FRME 10-Q Quarterly Report Sept. 30, 2025

FIRST MERCHANTS CORP

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frme-20250930

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _______ to _______

FIRST MERCHANTS CORP ORATION

(Exact name of registrant as specified in its charter)


Indiana
(State or other jurisdiction of incorporation)
001-41342			35-1544218
(Commission File Number)			(IRS Employer Identification No.)

200 East Jackson Street , Muncie , IN 47305-2814

(Address of principal executive offices) (Zip code)

(Registrant’s telephone number, including area code): ( 765 ) 747-1500

Not Applicable

(Former name, former address and former fiscal year,

if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.125 stated value per share	FRME	The Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/100th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series A	FRMEP	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 27, 2025, there were 57,825,020 outstanding common shares of the registrant.

TABLE OF CONTENTS

FIRST MERCHANTS CORPORATION


		Page No.
Glossary of Defined Terms		3

Part I. Financial Information
Item 1.	Financial Statements:
	Consolidated Condensed Balance Sheets	4
	Consolidated Condensed Statements of Income	5
	Consolidated Condensed Statements of Comprehensive Income	6
	Consolidated Condensed Statements of Stockholders' Equity	7
	Consolidated Condensed Statements of Cash Flows	9
	Notes to Consolidated Condensed Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 4.	Controls and Procedures	59

Part II. Other Information
Item 1.	Legal Proceedings	60
Item 1A.	Risk Factors	60
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	61

Signatures		62

GLOSSARY OF DEFINED TERMS

FIRST MERCHANTS CORPORATION


ACL - Loans			Allowance for Credit Losses on Loans
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
Bank			First Merchants Bank, a wholly-owned subsidiary of the Corporation

CECL			Current Expected Credit Losses (FASB Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , adopted by the Corporation on January 1, 2021.)
CET1			Common Equity Tier 1




CODM			Chief operating decision maker
Corporation			First Merchants Corporation
CRA			Community Reinvestment Act
Credit Agreement			Credit agreement entered into on September 30, 2024 with U.S. Bank, N.A.
Credit Facility			Revolving line of credit related to Credit Agreement entered into on September 30, 2024

ESPP			Employee Stock Purchase Plan
Exchange Ratio			0.85 share of the Corporation's stock pursuant to the Merger Agreement
FASB			Financial Accounting Standards Board
FDIC			Federal Deposit Insurance Corporation
Federal Reserve			Board of Governors of the Federal Reserve System
FHLB			Federal Home Loan Bank
First Savings			First Savings Financial Group, Inc.
FMC Trust II			First Merchants Capital Trust II
FTE			Fully taxable equivalent
GAAP			U.S. Generally Accepted Accounting Principles




IRA			Inflation Reduction Act of 2022
Level One			Level One Bancorp, Inc., which was acquired by the Corporation on April 1, 2022.
Merger			The merger of First Savings with and into the Corporation pursuant to the Merger Agreement
Merger Agreement			Agreement and Plan of Merger entered into on September 24, 2025 with First Savings
OBBBA			The One Big Beautiful Bill Act, signed into law on July 4th, 2025
Old Second			Old Second National Bank


RSAs			Restricted Stock Awards
Senior Debt			Fixed-to-Floating Rate Senior Notes due 2028
Subordinated Debt			Fixed-to-Floating Rate Subordinated Notes due 2028
SOFR			Secured Overnight Financing Rate

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED BALANCE SHEETS


	September 30, 2025		December 31, 2024
	(Unaudited)
ASSETS
Cash and due from banks	$	88,079	$	87,616
Interest-bearing deposits	168,706		298,891
Investment securities available for sale	1,386,903		1,386,475
Investment securities held to maturity, net of allowance for credit losses of $ 245 and $ 245 (fair value of $ 1,707,064 and $ 1,723,520 )	1,995,488		2,074,220
Loans held for sale	23,190		18,663
Loans	13,591,174		12,854,359
Less: Allowance for credit losses - loans	( 194,468 )		( 192,757 )
Net loans	13,396,706		12,661,602
Premises and equipment	121,771		129,743
Federal Home Loan Bank stock	47,264		41,690
Interest receivable	89,102		91,829
Goodwill	712,002		712,002
Other intangibles	15,298		19,828
Cash surrender value of life insurance	306,583		304,906
Other real estate owned	1,270		4,948
Tax asset, deferred and receivable	89,758		92,387
Other assets	369,509		387,169
TOTAL ASSETS	$	18,811,629	$	18,311,969
LIABILITIES
Deposits:
Noninterest-bearing	$	2,100,570	$	2,325,579
Interest-bearing	12,769,409		12,196,047
Total Deposits	14,869,979		14,521,626
Borrowings:
Federal funds purchased	199,370		99,226
Securities sold under repurchase agreements	122,226		142,876
Federal Home Loan Bank advances	798,626		822,554
Subordinated debentures and other borrowings	57,632		93,529
Total Borrowings	1,177,854		1,158,185

Interest payable	18,240		16,102
Other liabilities	333,154		311,073
Total Liabilities	16,399,227		16,006,986
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY




Cumulative Preferred Stock, $ 1,000 par value, $ 1,000 liquidation value:
Authorized - 600 cumulative shares
Issued and outstanding - 125 cumulative shares	125		125
Preferred Stock, Series A, no par value, $ 2,500 liquidation preference:
Authorized - 10,000 non-cumulative perpetual shares
Issued and outstanding - 10,000 non-cumulative perpetual shares	25,000		25,000
Common Stock, $ 0.125 stated value:
Authorized - 100,000,000 shares
Issued and outstanding - 57,192,497 and 57,974,535 shares	7,149		7,247
Additional paid-in capital	1,158,026		1,188,768
Retained earnings	1,377,966		1,272,528
Accumulated other comprehensive loss	( 155,864 )		( 188,685 )
Total Stockholders' Equity	2,412,402		2,304,983
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,811,629	$	18,311,969

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
INTEREST INCOME
Loans receivable:
Taxable	$	200,406	$	206,680	$	583,307	$	606,116
Tax exempt	11,173		8,622		32,510		25,242
Investment securities:
Taxable	8,288		9,263		24,926		27,062
Tax exempt	12,460		13,509		37,493		40,733

Deposits with financial institutions	1,676		2,154		5,940		11,642
Federal Home Loan Bank stock	1,092		855		3,172		2,569
Total Interest Income	235,095		241,083		687,348		713,364
INTEREST EXPENSE
Deposits	90,821		98,856		255,609		296,292
Federal funds purchased	224		329		2,001		455
Securities sold under repurchase agreements	654		700		2,059		2,377
Federal Home Loan Bank advances	8,638		8,544		27,716		21,715
Subordinated debentures and other borrowings	1,093		1,544		3,014		5,781
Total Interest Expense	101,430		109,973		290,399		326,620
NET INTEREST INCOME	133,665		131,110		396,949		386,744
Provision for credit losses	4,300		5,000		14,100		31,500
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	129,365		126,110		382,849		355,244
NONINTEREST INCOME
Service charges on deposit accounts	8,921		8,361		25,559		24,482
Fiduciary and wealth management fees	8,842		8,525		26,317		25,550
Card payment fees	5,007		5,121		14,465		14,360
Net gains and fees on sales of loans	4,983		6,764		15,854		15,159
Derivative hedge fees	1,097		736		2,332		1,488
Other customer fees	414		344		1,230		1,231
Earnings on bank-owned life insurance	1,667		2,755		5,759		6,276
Net realized losses on sales of available for sale securities	—		( 9,114 )		( 8 )		( 9,165 )
Other income	1,546		1,374		2,320		3,457
Total Noninterest Income	32,477		24,866		93,828		82,838
NONINTEREST EXPENSES
Salaries and employee benefits	57,317		55,223		166,826		165,730
Net occupancy	7,057		6,994		21,118		21,052
Equipment	6,998		6,949		20,933		19,774
Marketing	2,120		1,836		5,470		4,807
Outside data processing fees	6,943		7,150		19,979		21,111
Printing and office supplies	311		378		930		1,085
Intangible asset amortization	1,499		1,772		4,530		5,500
FDIC assessments	3,526		3,720		10,726		11,285
Other real estate owned and foreclosure expenses	121		942		750		1,849
Professional and other outside services	3,718		3,035		10,720		10,809
Other expenses	6,951		6,630		21,079		19,975
Total Noninterest Expenses	96,561		94,629		283,061		282,977
INCOME BEFORE INCOME TAX	65,281		56,347		193,616		155,105
Income tax expense	8,516		7,160		24,680		18,052
NET INCOME	56,765		49,187		168,936		137,053
Preferred stock dividends	468		468		1,406		1,406
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	56,297	$	48,719	$	167,530	$	135,647
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.98	$	0.84	$	2.91	$	2.32
Diluted Net Income Available to Common Stockholders	$	0.98	$	0.84	$	2.90	$	2.31
Cash Dividends Paid	$	0.36	$	0.35	$	1.07	$	1.04
Average Diluted Common Shares Outstanding (in thousands)	57,448		58,289		57,817		58,629

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Net income	$	56,765	$	49,187	$	168,936	$	137,053
Other comprehensive income:
Unrealized gains on securities available for sale:
Unrealized holding gain arising during the period	43,178		67,030		41,538		21,399
Reclassification adjustment for losses included in net income	—		9,114		8		9,165
Tax effect	( 9,067 )		( 15,990 )		( 8,725 )		( 6,419 )













Total other comprehensive income, net of tax	34,111		60,154		32,821		24,145
Comprehensive income	$	90,876	$	109,341	$	201,757	$	161,198

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)



	Three Months Ended September 30, 2025
	Cumulative Preferred Stock			Non-Cumulative Preferred Stock			Common Stock			Additional				Accumulated Other
	Shares	Amount		Shares	Amount		Shares	Amount		Paid in Capital		Retained Earnings		Comprehensive Loss		Total
Balances, June 30, 2025	125	$	125	10,000	$	25,000	57,272,433	$	7,159	$	1,163,170	$	1,342,473	$	( 189,975 )	$	2,347,952
Comprehensive income:
Net income	—	—		—	—		—	—		—		56,765		—		56,765
Other comprehensive income, net of tax	—	—		—	—		—	—		—		—		34,111		34,111
Cash dividends on preferred stock ($ 46.88 per share)	—	—		—	—		—	—		—		( 468 )		—		( 468 )
Cash dividends on common stock ($ 0.36 per share)	—	—		—	—		—	—		—		( 20,804 )		—		( 20,804 )

Repurchases of common stock	—	—		—	—		( 162,474 )	( 20 )		( 6,456 )		—		—		( 6,476 )
Excise tax on stock repurchases	—	—		—	—		—	—		( 32 )		—		—		( 32 )
Share-based compensation	—	—		—	—		91,857	10		1,744		—		—		1,754
Stock issued under employee benefit plans	—	—		—	—		4,802	1		162		—		—		163
Stock issued under dividend reinvestment and stock purchase plan	—	—		—	—		14,881	2		595		—		—		597
Stock options exercised	—	—		—	—		4,762	1		92		—		—		93
Restricted shares withheld for taxes	—	—		—	—		( 33,764 )	( 4 )		( 1,249 )		—		—		( 1,253 )
Balances, September 30, 2025	125	$	125	10,000	$	25,000	57,192,497	$	7,149	$	1,158,026	$	1,377,966	$	( 155,864 )	$	2,412,402



	Three Months Ended September 30, 2024
	Cumulative Preferred Stock			Non-Cumulative Preferred Stock			Common Stock			Additional				Accumulated Other
	Shares	Amount		Shares	Amount		Shares	Amount		Paid in Capital		Retained Earnings		Comprehensive Loss		Total
Balances, June 30, 2024	125	$	125	10,000	$	25,000	58,045,653	$	7,256	$	1,191,193	$	1,200,930	$	( 211,979 )	$	2,212,525
Comprehensive income:
Net income	—	—		—	—		—	—		—		49,187		—		49,187
Other comprehensive income, net of tax	—	—		—	—		—	—		—		—		60,154		60,154
Cash dividends on preferred stock ($ 46.88 per share)	—	—		—	—		—	—		—		( 468 )		—		( 468 )
Cash dividends on common stock ($ 0.35 per share)	—	—		—	—		—	—		—		( 20,524 )		—		( 20,524 )


Reduction of excise tax on common stock repurchases, net of share issuances	—	—		—	—		—	—		25		—		—		25
Share-based compensation	—	—		—	—		67,140	8		1,429		—		—		1,437
Stock issued under employee benefit plans	—	—		—	—		5,351	1		167		—		—		168
Stock issued under dividend reinvestment and stock purchase plan	—	—		—	—		14,903	2		573		—		—		575
Stock options exercised	—	—		—	—		6,191	1		87		—		—		88
Restricted shares withheld for taxes	—	—		—	—		( 22,123 )	( 3 )		( 791 )		—		—		( 794 )
Balances, September 30, 2024	125	$	125	10,000	$	25,000	58,117,115	$	7,265	$	1,192,683	$	1,229,125	$	( 151,825 )	$	2,302,373

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)



	Nine Months Ended September 30, 2025
	Cumulative Preferred Stock			Non-Cumulative Preferred Stock			Common Stock			Additional				Accumulated Other
	Shares	Amount		Shares	Amount		Shares	Amount		Paid in Capital		Retained Earnings		Comprehensive Loss		Total
Balances, December 31, 2024	125	$	125	10,000	$	25,000	57,974,535	$	7,247	$	1,188,768	$	1,272,528	$	( 188,685 )	$	2,304,983
Comprehensive income:
Net income	—	—		—	—		—	—		—		168,936		—		168,936
Other comprehensive loss, net of tax	—	—		—	—		—	—		—		—		32,821		32,821
Cash dividends on preferred stock ($ 140.64 per share)	—	—		—	—		—	—		—		( 1,406 )		—		( 1,406 )
Cash dividends on common stock ($ 1.07 per share)	—	—		—	—		—	—		—		( 62,092 )		—		( 62,092 )

Repurchases of common stock	—	—		—	—		( 939,271 )	( 117 )		( 36,359 )		—		—		( 36,476 )
Excise tax on common stock repurchases	—	—		—	—		—	—		( 325 )		—		—		( 325 )
Share-based compensation	—	—		—	—		122,365	14		4,902		—		—		4,916
Stock issued under employee benefit plans	—	—		—	—		14,117	2		478		—		—		480
Stock issued under dividend reinvestment and stock purchase plan	—	—		—	—		44,748	6		1,731		—		—		1,737
Stock options exercised	—	—		—	—		16,705	2		328		—		—		330
Restricted shares withheld for taxes	—	—		—	—		( 40,702 )	( 5 )		( 1,497 )		—		—		( 1,502 )
Balances, September 30, 2025	125	$	125	10,000	$	25,000	57,192,497	$	7,149	$	1,158,026	$	1,377,966	$	( 155,864 )	$	2,412,402


	Nine Months Ended September 30, 2024
	Cumulative Preferred Stock			Non-Cumulative Preferred Stock			Common Stock			Additional				Accumulated Other
	Shares	Amount		Shares	Amount		Shares	Amount		Paid in Capital		Retained Earnings		Comprehensive Loss		Total
Balances, December 31, 2023	125	$	125	10,000	$	25,000	59,424,122	$	7,428	$	1,236,506	$	1,154,624	$	( 175,970 )	$	2,247,713
Comprehensive income:
Net income	—	—		—	—		—	—		—		137,053		—		137,053
Other comprehensive income, net of tax	—	—		—	—		—	—		—		—		24,145		24,145
Cash dividends on preferred stock ($ 140.64 per share)	—	—		—	—		—	—		—		( 1,406 )		—		( 1,406 )
Cash dividends on common stock ($ 1.04 per share)	—	—		—	—		—	—		—		( 61,146 )		—		( 61,146 )

