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 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.

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 Global Select Market 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

Through the Bank, the Corporation offers a broad range of commercial and consumer banking services to meet the diverse needs of our customers. Our commercial banking team offers a full spectrum of debt capital, treasury management services and depository products. The consumer banking group offers a variety of consumer deposit and lending products. The mortgage banking team offers consumer mortgage solutions to assist with the purchase, refinance, construction or renovation of residential properties. Private Wealth Advisors offers personal wealth management services with expertise in investment management, private banking, fiduciary estate and financial planning.

Current wording

Through the Bank, the Corporation offers a broad range of commercial and consumer banking services to meet the diverse needs of its customers. Our commercial banking team offers a full spectrum of debt capital, treasury management services, and depository products. The consumer banking group offers a variety of consumer deposit and lending products. The mortgage banking team offers consumer mortgage solutions to assist with the purchase, refinance, construction or renovation of residential properties. Private Wealth Advisors offers personal wealth management services with expertise in investment management, private banking, fiduciary services, estate planning and financial planning.

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 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

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 Savings, the Corporation sold substantially all of the acquired investment securities portfolio. The sale was executed as part of the Corporation’s balance sheet repositioning strategy, with the resulting liquidity used to pay down wholesale funding following the acquisition.

Previous 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.

Current wording

There have been no significant changes during the nine months ended September 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

Business combinations are accounted for under the acquisition method of accounting. Under this method, the acquired assets and liabilities assumed are recorded at their estimated fair values as of the acquisition date, with the excess of the purchase price over the estimated fair value of the net assets acquired recorded as goodwill. The Corporation uses significant estimates and assumptions to value such items, including projected cash flows, repayment rates, default rates and losses assuming default, discount rates and realizable collateral values.

Current wording

Business combinations are accounted for under the acquisition method of accounting. Under this method, the acquired assets and liabilities assumed are recorded at their estimated fair values as of the acquisition date, with the excess of the purchase price over the estimated fair value of the net assets acquired recorded as goodwill. The Corporation uses significant estimates and assumptions to value such items, including projected cash flows, prepayment rates, default rates and losses assuming default, discount rates and realizable collateral values.

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 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.

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 loans' amortized cost basis. The establishment of the ACL - Loans at acquisition did not result in a provision for credit losses or an 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

The acquisition date valuations, as well as any measurement period adjustments recognized subsequent to the acquisition date, determine the amount of goodwill recorded. Measurement period adjustments are recorded if new information is obtained about facts and circumstances that existed as of the acquisition date and are reflected as adjustments to goodwill. Because these adjustments affect the fair values of acquired assets and liabilities, including loans and identifiable intangible assets, changes in these estimates could materially affect the amount of goodwill recorded.

Current wording

The acquisition date valuations, as well as any measurement period adjustments recognized subsequent to the acquisition date, determine the amount of goodwill recorded. Measurement period adjustments are recorded if new information is obtained about facts and circumstances that existed as of the acquisition date and are reflected as adjustments to goodwill. Because these adjustments affect the fair values of acquired assets and liabilities, including loans and identifiable intangible assets, changes in these estimates could materially affect the amount of goodwill recorded. There were no measurement period adjustments recognized during the three and nine months ended September 30, 2026.

Previous wording

The table below includes certain financial data of the Corporation for the previous five quarters:

Current wording

The table below includes certain financial data of the Corporation for the five most recent quarters:

Previous 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.

Current wording

Results for the three months ended September 30, 2026 reflect a full quarter of First Savings operations, while results for the nine months ended September 30, 2026 reflect the operations of First Savings beginning on the February 1, 2026 acquisition date. 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 of First Savings are provided in NOTE 2. ACQUISITIONS of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Previous 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.

Current wording

The Corporation reported third quarter 2026 net income available to common stockholders and diluted earnings per common share of $67.8 million and $1.09 per diluted share, respectively, compared to $56.3 million and $0.98 per diluted share, respectively, during the third quarter of 2025. The Corporation reported net income available to common stockholders and diluted earnings per common share of $139.0 million and $2.24 per diluted share, respectively, for the nine months ended September 30, 2026, compared to $167.5 million and $2.90 per diluted share, respectively, for the nine months ended September 30, 2025.

