FIRST MERCHANTS CORP

Previous wording

First Merchants Corporation (the “Corporation”) is a financial holding company headquartered in Muncie, Indiana and was organized in September 1982. The Corporation’s common stock is traded on the Nasdaq’s Global Select Market System under the symbol FRME. The Corporation conducts its banking operations through First Merchants Bank (the “Bank”), a wholly-owned subsidiary that opened for business in Muncie, Indiana in March 1893. The Bank also operates First Merchants Private Wealth Advisors (a division of First Merchants Bank). The Bank operates 127 banking locations in Indiana, Ohio, and Michigan. In addition to its branch network, the Corporation offers comprehensive electronic and mobile delivery channels to its customers. The Corporation’s business activities are currently limited to one significant business segment, which is community banking.

Current wording

First Merchants Corporation (the “Corporation”) is a financial holding company headquartered in Muncie, Indiana and was organized in September 1982. The Corporation’s common stock is traded on the Nasdaq’s Global Select Market System under the symbol FRME. The Corporation conducts its banking operations through First Merchants Bank (the “Bank”), a wholly-owned subsidiary that opened for business in Muncie, Indiana in March 1893. The Bank also operates First Merchants Private Wealth Advisors (a division of First Merchants Bank). The Bank operates 126 banking locations in Indiana, Ohio, and Michigan. In addition to its branch network, the Corporation offers comprehensive electronic and mobile delivery channels to its customers. The Corporation’s business activities are currently limited to one reportable business segment, which is community banking.

Previous wording

The Corporation acquired total assets of $2.4 billion, total loans of $1.8 billion, and total deposits of $1.7 billion. The total purchase price of approximately $243.2 million consists primarily of equity consideration issued by the Corporation and is measured at fair value based on the Corporation’s common stock price as of the acquisition date. The purchase price also includes cash paid in lieu of fractional shares. The purchase price represents the fair value of consideration transferred in accordance with ASC 805. Immediately following the acquisition of First

Current wording

The Corporation acquired total assets of $2.4 billion, total loans of $1.8 billion, and total deposits of $1.7 billion. The total purchase price of approximately $243.2 million consisted primarily of equity consideration issued by the Corporation and was measured at fair value based on the Corporation’s common stock price as of the acquisition date. The purchase price also included cash paid in lieu of fractional shares. The purchase price represented the fair value of consideration transferred in accordance with ASC 805. Immediately following the acquisition of First

Previous wording

There have been no significant changes during the three months ended March 31, 2026 to the items disclosed as our critical accounting policies and estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2025. For a complete discussion of our significant accounting policies, see “Notes to the Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2025. However, due to the First Savings acquisition on February 1, 2026, the Corporation has expanded below its discussion of accounting practices and valuation methodologies related to business combinations, which involve significant judgment and estimation uncertainty.

Current wording

There have been no significant changes during the six months ended June 30, 2026 to the items disclosed as our critical accounting policies and estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2025. For a complete discussion of our significant accounting policies, see “Notes to the Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2025. However, due to the First Savings acquisition on February 1, 2026, the Corporation has expanded its discussion below of accounting practices and valuation methodologies related to business combinations, which involve significant judgment and estimation uncertainty.

Previous wording

In connection with the acquisition, and consistent with the guidance in ASU 2025‑08, loans acquired through business combinations that meet the definition of PSL are recorded using the gross-up method. PCD loans continue to be accounted for under existing PCD guidance, which also applies the gross‑up method; however, PCD loans represent loans that experienced more‑than‑insignificant credit deterioration since origination, while PSLs did not. Under this method, the Corporation recognizes an allowance for credit losses on loans at the acquisition date, with a corresponding increase to the loan's amortized cost basis. The establishment of the ACL - Loans at acquisition does not result in a provision for credit losses or earnings impact on the acquisition date. Expected credit losses as of the acquisition date are recognized through the acquisition‑date allowance for credit losses, while the non‑credit discount reflects all other valuation factors, including differences between contractual interest rates and prevailing market rates, liquidity considerations, and other non‑credit‑related assumptions. The non‑credit discount is accreted into interest income over the remaining life of the loans using the effective interest method. Subsequent changes in expected credit losses for PSLs are recognized through the provision for credit losses in the period in which the estimate changes, consistent with the Corporation's methodology for originated loans measured at amortized cost.

Current wording

In connection with the acquisition, and consistent with the guidance in ASU 2025‑08, loans acquired through business combinations that meet the definition of PSL are recorded using the gross-up method. PCD loans continue to be accounted for under existing PCD guidance, which also applies the gross‑up method; however, PCD loans represent loans that experienced more‑than‑insignificant credit deterioration since origination, while PSLs did not. Under this method, the Corporation recognizes an allowance for credit losses on loans at the acquisition date, with a corresponding increase to the loan's amortized cost basis. The establishment of the ACL - Loans at acquisition did not result in a provision for credit losses or earnings impact on the acquisition date. Expected credit losses as of the acquisition date are recognized through the acquisition‑date allowance for credit losses, while the non‑credit discount reflects all other valuation factors, including differences between contractual interest rates and prevailing market rates, liquidity considerations, and other non‑credit‑related assumptions. The non‑credit discount is accreted into interest income over the remaining life of the loans using the effective interest method. Subsequent changes in expected credit losses for PSLs are recognized through the provision for credit losses in the period in which the estimate changes, consistent with the Corporation's methodology for originated loans measured at amortized cost.