Repurchases of common stock	—	—		—	—		( 1,481,565 )	( 185 )		( 49,770 )		—		—		( 49,955 )
Excise tax on stock repurchases	—	—		—	—		—	—		( 457 )		—		—		( 457 )
Share-based compensation	—	—		—	—		83,356	10		4,181		—		—		4,191
Stock issued under employee benefit plans	—	—		—	—		17,120	3		508		—		—		511
Stock issued under dividend reinvestment and stock purchase plan	—	—		—	—		48,793	6		1,670		—		—		1,676
Stock options exercised	—	—		—	—		49,084	6		894		—		—		900
Restricted shares withheld for taxes	—	—		—	—		( 23,795 )	( 3 )		( 849 )		—		—		( 852 )
Balances, September 30, 2024	125	$	125	10,000	$	25,000	58,117,115	$	7,265	$	1,192,683	$	1,229,125	$	( 151,825 )	$	2,302,373

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended September 30,
	2025		2024
Cash Flow from Operating Activities:
Net income	$	168,936	$	137,053
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	14,100		31,500
Depreciation and amortization	23,718		10,602
Change in deferred taxes	( 2,095 )		3,128
Share-based compensation	4,916		4,191

Loans originated for sale	( 358,898 )		( 775,504 )
Proceeds from sales of loans held for sale	366,363		773,446
Gains on sales of loans held for sale	( 11,992 )		( 10,508 )


Net losses on sales and redemptions of securities available for sale	8		9,165

Increase in cash surrender value of life insurance	( 4,667 )		( 4,128 )
Gains on life insurance benefits	( 1,092 )		( 2,148 )
Change in interest receivable	2,727		5,585
Change in interest payable	2,138		( 319 )
Other adjustments	( 1,228 )		16,643
Net cash provided by operating activities	202,934		198,706
Cash Flows from Investing Activities:
Net change in interest-bearing deposits	130,185		76,954

Purchase of securities available for sale	( 10,609 )		( 93,463 )

Proceeds from sales of securities available for sale	—		149,771
Proceeds from maturities and redemptions of:
Securities available for sale	47,991		33,346
Securities held to maturity	76,183		72,938
Purchases of Federal Home Loan Bank stock	( 5,644 )		—
Redemptions of Federal Home Loan Bank stock	70		53
Payment of capital calls to qualified affordable housing investments	( 34,969 )		( 22,238 )

Net change in loans	( 681,224 )		( 206,478 )


Proceeds from the sale of other real estate owned	6,072		325
Proceeds from life insurance benefits	4,082		7,964
Proceeds from mortgage portfolio loan sale	—		1,716
Proceeds from commercial portfolio loan sale	—		3,273
Other adjustments	( 5,203 )		( 25,046 )
Net cash used by investing activities	( 473,066 )		( 885 )
Cash Flows from Financing Activities:
Net increase (decrease) in:
Demand and savings deposits	307,586		( 308,714 )
Certificates of deposit and other time deposits	40,767		140,074
Proceeds from borrowings	854,091		551,851
Repayment of borrowings	( 834,422 )		( 499,542 )
Cash dividends on preferred stock	( 1,406 )		( 1,406 )
Cash dividends on common stock	( 62,092 )		( 61,146 )

Stock issued under employee benefit plans	480		511
Stock issued under dividend reinvestment and stock purchase plans	1,737		1,676
Stock options exercised	330		900


Repurchase of common stock	( 36,476 )		( 49,955 )
Net cash provided (used) by financing activities	270,595		( 225,751 )
Net Change in Cash and Cash Equivalents	463		( 27,930 )
Cash and Cash Equivalents, January 1	87,616		112,649
Cash and Cash Equivalents, September 30	$	88,079	$	84,719
Additional cash flow information:
Interest paid	$	288,261	$	327,443
Income tax paid	18,397		6,407
Loans transferred to other real estate owned	2,202		699
Fixed assets transferred to other real estate owned	—		69
Non-cash investing activities using trade date accounting	70,182		17,749

ROU assets obtained in exchange for new operating lease liabilities	692		6,918
Qualified affordable housing investments obtained in exchange for funding commitments	20,000		40,500
Reclassification of loans and other branch assets to held for sale	—		13,404
Reclassification of deposits and other branch liabilities to held for sale	—		288,476

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 1

GENERAL

Financial Statement Preparation

The Consolidated Condensed Balance Sheet of the Corporation as of December 31, 2024, has been derived from the audited consolidated balance sheet of the Corporation as of that date. Certain information and note disclosures normally included in the Corporation’s annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission. The results of operations for the three and nine months ended September 30, 2025, are not necessarily indicative of the results to be expected for the year. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses.

Significant Accounting Policies

The significant accounting policies followed by the Corporation and its wholly-owned subsidiaries for interim financial reporting are consistent with the accounting policies followed for annual financial reporting. All adjustments, which are of a normal recurring nature and are in the opinion of management necessary for a fair statement of the results for the periods reported, have been included in the accompanying Consolidated Condensed Financial Statements.

Recent Accounting Changes Adopted in 2025

The Corporation did not adopt any new accounting standards during the three and nine months ended September 30, 2025.

New Accounting Pronouncements Not Yet Adopted

The Corporation continually monitors potential accounting pronouncements and the following pronouncements have been deemed to have the most applicability to the Corporation's financial statements:

Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") - No. 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures

Summary - The FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures in the fourth quarter of 2023. This ASU is intended to enhance income tax disclosures to address investor requests for more information about the tax risks and opportunities present in an entity’s worldwide operations.

The two primary enhancements disaggregate existing income tax disclosures related to the effective tax rate reconciliation and income taxes paid. These amendments require that public business entities on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The amendments also require that all entities disclose on an annual basis the amount of income taxes paid (net of refunds received) disaggregated by federal, state and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received).

For public business entities, the amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issue. The amendments should be applied on a prospective basis. The Corporation is assessing the terms of this guidance, but adoption of the standard is not expected to have a significant impact on the Corporation’s financial statements or disclosures.

FASB Accounting Standards Update - No. 2024-03 - Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures

Summary - The FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures in the fourth quarter of 2024. This ASU requires public business entities to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods.

The objective of the disclosure requirements is to provide disaggregated information about a public business entity's expenses to help investors (a) better understand the entity's performance, (b) better assess the entity's prospects for future cash flows, and (c) compare an entity's performance over time and with that of other entities.

The amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Corporation is assessing the terms of this guidance, but adoption of the standard is not expected to have a significant impact on the Corporation’s financial statements or disclosures.

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 2

ACQUISITIONS AND DISPOSITIONS

First Savings Financial Group, Inc. Acquisition

On September 24, 2025, the Corporation and First Savings Financial Group, Inc., an Indiana corporation ("First Savings"), entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which First Savings will, subject to the terms and conditions of the Merger Agreement, merge with and into the Corporation (the "Merger"), whereupon the separate corporate existence of First Savings will cease and the Corporation will survive. Immediately following the Merger, First Savings' wholly owned subsidiary, First Savings Bank, will be merged with and into the Bank, with the Bank as the surviving bank.

Subject to the terms and conditions of the Merger Agreement, upon the Merger becoming effective, the common shareholders of First Savings will be entitled to receive, for each outstanding share of First Savings common stock, a 0.85 share (the "Exchange Ratio") of the Corporation's common stock, in a tax-free exchange. The Exchange Ratio is subject to adjustments for stock splits, stock dividends, recapitalization, or similar transactions, or as otherwise described in the Merger Agreement. Fractional shares of the Corporation's common stock will not be issued in respect of fractional interests arising from the Exchange Ratio but will be paid in cash pursuant to the Merger Agreement.

Based on an assumption of 7,010,008 shares of First Savings common stock outstanding at the time of closing (which was the number of shares of First Savings common stock outstanding on October 15, 2025, plus 24,000 shares of restricted stock that First Savings intends to issue in November 2025), the Corporation expects to issue approximately 5.96 million shares of its common stock in exchange for all of the issued and outstanding shares of First Savings common stock. In addition, the Corporation will pay cash to settle outstanding First Savings stock options. Based on the closing price of the Corporation's common stock on October 15, 2025 of $ 37.00 per share, the implied value for a share of First Savings common stock is $ 31.45 , and the aggregate value of the transaction is estimated at approximately $ 225.6 million.

The Boards of Directors of both the Corporation and First Savings have approved the Merger Agreement. The members of the Board of Directors of First Savings and certain executive officers of First Savings have entered into a Voting Agreement pursuant to which each of them has agreed to vote their shares of First Savings common stock in favor of the Merger. The Corporation has filed a Registration Statement on Form S-4 with the SEC in connection with the proposed Merger, including a preliminary Proxy Statement for First Savings and Prospectus for the Corporation which will be submitted to the First Savings common shareholders for their consideration at a meeting to be held December 19, 2025. Consummation of the Merger remains subject to certain other closing conditions set forth in the Merger Agreement. The parties expect the closing to occur in the first quarter of 2026, subject to satisfaction of those conditions.

Old Second National Bank Branch Sale

On December 6, 2024, the Bank completed its sale of five branches in the suburban Chicago market to Old Second National Bank ("Old Second"). Pursuant to the terms of the branch sale agreement, Old Second assumed certain deposit liabilities and acquired certain loans, as well as cash and premises and equipment. The Bank recognized a gain on sale of $ 20.0 million related to the branch sale for the year ended December 31, 2024.

The following table summarizes the assets and liabilities related to the branch sale:


	December 6, 2024
Assets
Cash and due from banks	$	419
Loans	7,410
Premises and equipment	3,233
Interest receivable and other assets	21
Total Assets	$	11,083
Liabilities
Deposits	$	267,448
Interest payable and other liabilities	692
Total Liabilities	$	268,140

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 3

INVESTMENT SECURITIES

The following tables summarize the amortized cost, gross unrealized gains and losses and approximate fair value of investment securities available for sale as of September 30, 2025 and December 31, 2024.


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at September 30, 2025

U.S. Government-sponsored agency securities	$	90,304	$	—	$	12,407	$	77,897
State and municipal	990,867		92		116,383		874,576
U.S. Government-sponsored mortgage-backed securities	491,164		1,320		69,146		423,338
Foreign investment	1,500		—		—		1,500
Corporate obligations	9,970		—		378		9,592

Total available for sale	$	1,583,805	$	1,412	$	198,314	$	1,386,903


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2024

U.S. Government-sponsored agency securities	$	95,462	$	—	$	16,081	$	79,381
State and municipal	996,541		19		133,386		863,174
U.S. Government-sponsored mortgage-backed securities	519,943		403		88,724		431,622
Corporate obligations	12,960		—		662		12,298

Total available for sale	$	1,624,906	$	422	$	238,853	$	1,386,475

The following tables summarize the amortized cost, gross unrealized gains and losses, approximate fair value and allowance for credit losses on investment securities held to maturity as of September 30, 2025 and December 31, 2024.


	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at September 30, 2025
U.S. Government-sponsored agency securities	$	330,430	$	—	$	330,430	$	—	$	50,255	$	280,175
State and municipal	1,072,380		245		1,072,135		684		163,944		909,120
U.S. Government-sponsored mortgage-backed securities	592,923		—		592,923		—		75,154		517,769

Total held to maturity	$	1,995,733	$	245	$	1,995,488	$	684	$	289,353	$	1,707,064


	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at December 31, 2024
U.S. Government-sponsored agency securities	$	345,531	$	—	$	345,531	$	—	$	63,112	$	282,419
State and municipal	1,085,921		245		1,085,676		299		185,784		900,436
U.S. Government-sponsored mortgage-backed securities	641,513		—		641,513		—		102,343		539,170
Foreign investment	1,500		—		1,500		—		5		1,495
Total held to maturity	$	2,074,465	$	245	$	2,074,220	$	299	$	351,244	$	1,723,520

Accrued interest on investment securities available for sale and held to maturity at September 30, 2025 and December 31, 2024 of $ 19.3 million and $ 22.5 million, respectively, is included in the Interest Receivable line on the Corporation's Consolidated Condensed Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of available for sale and held to maturity securities presented above.

In determining the allowance for credit losses on investment securities available for sale that are in an unrealized loss position, the Corporation first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through the income statement.

For investment securities available for sale that do not meet the aforementioned criteria, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Corporation considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Unrealized losses that have not been recorded through an allowance for credit losses are recognized in other comprehensive loss.

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Adjustments to the allowance are reported in the income statement as a component of the provision for credit losses. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities available for sale from the estimate of credit losses.

Investment securities available for sale are charged off against the allowance or, in the absence of any allowance, written down through the income statement when deemed uncollectible or when either of the aforementioned criteria regarding intent or requirement to sell is met. The Corporation did not record an allowance for credit losses on its investment securities available for sale as the unrealized losses were attributable to changes in interest rates, not credit quality.

The allowance for credit losses on investment securities held to maturity is a contra asset-valuation account that is deducted from the amortized cost basis of investment securities held to maturity to present the net amount expected to be collected. Investment securities held to maturity are charged off against the allowance when deemed uncollectible. Adjustments to the allowance are reported in the income statement as a component of the provision for credit losses.

The Corporation measures expected credit losses on investment securities held to maturity on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities held to maturity from the estimate of credit losses.

With regard to U.S. Government-sponsored agency and U.S. Government-sponsored mortgage-backed securities, all of these securities are issued by a U.S. Government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities.

With regard to securities issued by states and municipalities and other investment securities held to maturity, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. Historical loss rates associated with securities having similar grades as those in the Corporation's portfolio have been insignificant. Furthermore, as of September 30, 2025, there were no past due principal and interest payments associated with these securities.

The balance of the allowance for credit losses on investment securities held to maturity remained unchanged at $ 245,000 as of September 30, 2025 and December 31, 2024 based on applying the long-term historical credit rate, as published by Moody's, for similar rated securities.

On a quarterly basis, the Corporation monitors the credit quality of investment securities held to maturity through the use of credit ratings. The following tables summarize the amortized cost of investment securities held to maturity at September 30, 2025 and December 31, 2024, aggregated by credit quality indicator.


	September 30, 2025
	U.S. Government-sponsored agency securities (1)		State and municipal		U.S. Government-sponsored mortgage-backed securities (1)		Total
Credit Rating:
Aaa	$	330,430	$	75,667	$	592,923	$	999,020
Aa1	—		200,380		—		200,380
Aa2	—		177,970		—		177,970
Aa3	—		180,534		—		180,534
A1	—		59,635		—		59,635
A2	—		20,329		—		20,329


Non-rated	—		357,865		—		357,865
Total	$	330,430	$	1,072,380	$	592,923	$	1,995,733


	December 31, 2024
	U.S. Government-sponsored agency securities (1)		State and municipal		U.S. Government-sponsored mortgage-backed securities (1)		Foreign investment		Total
Credit Rating:
Aaa	$	345,531	$	120,801	$	641,513	$	—	$	1,107,845
Aa1	—		148,923		—		—		148,923
Aa2	—		184,341		—		—		184,341
Aa3	—		185,166		—		—		185,166
A1	—		65,665		—		—		65,665
A2	—		20,317		—		—		20,317


Non-rated	—		360,708		—		1,500		362,208
Total	$	345,531	$	1,085,921	$	641,513	$	1,500	$	2,074,465

(1) U.S. Government-sponsored agency securities and U.S. Government-sponsored mortgage-backed securities are included within the Aaa credit rating category due to their explicit or implicit government guarantees, which provide a high level of assurance regarding the timely collection of principal and interest payments.