Previous 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.

Current wording

When adjusting for certain non-recurring items, adjusted net income available to common stockholders was $68.5 million and adjusted diluted earnings per common share totaled $1.10 for the third quarter of 2026, compared to $57.0 million and $0.99, respectively, in the third quarter of 2025. Adjusted net income available to common stockholders and adjusted diluted earnings per common share for the nine months ended September 30, 2026, totaled $178.0 million and $2.87, respectively, compared to $168.2 million and $2.91, respectively, for the same period in 2025. These adjusted net income and earnings per share amounts are non-GAAP measures. For reconciliations of GAAP financial measures to the corresponding non-GAAP financial 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 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.

Current wording

As of September 30, 2026, total assets were $21.1 billion, an increase of $2.0 billion, or 10.7 percent, from December 31, 2025. The Corporation acquired First Savings on February 1, 2026, and acquired $2.4 billion of assets. 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 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.

Current wording

Cash and due from banks and interest-bearing deposits increased $68.6 million from December 31, 2025. Total investment securities decreased by $254.2 million from December 31, 2025, primarily due to $139.9 million of principal paydowns, maturities, and other redemptions of available-for-sale and held-to-maturity securities, a $123.8 million decrease in the fair value of the available-for-sale portfolio primarily driven by changes in market interest rates, and $7.3 million of amortization of purchase premiums. The decreases were partially offset by $15.7 million in purchases. Investment securities represented 14.8 percent of total assets at September 30, 2026, compared to 17.8 percent at December 31, 2025. Additional details of the Corporation's investment securities portfolio are discussed in 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 $1.7 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.

Current wording

Excluding loans held for sale, total loans increased $1.8 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 in June 2026. Excluding acquired loans and the impact of loans sold, the Corporation experienced organic loan growth of $273.2 million, or 2.6 percent on an annualized basis, since December 31, 2025. The loan portfolio remains predominantly commercial-oriented, with commercial loans comprising 76.2 percent of total loans. Commercial and industrial and commercial real estate, non-owner occupied, represent the largest loan categories at 29.3 percent and 20.6 percent of total loans, respectively. Growth during the period was driven primarily by increases in commercial real estate, non-owner occupied, home equity, commercial real estate, owner occupied, construction and commercial and industrial loans. Loans held for sale at September 30, 2026 and December 31, 2025 were $87.3 million and $20.1 million, respectively. The increase in loans held for sale was primarily attributable to the First Savings acquisition. Prior to the acquisition, loans held for sale primarily consisted of residential mortgage loans originated for sale in the secondary market. The acquisition added SBA and first-lien HELOC loans held for sale. 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 $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.

Current wording

The Corporation's allowance for credit losses - loans ("ACL - Loans") totaled $215.5 million, or 1.38 percent of total loans, as of September 30, 2026, compared to $195.6 million, or 1.42 percent, at December 31, 2025, representing an increase of $19.9 million. The increase was attributable to provision for credit losses - loans of $41.2 million and a $22.3 million acquisition-date allowance for expected credit losses recognized for the First Savings loan portfolio, partially offset by net charge-offs of $43.6 million. During the three and nine months ended September 30, 2026, the Corporation recorded net charge-offs of $29.4 million and $43.6 million, respectively, and provision for credit losses - loans of $3.3 million and $41.2 million, respectively. During the three and nine months ended September 30, 2025, the Corporation recorded net charge-offs of $5.1 million and $12.4 million, respectively, and provision for credit losses - loans of $4.3 million and $14.1 million, respectively. The increases in provision for credit losses - loans and net charge-offs during the nine months ended September 30, 2026 were primarily driven by two commercial lending relationships that were moved to nonaccrual status and for which specific reserves were established at the end of the second quarter before being charged off in the third quarter of 2026.

Previous 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.

Current wording

Several additional asset categories increased from December 31, 2025, primarily due to the acquisition of First Savings, including increases of $76.2 million in goodwill, $66.5 million in the cash surrender value of life insurance, $24.0 million in premises and equipment, $22.5 million in other intangibles, $23.5 million in FHLB stock, and $5.9 million in interest receivable.