Previous wording

Results for the three months ended March 31, 2026 reflect the partial-period impact of the acquisition of First Savings Financial Group, Inc. ("First Savings"), which was completed on February 1, 2026. Accordingly, period-over-period changes in assets, loans, deposits, net interest income, noninterest income and noninterest expense reflect the contribution of the acquired operations in addition to changes driven by market conditions, volume, and mix. Further details of the Corporation's acquisition are provided within NOTE 2. ACQUISITIONS of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Current wording

Results for the three and six months ended June 30, 2026 reflect the partial-period impact of the acquisition of First Savings, which was completed on February 1, 2026. Accordingly, period-over-period changes in assets, loans, deposits, net interest income, noninterest income and noninterest expense reflect the contribution of the acquired operations in addition to changes driven by market conditions, volume, and mix. Further details of the Corporation's acquisition are provided within NOTE 2. ACQUISITIONS of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Previous wording

The Corporation reported first quarter 2026 net income available to common stockholders and diluted earnings per common share of $27.7 million and $0.45 per diluted share, respectively, compared to $54.9 million and $0.94 per diluted share, respectively, during the first quarter of 2025.

Current wording

The Corporation reported second quarter 2026 net income available to common stockholders and diluted earnings per common share of $43.5 million and $0.70 per diluted share, respectively, compared to $56.4 million and $0.98 per diluted share, respectively, during the second quarter of 2025. The Corporation reported net income available to common stockholders and diluted earnings per common share of $71.2 million and $1.15 per diluted share, respectively, for the six months ended June 30, 2026 compared to $111.2 million and $1.92 per diluted share, respectively, for the six months ended June 30, 2025.

Previous wording

When adjusting for certain non-recurring items, adjusted net income available to common stockholders was $63.1 million and adjusted diluted earnings per common share totaled $1.03 for the first quarter of 2026, compared to $54.9 million and $0.94, respectively, in the first quarter of 2025. These adjusted net income and earnings per share amounts are non-GAAP measures. For reconciliations of GAAP earnings per share measures to the corresponding non-GAAP measures provided above, refer to the "NON-GAAP FINANCIAL MEASURES" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Current wording

When adjusting for certain non-recurring items, adjusted net income available to common stockholders was $46.4 million and adjusted diluted earnings per common share totaled $0.74 for the second quarter of 2026, compared to $56.4 million and $0.98, respectively, in the second quarter of 2025. Adjusted net income available to common stockholders and adjusted diluted earnings per common share for the six months ended June 30, 2026, totaled $109.5 million and $1.77, respectively, compared to $111.2 million and $1.92, respectively, for the same period in 2025. These adjusted net income and earnings per share amounts are non-GAAP measures. For reconciliations of GAAP earnings per share measures to the corresponding non-GAAP measures provided above, refer to the "NON-GAAP FINANCIAL MEASURES" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Previous wording

As of March 31, 2026, total assets were $21.1 billion, an increase of $2.0 billion or 10.8 percent from December 31, 2025. The Corporation acquired First Savings on February 1, 2026, which included $2.4 billion in assets at acquisition. Details of the acquisition are discussed within NOTE 2. ACQUISITIONS of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Current wording

As of June 30, 2026, total assets were $21.3 billion, an increase of $2.3 billion or 12.2 percent from December 31, 2025. The Corporation acquired First Savings on February 1, 2026, which included $2.4 billion in assets at acquisition. Details of the acquisition are discussed within NOTE 2. ACQUISITIONS of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Previous wording

Cash and due from banks and interest-bearing deposits decreased $7.0 million from December 31, 2025. Total investment securities decreased by $68.7 million from December 31, 2025, primarily due to $44.0 million of principal paydowns and maturities, as well as a $23.7 million decline in the valuation of available for sale securities. Investments represented 15.7 percent of total assets at March 31, 2026, compared to 17.8 percent at December 31, 2025. Additional details of the Corporation's investment securities portfolio are discussed within NOTE 3. INVESTMENT SECURITIES of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Current wording

Cash and due from banks and interest-bearing deposits increased $335.6 million from December 31, 2025, primarily due to proceeds received from the mortgage loan portfolio sale completed on June 30, 2026. Total investment securities decreased by $86.6 million from December 31, 2025, primarily due to $88.9 million of principal paydowns and maturities. Investments represented 15.4 percent of total assets at June 30, 2026, compared to 17.8 percent at December 31, 2025. Additional details of the Corporation's investment securities portfolio are discussed within NOTE 3. INVESTMENT SECURITIES of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Previous wording

Excluding loans held-for-sale, total loans increased $1.5 billion from December 31, 2025. Loans acquired in the First Savings acquisition contributed $1.8 billion, partially offset by the transfer of $357.0 million of mortgage loans to held for sale. Excluding acquired loans and the impact of loans transferred to held-for-sale, organic loan growth of remained flat since December 31, 2025. The loan portfolio remains predominantly commercial-oriented, with commercial loans comprising 76.9 percent of total loans. Commercial and industrial and commercial real estate, non-owner occupied, represent the largest loan categories at 30.2 percent and 20.9 percent of total loans, respectively. Growth during the period was driven primarily by increases in commercial and industrial, construction, commercial real estate, non-owner occupied, commercial real estate, owner occupied, and home equity loans, partially offset by a decline in residential loans. Additional details regarding changes in the Corporation's loan portfolio are discussed within NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q, and the "LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Current wording

Excluding loans held-for-sale, total loans increased $1.7 billion from December 31, 2025. Loans acquired in the First Savings acquisition contributed $1.8 billion, partially offset by the sale of $271.1 million in mortgage loans. Excluding acquired loans and the impact of loans sold, the Corporation experienced organic loan growth of $202.9 million, or 2.9 percent, since December 31, 2025. The loan portfolio remains predominantly commercial-oriented, with commercial loans comprising 76.6 percent of total loans. Commercial and industrial and commercial real estate, non-owner occupied, represent the largest loan categories at 30.4 percent and 21.1 percent of total loans, respectively. Growth during the period was driven primarily by increases in commercial real estate, non-owner occupied, home equity, commercial and industrial, and commercial real estate, owner occupied loans. Additional details regarding changes in the Corporation's loan portfolio are discussed within NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q, and the "LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Previous wording