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The following tables summarize, as of September 30, 2025 and December 31, 2024, investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and length of time in a continuous unrealized loss position.


	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at September 30, 2025

U.S. Government-sponsored agency securities	$	—	$	—	$	77,897	$	12,407	$	77,897	$	12,407
State and municipal	8,549		118		854,844		116,265		863,393		116,383
U.S. Government-sponsored mortgage-backed securities	5,436		224		321,624		68,922		327,060		69,146
Corporate obligations	—		—		8,562		378		8,562		378
Total investment securities available for sale	$	13,985	$	342	$	1,262,927	$	197,972	$	1,276,912	$	198,314


	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at December 31, 2024

U.S. Government-sponsored agency securities	$	—	$	—	$	79,381	$	16,081	$	79,381	$	16,081
State and municipal	40,398		2,115		820,663		131,271		861,061		133,386
U.S. Government-sponsored mortgage-backed securities	82,724		1,660		318,310		87,064		401,034		88,724
Corporate obligations	—		—		12,268		662		12,268		662
Total investment securities available for sale	$	123,122	$	3,775	$	1,230,622	$	235,078	$	1,353,744	$	238,853

The following tables summarize investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and the number of securities in the portfolio as of the dates indicated.


	Gross Unrealized Losses		Number of Securities
Investment securities available for sale at September 30, 2025

U.S. Government-sponsored agency securities	$	12,407	12
State and municipal	116,383		602
U.S. Government-sponsored mortgage-backed securities	69,146		95
Corporate obligations	378		7
Total investment securities available for sale	$	198,314	716


	Gross Unrealized Losses		Number of Securities
Investment securities available for sale at December 31, 2024

U.S. Government-sponsored agency securities	$	16,081	12
State and municipal	133,386		611
U.S. Government-sponsored mortgage-backed securities	88,724		127
Corporate obligations	662		10
Total investment securities available for sale	$	238,853	760

The unrealized losses in the Corporation’s investment portfolio were the result of changes in interest rates and not credit quality. As a result, the Corporation expects to recover the amortized cost basis over the term of the securities. The Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.

Certain investment securities available for sale are reported in the financial statements at an amount less than their historical cost as indicated in the table below.


	September 30, 2025			December 31, 2024
Investments available for sale reported at less than historical cost:
Historical cost	$	1,475,226		$	1,592,597
Fair value	1,276,912			1,353,744
Gross unrealized losses	$	198,314		$	238,853
Percentage of the Corporation's investment securities available for sale in an unrealized loss position	92.1		%	97.6		%

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level 1 and Level 2 in the fair value hierarchy. The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs. From these discussions, the Corporation’s management is comfortable that the classifications are proper. The Corporation has gained trust in the data for two reasons: (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis; and (b) actual gains or losses resulting from the sale of certain securities has proven the data to be accurate over time. Fair value of securities classified as Level 3 in the valuation hierarchy was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

The amortized cost and fair value of investment securities available for sale and held to maturity at September 30, 2025 and December 31, 2024, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately.


	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at September 30, 2025
Due in one year or less	$	—	$	—	$	6,564	$	6,581
Due after one through five years	15,819		15,559		120,072		116,636
Due after five through ten years	228,429		212,224		219,809		200,035
Due after ten years	848,393		735,782		1,056,365		866,043
	1,092,641		963,565		1,402,810		1,189,295
U.S. Government-sponsored mortgage-backed securities	491,164		423,338		592,923		517,769

Total investment securities	$	1,583,805	$	1,386,903	$	1,995,733	$	1,707,064


	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at December 31, 2024
Due in one year or less	$	1,800	$	1,795	$	5,268	$	5,254
Due after one through five years	12,189		11,857		124,004		117,999
Due after five through ten years	168,338		151,467		174,533		154,533
Due after ten years	922,636		789,734		1,129,147		906,564
	1,104,963		954,853		1,432,952		1,184,350
U.S. Government-sponsored mortgage-backed securities	519,943		431,622		641,513		539,170

Total investment securities	$	1,624,906	$	1,386,475	$	2,074,465	$	1,723,520

Securities with a carrying value of approximately $ 3.3 billion were pledged at September 30, 2025 and December 31, 2024 to secure certain deposits and securities sold under repurchase agreements, and for other purposes as permitted or required by law.

The book value of securities pledged and available under agreements to repurchase amounted to $ 143.8 million at September 30, 2025 and $ 173.0 million at December 31, 2024.

Gross gains and losses on the sales of investment securities available for sale for the three and nine months ended September 30, 2025 and 2024 are shown below.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Sales and redemptions of investment securities available for sale:
Gross gains	$	—	$	7	$	—	$	7
Gross losses	—		( 9,121 )		( 8 )		( 9,172 )

Net losses on sales and redemptions of investment securities available for sale	$	—	$	( 9,114 )	$	( 8 )	$	( 9,165 )

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 4

LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loan Portfolio and Credit Quality

The Corporation's primary lending focus is small business and middle market commercial, commercial real estate, public finance and residential real estate, which results in portfolio diversification. The following tables show the composition of the loan portfolio and credit quality characteristics by collateral classification, excluding loans held for sale. Loans held for sale at September 30, 2025 and December 31, 2024, were $ 23.2 million and $ 18.7 million, respectively.

The following table illustrates the composition of the Corporation’s loan portfolio by loan class as of the dates indicated.


	September 30, 2025		December 31, 2024

Commercial and industrial loans	$	4,604,895	$	4,114,292
Agricultural land, production and other loans to farmers	275,817		256,312
Real estate loans:
Construction	789,021		792,144
Commercial real estate, non-owner occupied	2,304,889		2,274,016
Commercial real estate, owner occupied	1,232,117		1,157,944
Residential	2,412,783		2,374,729
Home equity	687,021		659,811
Individuals' loans for household and other personal expenditures	138,703		166,028
Public finance and other commercial loans	1,145,928		1,059,083
Loans	$	13,591,174	$	12,854,359

Credit Quality

As part of the ongoing monitoring of the credit quality of the Corporation's loan portfolio, management tracks certain credit quality indicators including trends related to: (i) the level of criticized commercial loans, (ii) net charge-offs, (iii) nonperforming loans, (iv) covenant failures and (v) the general national and local economic conditions.

The Corporation utilizes a risk grading of pass, special mention, substandard, doubtful and loss to assess the overall credit quality of large commercial loans. All large commercial credit grades are reviewed at a minimum of once a year for pass grade loans. Loans with grades below pass are reviewed more frequently depending on the grade. A description of the general characteristics of these grades is as follows:

• Pass - Loans that are considered to be of acceptable credit quality.

• Special Mention - Loans which possess some credit deficiency or potential weakness, which deserves close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Corporation's credit position at some future date. Special mention assets are not adversely classified and do not expose the Corporation to sufficient risk to warrant adverse classification.

• Substandard - Loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have a well-defined weakness that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

• Doubtful - Loans that have all of the weaknesses of those classified as Substandard. However, based on existing facts, conditions and values, these weaknesses make full collection of principal highly questionable and improbable.

• Loss – Loans that are considered uncollectible and of such little value that continuing to carry them as an asset is not warranted. Loans will be classified as Loss when it is neither practical or desirable to defer charging-off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The following tables summarize the risk grading of the Corporation’s loan portfolio and gross charge-offs by loan class and by year of origination for the periods indicated. Consumer loans are not risk graded. For the purposes of this disclosure, consumer loans are classified in the following manner: loans that are less than 30 days past due are Pass, loans 30-89 days past due are Special Mention and loans greater than 89 days past due are Substandard. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.


	September 30, 2025
	Term Loans (amortized cost basis by origination year)
	2025		2024		2023		2022		2021		Prior		Revolving loans amortized cost basis		Revolving loans converted to term		Total
Commercial and industrial loans
Pass	$	1,228,198	$	869,398	$	267,325	$	145,103	$	94,273	$	77,656	$	1,709,249	$	—	$	4,391,202
Special Mention	1,843		29,466		20,153		2,449		6,163		687		39,995		—		100,756
Substandard	271		4,335		3,306		2,828		16,868		19,370		62,651		—		109,629
Doubtful	401		582		—		—		500		141		1,684		—		3,308

Total Commercial and industrial loans	1,230,713		903,781		290,784		150,380		117,804		97,854		1,813,579		—		4,604,895
Current period gross charge-offs	3,047		938		2,223		130		3,685		1,469		—		—		11,492
Agricultural land, production and other loans to farmers
Pass	58,346		19,030		21,557		25,456		24,039		46,138		63,114		—		257,680
Special Mention	594		1,656		26		507		—		1,506		1,367		—		5,656
Substandard	4,937		2,185		240		683		—		3,126		1,310		—		12,481


Total Agricultural land, production and other loans to farmers	63,877		22,871		21,823		26,646		24,039		50,770		65,791		—		275,817

Real estate loans:
Construction
Pass	180,692		309,001		129,822		17,639		11,553		10,325		13,803		—		672,835
Special Mention	40,597		6,104		—		—		—		—		—		—		46,701
Substandard	2,637		23,045		—		43,769		—		34		—		—		69,485


Total Construction	223,926		338,150		129,822		61,408		11,553		10,359		13,803		—		789,021
Current period gross charge-offs	—		63		—		—		—		—		—		—		63
Commercial real estate, non-owner occupied
Pass	363,617		314,160		276,753		282,620		386,878		493,783		29,859		—		2,147,670
Special Mention	53,226		16,512		9,666		4,555		1,406		5,350		100		—		90,815
Substandard	57,552		416		—		5,348		1,806		1,199		83		—		66,404


Total Commercial real estate, non-owner occupied	474,395		331,088		286,419		292,523		390,090		500,332		30,042		—		2,304,889
Current period gross charge-offs	—		—		1		451		—		16		—		—		468
Commercial real estate, owner occupied
Pass	248,570		136,935		141,532		156,278		192,605		257,141		38,377		—		1,171,438
Special Mention	348		17,874		—		1,939		1,374		877		200		—		22,612
Substandard	—		12,012		7,801		5,777		8,011		3,258		198		—		37,057
Doubtful	—		1,010		—		—		—		—		—		—		1,010

Total Commercial real estate, owner occupied	248,918		167,831		149,333		163,994		201,990		261,276		38,775		—		1,232,117
Current period gross charge-offs	—		243		152		—		—		3		—		—		398
Residential
Pass	199,663		197,804		412,661		631,381		364,189		551,936		7,147		47		2,364,828
Special Mention	167		1,205		7,041		8,397		5,059		5,697		346		—		27,912
Substandard	334		1,125		4,342		6,302		4,586		3,173		181		—		20,043


Total Residential	200,164		200,134		424,044		646,080		373,834		560,806		7,674		47		2,412,783
Current period gross charge-offs	—		91		622		565		94		163		—		—		1,535
Home equity
Pass	7,892		8,399		3,493		22,387		44,813		11,788		568,235		9,522		676,529
Special Mention	—		705		—		—		728		332		5,480		65		7,310
Substandard	60		—		—		90		108		257		2,312		355		3,182


Total Home Equity	7,952		9,104		3,493		22,477		45,649		12,377		576,027		9,942		687,021
Current period gross charge-offs	—		92		8		653		565		63		—		—		1,381
Individuals' loans for household and other personal expenditures
Pass	30,452		18,917		13,964		21,794		6,121		4,386		41,385		374		137,393
Special Mention	129		246		260		133		118		8		197		218		1,309
Substandard	—		—		—		1		—		—		—		—		1


Total Individuals' loans for household and other personal expenditures	30,581		19,163		14,224		21,928		6,239		4,394		41,582		592		138,703
Current period gross charge-offs	158		427		463		326		142		79		—		—		1,595
Public finance and other commercial loans
Pass	89,786		146,232		52,786		200,013		188,117		426,442		42,552		—		1,145,928




Total Public finance and other commercial loans	89,786		146,232		52,786		200,013		188,117		426,442		42,552		—		1,145,928

Loans	$	2,570,312	$	2,138,354	$	1,372,728	$	1,585,449	$	1,359,315	$	1,924,610	$	2,629,825	$	10,581	$	13,591,174
Total current period gross charge-offs	$	3,205	$	1,854	$	3,469	$	2,125	$	4,486	$	1,793	$	—	$	—	$	16,932

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)


	December 31, 2024
	Term Loans (amortized cost basis by origination year)
	2024		2023		2022		2021		2020		Prior		Revolving loans amortized cost basis		Revolving loans converted to term		Total
Commercial and industrial loans
Pass	$	1,314,174	$	493,138	$	196,877	$	158,215	$	55,639	$	49,554	$	1,576,409	$	130	$	3,844,136
Special Mention	14,982		13,282		20,837		1,097		2,222		348		41,187		—		93,955
Substandard	29,238		32,285		26,973		7,249		1,081		1,134		75,649		513		174,122
Doubtful	1,473		606		—		—		—		—		—		—		2,079

Total Commercial and industrial loans	1,359,867		539,311		244,687		166,561		58,942		51,036		1,693,245		643		4,114,292
Current period gross charge-offs	1,242		39,087		341		8,605		500		424		—		—		50,199
Agricultural land, production and other loans to farmers
Pass	28,600		23,070		30,518		26,442		27,105		29,930		84,502		—		250,167
Special Mention	169		—		245		—		446		422		528		—		1,810
Substandard	2,554		48		800		682		34		81		136		—		4,335


Total Agricultural land, production and other loans to farmers	31,323		23,118		31,563		27,124		27,585		30,433		85,166		—		256,312

Real estate loans:
Construction
Pass	241,622		203,829		114,794		31,864		6,398		8,549		12,836		—		619,892
Special Mention	74,879		21,853		19,019		15,214		—		40		—		—		131,005
Substandard	22,305		—		18,292		—		—		—		—		—		40,597
Doubtful	—		—		—		650		—		—		—		—		650

Total Construction	338,806		225,682		152,105		47,728		6,398		8,589		12,836		—		792,144

Commercial real estate, non-owner occupied
Pass	383,279		275,907		342,442		406,289		327,372		278,362		19,863		—		2,033,514
Special Mention	79,440		9,051		35,230		12,975		5,287		28,200		—		—		170,183
Substandard	34,215		2,506		6,737		6,656		18,607		1,598		—		—		70,319


Total Commercial real estate, non-owner occupied	496,934		287,464		384,409		425,920		351,266		308,160		19,863		—		2,274,016
Current period gross charge-offs	—		339		3		—		—		1		—		—		343
Commercial real estate, owner occupied
Pass	194,703		141,964		164,725		217,319		198,314		127,431		31,573		—		1,076,029
Special Mention	1,887		11,013		7,555		9,910		8,603		1,951		460		—		41,379
Substandard	13,310		7,669		3,189		11,294		1,522		3,552		—		—		40,536


Total Commercial real estate, owner occupied	209,900		160,646		175,469		238,523		208,439		132,934		32,033		—		1,157,944
Current period gross charge-offs	—		—		—		—		9		—		—		—		9
Residential
Pass	221,016		413,552		672,713		397,192		326,154		293,785		8,887		13		2,333,312
Special Mention	1,528		1,953		6,228		4,102		2,891		3,152		150		—		20,004
Substandard	1,306		1,912		8,849		3,989		1,216		3,794		347		—		21,413