Previous 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.

Current wording

The Corporation's tax asset, deferred and receivable, increased $57.6 million from December 31, 2025, primarily driven by a $25.5 million increase in the deferred tax asset associated with the unrealized loss on available for sale securities, a $22.9 million tax asset recorded as part of the First Savings acquisition and an increase of $15.3 million in income tax receivable.

Previous 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.

Current wording

Other assets increased $83.4 million from December 31, 2025, primarily due to $26.5 million of assets acquired in the First Savings acquisition, $23.2 million related to investments in community redevelopment funds, $28.0 million related to an increase in derivative instruments, and $5.6 million related to the recognition of a right‑of‑use asset associated with the Corporation’s new Michigan headquarters. The increase in derivative instruments reflects new interest rate swaps executed with commercial banking customers and favorable fair value adjustments resulting from changes in market interest rates.

Previous 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.

Current wording

As of September 30, 2026, total deposits equaled $16.9 billion, an increase of $1.6 billion from December 31, 2025, or 14.2 percent on an annualized basis. The acquisition of First Savings contributed $1.7 billion in deposits, partially offset by a $56.1 million decline in deposits, excluding acquired deposits, from December 31, 2025. The increase in total deposits from December 31, 2025 was primarily attributable to increases of $751.2 million in demand deposits, $679.4 million in money market and savings deposits, and $317.3 million in time deposits. Total deposits less time deposits greater than $100,000, or core deposits, represented 91.0 percent of the deposit portfolio at September 30, 2026. Noninterest-bearing deposits represented 22.2 percent of the deposit portfolio at September 30, 2026, compared to 14.0 percent at December 31, 2025. The loan to deposit ratio increased to 92.2 percent at period end from 90.2 percent as of December 31, 2025.

Previous 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.

Current wording

The average account balance within the deposit portfolio was $40,000 at September 30, 2026. Insured deposits totaled 68.3 percent of total deposits, with the State of Indiana's Public Deposit Insurance Fund, which insures certain public deposits, providing insurance for 14.4 percent of deposits and the Federal Deposit Insurance Corporation ("FDIC") providing insurance for the remaining 53.9 percent. Uninsured deposits represented 31.7 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 $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.

Current wording

Total borrowings increased $188.2 million at September 30, 2026, compared to December 31, 2025. FHLB advances and subordinated notes, debentures and other borrowings increased $105.4 million and $126.9 million, respectively. The increase in subordinated notes, debentures and other borrowings was primarily attributable to the issuance of $100.0 million of subordinated debt during the third quarter of 2026 and the assumption of $28.7 million of subordinated notes in the First Savings acquisition. The increase in FHLB advances was primarily attributable to the assumption of $482.7 million of FHLB advances in the First Savings acquisition, partially offset by repayments and maturities of advances. Federal funds purchased decreased $40.0 million from December 31, 2025, primarily due to elevated deposit balances, which reduced the Corporation's need for short-term wholesale funding. Additional details regarding the Corporation's subordinated notes, debentures and other borrowings 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 $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.

Current wording

The Corporation's other liabilities increased $40.8 million as of September 30, 2026, compared to December 31, 2025, primarily due to a $28.2 million increase in derivative instruments as a result of new interest rate swaps and changes in market interest rates, $13.8 million of liabilities assumed in the First Savings acquisition, and a $5.6 million increase in lease liabilities related to the new Michigan headquarters. Partially offsetting these increases was a $6.3 million decrease in unfunded affordable housing investment commitments.

Previous wording

Additional paid-in capital increased $208.2 million from December 31, 2025, primarily due to the issuance of $243.2 million of common stock as equity consideration in connection with the First Savings acquisition. The increase was partially offset by $38.3 million of share repurchases under the Corporation's Stock Repurchase Program and other capital activity.

Current wording

Additional paid-in capital increased $197.1 million from December 31, 2025, primarily due to the issuance of $243.2 million of common stock as equity consideration in connection with the First Savings acquisition. The increase was partially offset by $50.3 million of share repurchases under the Corporation's Stock Repurchase Program and other capital activity.