The Corporation's allowance for credit losses - loans ("ACL - Loans") totaled $212.5 million, or 1.39 percent of total loans, as of March 31, 2026, compared to $195.6 million, or 1.42 percent, at December 31, 2025, representing an increase of $16.9 million from December 31, 2025. The increase was primarily attributable to a $22.3 million acquisition-date allowance for expected credit losses recognized in connection with the First Savings loan portfolio. During the three months ended March 31, 2026, the Corporation recorded net charge-offs of $10.3 million and provision for credit losses - loans of $4.9 million, compared to net charge-offs of $4.9 million and provision of $4.2 million for the same period in 2025. Nonaccrual loans as of March 31, 2026 totaled $89.6 million, an increase of $17.8 million from December 31, 2025, primarily driven by the addition of $20.5 million of nonaccrual loans acquired from First Savings. The Corporation's reserve for unfunded commitments increased to $18.5 million at March 31, 2026, from $18.0 million at December 31, 2025, reflecting a $0.5 million of Day 1 allowance for credit losses recognized in connection with the First Savings acquisition related to off-balance sheet commitments. The reserve is recorded in Other liabilities. There was no provision for credit losses on unfunded commitments recognized during the three months ended March 31, 2026. Additional details of the Corporation's allowance methodology and asset quality are discussed within NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q and within the “LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Current wording

The Corporation's allowance for credit losses - loans ("ACL - Loans") totaled $241.6 million, or 1.56 percent of total loans, as of June 30, 2026, compared to $195.6 million, or 1.42 percent, at December 31, 2025, representing an increase of $46.0 million. The increase reflected a $22.3 million acquisition-date allowance for expected credit losses recognized in connection with the First Savings loan portfolio, and a provision expense recorded during the period, including $29.7 million of specific reserves established during the second quarter related to two commercial lending relationships, partially offset by net charge-offs of $3.9 million. During the three and six months ended June 30, 2026, the Corporation recorded net charge-offs of $3.9 million and $14.2 million, respectively, and provision for credit losses - loans of $33.0 million and $37.9 million, respectively. During the three and six months ended June 30, 2025, the Corporation recorded net charge-offs of $2.3 million and $7.2 million, respectively, and provision for credit losses - loans of $5.6 million and $9.8 million, respectively. Nonaccrual loans as of June 30, 2026 totaled $118.2 million, an increase of $46.4 million from December 31, 2025. The increase was primarily attributable to the two commercial lending relationships discussed above, totaling $41.8 million, being placed on nonaccrual status during the second quarter of 2026. The Corporation's reserve for unfunded commitments increased to $18.5 million at June 30, 2026, from $18.0 million at December 31, 2025, reflecting a $0.5 million Day 1 allowance for credit losses recognized in connection with the First Savings acquisition related to off-balance sheet commitments. The reserve is recorded in other liabilities. There was no provision for credit losses on unfunded commitments recognized during the three and six months ended June 30, 2026. Additional details of the Corporation's allowance methodology and asset quality are discussed within NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q and within the “LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Previous wording

Several additional asset categories increased from December 31, 2025 primarily due to the acquisition of First Savings, including goodwill of $70.8 million, cash surrender value of life insurance of $62.8 million, other intangibles of $27.9 million, premises and equipment of $25.0 million, FHLB stock of $23.6 million, and interest receivable of $3.7 million.

Current wording

Several additional asset categories increased from December 31, 2025 primarily due to the acquisition of First Savings, including goodwill of $76.2 million, cash surrender value of life insurance of $64.8 million, premises and equipment of $27.1 million, other intangibles of $25.2 million, FHLB stock of $23.6 million, and interest receivable of $8.6 million.

Previous wording

The Corporation's net tax asset, deferred and receivable increased $38.2 million from December 31, 2025, primarily driven by the $22.9 million net tax asset recorded as part of the First Savings acquisition and an increase of $17.4 million in income tax receivable.

Current wording

The Corporation's net tax asset, deferred and receivable increased $35.3 million from December 31, 2025, primarily driven by the $22.9 million net tax asset recorded as part of the First Savings acquisition and an increase of $11.3 million in income tax receivable.

Previous wording

Other assets increased $35.7 million from December 31, 2025, of which $26.5 million was attributable to the First Savings acquisition and $5.6 million related to the recognition of a right‑of‑use asset associated with the Corporation’s new Michigan headquarters.

Current wording

Other assets increased $62.2 million from December 31, 2025, primarily due to $26.5 million of assets acquired in the First Savings acquisition, $28.4 million related to investments in community redevelopment funds, and $5.6 million related to the recognition of a right‑of‑use asset associated with the Corporation’s new Michigan headquarters.

Previous wording

As of March 31, 2026, total deposits equaled $16.5 billion, an increase of $1.2 billion from December 31, 2025, or 31.1 percent on an annualized basis. The acquisition of First Savings contributed $1.7 billion in deposits, partially offset by a decline in deposits of $499.4 million from December 31, 2025. Net period activity resulted in increases from December 31, 2025 primarily in money market and savings deposits of $772.7 million, demand deposits of $239.1 million, and time deposits of $159.6 million. Total deposits less time deposits greater than $100,000, or core deposits, represented 90.6 percent of the deposit portfolio at March 31, 2026. Noninterest bearing deposits represented 22.7 percent of the deposit portfolio at March 31, 2026, compared to 14.0 percent at December 31, 2025. Due to the balance sheet growth, the loan to deposit ratio increased to 92.6 percent at period end from 90.3 percent as of December 31, 2025.