Total Residential	223,850		417,417		687,790		405,283		330,261		300,731		9,384		13		2,374,729
Current period gross charge-offs	—		173		779		136		20		288		—		—		1,396
Home equity
Pass	6,788		4,354		24,810		51,313		10,486		3,976		535,132		12,124		648,983
Special Mention	38		—		375		285		297		69		4,568		442		6,074
Substandard	61		—		572		815		—		96		2,244		966		4,754


Total Home Equity	6,887		4,354		25,757		52,413		10,783		4,141		541,944		13,532		659,811
Current period gross charge-offs	—		10		35		22		—		267		—		—		334
Individuals' loans for household and other personal expenditures
Pass	40,819		21,867		31,356		10,520		2,276		4,693		53,180		180		164,891
Special Mention	153		234		347		175		59		40		128		—		1,136
Substandard	—		—		—		—		—		—		—		1		1


Total Individuals' loans for household and other personal expenditures	40,972		22,101		31,703		10,695		2,335		4,733		53,308		181		166,028
Current period gross charge-offs	208		920		523		184		47		80		—		—		1,962
Public finance and other commercial loans
Pass	161,072		53,750		203,884		195,066		146,377		298,802		132		—		1,059,083




Total Public finance and other commercial loans	161,072		53,750		203,884		195,066		146,377		298,802		132		—		1,059,083

Loans	$	2,869,611	$	1,733,843	$	1,937,367	$	1,569,313	$	1,142,386	$	1,139,559	$	2,447,911	$	14,369	$	12,854,359
Total current period gross charge-offs	$	1,450	$	40,529	$	1,681	$	8,947	$	576	$	1,060	$	—	$	—	$	54,243

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Total past due loans equaled $ 156.4 million as of September 30, 2025 representing a $ 40.2 million increase from $ 116.2 million at December 31, 2024. At September 30, 2025, 30-59 days past due increased $ 47.7 million from December 31, 2024 as construction and commercial real estate, owner occupied loan classes increased $ 43.0 million and $ 5.3 million, respectively. At September 30, 2025, 60-89 days past due decreased $ 8.1 million from December 31, 2024 as the construction loan class decreased $ 22.0 million. The decrease was partially offset by increases in the commercial and industrial, residential, and commercial real estate, non-owner occupied loan classes of $ 5.0 million, $ 4.7 million, and $ 3.2 million, respectively. At September 30, 2025, 90 days or more past due increased $ 0.6 million from December 31, 2024 as construction and commercial real estate, owner occupied loan classes increased $ 8.9 million and $ 5.4 million, respectively. The increase was partially offset by decreases in the commercial real estate, non-owner occupied and commercial and industrial loan classes of $ 8.4 million and $ 3.9 million, respectively. The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, as of the dates indicated.


	September 30, 2025
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	4,591,709	$	1,848	$	5,488	$	5,850	$	4,604,895	$	154
Agricultural land, production and other loans to farmers	275,364		—		217		236		275,817		—
Real estate loans:
Construction	728,758		47,341		—		12,922		789,021		—
Commercial real estate, non-owner occupied	2,292,354		5,727		4,907		1,901		2,304,889		1,329
Commercial real estate, owner occupied	1,216,776		9,037		564		5,740		1,232,117		—
Residential	2,368,841		13,926		11,279		18,737		2,412,783		423
Home equity	677,667		4,662		1,631		3,061		687,021		19
Individuals' loans for household and other personal expenditures	137,393		927		382		1		138,703		—

Public finance and other commercial loans	1,145,928		—		—		—		1,145,928		—
Loans	$	13,434,790	$	83,468	$	24,468	$	48,448	$	13,591,174	$	1,925


	December 31, 2024
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	4,096,605	$	7,428	$	473	$	9,786	$	4,114,292	$	2,010
Agricultural land, production and other loans to farmers	256,148		164		—		—		256,312		—
Real estate loans:
Construction	761,819		4,332		22,005		3,988		792,144		3,683
Commercial real estate, non-owner occupied	2,259,549		2,407		1,718		10,342		2,274,016		—
Commercial real estate, owner occupied	1,153,861		3,783		—		300		1,157,944		—
Residential	2,337,002		12,302		6,606		18,819		2,374,729		208
Home equity	649,238		4,431		1,569		4,573		659,811		—
Individuals' loans for household and other personal expenditures	164,891		926		210		1		166,028		1

Public finance and other commercial loans	1,059,083		—		—		—		1,059,083		—
Loans	$	12,738,196	$	35,773	$	32,581	$	47,809	$	12,854,359	$	5,902

Loans are reclassified to a nonaccruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. At the time the accrual is discontinued, all unpaid accrued interest is reversed against earnings. Interest income accrued in prior years, if any, is charged to the allowance for credit losses. Payments subsequently received on nonaccrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance.

The following table summarizes the Corporation’s nonaccrual loans by loan class as of the dates indicated.


	September 30, 2025				December 31, 2024
	Nonaccrual Loans		Nonaccrual Loans with no Allowance for Credit Losses		Nonaccrual Loans		Nonaccrual Loans with no Allowance for Credit Losses
Commercial and industrial loans	$	9,399	$	2,713	$	8,090	$	4,937
Agricultural land, production and other loans to farmers	254		—		75		—
Real estate loans:
Construction	12,922		12,889		24,629		22,650
Commercial real estate, non-owner occupied	6,693		5,823		12,118		10,153
Commercial real estate, owner occupied	6,622		4,973		2,440		1,904
Residential	25,487		—		21,491		—
Home equity	4,346		—		4,924		—
Individuals' loans for household and other personal expenditures	17		—		6		—

Loans	$	65,740	$	26,398	$	73,773	$	39,644

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Interest income on nonaccrual loans is recognized only to the extent that cash payments are received in excess of principal due. There was no interest income recognized on nonaccrual loans for the three and nine months ended September 30, 2025 or 2024.

Determining fair value for collateral dependent loans requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

The tables below present the amortized cost basis of collateral dependent loans by loan class and their respective collateral type, which are individually evaluated to determine expected credit losses. The total collateral dependent loan balance decreased $ 3.4 million for the nine months ended September 30, 2025, primarily related to decreases of $ 9.8 million and $ 6.2 million in the construction and commercial real estate, non-owner occupied loan classes, respectively. The decrease was partially offset by an increase of $ 13.6 million in the commercial and industrial loan class. The total related allowance balance increased $ 2.7 million for the nine months ended September 30, 2025, primarily related to an increase of $ 2.8 million in the commercial and industrial loan class.


	September 30, 2025
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	37,092	$	37,092	$	10,594

Real estate loans:
Construction	—		12,889		—		12,889		—
Commercial real estate, non-owner occupied	21,369		—		—		21,369		4,180
Commercial real estate, owner occupied	8,792		—		—		8,792		69
Residential	—		1,044		—		1,044		170
Home equity	—		184		—		184		22


Loans	$	30,161	$	14,117	$	37,092	$	81,370	$	15,035


	December 31, 2024
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	23,455	$	23,455	$	7,803

Real estate loans:
Construction	—		22,652		—		22,652		—
Commercial real estate, non-owner occupied	27,583		—		—		27,583		4,295
Commercial real estate, owner occupied	9,748		—		—		9,748		—
Residential	—		1,174		—		1,174		189
Home equity	—		201		—		201		25


Loans	$	37,331	$	24,027	$	23,455	$	84,813	$	12,312

In certain situations, the Corporation may modify the terms of a loan to a debtor experiencing financial difficulty. The modifications may include principal forgiveness, interest rate reductions, payment delays, term extensions or combinations of these modifications. The following tables present the amortized cost basis of loans at September 30, 2025 and 2024 that were both experiencing financial difficulty and modified during the three and nine months ended September 30, 2025 and 2024, by class and by type of modification. For the three and nine months ended September 30, 2025, the table below excludes loan modifications considered insignificant. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.


	Three Months Ended September 30, 2025
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Interest Rate Reduction & Term Extension		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	6,154	$	—	0.13	%

Real estate loans:

Commercial real estate, non-owner occupied	—		1,570		6,426		0.35	%

Residential	261		—		—		0.01	%



Total	$	261	$	7,724	$	6,426

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)


	Three Months Ended September 30, 2024
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Payment Delay & Term Extension		Combination Interest Rate Reduction & Term Extension		Combination Interest Rate Reduction, Term Extension, & Payment Delay		% of Total Class of Financing Receivable
Commercial and industrial loans	$	9,600	$	10,333	$	—	$	31	$	—	0.49	%

Real estate loans:
Construction	—		915		22,000		—		—		2.81	%
Commercial real estate, non-owner occupied	—		10,254		—		10,828		—		0.94	%
Commercial real estate, owner occupied	—		5,841		—		—		—		0.51	%
Residential	493		56		—		—		304		0.04	%
Home equity	—		62		—		—		—		0.01	%


Total	$	10,093	$	27,461	$	22,000	$	10,859	$	304



	Nine Months Ended September 30, 2025
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Interest Rate Reduction		Combination Interest Rate Reduction & Term Extension		Combination Interest Rate Reduction, Term Extension, & Payment Delay		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	11,201	$	—	$	—	$	—	0.24	%

Real estate loans:

Commercial real estate, non-owner occupied	—		15,515		37,954		12,248		—		2.85	%

Residential	977		—		—		—		1,285		0.09	%



Total	$	977	$	26,716	$	37,954	$	12,248	$	1,285



	Nine Months Ended September 30, 2024
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Interest Rate Reduction		Combination Payment Delay & Term Extension		Combination Interest Rate Reduction & Term Extension		Combination Interest Rate Reduction, Term Extension, & Payment Delay		% of Total Class of Financing Receivable
Commercial and industrial loans	$	11,080	$	12,880	$	247	$	17	$	31	$	—	0.60	%

Real estate loans:
Construction	—		915		—		22,000		—		—		2.81	%
Commercial real estate, non-owner occupied	—		18,933		—		—		10,828		—		1.32	%
Commercial real estate, owner occupied	—		6,208		—		—		—		—		0.54	%
Residential	1,931		341		—		283		—		529		0.13	%
Home equity	—		62		—		162		—		—		0.03	%


Total	$	13,011	$	39,339	$	247	$	22,462	$	10,859	$	529

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three and nine months ended September 30, 2025 and 2024.

Three Months Ended September 30, 2025

Financial Effect of Loan Modifications

Payment Delay

Term Extension

Combination Interest Rate Reduction & Term Extension

Commercial and industrial loans

Extended loans by a weighted average of 4 months.

Real estate loans:

Commercial real estate, non-owner occupied

Extended loans by a weighted average of 12 months.

Reduced the weighted average contractual interest rate from 12.44 % to 7.42 % and extended loans by a weighted average of 5 months.

Residential

Provided payment deferrals with weighted average delayed amounts of $ 28 .

Three Months Ended September 30, 2024

Financial Effect of Loan Modifications

Payment Delay

Term Extension

Combination Payment Delay & Term Extension

Combination Interest Rate Reduction & Term Extension

Combination Interest Rate Reduction, Term Extension & Payment Delay

Commercial and industrial loans

Provided payment deferrals with weighted average delayed amounts of $ 200 .

Extended loans by a weighted average of 6 months.

Reduced the weighted average contractual interest rate from 9.50 % to 8.05 % and extended loans by a weighted average of 48 months.

Real estate loans:

Construction

Extended loans by a weighted average of 6 months.

Provided payment deferrals with weighted average delayed amounts of $ 475 and extended loans by a weighted average of 4 months.

Commercial real estate, non-owner occupied

Extended loans by a weighted average of 8 months.

Reduced the weighted average contractual interest rate from 12.38 % to 7.88 % and extended loans by a weighted average of 8 months.

Commercial real estate, owner occupied

Extended loans by a weighted average of 8 months.

Residential

Provided payment deferrals with weighted average delayed amounts of $ 8 .

Extended loans by a weighted average of 92 months.

Provided payment deferrals with weighted average delayed amounts of $ 14 , extended loans by a weighted average of 149 months, and reduced the weighted average contractual interest rate from 5.73 % to 3.31 %.

Home equity

Extended loans by a weighted average of 6 months.

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Nine Months Ended September 30, 2025

Financial Effect of Loan Modifications

Payment Delay

Term Extension

Interest Rate Reduction

Combination Interest Rate Reduction & Term Extension

Combination Interest Rate Reduction, Term Extension & Payment Delay

Commercial and industrial loans

Extended loans by a weighted average of 4 months.

Real estate loans:

Commercial real estate, non-owner occupied

Extended loans by a weighted average of 7 months.

Reduced the weighted average contractual interest rate from 7.58 % to 6.93 %.

Reduced the weighted average contractual interest rate from 13.18 % to 7.22 % and extended loans by a weighted average of 10 months.

Residential

Provided payment deferrals with weighted average delayed amounts of $ 26 .

Reduced the weighted average contractual interest rate from 4.50 % to 2.50 %, extended loans by a weighted average of 68 months, and provided payment deferrals with weighted average delayed amounts of $ 8 .

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Nine Months Ended September 30, 2024

Financial Effect of Loan Modifications

Payment Delay

Term Extension

Interest Rate Reduction

Combination Payment Delay & Term Extension

Combination Interest Rate Reduction & Term Extension

Combination Interest Rate Reduction, Term Extension & Payment Delay

Commercial and industrial loans

Provided payment deferrals with weighted average delayed amounts of $ 180 .

Extended loans by a weighted average of 9 months.

Reduced the weighted average contractual interest rate from 9.00 % to 8.00 %.

Provided payment deferrals with weighted average delayed amounts of $ 5 and extended loans by a weighted average of 3 months.

Reduced the weighted average contractual interest rate from 9.50 % to 8.05 %. Extended loans by a weighted average of 48 months.

Real estate loans:

Construction

Extended loans by a weighted average of 6 months.

Provided payment deferrals with weighted average delayed amounts of $ 475 and extended loans by a weighted average of 4 months.

Commercial real estate, non-owner occupied

Extended loans by a weighted average of 13 months.

Reduced the weighted average contractual interest rate from 12.38 % to 7.88 %. Extended loans by a weighted average of 8 months.

Commercial real estate, owner occupied

Extended loans by a weighted average of 13 months.

Residential

Provided payment deferrals with weighted average delayed amounts of $ 26 .

Extended loans by a weighted average of 20 months.

Provided payment deferrals with weighted average delayed amounts of $ 8 and extended loans by a weighted average of 153 months.

Provided payment deferrals with weighted average delayed amounts of $ 14 , extended loans by a weighted average of 91 months, and reduced the weighted average contractual interest rate from 5.74 % to 4.03 %.

Home equity

Extended loans by a weighted average of 6 months.

Provided payment deferrals with weighted average delayed amounts of $ 8 and extended loans by a weighted average of 60 months.

The Corporation closely monitors the performance of financial difficulty modifications to understand the effectiveness of its efforts. The following tables present the performance of financial difficulty modifications in the twelve months following modification.