Previous wording

The Corporation continued to maintain all regulatory capital ratios in excess of the regulatory definition of “well-capitalized.” Details of the Stock Repurchase Program and regulatory capital ratios are discussed within the “CAPITAL” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Current wording

The Corporation continued to maintain all regulatory capital ratios in excess of the regulatory requirements for “well-capitalized” institutions. Details of the Stock Repurchase Program and regulatory capital ratios are discussed in the “CAPITAL” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Previous wording

The Corporation's accounting and reporting policies conform to GAAP and general practices within the banking industry. As a supplement to GAAP, the Corporation provides non-GAAP performance measures, which management believes are useful because they assist investors in assessing the Corporation's performance. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure can be found in the following tables.

Current wording

The Corporation's accounting and reporting policies conform to GAAP and general practices within the banking industry. As a supplement to GAAP, the Corporation provides non-GAAP performance measures, which management believes are useful because they assist investors in assessing the Corporation's performance. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. Where non-GAAP financial measures are used, the comparable GAAP financial measure and the reconciliation to the comparable GAAP financial measure can be found in the following tables.

Previous wording

Adjusted net income available to common stockholders and adjusted diluted earnings per common share are meaningful non-GAAP financial measures for management, as they provide a meaningful foundation for period-to-period and company-to-company comparisons, which management believes will aid both investors and analysts in analyzing our financial measures and predicting future performance.

Current wording

Adjusted net income available to common stockholders and adjusted diluted earnings per common share are meaningful non-GAAP financial measures for management, as they provide a foundation for period-to-period and company-to-company comparisons, which management believes will aid both investors and analysts in analyzing our financial measures and evaluating future performance.

Previous wording

Net interest income and net interest margin presented on a fully taxable equivalent ("FTE") basis, reflecting the income tax savings when comparing tax-exempt and taxable assets using the federal statutory rate of 21 percent, are non-GAAP financial measures used by management to assess what our tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on an FTE basis and that it provides useful information for management and investors for peer comparison purposes. Non-GAAP financial measures such as tangible common stockholders' equity, tangible assets, tangible common stockholders' equity to tangible assets, tangible book value per common share, tangible net income available to common stockholders, diluted tangible net income per common share, return on average tangible common stockholders' equity and return on average tangible assets 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 do 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.

Current wording

Net interest income, net interest spread, and net interest margin presented on a fully taxable equivalent ("FTE") basis, using the 21 percent federal statutory tax rate, are non-GAAP financial measures used by management to assess the comparability of yields on taxable and tax-exempt assets. Management believes that it is standard practice in the banking industry to present net interest income, net interest spread, and net interest margin on an FTE basis and that it provides useful information for management and investors for peer comparison purposes. Non-GAAP financial measures such as tangible common stockholders' equity, tangible assets, tangible common stockholders' equity to tangible assets, tangible book value per common share, tangible net income available to common stockholders, diluted tangible net income per common share, return on average tangible common stockholders' equity and return on average tangible assets 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 do retain the effect of accumulated other comprehensive losses in stockholders' equity. Disclosure of these measures also allows analysts and banking regulators to assess the Corporation's capital adequacy on these same bases.

Previous wording

Return on average tangible common stockholders' equity is tangible net income (annualized) expressed as a percentage of average tangible common stockholders' equity. Return on average tangible assets is tangible net income (annualized) expressed as a percentage of average tangible assets.

Current wording

Return on average tangible common stockholders' equity is tangible net income available to common stockholders (annualized) expressed as a percentage of average tangible common stockholders' equity. Return on average tangible assets is tangible net income (annualized) expressed as a percentage of average tangible assets.

Previous 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.

Current wording

Net interest income is the most significant component of the Corporation's earnings, comprising 85.3 percent of total revenue for the nine months ended September 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 changes in the pricing of competing investment alternatives can also exert significant influence on the Corporation's ability to optimize the mix of assets and funding to maximize 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 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.

Current wording

Net interest income is the excess of interest earned on earning assets over interest expense incurred on interest-bearing liabilities. For analytical purposes, net interest income is also presented on an FTE basis in the tables that follow, which adjusts tax-exempt income to a taxable-equivalent amount to facilitate comparison with taxable assets. The federal statutory income tax rate of 21 percent was used for 2026 and 2025. For reconciliations of GAAP net interest margin to the corresponding non-GAAP measure 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 $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.