Current wording

As of June 30, 2026, total deposits equaled $16.8 billion, an increase of $1.5 billion from December 31, 2025, or 19.1 percent on an annualized basis. The acquisition of First Savings contributed $1.7 billion in deposits, partially offset by a decline in deposits of $231.6 million from December 31, 2025 driven by $289.8 million reduction of brokered deposits. Net period activity resulted in increases from December 31, 2025 primarily in demand deposits of $800.0 million, money market and savings deposits of $561.8 million, and time deposits of $201.5 million. Total deposits less time deposits greater than $100,000, or core deposits, represented 91.5 percent of the deposit portfolio at June 30, 2026. Noninterest bearing deposits represented 22.9 percent of the deposit portfolio at June 30, 2026, compared to 14.0 percent at December 31, 2025. Due to balance sheet growth, the loan to deposit ratio increased to 92.7 percent at period end from 90.3 percent as of December 31, 2025.

Previous wording

The average account balance within the deposit portfolio was $38,000 at March 31, 2026. Insured deposits totaled 71.4 percent of total deposits, with the State of Indiana's Public Deposit Insurance Fund, which insures certain public deposits, providing insurance to 13.8 percent of deposits and the Federal Deposit Insurance Corporation ("FDIC") providing insurance to the remaining 57.6 percent. Only 28.6 percent of deposits are uninsured and our available liquidity is ample to cover those when considering both on balance sheet sources of liquidity and unused capacity from the Federal Reserve Discount Window, FHLB and unsecured borrowing sources.

Current wording

The average account balance within the deposit portfolio was $39,000 at June 30, 2026. Insured deposits totaled 70.5 percent of total deposits, with the State of Indiana's Public Deposit Insurance Fund, which insures certain public deposits, providing insurance for 15.8 percent of deposits and the Federal Deposit Insurance Corporation ("FDIC") providing insurance to the remaining 54.7 percent. Uninsured deposits represented 29.5 percent of total deposits. The Corporation maintains available liquidity through on-balance-sheet sources and unused borrowing capacity from the Federal Reserve Discount Window, the FHLB and unsecured borrowing sources.

Previous wording

Total borrowings increased $645.1 million at March 31, 2026, compared to December 31, 2025. Federal funds purchased and FHLB advances increased $130.0 million and $500.6 million, respectively. The increase in borrowings was primarily attributable to the First Savings acquisition, which included the assumption of $482.7 million of FHLB advances and $28.7 million of subordinated debentures and other borrowings. Securities sold under repurchase agreements decreased $14.3 million from December 31, 2025, as customers shifted into other deposit products. Additional details of the Corporation's subordinated debentures and term loans are discussed in NOTE 9. BORROWINGS of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Current wording

Total borrowings increased $603.8 million at June 30, 2026, compared to December 31, 2025. FHLB advances and subordinated debentures and other borrowings increased $615.5 million and $28.7 million, respectively. The increase in borrowings was primarily attributable to the First Savings acquisition, which included the assumption of $482.7 million of FHLB advances and $28.7 million of subordinated debentures and other borrowings. The remaining increase in FHLB advances was primarily attributable to borrowings used to support loan growth and liquidity needs. Federal funds purchased decreased $40.0 million from December 31, 2025, primarily due to elevated deposit balances during the second quarter, which reduced the Corporation's need for short-term wholesale funding. Additional details regarding the Corporation's subordinated debentures and term loans are discussed in NOTE 9. BORROWINGS of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Previous wording

The Corporation's other liabilities increased $5.0 million as of March 31, 2026, compared to December 31, 2025, primarily due to $13.8 million of assumed liabilities and $4.0 million of employee severance costs related to the First Savings acquisition, as well as a $5.6 million lease liability for the new Michigan headquarters. These increases were partially offset by an $11.5 million decrease in salaries and incentives following annual incentive payouts and a $9.0 million decrease in unfunded commitments related to the Corporation's affordable housing investments.

Current wording

The Corporation's other liabilities increased $31.6 million as of June 30, 2026, compared to December 31, 2025, primarily due to $13.8 million of assumed liabilities related to the First Savings acquisition, as well as increases in lease liabilities of $5.6 million related to the new Michigan headquarters and liabilities associated with unfunded commitments of $9.6 million related to the Corporation's affordable housing investments.

Previous wording

Net interest income is the most significant component of our earnings, comprising 96.3 percent of total revenue for the three months ended March 31, 2026. Net interest income and net interest margin are influenced by the volume and mix of earning assets and funding sources, as well as prevailing interest rate conditions. Other factors include accretion income on purchased loans, prepayment activity and the composition and maturity of earning assets and interest-bearing liabilities. Loans typically generate more interest income than investment securities with similar maturities. Funding from customer deposits generally costs less than wholesale funding sources. Factors such as general economic activity, the Federal Reserve's monetary policy, and price volatility of competing alternative investments, can also exert significant influence on our ability to optimize the mix of assets and funding and the net interest income and net interest margin.

Current wording

Net interest income is the most significant component of the Corporation's earnings, comprising 87.8 percent of total revenue for the six months ended June 30, 2026. Net interest income and net interest margin are influenced by the volume and mix of earning assets and funding sources, as well as prevailing interest rate conditions. Other factors include accretion income on purchased loans, prepayment activity and the composition and maturity of earning assets and interest-bearing liabilities. Loans typically generate more interest income than investment securities with similar maturities. Funding from customer deposits generally costs less than wholesale funding sources. Factors such as general economic activity, the Federal Reserve's monetary policy, and price volatility of competing alternative investments can also exert significant influence on the Corporation's ability to optimize the mix of assets and funding and the net interest income and net interest margin.