	September 30, 2025
	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Commercial and industrial loans	$	9,561	$	—	$	—	$	3,278	$	12,839
Agricultural land, production and other loans to farmers	2,177		—		—		—		2,177
Real estate loans:

Commercial real estate, non-owner occupied	65,717		—		—		—		65,717

Residential	4,275		351		647		1,764		7,037
Home equity	155		—		—		—		155


Total	$	81,885	$	351	$	647	$	5,042	$	87,925

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)


	September 30, 2024
	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Commercial and industrial loans	$	24,445	$	—	$	1,927	$	—	$	26,372
Agricultural land, production and other loans to farmers	22		—		—		—		22
Real estate loans:
Construction	22,915		—		—		—		22,915
Commercial real estate, non-owner occupied	21,082		8,680		—		1,730		31,492
Commercial real estate, owner occupied	7,523		—		—		—		7,523
Residential	1,940		—		250		1,189		3,379
Home equity	252		—		—		—		252


Total	$	78,179	$	8,680	$	2,177	$	2,919	$	91,955

During the nine months ended September 30, 2025 and 2024, there were payment defaults of $ 5.0 million and $ 2.9 million, respectively, on loans to borrowers whose loans were modified due to financial difficulties within the previous twelve months. The payment defaults did not materially impact the allowance for credit losses on loans.

Upon the Corporation's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is charged-off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

Allowance for Credit Losses on Loans

The Allowance for Credit Losses on Loans ("ACL - Loans") is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on loans over the contractual term. The ACL - Loans is adjusted by the provision for credit losses, which is reported in earnings, and reduced by charge-offs for loans, net of recoveries. Provision for credit losses on loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans. Loans are charged-off against the allowance when the uncollectibility of the loan is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

The allowance represents the Corporation’s best estimate of current expected credit losses on loans using relevant available information from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The Current Expected Credit Losses ("CECL") calculation is performed and evaluated quarterly and losses are estimated over the expected life of the loan. The level of the allowance for credit losses is believed to be adequate to absorb all expected future losses inherent in the loan portfolio at the measurement date.

In calculating the allowance for credit losses, the loan portfolio was pooled into ten loan segments with similar risk characteristics. Common characteristics include the type or purpose of the loan, underlying collateral and historical/expected credit loss patterns. In developing the loan segments, the Corporation analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors.

The expected credit losses are measured over the life of each loan segment utilizing the Probability of Default / Loss Given Default methodology combined with economic forecast models to estimate the current expected credit loss inherent in the loan portfolio. This approach is also leveraged to estimate the expected credit losses associated with unfunded loan commitments incorporating expected utilization rates.

The Corporation sub-segmented certain commercial portfolios by risk level and certain consumer portfolios by delinquency status where appropriate. The Corporation utilized a four-quarter reasonable and supportable economic forecast period followed by a six-quarter, straight-line reversion period to the historical macroeconomic mean for the remaining life of the loans. Econometric modeling was performed using historical default rates and a selection of economic forecast scenarios published by Moody’s to develop a range of estimated credit losses for which to

determine the best credit loss estimate within. Macroeconomic factors utilized in the modeling process include the national unemployment rate, BBB US corporate index, commercial real estate price index and the home price index.

The Corporation qualitatively adjusts model results for risk factors that are not inherently considered in the quantitative modeling process, but are nonetheless relevant in assessing the expected credit losses within the loan portfolio. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that may be considered in making qualitative adjustments include, among other things, the impact of (i) changes in the nature and volume of the loan portfolio, (ii) changes in the existence, growth and effect of any concentrations in credit, (iii) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, charge-offs, and recoveries, (iv) changes in the quality of the credit review function, (v) changes in the experience, ability and depth of lending, investment, collection and other relevant management staff, (vi) changes in the volume and severity of past due financial assets, the volume of the nonaccrual assets, and the volume and severity of adversely classified or graded assets, (vii) the value of underlying collateral for loans that are not collateral dependent, and (viii) other environmental factors such as regulatory, legal and technological considerations, as well as competition and changes in the economic and business conditions that affect the collectability of financial assets.

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within the loan segments. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific reserve allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The fair value of collateral supporting collateral dependent loans is evaluated on a quarterly basis.

The risk characteristics of the Corporation’s portfolio segments are as follows:

Commercial

Commercial lending is primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the tangible assets being financed such as equipment or real estate or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. Other loans may be unsecured, secured but under-collateralized or otherwise made on the basis of the enterprise value of an organization. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. The Corporation monitors commercial real estate loans based on collateral and risk grade criteria, as well as the levels of owner-occupied versus non-owner occupied loans.

Construction

Construction loans are underwritten utilizing a combination of tools and techniques including feasibility and market studies, independent appraisals and appraisal reviews, absorption and interest rate sensitivity analysis as well as the financial analysis of the developer and all guarantors. Construction loans are monitored by either in house or third party inspectors limiting advances to a percentage of costs or stabilized project value. These loans frequently involve the disbursement of significant funds with the repayment dependent upon the successful completion and, where necessary, the future stabilization of the project. The predominant inherent risk of this portfolio is associated with the borrower's ability to successfully complete a project on time, within budget and stabilize the projected as originally projected.

Consumer and Residential

With respect to residential loans that are secured by 1-4 family residences, which are typically owner occupied, the Corporation generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans, such as small installment loans and certain lines of credit, are unsecured. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers and can also be impacted by changes in property values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

The ACL - Loans decreased $ 0.8 million and increased $ 1.7 million during the three and nine months ended September 30, 2025, respectively. Net charge-offs totaled $ 5.1 million and $ 12.4 million during the three and nine months ended September 30, 2025, respectively. Provision expense of $ 4.3 million and $ 14.1 million was recorded during the three and nine months ended September 30, 2025, respectively. The following tables summarize changes in the allowance for credit losses by loan segment for the three and nine months ended September 30, 2025 and 2024.


	Three Months Ended September 30, 2025
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses - loans
Balances, June 30, 2025	$	98,984	$	46,277	$	8,743	$	41,312	$	195,316



Provision for credit losses - loans	3,632		1,252		( 2,257 )		1,673		4,300


Recoveries on loans	914		4		—		433		1,351
Loans charged off	( 4,519 )		( 391 )		—		( 1,589 )		( 6,499 )
Balances, September 30, 2025	$	99,011	$	47,142	$	6,486	$	41,829	$	194,468

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)


	Three Months Ended September 30, 2024
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses - loans
Balances, June 30, 2024	$	91,217	$	45,514	$	14,360	$	38,446	$	189,537
Provision for credit losses - loans	8,456		1,873		( 2,609 )		( 2,720 )		5,000


Recoveries on loans	505		18		—		371		894
Loans charged off	( 6,375 )		—		—		( 1,228 )		( 7,603 )
Balances, September 30, 2024	$	93,803	$	47,405	$	11,751	$	34,869	$	187,828



	Nine Months Ended September 30, 2025
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses - loans
Balances, December 31, 2024	$	94,757	$	51,099	$	9,784	$	37,117	$	192,757
Provision for credit losses - loans	12,380		( 3,198 )		( 3,235 )		8,153		14,100


Recoveries on loans	3,366		107		—		1,070		4,543
Loans charged off	( 11,492 )		( 866 )		( 63 )		( 4,511 )		( 16,932 )
Balances, September 30, 2025	$	99,011	$	47,142	$	6,486	$	41,829	$	194,468



	Nine Months Ended September 30, 2024
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses - loans
Balances, December 31, 2023	$	97,348	$	44,048	$	24,823	$	38,715	$	204,934
Provision for credit losses - loans	43,249		3,476		( 13,072 )		( 2,153 )		31,500


Recoveries on loans	1,592		232		—		1,227		3,051
Loans charged off	( 48,386 )		( 351 )		—		( 2,920 )		( 51,657 )
Balances, September 30, 2024	$	93,803	$	47,405	$	11,751	$	34,869	$	187,828

Off-Balance Sheet Arrangements, Commitments And Contingencies

In the normal course of business, the Corporation has entered into off-balance sheet financial instruments which include commitments to extend credit and standby letters of credit. Commitments to extend credit are usually the result of lines of credit granted to existing borrowers under agreements that the total outstanding indebtedness will not exceed a specific amount during the term of the indebtedness. Typical borrowers are commercial customers that use lines of credit to supplement their treasury management functions, and thus their total outstanding indebtedness may fluctuate during any time period based on the seasonality of their business and the resultant timing for their cash flows. Other typical lines of credit are related to home equity loans granted to customers. Commitments to extend credit generally have fixed expiration dates or other termination clauses that may require a fee.

Standby letters of credit are generally issued on behalf of an applicant (the Corporation’s customer) to a specifically named beneficiary and are the result of a particular business arrangement that exists between the applicant and the beneficiary. Standby letters of credit have fixed expiration dates and are usually for terms of two years or less unless terminated beforehand due to criteria specified in the standby letter of credit. The standby letter of credit would permit the beneficiary to obtain payment from the Corporation under certain prescribed circumstances. Subsequently, the Corporation would seek reimbursement from the applicant pursuant to the terms of the standby letter of credit.

The Corporation typically follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments. Each customer’s creditworthiness is typically evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management’s credit evaluation of the customer. Collateral held varies but may include cash, real estate, marketable securities, accounts receivable, inventory, equipment and personal property. The contractual amounts of these commitments are not reflected in the consolidated financial statements and only amounts drawn upon would be reflected in the future. Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements. However, should the commitments be drawn upon and should the Corporation’s customers default on their resulting obligation to the Corporation, the maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those commitments.

Financial instruments with off-balance sheet risk were as follows:


	September 30, 2025		December 31, 2024
Amounts of commitments:
Loan commitments to extend credit	$	5,552,327	$	5,006,085
Standby letters of credit	$	72,972	$	71,271

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The Corporation maintains an accrual for credit losses on off-balance sheet commitments using the CECL methodology. Reserves for unfunded commitments were $ 18.0 million at September 30, 2025 and December 31, 2024. There was no provision for credit losses on unfunded commitments during the three and nine months ended September 30, 2025 and 2024. This reserve level remains appropriate and is reported in Other Liabilities as of September 30, 2025 and December 31, 2024 in the Consolidated Condensed Balance Sheets.

NOTE 5

DERIVATIVE FINANCIAL INSTRUMENTS

Non-designated Hedges

Derivatives not designated as hedges are not used for speculative purposes. Instead, they arise from services provided to commercial banking customers as part of their risk management strategies. The Corporation executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Corporation executes with a third party, such that the Corporation minimizes its net risk exposure resulting from such transactions. As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.

Interest rate lock commitments related to mortgage loans and forward sale commitments to third-party investors are also considered derivatives. It is the Corporation's practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated in hedge relationships. Fair values were estimated using observable market inputs, primarily changes in mortgage interest rates, from the date of the commitment to the reporting date. Changes in the fair value of these mortgage banking derivatives are included in net gains and fees on sales of loans.

The table below presents the fair value of the Corporation’s non-designated hedges, as well as their classification on the Consolidated Condensed Balance Sheets, as of September 30, 2025 and December 31, 2024.


	September 30, 2025				December 31, 2024
	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in other assets:
Interest rate swaps	$	1,456,442	$	49,673	$	1,386,757	$	76,528
Forward contracts related to mortgage loans to be delivered for sale	50,872		800		39,142		465
Interest rate lock commitments	36,909		249		15,000		140
Included in other assets	$	1,544,223	$	50,722	$	1,440,899	$	77,133
Included in other liabilities:
Interest rate swaps	$	1,583,830	$	49,719	$	1,486,764	$	76,450
Forward contracts related to mortgage loans to be delivered for sale	28,559		87		13,020		18
Interest rate lock commitments	7,220		57		14,457		100
Included in other liabilities	$	1,619,609	$	49,863	$	1,514,241	$	76,568

In the normal course of business, the Corporation may decide to settle a forward contract rather than fulfill the contract. Cash received or paid in this settlement manner is included in "Net gains and fees on sales of loans" in the Consolidated Condensed Statements of Income and is considered a cost of executing a forward contract. The amount of gain (loss) recognized into income related to non-designated hedging instruments is included in the table below for the periods indicated.


Derivatives Not Designated as Hedging Instruments under FASB ASC 815-10	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain (Loss) Recognized into Income on Derivatives
		Three Months Ended September 30, 2025		Three Months Ended September 30, 2024
Forward contracts related to mortgage loans to be delivered for sale	Net gains and fees on sales of loans	$	( 616 )	$	( 966 )
Interest rate lock commitments	Net gains and fees on sales of loans	( 68 )		30
Total net gain (loss) recognized in income		$	( 684 )	$	( 936 )



Derivatives Not Designated as Hedging Instruments under FASB ASC 815-10	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain (Loss) Recognized into Income on Derivatives
		Nine Months Ended September 30, 2025		Nine Months Ended September 30, 2024
Forward contracts related to mortgage loans to be delivered for sale	Net gains and fees on sales of loans	$	( 542 )	$	( 573 )
Interest rate lock commitments	Net gains and fees on sales of loans	151		( 15 )
Total net gain (loss) recognized in income		$	( 391 )	$	( 588 )

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The Corporation’s exposure to credit risk occurs because of nonperformance by its counterparties. The counterparties approved by the Corporation are usually financial institutions, which are well capitalized and have credit ratings through Moody’s and/or Standard & Poor’s at or above investment grade. The Corporation’s mitigation of such risk is through quarterly financial reviews, comparing mark-to-market values with policy limitations, credit ratings and collateral pledging.

Credit-risk-related Contingent Features

The Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation fails to maintain its status as a well or adequately capitalized institution, then the Corporation could be required to terminate or fully collateralize all outstanding derivative contracts. Additionally, the Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations. As of September 30, 2025, the termination value of derivatives in a net liability position related to these agreements was $ 10.1 million, which resulted in $ 1.1 million of collateral pledged to counterparties as of September 30, 2025. While the Corporation did not breach any of these provisions as of September 30, 2025, if it had, the Corporation could have been required to settle its obligations under the agreements at their termination value.

NOTE 6

FAIR VALUES OF FINANCIAL INSTRUMENTS

The Corporation uses fair value measurements to adjust certain assets and liabilities and to provide fair value disclosures. Accounting Standards Codification ("ASC") 820 defines fair value, establishes a framework for measuring it and expands related disclosure requirements. It applies only when other accounting guidance requires or permits fair value measurement and does not expand its use to new circumstances.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It represents an exit price at the measurement date. Market participants are buyers and sellers, who are independent, knowledgeable, and willing and able to transact in the principal (or most advantageous) market for the asset or liability being measured. The Corporation values its assets and liabilities in the principal market where it sells the asset or transfers the liability with the greatest volume and level of activity. If no principal market exists, valuation is based on the most advantageous market — one that maximizes the asset’s sale price or minimizes the liability’s transfer cost.

Valuation inputs reflect assumptions that market participants would use to price an asset or liability. These inputs are categorized as either observable or unobservable. Observable inputs are based on market data from independent sources and reflect assumptions market participants would use. Unobservable inputs are derived from the Corporation’s own estimates, reflecting assumptions market participants might use when market data is not available. These rely on the best available information at the measurement date.

Inputs are ranked within a three-level fair value hierarchy. Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are based on one or more of the following: quoted prices for similar assets, observable inputs such as interest rates or yield curves, or inputs corroborated by market data. Level 3 inputs are unobservable and reflect minimal market activity.

An input is considered significant if it contributes 10 percent or more to the total fair value of the asset or liability.