Current wording

Total average earning assets increased $2.1 billion, or 12.4 percent, to $19.4 billion for the three months ended September 30, 2026, compared to the same period in 2025. This increase was primarily driven by a $2.3 billion, or 17.0 percent, increase in average total loans, including loans held for sale, reflecting the impact of loans acquired from First Savings on February 1, 2026, which totaled approximately $1.8 billion at acquisition, as well as organic loan growth of $531.8 million. Average commercial loans and HELOC and installment loans increased $1.7 billion and $466.1 million, respectively. These increases were partially offset by a $163.5 million decline in average investment securities.

Previous wording

Total average deposits increased $2.0 billion year-over-year, reflective of $1.7 billion in deposits acquired from First Savings. Total average interest-bearing deposits increased $466.8 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 $1.5 billion, consistent with those product offering changes. Average borrowings increased $389.9 million, primarily driven by higher FHLB advances, including advances assumed in connection with the First Savings acquisition, and borrowings used to support balance sheet growth and liquidity needs.

Current wording

Total average deposits increased $2.0 billion year-over-year, reflecting the impact of deposits acquired from First Savings and $598.0 million of organic deposit growth. At acquisition, deposits acquired from First Savings totaled $1.7 billion. Total average interest-bearing deposits increased $373.8 million, driven primarily by higher money market deposit balances, partially offset by lower checking deposit balances. The decrease in checking 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 $1.6 billion, consistent with those product offering changes. Average borrowings increased $119.4 million, primarily driven by higher FHLB advances, including advances assumed in connection with the First Savings acquisition, and borrowings used to support balance sheet growth and liquidity needs.

Previous wording

Total average earning assets increased $2.2 billion, or 12.6 percent, to $19.2 billion for the six months ended June 30, 2026, compared to the same period in 2025. This increase was primarily driven by a $2.3 billion, or 17.8 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 $1.6 billion and $371.2 million, respectively. These increases were partially offset by a $137.8 million decline in average investment securities.

Current wording

Total average earning assets increased $2.2 billion, or 12.6 percent, to $19.3 billion for the nine months ended September 30, 2026, compared to the same period in 2025. This increase was primarily driven by a $2.3 billion, or 17.5 percent, increase in average total loans, including loans held for sale, reflecting the impact of loans acquired from First Savings on February 1, 2026, which totaled approximately $1.8 billion at acquisition. Loans increased organically by $585.9 million during the nine months ended September 30, 2026. Average commercial loans and HELOC and installment loans increased $1.7 billion and $403.2 million, respectively. These increases were partially offset by a $146.5 million decline in average investment securities.

Previous 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.

Current wording

Total average deposits increased $1.9 billion year-over-year, reflecting the impact of the First Savings acquisition, which added $1.7 billion of deposits at acquisition, as well as $584.0 million of organic deposit growth. Total average interest-bearing deposits increased $744.4 million, driven primarily by higher money market deposit balances, partially offset by lower checking deposit balances. The decrease in checking 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 $1.1 billion, consistent with those product offering changes. Average borrowings increased $218.1 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

Net interest income on an FTE basis increased $26.1 million, or 18.8 percent, to $165.3 million for the three months ended June 30, 2026, compared to $139.2 million for the three months ended June 30, 2025. Net interest margin on an FTE basis increased 13 basis points to 3.38 percent from 3.25 percent in the prior year quarter. This improvement was driven primarily by growth in average loan balances and favorable changes in funding mix, including higher average noninterest-bearing deposits. The yield on average earning assets decreased four basis points to 5.46 percent from 5.50 percent, while the cost of interest-bearing liabilities decreased two basis points to 2.80 percent from 2.82 percent. The Corporation recognized $3.7 million of fair value accretion income from purchased loans during the quarter, which contributed approximately eight basis points to net interest margin during the three months ended June 30, 2026. This compares to $1.0 million, or three basis points, in the same period of 2025.