Previous wording

Net interest income is the excess of interest received from earning assets over interest paid on interest-bearing liabilities. For analytical purposes, net interest income is also presented on an FTE basis in the tables that follow to reflect what our tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. The federal statutory rate of 21 percent was used for 2026 and 2025. Management believes presenting net interest income and net interest margin on an FTE basis is a standard industry practice and provides meaningful comparability to peers by normalizing the impact of tax‑exempt income. For reconciliations of GAAP net interest margin to the corresponding non-GAAP measures provided below, refer to the "NON-GAAP FINANCIAL MEASURES" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Current wording

Net interest income is the excess of interest received from earning assets over interest paid on interest-bearing liabilities. For analytical purposes, net interest income is also presented on an FTE basis in the tables that follow to reflect what the Corporation's tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. The federal statutory rate of 21 percent was used for 2026 and 2025. For reconciliations of GAAP net interest margin to the corresponding non-GAAP measures provided below, refer to the "NON-GAAP FINANCIAL MEASURES" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Previous wording

Total average earning assets increased $1.9 billion, or 11.1 percent, to $18.8 billion for the three months ended March 31, 2026, compared to the same period in 2025. This increase was primarily driven by a $2.1 billion, or 15.9 percent, increase in average total loans, reflecting the impact of loans acquired from First Savings on February 1, 2026, which totaled approximately $1.8 billion at acquisition. Average commercial loans, HELOC and installment loans and real estate mortgage loans increased $1.5 billion, $295.0 million and $177.7 million, respectively. These increases were partially offset by a $108.7 million decline in average investment securities and an $81.9 million decline in interest-bearing deposits.

Current wording

Total average earning assets increased $2.4 billion, or 14.1 percent, to $19.6 billion for the three months ended June 30, 2026, compared to the same period in 2025. This increase was primarily driven by a $2.6 billion, or 19.6 percent, increase in average total loans, reflecting the impact of loans acquired from First Savings on February 1, 2026, which totaled approximately $1.8 billion at acquisition. Average commercial loans and HELOC and installment loans increased $1.8 billion and $446.6 million, respectively. These increases were partially offset by a $166.5 million decline in average investment securities.

Previous wording

Total average deposits increased $1.7 billion year-over-year. Total average interest-bearing deposits increased $1.4 billion, driven primarily by higher money market and time deposit balances, reflecting the impact of $1.5 billion of interest-bearing deposits acquired from First Savings as well as changes in customer deposit mix following the acquisition. Average noninterest‑bearing deposits increased $257.1 million, reflecting approximately $190.8 million of noninterest‑bearing deposits acquired from First Savings on February 1, 2026, as well as changes to the Corporation’s deposit product offerings, under which certain accounts that previously earned interest were intentionally transitioned to noninterest‑bearing products. Average borrowings increased $145.3 million, primarily driven by higher FHLB advances associated with the First Savings acquisition, partially offset by lower repurchase agreement balances.

Current wording

Total average deposits increased $1.8 billion year-over-year primarily driven by the impact of $1.7 billion of interest-bearing deposits acquired from First Savings. Total average interest-bearing deposits increased $932.8 million, driven primarily by higher money market deposit balances, partially offset by lower interest-bearing transaction deposit balances. The decrease in interest-bearing transaction deposit balances reflected changes to the Corporation’s deposit product offerings, under which certain accounts that previously earned interest were intentionally transitioned to noninterest-bearing products. Average noninterest‑bearing deposits increased $901.8 million, consistent with those product offering changes. Average borrowings increased $268.3 million, primarily driven by higher FHLB advances, including advances assumed in connection with the First Savings acquisition, partially offset by lower repurchase agreement balances.

Previous wording

Interest income on an FTE basis increased $26.3 million compared to the same period in the prior year, driven primarily by a $1.9 billion increase in average earning assets, which reflected the contribution of loans acquired from First Savings and growth in average loan balances across commercial, real estate mortgage, and HELOC and installment portfolios. Average total loans increased $2.1 billion, or 15.9 percent, year‑over‑year, more than offsetting lower average balances in cash and investment securities. Additionally, the Corporation recorded a $1.2 million interest recovery during the first quarter of 2026 related to the resolution of a previously nonaccrual multifamily commercial real estate loan, which favorably impacted interest income for the period.

Current wording

Interest income on an FTE basis increased $31.3 million compared to the same period in the prior year, driven primarily by a $2.4 billion increase in average earning assets, which reflected the contribution of loans acquired from First Savings and growth in average loan balances across commercial and HELOC and installment portfolios. Average total loans increased $2.6 billion, or 19.6 percent, year‑over‑year, more than offsetting lower average balances in cash and investment securities.

Previous wording

Net interest income on an FTE basis increased $21.3 million, or 15.6 percent, to $157.7 million for the three months ended March 31, 2026, compared to $136.4 million for the three months ended March 31, 2025. Net interest margin on an FTE basis increased 13 basis points to 3.35 percent from 3.22 percent in the prior year quarter. This improvement was driven primarily by a 15 basis point decline in the cost of interest-bearing liabilities to 2.59 percent from 2.74 percent, reflecting lower average deposit costs and favorable changes in funding mix, while yields on average earning assets remained relatively stable at 5.41 percent compared to 5.39 percent in the prior year period. The Corporation recognized $2.8 million of fair value accretion income from purchased loans during the quarter, which contributed approximately six basis points to net interest margin during the three months ended March 31, 2026. This compares to $1.1 million, or three basis points, in the same period of 2025.

Current wording

Net interest income on an FTE basis increased $47.4 million, or 17.2 percent, to $323.0 million for the six months ended June 30, 2026, compared to $275.6 million for the six months ended June 30, 2025. Net interest margin on an FTE basis increased 13 basis points to 3.36 percent from 3.23 percent in the prior year. This improvement was driven primarily by a 9 basis point decline in the cost of interest-bearing liabilities to 2.69 percent from 2.78 percent, reflecting lower average deposit costs and favorable changes in funding mix, while yields on average earning assets remained relatively stable at 5.43 percent compared to 5.45 percent in the prior year period. The Corporation recognized $6.5 million of fair value accretion income from purchased loans during the six months, which contributed approximately seven basis points to net interest margin during the six months ended June 30, 2026. This compares to $2.1 million, or two basis points, in the same period of 2025.