RECURRING AND NONRECURRING FAIR VALUE MEASUREMENTS

Assets and liabilities are considered to be measured at fair value on a recurring basis if fair value is measured regularly — such as daily, weekly, monthly, or quarterly. Recurring valuation occurs at least on the measurement date. Assets and liabilities are considered to be measured at fair value on a nonrecurring basis if the fair value measurement is not performed regularly and does not necessarily result in a change to the recorded balance sheet amount. Generally, nonrecurring valuation is the result of the application of other accounting pronouncements which require assets or liabilities to be assessed for impairment and recorded at the lower of cost or fair value. The fair value of assets or liabilities transferred in or out of Level 3 is measured on the transfer date, with any additional changes in fair value subsequent to the transfer considered to be realized or unrealized gains or losses.

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the

accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Investment Securities

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. As of September 30, 2025, and December 31, 2024 the Corporation did not hold any Level 1 securities. Where significant observable inputs, other than Level 1 quoted prices, are available, securities are classified within Level 2 of the valuation hierarchy. Level 2 securities include U.S. Government-sponsored agency and mortgage-backed securities, state and municipal securities, foreign investment and corporate obligations. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include state and municipal securities and corporate obligations. Fair values for Level 3 securities were determined using discounted cash flow models that incorporated market estimates of interest rates and volatility in markets that have not been active.

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Third party vendors compile prices from various sources and may apply such techniques as matrix pricing to determine the value of identical or similar investment securities (Level 2). Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities. Any investment security not valued based upon the methods above are considered Level 3.

Derivative Financial Agreements

See information regarding the Corporation’s derivative financial agreements in NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets on a recurring basis, along with their classification within the fair value hierarchy as of September 30, 2025, and December 31, 2024.


			Fair Value Measurements Using:
September 30, 2025	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:

U.S. Government-sponsored agency securities	$	77,897	$	—	$	77,897	$	—
State and municipal	874,576		—		872,613		1,963
U.S. Government-sponsored mortgage-backed securities	423,338		—		423,338		—
Foreign investment	1,500		—		1,500		—
Corporate obligations	9,592		—		9,561		31
Derivative assets	50,722		—		50,722		—
Derivative liabilities	49,863		—		49,863		—


			Fair Value Measurements Using:
December 31, 2024	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:


U.S. Government-sponsored agency securities	$	79,381	$	—	$	79,381	$	—
State and municipal	863,174		—		860,793		2,381
U.S. Government-sponsored mortgage-backed securities	431,622		—		431,618		4
Corporate obligations	12,298		—		12,267		31

Derivative assets	77,133		—		77,133		—
Derivative liabilities	76,568		—		76,568		—

Level 3 Reconciliation

The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying

balance sheets using significant unobservable Level 3 inputs for the three and nine months ended September 30, 2025 and 2024.


	Available for Sale Securities
	Three Months Ended				Nine Months Ended
	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Balance at beginning of the period	$	2,196	$	3,224	$	2,416	$	3,310


Included in other comprehensive income	29		65		38		76


Principal payments	( 231 )		( 808 )		( 460 )		( 905 )
Ending balance	$	1,994	$	2,481	$	1,994	$	2,481

There were no gains or losses included in earnings that were attributable to the changes in unrealized gains or losses related to assets or

liabilities held at September 30, 2025 or December 31, 2024.

Transfers Between Levels

There were no transfers in or out of Level 3 during the three and nine months ended September 30, 2025 and 2024.

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Nonrecurring Measurements

Following is a description of valuation methodologies used for instruments measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy at September 30, 2025, and December 31, 2024.


			Fair Value Measurements Using
September 30, 2025	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	66,708	$	—	$	—	$	66,708


			Fair Value Measurements Using
December 31, 2024	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	46,810	$	—	$	—	$	46,810

Collateral Dependent Loans

Unobservable (Level 3) Inputs

The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at September 30, 2025 and December 31, 2024.

September 30, 2025

Fair Value

Valuation Technique

Unobservable Inputs

Range (Weighted-Average)

State and municipal securities

1,963

Discounted cash flow

Maturity/Call date

1 month to 5 years

US Muni BQ curve

BBB

Discount rate

3.4 % - 5.7 %

Weighted-average coupon

3.6 %

Corporate obligations

Discounted cash flow

Risk free rate

3 month CME Term SOFR plus 26 bps

plus premium for illiquidity (basis points)

plus 200 bps

Weighted-average coupon

0 %

Collateral dependent loans

66,708

Collateral based measurements

Discount to reflect current market conditions and ultimate collectability

1 % - 16 %

Weighted-average discount by loan balance

1.5 %

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

December 31, 2024

Fair Value

Valuation Technique

Unobservable Inputs

Range (Weighted-Average)

State and municipal securities

2,381

Discounted cash flow

Maturity/Call date

1 month to 6 years

US Muni BQ curve

BBB

Discount rate

3.6 % - 4.7 %

Weighted-average coupon

3.6 %

Corporate obligations and U.S. Government-sponsored mortgage-backed securities

Discounted cash flow

Risk free rate

3 month CME Term

SOFR plus 26 bps

plus premium for illiquidity (basis points)

plus 200 bps

Weighted-average coupon

0 %

Collateral dependent loans

46,810

Collateral based measurements

Discount to reflect current market conditions and ultimate collectability

0 % - 16 %

Weighted-average discount by loan balance

12.6 %

The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement and how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.

State and Municipal Securities and Corporate Obligations

The significant unobservable inputs used in the fair value measurement of the Corporation's state and municipal securities and corporate obligations are premiums for unrated securities and marketability discounts. Significant increases or decreases in either of those inputs in isolation would result in a significantly lower or higher fair value measurement. Generally, changes in either of those inputs will not affect the other input.

Fair Value of Financial Instruments

The following tables present estimated fair values of the Corporation’s financial instruments not carried at fair value and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2025 and December 31, 2024.


			September 30, 2025
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		Total Fair Value
Assets:
Cash and due from banks	$	88,079	$	88,079	$	—	$	—	$	88,079
Interest-bearing deposits	168,706		168,706		—		—		168,706
Investment securities held to maturity, net of allowance for credit losses	1,995,488		—		1,702,443		4,621		1,707,064
Loans held for sale	23,190		—		23,190		—		23,190
Net loans	13,396,706		—		—		13,306,141		13,306,141
Federal Home Loan Bank stock	47,264		—		47,264		—		47,264

Interest receivable	89,102		—		89,102		—		89,102
Liabilities:
Deposits	$	14,869,979	$	12,810,405	$	2,058,720	$	—	14,869,125
Borrowings:
Federal funds purchased	199,370		—		199,370		—		199,370
Securities sold under repurchase agreements	122,226		—		122,218		—		122,218
Federal Home Loan Bank advances	798,626		—		803,788		—		803,788
Subordinated debentures and other borrowings	57,632		—		53,537		—		53,537


Interest payable	18,240		—		18,240		—		18,240

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)


			December 31, 2024
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		Total Fair Value
Assets:
Cash and due from banks	$	87,616	$	87,616	$	—	$	—	$	87,616
Interest-bearing deposits	298,891		298,891		—		—		298,891
Investment securities held to maturity, net	2,074,220		—		1,716,647		6,873		1,723,520
Loans held for sale	18,663		—		18,663		—		18,663
Net loans	12,661,602		—		—		12,437,523		12,437,523
Federal Home Loan Bank stock	41,690		—		41,690		—		41,690

Interest receivable	91,829		—		91,829		—		91,829
Liabilities:
Deposits	$	14,521,626	$	12,502,819	$	2,010,348	$	—	14,513,167
Borrowings:

Securities sold under repurchase agreements	142,876		—		142,865		—		142,865
Federal Home Loan Bank advances	822,554		—		816,786		—		816,786
Subordinated debentures and other borrowings	93,529		—		84,108		—		84,108

Interest payable	16,102		—		16,102		—		16,102

NOTE 7

QUALIFIED AFFORDABLE HOUSING INVESTMENTS

The Corporation has investments in various limited partnerships that sponsor affordable housing projects. The purpose of these investments is to earn an adequate return of capital through the receipt of low income housing tax credits and to assist the Corporation in achieving goals associated with the Community Reinvestment Act ("CRA"). These investments are included in other assets on the Consolidated Condensed Balance Sheets, with any unfunded commitments included in other liabilities. The investments are amortized as a component of income tax expense.

The following table summarizes the Corporation’s affordable housing investments as of September 30, 2025 and December 31, 2024.


	September 30, 2025				December 31, 2024
Investment Type	Investment		Unfunded Commitment		Investment		Unfunded Commitment
LIHTC	$	175,306	$	117,257	$	167,685	$	132,226

The following table summarizes the amortization expense and tax credits recognized for the Corporation’s affordable housing investments for the three and nine months ended September 30, 2025 and 2024.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Amortization expense	$	4,258	$	1,695	$	12,379	$	5,018
Tax credits recognized	5,208		1,644		15,147		4,933

NOTE 8

BORROWINGS

The following table summarizes the Corporation’s borrowings as of September 30, 2025 and December 31, 2024.


	September 30, 2025		December 31, 2024
Federal funds purchased	$	199,370	$	99,226
Securities sold under repurchase agreements	122,226		142,876
Federal Home Loan Bank advances	798,626		822,554
Subordinated debentures and other borrowings	57,632		93,529
Total Borrowings	$	1,177,854	$	1,158,185

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Securities sold under repurchase agreements consist of obligations of the Bank to other parties and are secured by U.S. Government-sponsored enterprise obligations. The maximum amount of outstanding agreements at any month-end during the nine months ended September 30, 2025 and 2024 totaled $ 169.1 million and $ 194.2 million, respectively, and the average balance of such agreements totaled $ 137.8 million and $ 138.1 million during the same period of 2025 and 2024, respectively.

The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of September 30, 2025 and December 31, 2024 were:


	September 30, 2025
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	122,226	$	—	$	—	$	—	$	122,226


	December 31, 2024
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	142,876	$	—	$	—	$	—	$	142,876

Contractual maturities of borrowings as of September 30, 2025, are as follows:


Maturities in Years Ending December 31:	Federal Funds Purchased		Securities Sold Under Repurchase Agreements		Federal Home Loan Bank Advances		Subordinated Debentures and Term Loans
2025	$	199,370	$	122,226	$	—	$	1,111
2026	—		—		75,000		—
2027	—		—		320,000		—
2028	—		—		290,000		—
2029	—		—		50,000		—
2030 and after	—		—		63,626		60,471
ASC 805 fair value adjustments at acquisition	—		—		—		( 3,950 )
	$	199,370	$	122,226	$	798,626	$	57,632

At September 30, 2025, the outstanding Federal Home Loan Bank ("FHLB") advances had interest rates from 0 percent to 4.56 percent and are subject to restrictions or penalties in the event of prepayment. The total available remaining borrowing capacity from the FHLB at September 30, 2025, was $ 781.2 million. As of September 30, 2025, the Corporation had $ 280.0 million of putable advances with the FHLB.

Subordinated Debentures and Term Loans. As of September 30, 2025 and December 31, 2024, subordinated debentures and term loans totaled $ 57.6 million and $ 93.5 million, respectively.

• First Merchants Capital Trust II (“FMC Trust II”). At September 30, 2025 and December 31, 2024, the Corporation had $ 41.7 million of subordinated debentures issued to FMC Trust II, a wholly-owned statutory business trust. FMC Trust II was formed in July 2007 for purposes of issuing trust preferred securities to investors. At that time, it simultaneously issued and sold its common securities to the Corporation, which constituted all of the issued and outstanding common securities of FMC Trust II. The subordinated debentures, which were purchased with the proceeds of the sale of the trust’s capital securities, are the sole assets of FMC Trust II and are fully and unconditionally guaranteed by the Corporation. As of September 30, 2025 and December 31, 2024, the subordinated debentures and trust preferred securities bear interest at a variable rate equal to the three-month CME Term Secured Overnight Financing Rate ("SOFR"), plus the 0.26161 percent spread adjustment. The interest rate at September 30, 2025 and December 31, 2024 was 5.86 percent and 6.18 percent, respectively. The trust preferred securities are currently redeemable at par and without penalty, subject to the Corporation having first redeemed the related subordinated debentures, with the prior approval of the Board of Governors of the Federal Reserve System ("Federal Reserve") if then required under applicable capital guidelines or policies. The trust preferred securities and the subordinated debentures of FMC Trust II will mature on September 15, 2037. The Corporation continues to hold all outstanding common securities of FMC Trust II.

• Ameriana Capital Trust I. At September 30, 2025 and December 31, 2024, the Corporation had $ 10.3 million of subordinated debentures issued to Ameriana Capital Trust I. On December 31, 2015, the Corporation acquired Ameriana Capital Trust I in conjunction with its acquisition of Ameriana Bancorp, Inc. With a trust preferred structure substantially similar to that described above for FMC Trust II, the subordinated debentures held by Ameriana Capital Trust I were purchased with the proceeds of the sale of the trust’s capital securities. As of September 30, 2025 and December 31, 2024, the subordinated debentures and trust preferred securities bear interest at a variable rate equal to the three-month CME Term SOFR, plus the 0.26161 percent spread adjustment. The interest rate at September 30, 2025 and December 31, 2024 was 5.80 percent and 6.12 percent, respectively. The trust preferred securities of Ameriana Capital Trust I are currently redeemable at par and without penalty, subject to the Corporation having first redeemed the related subordinated debentures, with the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies. The trust preferred securities and the subordinated debentures of Ameriana Capital Trust I will mature in March 2036. The Corporation continues to hold all of the outstanding common securities of Ameriana Capital Trust I.

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

• First Merchants Senior Notes and Subordinated Notes. On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $ 70 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $ 5 million (the “Senior Debt”) and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due 2028 in the aggregate principal amount of $ 65 million (the “Subordinated Debt”). The interest rate on the Senior Debt and Subordinated Debt remained fixed for the first ten ( 10 ) years and converted to floating on October 30, 2023 at which time the optional redemption provisions of both instruments became effective. During the nine months ended September 30, 2024, the Corporation exercised its option to redeem $ 65.0 million in principal, fully repaying the Subordinated Debt on the scheduled interest payment dates.

As of December 31, 2024, the Senior Debt had an annual floating rate equal to three-month CME Term SOFR, plus the 0.26161 percent spread adjustment plus 2.345 percent, resulting in an interest rate of 7.18 percent. The Senior Debt agreement contained certain customary representations and warranties and financial and negative covenants. As of December 31, 2024 the Corporation was in compliance with these covenants. During the third quarter of 2025, the Corporation exercised its rights to redeem the $ 5.0 million in principal and paid the Senior Debt on the scheduled interest payment date. No principal amount remains outstanding related to the Senior Debt as of September 30, 2025.

• Level One Bancorp, Inc. ("Level One") Subordinated Notes. On April 1, 2022, the Corporation assumed certain subordinated notes in conjunction with its acquisition of Level One. The $ 30.0 million of subordinated notes issued on December 18, 2019 had a fixed interest rate of 4.75 percent per annum, payable semiannually through December 18, 2024. The notes had a floating interest rate equal to the of three-month CME Term SOFR plus 3.11 percent, payable quarterly, after December 18, 2024 through maturity. The Corporation had the option to redeem any or all of the subordinated notes without premium or penalty any time after December 18, 2024 or upon the occurrence of a tier 2 capital event or tax event. During the first quarter of 2025, the Corporation exercised its rights to redeem $ 30.0 million in principal and paid the debt in full on the scheduled interest payment date. The redemption was permitted under the optional redemption provisions of the subordinated notes. No principal amount remains outstanding related to the subordinated notes as of September 30, 2025.

