First Merchants (FRME) investor relations material

Executive summary

• Net income for Q2 2026 was $43.5 million ($0.70 per diluted share), with adjusted EPS at $0.74, reflecting acquisition-related expenses and elevated credit provisions; adjusted pre-tax, pre-provision earnings rose 7.5% sequentially to $84.6 million.

• Completed and integrated the First Savings acquisition, expanding the footprint to 126 banking centers and $21.3 billion in assets, and strengthening the regional franchise.

• Asset quality was impacted by two large commercial loans moved to nonaccrual, resulting in significant specific reserves and higher provision expense.

• Mortgage loan sale completed, adding $271 million in liquidity but resulting in a $29.8 million loss.

• Share repurchases totaled nearly one million shares for $38.3 million year-to-date, with a new buyback authorization in place.

Financial highlights

• Total assets reached $21.3 billion at June 30, 2026, up 14.8% year-over-year, driven by the First Savings acquisition.

• Net interest income for Q2 2026 was $165.3 million, up 18.8% year-over-year and 5% sequentially; net interest margin (FTE) improved to 3.38%.

• Noninterest income for Q2 2026 was $37.2 million, up 18.7% year-over-year, reflecting higher customer-related fees and reversal of prior quarter mortgage loan valuation losses.

• Noninterest expense for Q2 2026 was $115.3 million, up 23.2% year-over-year, mainly due to higher salaries and $3.8 million in integration and transaction-related expenses.

• Tangible book value per share increased to $29.80 at June 30, 2026.

Outlook and guidance

• Management expects continued integration of First Savings, organic loan growth, and strong capital and liquidity to support long-term growth and shareholder value.

• Net interest margin is expected to remain stable or increase slightly in the second half of the year, assuming no Fed rate changes.

• Expense run rate guidance remains $111–$114 million per quarter for the remainder of the year, with 3–5% normalized annual growth expected.

• Effective tax rate expected to be 13%.

• Focus remains on organic growth, deepening client relationships, and leveraging technology.