Previous wording

Interest expense on deposits increased $3.5 million compared to the prior year period, reflecting a $1.4 billion increase in average interest‑bearing deposit balances, partially offset by lower deposit pricing across most deposit categories. The total cost of interest‑bearing liabilities declined 15 basis points to 2.59 percent for the three months ended March 31, 2026, from 2.74 percent for the three months ended March 31, 2025. Lower average rates on core deposit products, including interest‑bearing demand, money market, and savings deposits, reduced interest expense and favorably impacted margin, while higher average borrowings and modestly higher wholesale funding costs partially offset these benefits. Overall, the reduction in funding costs more than offset relatively stable asset yields and resulted in a 17 basis point improvement in the FTE net interest spread to 2.82 percent from 2.65 percent in the prior year quarter.

Current wording

Interest expense on deposits increased $5.6 million compared to the prior year period, reflecting a $932.8 million increase in average interest‑bearing deposit balances, partially offset by lower deposit pricing across all deposit categories. The total cost of interest‑bearing liabilities declined 9 basis points to 2.69 percent for the six months ended June 30, 2026, from 2.78 percent for the six months ended June 30, 2025. Lower average rates on core deposit products reduced interest expense and favorably impacted margin, while higher average borrowings partially offset these benefits, despite lower average borrowing costs. Overall, the reduction in funding costs more than offset relatively stable asset yields and resulted in a 7 basis point improvement in the FTE net interest spread to 2.74 percent from 2.67 percent in the prior year period.

Previous wording

The following table presents the Corporation’s average balance sheet, interest income/interest expense, and the average rate as a percent of average earning assets/liabilities for the three months ended March 31, 2026 and 2025.

Current wording

The following tables present the Corporation’s average balance sheet, interest income/interest expense, and the average rate as a percent of average earning assets/liabilities for the three and six months ended June 30, 2026 and 2025.

Previous wording

Noninterest income totaled $5.8 million for the three months ended March 31, 2026, a decrease of $24.2 million, or 80.6 percent, compared to the same period in 2025. The decrease was driven primarily by a $29.8 million net loss recognized on mortgage loans reclassified to held for sale during the quarter. This decline was partially offset by higher customer‑related fees, which increased $4.7 million to $31.7 million for the three months ended March 31, 2026 compared to the same period in 2025. The increase in customer‑related fees was driven primarily by higher fiduciary and wealth management fees, increased service charges on deposit accounts, higher card payment fees, and higher net gains and fees on sales of loans.

Current wording

For the six months ended June 30, 2026, noninterest income totaled $43.0 million, representing a decrease of $18.4 million, or 29.9 percent, compared to the same period in 2025. The decrease was driven primarily by a $29.8 million net loss recognized on mortgage loans that had been moved to held-for-sale and marked to fair value in the first quarter, which were sold during the second quarter. This decline was partially offset by higher customer‑related fees, which increased $9.5 million to $66.0 million for the six months ended June 30, 2026 compared to the same period in 2025. Customer-related fee growth was primarily attributable to higher net gains and fees on sales of loans of $3.4 million, higher fiduciary and wealth management fees of $1.9 million, increased service charges on deposit accounts of $1.8 million, and higher card payment fees of $1.3 million.

Previous wording

Noninterest expense totaled $125.1 million for the three months ended March 31, 2026, a $32.2 million, or 34.7 percent, increase from the first quarter of 2025. Integration and transaction-related expenses totaling $17.0 million were incurred during the quarter, including $5.2 million attributed to salaries and benefits, $3.0 million of acquisition-related professional and advisory services, and $8.4 million of contract termination and similar charges. Salaries and employee benefits expense, excluding integration and transaction-related expenses, increased by $9.3 million, primarily due to higher salaries and incentive costs during the three months ended March 31, 2026, compared to the same period in 2025. Other expense increased $1.5 million primarily due to a one-time charge for the write-down of a held-for-sale building. Additionally, outside data processing fees and net occupancy increased $1.3 million and $1.1 million, respectively, during the three months ended March 31, 2026, compared to the same period in 2025.

Current wording

For the six months ended June 30, 2026, noninterest expense totaled $240.5 million, representing an increase of $54.0 million, or 29.0 percent, compared to the same period in 2025. The increase was driven primarily by higher salaries and employee benefits, which increased $25.7 million to $135.2 million for the six months ended June 30, 2026. Integration and transaction-related expenses totaling $20.8 million were incurred during the six months ended June 30, 2026, including $10.7 million of contract termination and similar charges, $5.8 million related to salaries and benefits, $3.0 million of acquisition-related professional and advisory services and $1.3 million in miscellaneous costs. Salaries and employee benefits expense, excluding integration and transaction-related expenses, increased by $19.9 million, primarily due to higher salaries and incentive costs during the six months ended June 30, 2026, compared to the same period in 2025. Professional and other outside services, excluding integration and transaction-related expenses, increased $9.6 million during the six months ended June 30, 2026, compared to the same period in 2025. Additionally, equipment, net occupancy and outside data processing fees increased $2.5 million, $2.5 million and $2.2 million, respectively, during the six months ended June 30, 2026, compared to the same period in 2025. Other expense increased $3.1 million primarily due to the write-down of a held-for-sale building, increased travel costs and other miscellaneous expenses.

Previous wording

Income tax benefit for the three months ended March 31, 2026 was $1.1 million on pre-tax income of $27.1 million. For the same period in 2025, income tax expense was $7.9 million on pre-tax income of $63.2 million. The effective income tax rates for the first quarter of 2026 and 2025 were (3.9)% and 12.5 percent, respectively.