• Other Borrowings. On April 1, 2022, the Corporation acquired a secured borrowing in conjunction with its acquisition of Level One. The secured borrowing related to a certain loan participation sold by Level One that did not qualify for sales treatment. The secured borrowing bears a fixed rate of 1.00 percent and had a balance of $ 1.1 million as of September 30, 2025 and December 31, 2024. During the third quarter of 2023, the Corporation acquired a secured borrowing in conjunction with the purchase of the Indianapolis regional headquarters building. The secured borrowing bears a fixed interest rate of 3.41 percent, has a maturity date of March 2035, and had a balance of $ 7.0 million and $ 7.1 million as of September 30, 2025 and December 31, 2024, respectively.

Line of Credit. As of September 30, 2025 and December 31, 2024, there was no outstanding balance on the line of credit.

• U.S. Bank, N.A. On September 30, 2024, the Corporation entered into a Credit Agreement with U.S. Bank, N.A. Under the terms of the Credit Agreement, U.S. Bank, N.A. has provided the Corporation with a revolving line of credit ("Credit Facility") of up to $ 75.0 million. The outstanding principal balance under the Credit Facility bears interest at a variable rate equal to the one-month Term SOFR rate plus 2.25 percent. Interest on the outstanding balance is payable quarterly. Additionally, the Corporation is subject to a non-refundable facility fee equal to 0.40 percent per annum on the average daily unused amount of the Credit Facility, payable quarterly. The Credit Agreement contains customary representations, warranties and covenants. During the third quarter of 2025, the Corporation amended the Credit Facility to extend the termination date from September 30, 2025 to September 29, 2026. As of September 30, 2025 and December 31, 2024, the Corporation's outstanding principal balance under the Credit Facility was zero and the Corporation was in compliance with all covenants.

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 9

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table summarizes the changes in the balances of each component of accumulated other comprehensive loss, net of tax, as of September 30, 2025 and 2024.


	Accumulated Other Comprehensive Loss
	Unrealized Gains (Losses) on Securities Available for Sale		Unrealized Gains (Losses) on Defined Benefit Plans		Total
Balance at December 31, 2024	$	( 188,412 )	$	( 273 )	$	( 188,685 )
Other comprehensive income before reclassifications	32,815		—		32,815
Amounts reclassified from accumulated other comprehensive loss	6		—		6
Period change	32,821		—		32,821

Balance at September 30, 2025	$	( 155,591 )	$	( 273 )	$	( 155,864 )


Balance at December 31, 2023	$	( 173,654 )	$	( 2,316 )	$	( 175,970 )
Other comprehensive income before reclassifications	16,905		—		16,905
Amounts reclassified from accumulated other comprehensive loss	7,240		—		7,240
Period change	24,145		—		24,145

Balance at September 30, 2024	$	( 149,509 )	$	( 2,316 )	$	( 151,825 )

The following tables present the reclassification adjustments out of accumulated other comprehensive loss that were included in net income in the Consolidated Condensed Statements of Income for the three and nine months ended September 30, 2025 and 2024.


	Amount Reclassified from Accumulated Other Comprehensive Loss For the Three Months Ended September 30,
Details about Accumulated Other Comprehensive Loss Components	2025		2024		Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities losses reclassified into income	$	—	$	( 9,114 )	Noninterest income - net realized losses on sales of available for sale securities
Related income tax benefit	—		1,914		Income tax expense












Total reclassifications for the period, net of tax	$	—	$	( 7,200 )



	Amount Reclassified from Accumulated Other Comprehensive Loss For the Nine Months Ended September 30,
Details about Accumulated Other Comprehensive Loss Components	2025		2024		Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities losses reclassified into income	$	( 8 )	$	( 9,165 )	Noninterest income - net realized losses on sales of available for sale securities
Related income tax benefit	2		1,925		Income tax expense












Total reclassifications for the period, net of tax	$	( 6 )	$	( 7,240 )

(1) For additional detail related to unrealized gains (losses) on available for sale securities and related amounts reclassified from accumulated other comprehensive loss see NOTE 3. INVESTMENT SECURITIES of these Notes to Consolidated Condensed Financial Statements.

NOTE 10

SHARE-BASED COMPENSATION

Stock options and Restricted Stock Awards ("RSAs") have been issued to directors, officers and other management employees under the Corporation's 2019 Long-term Equity Incentive Plan, the 2024 Long-term Equity Incentive Plan, the Level One Bancorp, Inc. 2007 Stock Option Plan and the Equity Compensation Plan for Non-Employee Directors. The stock options, which have a ten year life, become 100 percent vested based on time ranging from one year to two years and are fully exercisable when vested. Option exercise prices equal the Corporation's common stock closing price on NASDAQ on the date of grant. The RSAs issued to employees and non-employee directors provide for the issuance of shares of the Corporation's common stock at no cost to the holder and generally vest after three years . The RSAs vest only if the employee is actively employed by the Corporation on the vesting date. For non-employee directors, the RSAs vest only if the non-employee director remains as an active board member on the vesting date. The RSAs for employees and non-employee directors are either immediately vested at retirement, disability or death, or, continue to vest after retirement, disability or death, depending on the plan under which the shares were granted.

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The Corporation’s 2024 Employee Stock Purchase Plan ("ESPP") provides eligible employees of the Corporation and its subsidiaries an opportunity to purchase shares of common stock of the Corporation through quarterly offerings financed by payroll deductions. The price of the stock to be paid by the employees shall be equal to 85 percent of the average of the closing price of the Corporation’s common stock on each trading day during the offering period. However, in no event shall such purchase price be less than the lesser of an amount equal to 85 percent of the market price of the Corporation’s stock on the offering date or an amount equal to 85 percent of the market value on the date of purchase. Common stock purchases are made quarterly and are paid through advance payroll deductions up to a calendar year maximum of $ 25,000 .

Compensation expense related to unvested share-based awards is recorded by recognizing the unamortized grant date fair value of these awards over the remaining service periods of those awards, with no change in historical reported fair values and earnings. Awards are valued at

fair value in accordance with provisions of share-based compensation guidance and are recognized on a straight-line basis over the service periods of each award. To complete the exercise of vested stock options, RSAs and ESPP options, the Corporation generally issues new shares from its authorized but unissued share pool. Share-based compensation has been recognized as a component of salaries and benefits expense in the accompanying Consolidated Condensed Statements of Income.

The following table summarizes the components of the Corporation's share-based compensation awards recorded as an expense and the income tax benefit of such awards.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Stock and ESPP Options
Pre-tax compensation expense	$	28	$	28	$	82	$	130
Income tax expense (benefit)	( 15 )		—		( 15 )		( 40 )
Stock and ESPP option expense, net of income taxes	$	13	$	28	$	67	$	90
Restricted Stock Awards
Pre-tax compensation expense	$	1,726	$	1,409	$	4,834	$	4,061
Income tax expense (benefit)	( 292 )		( 204 )		( 927 )		( 727 )
Restricted stock awards expense, net of income taxes	$	1,434	$	1,205	$	3,907	$	3,334
Total Share-Based Compensation
Pre-tax compensation expense	$	1,754	$	1,437	$	4,916	$	4,191
Income tax expense (benefit)	( 307 )		( 204 )		( 942 )		( 767 )
Total share-based compensation expense, net of income taxes	$	1,447	$	1,233	$	3,974	$	3,424

The grant date fair value of ESPP options was estimated to be approximately $ 28,000 at the beginning of the July 1, 2025 quarterly offering period. The ESPP shares were purchased and issued during the three months ended September 30, 2025, resulting in no unrecognized compensation expense related to ESPP options at September 30, 2025.

Stock option activity under the Corporation's stock option plans as of September 30, 2025 and changes during the nine months ended September 30, 2025, were as follows:


	Number of Shares	Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2025	40,991	$	22.44


Exercised	( 16,705 )	$	19.76

Outstanding at September 30, 2025	24,286	$	24.29	1.56	$	326
Vested and Expected to Vest at September 30, 2025	24,286	$	24.29	1.56	$	326
Exercisable at September 30, 2025	24,286	$	24.29	1.56	$	326

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Corporation's closing stock price on the last trading day of the first nine months of 2025 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their stock options on September 30, 2025. The amount of aggregate intrinsic value will change based on the fair value of the Corporation's common stock.

The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2025 and 2024 was $ 322,000 and $ 707,000 , respectively. Cash receipts of stock options exercised during the same periods were $ 330,000 and $ 900,000 , respectively.

The following table summarizes changes in unvested RSAs for the nine months ended September 30, 2025.


	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested RSAs at January 1, 2025	554,436	$	36.47
Granted	205,058	$	37.66
Vested	( 122,365 )	$	40.58
Forfeited	( 1,325 )	$	38.34
Unvested RSAs at September 30, 2025	635,804	$	36.06

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

As of September 30, 2025, unrecognized compensation expense related to RSAs was $ 13.4 million and is expected to be recognized over a weighted-average period of 1.7 years. The Corporation did no t have any unrecognized compensation expense related to stock options as of September 30, 2025.

NOTE 11

INCOME TAX

The following table summarizes the major components creating differences between income taxes at the federal statutory and the effective tax rate recorded in the Consolidated Condensed Statements of Income for the three and nine months ended September 30, 2025 and 2024.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024








Reconciliation of Federal Statutory to Actual Tax Expense:
Federal statutory income tax at 21%	$	13,709		$	11,833		$	40,659		$	32,572
Tax-exempt interest income	( 4,640 )			( 4,409 )			( 13,881 )			( 13,157 )
Non-deductible FDIC premiums	171			180			462			462

Tax-exempt earnings and gains on life insurance	( 350 )			( 579 )			( 1,209 )			( 1,318 )
Tax credits	( 952 )			( 305 )			( 2,770 )			( 969 )
State Income Tax	314			333			918			142
Other	264			107			501			320
Actual Tax Expense	$	8,516		$	7,160		$	24,680		$	18,052

Effective Tax Rate	13.0		%	12.7		%	12.7		%	11.6		%

NOTE 12

NET INCOME PER COMMON SHARE

Basic net income per common share is calculated by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the reporting period.

Diluted net income per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. It is computed by dividing net income available to common stockholders by the sum of the weighted-average common shares outstanding and the effect of all potentially dilutive common shares outstanding during the period.

Potentially dilutive common shares include stock options and RSAs granted under the Corporation’s share-based compensation plans. These securities are included in the diluted earnings per share calculation only when their effect is dilutive. Securities that would increase earnings per share are considered anti-dilutive and are therefore excluded from the computation of diluted earnings per share for the applicable periods.

The following tables reconcile basic and diluted net income per common share for the three and nine months ended September 30, 2025 and 2024.


	Three Months Ended September 30,
	2025					2024
	Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount		Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount
Net income available to common stockholders	$	56,297	57,186,148	$	0.98	$	48,719	58,074,361	$	0.84
Effect of potentially dilutive stock options and restricted stock awards			261,653					215,128
Diluted net income per common share	$	56,297	57,447,801	$	0.98	$	48,719	58,289,489	$	0.84
RSAs excluded from the diluted average common share calculation			61,861					94,650

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)



	Nine Months Ended September 30,
	2025					2024
	Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount		Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount
Net income available to common stockholders	$	167,530	57,549,397	$	2.91	$	135,647	58,413,814	$	2.32
Effect of potentially dilutive stock options and restricted stock awards			267,994					215,185
Diluted net income per common share	$	167,530	57,817,391	$	2.90	$	135,647	58,628,999	$	2.31
RSAs excluded from the diluted average common share calculation			56,523					122,134

NOTE 13

SEGMENT INFORMATION

The Corporation has one reportable segment, community banking. The Corporation’s reportable segment is determined by the Chief Executive Officer, who is the designated chief operating decision maker (“CODM”), based upon information provided about the Corporation’s products and services offered. The CODM will evaluate the financial performance of the Corporation’s business components by evaluating revenue streams, significant expenses, and budget to actual results in assessing the Corporation’s segment. The Corporation generates revenue primarily by providing banking services to its customers. Interest expense, provisions for credit losses and salaries and employee benefits are the significant expenses in the banking operations. The CODM evaluates performance, allocates resources and makes key operating decisions based on consolidated net income that is reported in the Consolidated Statements of Income. The measure of segment assets is reported on the Consolidated Balance Sheets as total consolidated assets. All operations are domestic.

NOTE 14

GENERAL LITIGATION AND REGULATORY EXAMINATIONS

The Corporation is subject to claims and lawsuits that arise primarily in the ordinary course of business. Additionally, the Corporation is also subject to periodic examinations by various regulatory agencies. It is the general opinion of management that the disposition or ultimate resolution of any such routine litigation or regulatory examinations will not have a material adverse effect on the consolidated financial position, results of operations and cash flow of the Corporation.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

From time to time, we include forward-looking statements in our oral and written communication. We may include forward-looking statements in filings with the Securities and Exchange Commission, such as this Quarterly Report on Form 10-Q, in other written materials and in oral statements made by senior management to analysts, investors, representatives of the media and others. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of these safe harbor provisions. Forward-looking statements can often be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, “would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These forward-looking statements include:

• statements of the Corporation's goals, intentions and expectations;

• statements regarding the Corporation's business plan and growth strategies;

• statements regarding the asset quality of the Corporation's loan and investment portfolios; and

• estimates of the Corporation's risks and future costs and benefits.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors which could affect the actual outcome of future events:

• fluctuations in market rates of interest and loan and deposit pricing, which could negatively affect our net interest margin, asset valuations and expense expectations;

• adverse changes in the economy, which might affect our business prospects and could cause credit-related losses and expenses;

• the impacts of epidemics, pandemics or other infectious disease outbreaks;

• the impacts related to or resulting from recent bank failures or adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks;

• adverse developments in our loan and investment portfolios;

• competitive factors in the banking industry, such as the trend towards consolidation in our market;

• changes in the banking legislation or the regulatory requirements of federal and state agencies applicable to bank holding companies and banks like our affiliate bank;

• acquisitions of other businesses by us and integration of such acquired businesses;

• changes in market, economic, operational, liquidity, credit and interest rate risks associated with our business; and

• the continued availability of earnings and excess capital sufficient for the lawful and prudent declaration and payment of cash dividends.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. In addition, our past results of operations do not necessarily indicate our anticipated future results.

BUSINESS SUMMARY

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 111 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.

