.25%
Net Interest Margin (FTE) (5)    3.38%     3.25%
            
(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 $6.2 million for the three months ended June 30, 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.
 


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars In Thousands)           
 Six Months Ended
 June 30, 2026 June 30, 2025
 Average Balance Interest
Income /
Expense		 Average
Rate		 Average Balance Interest
Income /
Expense		 Average
Rate
ASSETS           
Federal Funds Sold           
Interest-bearing deposits$220,361 $2,391 2.17% $273,200 $4,264 3.12%
Federal Home Loan Bank stock 66,795  3,490 10.45   45,296  2,080 9.18 
Investment Securities: (1)           
Taxable 1,483,615  14,902 2.01   1,620,005  16,638 2.05 
Tax-exempt (2) 2,043,092  31,715 3.10   2,044,489  31,687 3.10 
Total Investment Securities 3,526,707  46,617 2.64   3,664,494  48,325 2.64 
Loans held for sale 225,868  5,968 5.28   23,190  708 6.11 
Loans: (3)           
Commercial 10,523,765  337,327 6.41   8,889,119  301,880 6.79 
Real estate mortgage 2,250,726  54,774 4.87   2,195,988  49,508 4.51 
HELOC and installment 1,203,122  42,089 7.00   831,904  30,805 7.41 
Tax-exempt (2) 1,197,794  29,537 4.93   1,137,087  27,009 4.75 
Total Loans, including loans held for sale 15,401,275  469,695 6.10   13,077,288  409,910 6.27 
Total Earning Assets 19,215,138  522,193 5.43%  17,060,278  464,579 5.45%
Total Non-Earning Assets 1,617,545      1,365,445    
TOTAL ASSETS$20,832,683     $18,425,723    
LIABILITIES           
Interest-Bearing deposits:           
Interest-bearing deposits$4,970,120 $61,020 2.46% $5,533,858 $69,909 2.53%
Money market deposits 4,649,219  65,317 2.81   3,526,461  54,666 3.10 
Savings deposits 1,398,327  4,512 0.65   1,291,133  4,958 0.77 
Certificates and other time deposits 2,242,527  39,498 3.52   1,975,923  35,255 3.57 
Total Interest-Bearing Deposits 13,260,193  170,347 2.57   12,327,375  164,788 2.67 
Borrowings 1,524,974  28,817 3.78   1,256,688  24,181 3.85 
Total Interest-Bearing Liabilities 14,785,167  199,164 2.69   13,584,063  188,969 2.78 
Noninterest-bearing deposits 3,100,719      2,198,939    
Other liabilities 267,666      302,281    
Total Liabilities 18,153,552      16,085,283    
STOCKHOLDERS' EQUITY 2,679,131      2,340,440    
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$20,832,683     $18,425,723    
Net Interest Income (FTE)  $323,029     $275,610  
Net Interest Spread (FTE) (4)    2.74%     2.67%
            
Net Interest Margin (FTE):           
Interest Income (FTE) / Average Earning Assets    5.43%     5.45%
Interest Expense / Average Earning Assets    2.07%     2.22%
Net Interest Margin (FTE) (5)    3.36%     3.23%
            
(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 $12.8 million and $12.3 million for the six months ended June 30, 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 Six Months Ended
 June 30, March 31, December 31, September 30, June 30, June 30, June 30,
  2026   2026   2025   2025   2025  2026   2025 
Net Income Available to Common Stockholders (GAAP)$43,511  $27,687  $56,596  $56,297  $56,363 $71,198  $111,233 
Adjustments:             
Net realized losses on sales of available for sale securities —   —   —   —   1  —   8 
Net loss on mortgage loans reclassified to held for sale —   29,755   —   —   —  29,755   — 
Acquisition-related expenses 3,830   16,968   524   276   —  20,798   — 
Non-core expenses (1)(2) —   —   (743)  633   —  —   — 
Tax on adjustments (925)  (11,279)  53   (220)  —  (12,204)  (2)
Adjusted Net Income Available to Common Stockholders (non-GAAP)$46,416  $63,131  $56,430  $56,986  $56,364 $109,547  $111,239 
              
Average Diluted Common Shares Outstanding (in thousands) 62,574   61,008   57,442   57,448   57,773  61,795   58,005 
              