Current wording

Income tax expense for the three months ended June 30, 2026 was $3.8 million on pre-tax income of $47.8 million. For the same period in 2025, income tax expense was $8.3 million on pre-tax income of $65.1 million. The effective income tax rates for the second quarter of 2026 and 2025 were 7.9 percent and 12.7 percent, respectively.

Previous wording

The lower effective income tax rate for the three months ended March 31, 2026 when compared to the same period in 2025 was primarily due to a higher proportion of non-taxable income relative to total income before income taxes. The lower income before income taxes during the first quarter of 2026 was driven by integration and transaction‑related expenses resulting from the First Savings acquisition, and the net loss on mortgage loans reclassified to held for sale.

Current wording

The lower effective income tax rates for the three and six months ended June 30, 2026, when compared to the same periods in 2025, were primarily due to a higher proportion of non-taxable income relative to total income before income taxes and lower income before income taxes in 2026. Lower income before income taxes during the three months ended June 30, 2026 was driven by integration and transaction‑related expenses resulting from the First Savings acquisition and the net loss on mortgage loans reclassified to held for sale. Lower income before income taxes during the six months ended June 30, 2026 was driven by the provision for credit losses of $33.0 million.

Previous wording

As part of the Level One acquisition, the Corporation issued 10,000 shares of newly created 7.5 percent non-cumulative perpetual preferred stock, with a liquidation preference of $2,500 per share, in exchange for the outstanding Level One Series B preferred stock, and as part of that exchange, each outstanding Level One depository share representing a 1/100th interest in a share of the Level One preferred stock was converted into a depository share of the Corporation representing a 1/100th interest in a share of its newly issued preferred stock. The Corporation had $25.0 million of outstanding preferred stock at March 31, 2026 and December 31, 2025. During the three months ended March 31, 2026 and 2025, the Corporation declared and paid dividends of $46.88 per share (equivalent to $0.4688 per depository share) equal to $0.5 million. The Series A preferred stock qualifies as tier 1 capital for purposes of the regulatory capital calculations.

Current wording

As part of the Level One acquisition, the Corporation issued 10,000 shares of newly created 7.5 percent non-cumulative perpetual preferred stock, with a liquidation preference of $2,500 per share, in exchange for the outstanding Level One Series B preferred stock, and as part of that exchange, each outstanding Level One depository share representing a 1/100th interest in a share of the Level One preferred stock was converted into a depository share of the Corporation representing a 1/100th interest in a share of its newly issued preferred stock. The Corporation had $25.0 million of outstanding preferred stock at June 30, 2026 and December 31, 2025. During the three and six months ended June 30, 2026 and 2025, the Corporation declared and paid dividends of $46.88 per share (equivalent to $0.4688 per depository share) and $93.76 per share, respectively, equal to $0.5 million and $0.9 million, respectively. The Series A preferred stock qualifies as tier 1 capital for purposes of the regulatory capital calculations.

Previous wording

On March 18, 2025, the Board of Directors of the Corporation approved a stock repurchase program of up to 2,927,000 shares of the Corporation's outstanding common stock; provided, however, that the total aggregate investment in shares repurchased under the program may not exceed $100.0 million. On a share basis, the amount of common stock subject to the repurchase program represented approximately 5 percent of the Corporation's outstanding shares at the time the program became effective. During the three months ended March 31, 2026, the Corporation repurchased 0.6 million shares of its common stock under the program, for total consideration of $24.9 million. The average purchase price was $38.90 per share. As of March 31, 2026, approximately 1.1 million shares remained available for repurchase under the program, with an aggregate remaining authorization of $28.2 million.

Current wording

On March 18, 2025, the Board of Directors of the Corporation approved a stock repurchase program of up to 2,927,000 shares of the Corporation's outstanding common stock; provided, however, that the total aggregate investment in shares repurchased under the program may not exceed $100.0 million. On a share basis, the amount of common stock subject to the repurchase program represented approximately 5 percent of the Corporation's outstanding shares at the time the program became effective. During the three and six months ended June 30, 2026, the Corporation repurchased 0.3 million and 1.0 million shares of its common stock, respectively, under the program, for total consideration of $13.4 million and $38.3 million, respectively. The average purchase price was $39.79 and $39.21 per share, respectively. During the three and six months ended June 30, 2025, the Corporation repurchased 0.6 million and 0.8 million shares of its common stock, respectively, under the program, for total consideration of $22.1 million and $30.0 million, respectively. The average purchase prices were $37.93 and $38.62 per share, respectively. The stock repurchase program approved in 2025 was discontinued as of June 24, 2026.

Previous wording

On January 27, 2021, the Board of Directors of the Corporation approved a stock repurchase program of up to 3,333,000 shares of the Corporation's outstanding common stock; provided, however, that the total aggregate investment in shares repurchased under the program may not exceed $100.0 million. On a share basis, the amount of common stock subject to the repurchase program represented approximately 6 percent of the Corporation's outstanding shares at the time the program became effective. The Corporation did not repurchase any shares of its common stock pursuant to the repurchase program during the three months ended March 31, 2025. The stock repurchase program approved in 2021 was discontinued as of March 18, 2025.

Current wording

On June 24, 2026, the Board of Directors of the Corporation approved a stock repurchase program of up to 3,125,000 shares of the Corporation's outstanding common stock; provided, however, that the total aggregate investment in shares repurchased under the program may not exceed $100.0 million. On a share basis, the amount of common stock subject to the repurchase program represented approximately 5 percent of the Corporation's outstanding shares at the time the program became effective. No shares had been repurchased under the 2026 stock repurchase program as of June 30, 2026.

