First Merchants (FRME) investor relations material

Executive summary

• Q3 net income available to common shareholders was $67.8 million, or $1.09 diluted EPS, versus $56.3 million and $0.98 a year earlier; adjusted diluted EPS was $1.10.

• Adjusted Q3 pre-tax, pre-provision earnings were $83.7 million, up 19% YoY; FTE net interest margin rose 20 bps YoY to 3.44%.

• Organic loans grew $70.2 million and deposits grew $175.6 million linked quarter; the CET1 ratio was 11.22%.

Financial highlights

• Q3 net interest income was $161.1 million, up $2.1 million, or 1.3%, QoQ and $27.4 million, or 20.5%, YoY; noninterest income was $38.0 million, up $0.8 million QoQ.

• Q3 noninterest expense was $116.3 million; excluding $0.9 million of acquisition costs, it rose $3.9 million, or 3.5%, QoQ and included a $0.5 million building-lease impairment.

• Nine-month reported net income was $139.0 million and diluted EPS was $2.24; adjusted net income was $178.0 million and adjusted EPS was $2.87.

• Nine-month adjusted pre-tax, pre-provision earnings rose $38.3 million, or 18.4%, to $247.0 million.

• At September 30, total assets were $21.1 billion, loans $15.6 billion and deposits $16.9 billion.

Outlook and guidance

• Q4 loan growth is expected in the mid-single digits, supported by stable pipelines and fewer expected payoffs or purposeful credit exits.

• Q4 NIM is expected to be stable, with some margin lift anticipated in 2027 after a full quarter of subordinated-debt interest expense.

• Q4 expenses are expected near the Q3 run rate; 2027 expense growth guidance is 3%-5%.

• Q4 fee income is expected to remain broadly consistent with Q3; client-related fee categories are expected to grow 8%-10% in 2027.

• Full-year net charge-offs are expected at 38-40 bps; normalized charge-offs are estimated at 20-25 bps, with allowance coverage in the low-to-mid 130% range.