Diluted Earnings Per Common Share (GAAP)$0.70  $0.45  $0.99  $0.98  $0.98 $1.15  $1.92 
Adjustments:             
Net realized losses on sales of available for sale securities —   —   —   —   —  —   — 
Net loss on mortgage loans reclassified to held for sale —   0.49   —   —   —  0.48   — 
Acquisition-related expenses 0.06   0.28   —   —   —  0.34   — 
Non-core expenses (1)(2) —   —   (0.01)  0.01   —  —   — 
Tax on adjustments (0.02)  (0.19)  —   —   —  (0.20)  — 
Adjusted Diluted Earnings Per Common Share (non-GAAP)$0.74  $1.03  $0.98  $0.99  $0.98 $1.77  $1.92 

(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

PRE-TAX, PRE-PROVISION ("PTPP") EARNINGS, AS ADJUSTED (NON-GAAP)
(Dollars In Thousands)Three Months Ended Six Months Ended
 June 30, March 31, December 31, September 30, June 30, June 30, June 30,
  2026   2026   2025   2025   2025   2026   2025 
Net Interest Income (GAAP)$158,941  $151,303  $139,064  $133,665  $133,014  $310,244  $263,284 
Noninterest Income (GAAP) 37,156   5,829   33,106   32,477   31,303   42,985   61,351 
Total Revenue 196,097   157,132   172,170   166,142   164,317   353,229   324,635 
Less: Noninterest Expense (GAAP) (115,347)  (125,145)  (99,522)  (96,561)  (93,598)  (240,492)  (186,500)
Add: Net Realized Losses on Sales of Available for Sale Securities —   —   —   —   1   —   8 
Add: Net loss on mortgage loans reclassified to held for sale —   29,755   —   —   —   29,755   — 
Add: Acquisition-Related Expenses (non-GAAP) 3,830   16,968   524   276   —   20,798   — 
Add: Non-core Expenses (1)(2) (non-GAAP) —   —   (743)  633   —   —   — 
Pre-Tax, Pre-Provision Earnings (non-GAAP)$84,580  $78,710  $72,429  $70,490  $70,720  $163,290  $138,143 
              
Average Assets (GAAP)$21,253,171  $20,407,523  $19,039,989  $18,637,581  $18,508,785  $20,832,683  $18,425,723 
Average Equity (GAAP)$2,702,249  $2,655,756  $2,452,005  $2,367,971  $2,340,010  $2,679,131  $2,340,440 
              
PTPP/Average Assets (PTPP ROA) 1.59%  1.54%  1.52%  1.51%  1.53%  1.57%  1.50%
PTPP/Average Equity (PTPP ROE) 12.52%  11.86%  11.82%  11.91%  12.09%  12.19%  11.80%

(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 Six Months Ended
 June 30, March 31, December 31, September 30, June 30, June 30, June 30,
  2026   2026   2025   2025   2025   2026   2025 
Net Interest Income (GAAP)$158,941  $151,303  $139,064  $133,665  $133,014  $310,244  $263,284 
Fully Taxable Equivalent ("FTE") Adjustment 6,391   6,394   6,185   6,209   6,199   12,785   12,326 
Net Interest Income (FTE) (Non-GAAP)$165,332  $157,697  $145,249  $139,874  $139,213  $323,029  $275,610 
              
Average Earning Assets (GAAP)$19,583,204  $18,842,984  $17,648,233  $17,282,901  $17,158,984  $19,215,138  $17,060,278 
Net Interest Margin (GAAP) 3.25%  3.21%  3.15%  3.09%  3.10%  3.23%  3.09%
FTE Adjustment 0.13%  0.14%  0.14%  0.15%  0.15%  0.13%  0.14%
Net Interest Margin (FTE) (Non-GAAP) 3.38%  3.35%  3.29%  3.24%  3.25%  3.36%  3.23%
                            