Previous wording

In August 2022, the Inflation Reduction Act of 2022 (the "IRA") was enacted. Among other things, the IRA imposes a new 1 percent excise tax on the fair market value of stock repurchased after December 31, 2022 by publicly traded U.S. corporations (like the Corporation). With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements. During the three months ended March 31, 2026 and 2025, the Corporation recorded excise tax of $0.2 million and $0.1 million, respectively, related to its share repurchases during the period, which is reflected in the Statement of Stockholders' Equity as a component of additional paid-in capital.

Current wording

In August 2022, the Inflation Reduction Act of 2022 (the "IRA") was enacted. Among other things, the IRA imposes a 1 percent excise tax on the fair market value of stock repurchased after December 31, 2022, by publicly traded U.S. corporations, including the Corporation. With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements. During the three and six months ended June 30, 2026, the Corporation recorded excise tax of $0.1 million and $0.3 million, respectively. During the three and six months ended June 30, 2025, the Corporation recorded excise tax of $0.2 million and $0.3 million, respectively, related to its share repurchases during the period, which is reflected in the Statement of Stockholders' Equity as a component of additional paid-in capital.

Previous wording

Under the fully phased-in Basel III capital rules, the Corporation and the Bank maintain the minimum capital and leverage ratios, including a 2.5 percent capital conservation buffer, as illustrated in the table below. In order to avoid limitations on capital distributions, including dividends, the Corporation must maintain capital levels above these minimum requirements. The Corporation and Bank have elected to opt-out of including accumulated other comprehensive income in regulatory capital. As of March 31, 2026, the Bank met all capital adequacy requirements to be considered well capitalized under the fully phased-in Basel III capital rules. There is no threshold for well capitalized status for bank holding companies.

Current wording

Under the fully phased-in Basel III capital rules, the Corporation and the Bank maintain the minimum capital and leverage ratios, including a 2.5 percent capital conservation buffer, as illustrated in the tables below. In order to avoid limitations on capital distributions, including dividends, the Corporation must maintain capital levels above these minimum requirements. The Corporation and Bank have elected to opt-out of including accumulated other comprehensive income in regulatory capital. As of June 30, 2026, the Bank met all capital adequacy requirements to be considered well capitalized under the fully phased-in Basel III capital rules. There is no threshold for well capitalized status for bank holding companies.

Previous wording

The Corporation's tangible common equity measures are capital adequacy metrics that are meaningful to the Corporation, as well as analysts and investors, in assessing the Corporation's use of equity and in facilitating period-to-period and company-to-company comparisons. Tangible common equity to tangible assets ratio was 9.00 percent at March 31, 2026, and 9.38 percent at December 31, 2025.

Current wording

The Corporation's tangible common equity measures are capital adequacy metrics that are meaningful to the Corporation, as well as analysts and investors, in assessing the Corporation's use of equity and in facilitating period-to-period and company-to-company comparisons. Tangible common equity to tangible assets ratio was 8.99 percent at June 30, 2026, and 9.38 percent at December 31, 2025.

Previous wording

Non-GAAP financial measures such as tangible common equity to tangible assets, tangible earnings per share, return on average tangible assets and return on average tangible equity are important measures of the strength of the Corporation's capital and ability to generate earnings on tangible common equity invested by our shareholders. These non-GAAP measures provide useful supplemental information and may assist investors in analyzing the Corporation’s financial position without regard to the effects of intangible assets and preferred stock, but retain the effect of accumulated other comprehensive losses in shareholder's equity. Disclosure of these measures also allows analysts and banking regulators to assess our capital adequacy on these same bases.

Current wording

Non-GAAP financial measures such as tangible common equity to tangible assets, tangible earnings per share, return on average tangible assets and return on average tangible equity are important measures of the strength of the Corporation's capital and ability to generate earnings on tangible common equity invested by our shareholders. These non-GAAP measures provide useful supplemental information and may assist investors in analyzing the Corporation’s financial position without regard to the effects of intangible assets and preferred stock, but retain the effect of accumulated other comprehensive losses in stockholders' equity. Disclosure of these measures also allows analysts and banking regulators to assess our capital adequacy on these same bases.

Previous wording

The tables within the “NON-GAAP FINANCIAL MEASURES” section of this Management’s Discussion and Analysis of Financial Condition and

Current wording

The tables within the “NON-GAAP FINANCIAL MEASURES” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations reconcile traditional GAAP measures to these non-GAAP financial measures at June 30, 2026 and December 31, 2025.

Previous wording

At March 31, 2026, nonaccrual loans totaled $89.6 million, an increase of $17.8 million from December 31, 2025, primarily driven by the addition of $20.5 million of nonaccrual loans acquired from First Savings. The largest increases were in commercial real estate, non-owner occupied, commercial real estate, owner occupied and residential loan classes which increased $11.4 million, $7.9 million, and $7.9 million, respectively. The increase was offset by a decrease in the construction loan class of $12.6 million.

Current wording

At June 30, 2026, nonaccrual loans totaled $118.2 million, an increase of $46.4 million from December 31, 2025, primarily attributable to the placement of two commercial lending relationships, totaling $41.8 million, on nonaccrual status during the second quarter of 2026. The increase was also driven by increases in the commercial real estate, non-owner occupied, commercial real estate, owner occupied, and residential loan classes of $8.0 million, $4.7 million, and $3.4 million, respectively. The increase was partially offset by a decrease in the construction loan class of $12.7 million.

Previous wording

At March 31, 2026, loans 90-days or more delinquent and still accruing totaled $4.1 million, an increase of $2.0 million from December 31, 2025.

Current wording

At June 30, 2026, loans 90-days or more delinquent and still accruing totaled $9.7 million, an increase of $7.7 million from December 31, 2025, as the commercial real estate, non-owner occupied, and commercial and industrial loan classes increased $4.7 million and $3.1 million, respectively.