Current wording

Net interest income on an FTE basis increased $27.5 million, or 19.6 percent, to $167.3 million for the three months ended September 30, 2026, compared to $139.9 million for the three months ended September 30, 2025. Net interest margin on an FTE basis increased 20 basis points to 3.44 percent from 3.24 percent in the prior-year quarter. The increase primarily reflects a 22 basis point decline in interest expense as a percentage of average earning assets, including the benefit of a more favorable funding mix and higher average noninterest-bearing deposits, partially offset by a two basis point decline in the yield on average earning assets. The yield on average earning assets decreased two basis points to 5.56 percent from 5.58 percent, while the cost of interest-bearing liabilities decreased seven basis points to 2.87 percent from 2.94 percent. The Corporation recognized $4.0 million of fair value accretion income from purchased loans during the quarter, which contributed approximately eight basis points to net interest margin during the three months ended September 30, 2026. This compares to $0.9 million, or two basis points, in the same period of 2025.

Previous 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.

Current wording

Interest income on an FTE basis increased $28.9 million compared to the same period in the prior year, driven primarily by a $2.1 billion increase in average earning assets, which reflected the contribution of loans acquired from First Savings and growth in average loan balances across the commercial, HELOC and installment portfolios. Average loans increased $2.3 billion, or 17.0 percent, year‑over‑year, more than offsetting lower average balances in cash and investment securities.

Previous wording

Interest expense on deposits increased $2.0 million compared to the prior year period, reflecting a $466.8 million increase in average interest‑bearing deposit balances, partially offset by lower deposit pricing across most deposit categories. Lower average rates on money market, savings deposits, and time deposits reduced interest expense and favorably impacted margin. Borrowing expense increased due to higher average borrowing balances, partially offset by lower average borrowing costs. Overall, the decline in average earning asset yields exceeded the decline in funding costs, resulting in a 2 basis point decline in the FTE net interest spread to 2.66 percent from 2.68 percent in the prior year quarter.

Current wording

Interest expense on deposits increased $0.5 million compared to the prior year period, reflecting a $373.8 million increase in average interest‑bearing deposit balances, partially offset by lower deposit pricing across most deposit categories. Lower average rates on money market, savings deposits, and time deposits reduced interest expense and favorably impacted margin. Borrowing expense increased due to higher average borrowing balances, partially offset by lower average borrowing costs. Overall, the seven basis point decline in the cost of interest-bearing liabilities exceeded the two basis point decline in the yield on average earning assets, resulting in a five basis point increase in the FTE net interest spread to 2.69 percent from 2.64 percent in the prior-year quarter.

Previous 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.

Current wording

Net interest income on an FTE basis increased $74.9 million, or 18.0 percent, to $490.4 million for the nine months ended September 30, 2026, compared to $415.5 million for the nine months ended September 30, 2025. Net interest margin on an FTE basis increased 16 basis points to 3.39 percent from 3.23 percent in the prior-year period. The improvement primarily reflected lower funding costs and a more favorable funding mix, partially offset by a one basis point decline in the yield on average earning assets. The Corporation recognized $10.5 million of fair value accretion income from purchased loans during the nine months, which contributed approximately seven basis points to net interest margin during the nine months ended September 30, 2026. This compares to $3.0 million, or two basis points, in the same period of 2025.

Previous wording

Interest income on an FTE basis increased $57.6 million compared to the same period in the prior year, driven primarily by a $2.2 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 $2.3 billion, or 17.8 percent, year‑over‑year, more than offsetting lower average balances in cash and investment securities.

Current wording

Interest income on an FTE basis increased $86.5 million compared to the same period in the prior year, driven primarily by a $2.2 billion increase in average earning assets, which reflected the contribution of loans acquired from First Savings and growth in average loan balances across the commercial, HELOC and installment portfolios. Average loans increased $2.3 billion, or 17.5 percent, year‑over‑year, more than offsetting lower average balances in cash and investment securities.

Previous 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.

Current wording

Interest expense on deposits increased $6.1 million compared to the prior year period, reflecting a $744.4 million 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 seven basis points to 2.76 percent for the nine months ended September 30, 2026, from 2.83 percent for the nine months ended September 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 six basis point improvement in the FTE net interest spread to 2.72 percent from 2.66 percent in the prior-year period.