RETURN ON TANGIBLE COMMON EQUITY (NON-GAAP)
(Dollars In Thousands)Three Months Ended Six Months Ended
 June 30, March 31, December 31, September 30, June 30, June 30, June 30,
  2026   2026   2025   2025   2025   2026   2025 
Total Average Stockholders' Equity (GAAP)$2,702,249  $2,655,756  $2,452,005  $2,367,971  $2,340,010  $2,679,131  $2,340,440 
Less: Average Preferred Stock (25,125)  (25,125)  (25,125)  (25,125)  (25,125)  (25,125)  (25,125)
Less: Average Intangible Assets, Net of Tax (813,608)  (784,490)  (723,466)  (724,619)  (725,813)  (799,129)  (726,362)
Average Tangible Common Equity, Net of Tax (non-GAAP)$1,863,516  $1,846,141  $1,703,414  $1,618,227  $1,589,072  $1,854,877  $1,588,953 
              
Net Income Available to Common Stockholders (GAAP)$43,511  $27,687  $56,596  $56,297  $56,363  $71,198  $111,233 
Plus: Intangible Asset Amortization, Net of Tax 2,137   1,819   1,183   1,185   1,188   3,956   2,394 
Tangible Net Income (Non-GAAP)$45,648  $29,506  $57,779  $57,482  $57,551  $75,154  $113,627 
              
Return on Tangible Common Equity (non-GAAP) 9.80%  6.39%  13.57%  14.21%  14.49%  8.10%  14.30%
                            


EFFICIENCY RATIO (NON-GAAP)             
(Dollars In Thousands)Three Months Ended Six Months Ended
 June 30, March 31, December 31, September 30, June 30, June 30, June 30,
  2026   2026   2025   2025   2025   2026   2025 
Noninterest Expense (GAAP)$115,347  $125,145  $99,522  $96,561  $93,598  $240,492  $186,500 
Less: Intangible Asset Amortization (2,706)  (2,302)  (1,498)  (1,499)  (1,505)  (5,008)  (3,031)
Less: OREO and Foreclosure Expenses (1,052)  (1,100)  (775)  (121)  (29)  (2,152)  (629)
Adjusted Noninterest Expense (non-GAAP)$111,589  $121,743  $97,249  $94,941  $92,064  $233,332  $182,840 
              
Net Interest Income (GAAP)$158,941  $151,303  $139,064  $133,665  $133,014  $310,244  $263,284 
Plus: Fully Taxable Equivalent Adjustment 6,391   6,394   6,185   6,209   6,199   12,785   12,326 
Net Interest Income on a Fully Taxable Equivalent Basis (non-GAAP)$165,332  $157,697  $145,249  $139,874  $139,213  $323,029  $275,610 
              
Noninterest Income (GAAP)$37,156  $5,829  $33,106  $32,477  $31,303  $42,985  $61,351 
Less: Investment Securities (Gains) Losses —   —   —   —   1   —   8 
Adjusted Noninterest Income (non-GAAP)$37,156  $5,829  $33,106  $32,477  $31,304  $42,985  $61,359 
Adjusted Revenue (non-GAAP)$202,488  $163,526  $178,355  $172,351  $170,517  $366,014  $336,969 
Efficiency Ratio (non-GAAP) 55.11%  74.45%  54.52%  55.09%  53.99%  63.75%  54.26%
              
Adjusted Noninterest Expense (non-GAAP)$111,589  $121,743  $97,249  $94,941  $92,064  $233,332  $182,840 
Less: Acquisition-related Expenses (3,830)  (16,968)  (524)  (276)  —   (20,798)  — 
Less: Non-core Expenses (1)(2) —   —   743   (633)  —   —   — 
Adjusted Noninterest Expense Excluding Non-core Expenses (non-GAAP)$107,759  $104,775  $97,468  $94,032  $92,064  $212,534  $182,840 
              
Adjusted Revenue (non-GAAP)$202,488  $163,526  $178,355  $172,351  $170,517  $366,014  $336,969 
Add: Net loss on mortgage loans reclassified to held for sale —   29,755   —   —   —   29,755   — 
Adjusted Revenue Excluding Net loss on mortgage loans reclassified to held for sale (non-GAAP)$202,488  $193,281  $178,355  $172,351  $170,517  $395,769  $336,969 
Adjusted Efficiency Ratio (non-GAAP) 53.22%  54.21%  54.65%  54.56%  53.99%  53.70%  54.26%

(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

For more information, contact:
Nicole M. Weaver, First Vice President and Director of Corporate Administration
765-521-7619
http://www.firstmerchants.com


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Source: First Merchants Corporation
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