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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The U.S. Generally Accepted Accounting Principles ("GAAP") are complex and require us to apply significant judgments to various accounting, reporting and disclosure matters. Management must use assumptions and estimates to apply those principles where actual measurement is not possible or practical. The judgments and assumptions made are based upon historical experience or other factors that management believes to be reasonable under the circumstances. Because of the nature of the judgments and assumptions, actual results could differ from estimates, which could have a material effect on our financial condition and results of operations. There have been no significant changes during the nine months ended September 30, 2025 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, 2024. 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, 2024.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FINANCIAL HIGHLIGHTS

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


	Three Months Ended
(Dollars in Thousands, Except Per Share Amounts)	September 30,			June 30,			March 31,			December 31,			September 30,
	2025			2025			2025			2024			2024
Income Statement:
Net interest income	$	133,665		$	133,014		$	130,270		$	134,370		$	131,110
Provision for credit losses	4,300			5,600			4,200			4,200			5,000
Noninterest income	32,477			31,303			30,048			42,742			24,866
Noninterest expense	96,561			93,598			92,902			96,289			94,629
Net income available to common stockholders	56,297			56,363			54,870			63,880			48,719
Per Share Data:
Average diluted common shares outstanding (in thousands)	57,448			57,773			58,242			58,247			58,289
Diluted net income available to common stockholders	$	0.98		$	0.98		$	0.94		$	1.10		$	0.84
Cash dividends paid to common stockholders	0.36			0.36			0.35			0.35			0.35
Common dividend payout ratio (1)	36.90		%	36.73		%	37.23		%	32.11		%	41.67		%
Book value per share	$	41.74		$	40.56		$	39.91		$	39.33		$	39.18
Tangible common book value per share (2)	29.08			27.90			27.34			26.78			26.64
Performance Ratios:
Return on average assets	1.22		%	1.23		%	1.21		%	1.39		%	1.07		%
Return on average stockholders' equity	9.51			9.63			9.38			11.05			8.66
Return on tangible common stockholders' equity (2)	14.21			14.49			14.12			16.75			13.39
Net interest margin (FTE) (3)	3.24			3.25			3.22			3.28			3.23
Efficiency ratio (2)	55.09			53.99			54.54			48.48			53.76
Net charge-offs as % of average loans (annualized)	0.15			0.07			0.15			0.02			0.21
Allowance for credit losses - loans as % of total loans	1.43			1.47			1.47			1.50			1.48
Nonperforming assets / total assets %	0.36			0.36			0.47			0.43			0.35
Balance Sheet:
Total securities	$	3,382,391		$	3,380,956		$	3,427,121		$	3,460,695		$	3,662,145
Total loans	13,614,364			13,325,542			13,027,909			12,873,022			12,687,460
Total assets	18,811,629			18,592,777			18,439,787			18,311,969			18,347,552
Total deposits	14,869,979			14,797,578			14,461,978			14,521,626			14,365,100
Total borrowings	1,177,854			1,161,077			1,343,044			1,158,185			1,081,085
Total stockholders' equity	2,412,402			2,347,952			2,332,214			2,304,983			2,302,373
Capital Ratios:
Total stockholders' equity to assets	12.82		%	12.63		%	12.65		%	12.59		%	12.55		%
Tangible common equity to tangible assets (2)	9.18			8.92			8.90			8.81			8.76
Total risk-based capital to risk-weighted assets	13.04			13.06			13.22			13.31			13.18
Tier 1 capital to risk-weighted assets	11.49			11.50			11.67			11.59			11.41
Common equity tier 1 capital to risk-weighted assets	11.34			11.35			11.50			11.43			11.25
Tier 1 capital to average assets	10.30			10.20			10.20			9.96			9.79
(1) Cash dividends paid per common share divided by diluted net income per common share.
(2) Non-GAAP financial measures. Refer to the "Non-GAAP Financial Measures" section for reconciliations to GAAP financial measures.
(3) Calculated using a marginal tax rate of 21 percent for all periods.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The Corporation reported third quarter 2025 net income available to common stockholders and diluted earnings per common share of $56.3 million and $0.98 per diluted share, respectively, compared to $48.7 million and $0.84 per diluted share, respectively, during the third quarter of 2024. The Corporation reported net income available to common stockholders and diluted earnings per common share of $167.5 million and $2.90 per diluted share, respectively, for the nine months ended September 30, 2025 compared to $135.6 million and $2.31 per diluted share, respectively, for the nine months ended September 30, 2024.

When adjusting for certain non-recurring items, adjusted net income available to common stockholders was $57.0 million and adjusted diluted earnings per common share totaled $0.99 for the third quarter of 2025, compared to $55.6 million and $0.95, respectively, in the third quarter of 2024. Adjusted net income available to common stockholders and adjusted diluted earnings per common share for the nine months ended September 30, 2025, totaled $168.2 million and $2.91, respectively, compared to $145.2 million and $2.48, respectively, for the same period in 2024. 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.

As of September 30, 2025, total assets equaled $18.8 billion, an increase of $499.7 million or 2.7 percent from December 31, 2024.

Cash and due from banks and interest-bearing deposits decreased $129.7 million from December 31, 2024. Total investment securities decreased $78.3 million from December 31, 2024, primarily due to $124.2 million in maturities and redemptions of available for sale securities and held to maturity securities. The investment portfolio as a percentage of total assets was 18.0 percent at September 30, 2025 and 18.9 percent at December 31, 2024. 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.

The Corporation's total loan portfolio increased $741.3 million, or 7.7 percent on an annualized basis, since December 31, 2024. The composition of the loan portfolio is 76.0 percent commercial oriented with the largest loan classes of commercial and industrial and commercial real estate, non-owner occupied, representing 33.8 percent and 16.9 percent of the total loan portfolio, respectively. The increase was primarily driven by increases in commercial and industrial, commercial real estate, owner occupied, commercial real estate, non-owner occupied, public finance, and residential loans. Offsetting those increases were decreases in individuals' loans for household and other personal expenditures and construction loans. Additional details of the changes in the Corporation's loans 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.

The Corporation’s ACL - Loans totaled $194.5 million as of September 30, 2025 and equaled 1.43 percent of total loans, compared to $192.8 million and 1.50 percent of total loans at December 31, 2024. The ACL - Loans increased $1.7 million from December 31, 2024. 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 $4.3 million and $14.1 million of provision for credit losses - loans, for the same periods respectively. During the three and nine months ended September 30, 2024, the Corporation recorded net charge-offs of $6.7 million and $48.6 million, respectively, and $5.0 million and $31.5 million of provision for credit losses - loans, for the same periods respectively. Nonaccrual loans at September 30, 2025 were $65.7 million and decreased $8.0 million from December 31, 2024 primarily due to declines in nonaccrual balances of $11.7 million in construction and $5.4 million in commercial real estate, non-owner occupied. The decreases were partially offset by increases in nonaccrual balances within the commercial real estate, owner occupied portfolio of $4.2 million and residential of $4.0 million. The Corporation's reserve for unfunded commitments was $18.0 million at September 30, 2025 and December 31, 2024, and is recorded in Other Liabilities. 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.

The Corporation's other assets decreased $17.7 million from December 31, 2024 and was driven by a $26.4 million decline in the fair value of derivatives included in other assets from $77.1 million at December 31, 2024 to $50.7 million at September 30, 2025. The decrease in derivatives is due primarily to a decline in market interest rates. This decrease was partially offset by an increase of $7.6 million related to the Corporation's continual investment in community redevelopment funds. Additional details of the Corporation's investments in community redevelopment funds are discussed in NOTE 7. QUALIFIED AFFORDABLE HOUSING INVESTMENTS of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

As of September 30, 2025, total deposits equaled $14.9 billion, an increase of $348.4 million from December 31, 2024, or 3.2 percent on an annualized basis. The Corporation experienced increases from December 31, 2024 in money market and savings deposits of $641.9 million and brokered certificates of deposits of $237.7 million. Partially offsetting these increases was a decrease in time deposits of $197.0 million and demand deposits of $334.4 million from December 31, 2024. The overall deposit increase was driven primarily by an increase in wholesale deposits used to fund loan growth and a shift in the deposit mix from time deposits to money market as a result of product repricing. Total deposits less time deposits greater than $100,000, or core deposits, represented 90.7 percent of the deposit portfolio at September 30, 2025. Noninterest bearing deposits represented 14.1 percent of the deposit portfolio at September 30, 2025, compared to 16.0 percent at December 31, 2024. The loan to deposit ratio increased to 91.6 percent at period end from 88.6 percent as of December 31, 2024.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The average account balance within the deposit portfolio was $37,000 at September 30, 2025. Insured deposits totaled 70.0 percent of total deposits, with the State of Indiana's Public Deposit Insurance Fund, which insures certain public deposits, providing insurance to 14.2 percent of deposits and the Federal Deposit Insurance Corporation ("FDIC") providing insurance to the remaining 55.8 percent. Only 30.0 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.

Total borrowings increased $19.7 million as of September 30, 2025, compared to December 31, 2024. This increase was primarily driven by an increase of $100.1 million in federal funds purchased and partially offset by a decrease of $23.9 million in FHLB advances from December 31, 2024. Subordinated debentures and other borrowings decreased $35.9 million compared to December 31, 2024 as the Corporation utilized excess liquidity to pay down $30.0 million of Level One subordinated notes and $5.0 million of Senior Debt during the first and third quarter of 2025, respectively. Securities sold under repurchase agreements decreased $20.7 million from December 31, 2024 as clients moved into other deposit products. Additional details of the Corporation's subordinated debentures and term loans are discussed in NOTE 8. BORROWINGS of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

The Corporation's other liabilities as of September 30, 2025 increased $22.1 million compared to December 31, 2024. This increase was primarily driven by an increase in accrued other expenses of $70.6 million related to the purchase of syndicated loans not yet settled at period end. Partially offsetting this increase was a decrease in the derivative liabilities of $26.7 million, as a result of a decline in market interest rates and a $15.0 million decrease in unfunded commitments related to the Corporation's affordable housing investments.

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.

NON-GAAP FINANCIAL MEASURES

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.

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.

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.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


ADJUSTED NET INCOME AND DILUTED EARNINGS PER COMMON SHARE - (NON-GAAP)
(Dollars in Thousands, Except Per Share Amounts)
	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
	2025		2025		2024		2025		2024
Net income available to common stockholders (GAAP)	$	56,297	$	56,363	$	48,719	$	167,530	$	135,647
Adjustments:
Net realized losses on sales of available for sale securities	—		1		9,114		8		9,165
Acquisition-related expenses	276		—		—		276		—


Non-core expenses (1),(2)	633		—		—		633		3,481
Tax on adjustments	(220)		—		(2,220)		(222)		(3,081)
Adjusted net income available to common stockholders (non-GAAP)	$	56,986	$	56,364	$	55,613	$	168,225	$	145,212

Average diluted common shares outstanding (in thousands)	57,448		57,773		58,289		57,817		58,629

Diluted earnings per common share (GAAP)	$	0.98	$	0.98	$	0.84	$	2.90	$	2.31
Adjustments:
Net realized losses on sales of available for sale securities	—		—		0.15		—		0.16



Non-core expenses (1),(2)	0.01		—		—		0.01		0.06
Tax on adjustments	—		—		(0.04)		—		(0.05)
Adjusted diluted earnings per common share (non-GAAP)	$	0.99	$	0.98	$	0.95	$	2.91	$	2.48

(1) Non-core expenses in the three and nine months ended September 30, 2025 included $0.6 million of severance costs.
(2) Non-core expenses in the nine months ended September 30, 2024 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.


NET INTEREST INCOME (FTE) AND NET INTEREST MARGIN (FTE) (NON-GAAP)
(Dollars in Thousands, Except Per Share Amounts)
	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2025			2024			2025			2024
Net interest income (GAAP)	$	133,665		$	131,110		$	396,949		$	386,744
FTE adjustment	6,209			5,883			18,535			17,538
Net interest income (FTE) (non-GAAP)	139,874			136,993			415,484			404,282

Average earning assets (GAAP)	$	17,282,901		$	16,990,358		$	17,135,301		$	17,042,540
Net interest margin (GAAP)	3.09		%	3.09		%	3.09		%	3.03		%
FTE adjustment	0.15		%	0.14		%	0.14		%	0.13		%
Net interest margin (FTE) (non-GAAP)	3.24		%	3.23		%	3.23		%	3.16		%


TANGIBLE COMMON STOCKHOLDERS' EQUITY TO TANGIBLE ASSETS (NON-GAAP)
(Dollars in Thousands, Except Per Share Amounts)

	September 30, 2025			December 31, 2024
Total stockholders' equity (GAAP)	$	2,412,402		$	2,304,983
Less: Preferred stock (GAAP)	(25,125)			(25,125)
Less: Intangible assets (GAAP)	(727,300)			(731,830)
Tangible common stockholders' equity (non-GAAP)	$	1,659,977		$	1,548,028
Total assets (GAAP)	$	18,811,629		$	18,311,969
Less: Intangible assets (GAAP)	(727,300)			(731,830)
Tangible assets (non-GAAP)	$	18,084,329		$	17,580,139
Stockholders' equity to assets (GAAP)	12.82		%	12.59		%
Tangible common stockholders' equity to tangible assets (non-GAAP)	9.18		%	8.81		%

Tangible common stockholders' equity (non-GAAP)	$	1,659,977		$	1,548,028
Plus: Tax benefit of intangibles (non-GAAP)	3,290			4,263
Tangible common stockholders' equity, net of tax (non-GAAP)	$	1,663,267		$	1,552,291
Common stock outstanding	57,192			57,975
Book value per common share (GAAP)	$	41.74		$	39.33
Tangible book value per common share (non-GAAP)	$	29.08		$	26.78

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


DILUTED TANGIBLE NET INCOME PER COMMON SHARE, RETURN ON AVERAGE TANGIBLE ASSETS AND RETURN ON AVERAGE TANGIBLE COMMON STOCKHOLDERS' EQUITY (NON-GAAP)
(Dollars in Thousands, Except Per Share Amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Average goodwill (GAAP)	$	712,002		$	712,002		$	712,002		$	712,002
Average other intangibles (GAAP)	16,075			22,388			17,548			24,185
Average deferred tax on other intangibles (GAAP)	(3,458)			(4,810)			(3,775)			(5,194)
Intangible adjustment (non-GAAP)	$	724,619		$	729,580		$	725,775		$	730,993
Average stockholders' equity (GAAP)	$	2,367,971		$	2,251,546		$	2,349,718		$	2,232,419
Average preferred stock (GAAP)	(25,125)			(25,125)			(25,125)			(25,125)

Intangible adjustment (non-GAAP)	(724,619)			(729,580)			(725,775)			(730,993)
Average tangible common stockholders' equity (non-GAAP)	$	1,618,227		$	1,496,841		$	1,598,818		$	1,476,301
Average assets (GAAP)	$	18,637,581		$	18,360,580		$	18,497,118		$	18,374,370
Intangible adjustment (non-GAAP)	(724,619)			(729,580)			(725,775)			(730,993)
Average tangible assets (non-GAAP)	$	17,912,962		$	17,631,000		$	17,771,343		$	17,643,377
Net income available to common stockholders (GAAP)	$	56,297		$	48,719		$	167,530		$	135,647
Other intangible amortization, net of tax (GAAP)	1,185			1,399			3,579			4,345
Tangible net income available to common stockholders (non-GAAP)	57,482			50,118			171,109			139,992
Preferred stock dividend	469			469			1,406			1,406
Tangible net income (non-GAAP)	$	57,951		$	50,587		$	172,515		$	141,398
Per Share Data:
Diluted net income per common share (GAAP)	$	0.98		$	0.84		$	2.90		$	2.31
Diluted tangible net income per common share (non-GAAP)	$	1.00		$	0.86		$	2.96		$	2.39
Ratios:
Return on average stockholders' equity (GAAP)	9.51		%	8.66		%	9.51		%	8.10		%
Return on average tangible common stockholders' equity (non-GAAP)	14.21		%	13.39		%	14.27		%	12.64		%
Return on average assets (GAAP)	1.22		%	1.07		%	1.22		%	0.99		%
Return on average tangible assets (non-GAAP)	1.29		%	1.15		%	1.29		%	1.07		%

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.


EFFICIENCY RATIO (NON-GAAP)
(Dollars in Thousands)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Noninterest expense (GAAP)	$	96,561		$	94,629		$	283,061		$	282,977
Less: Intangible asset amortization	(1,499)			(1,772)			(4,530)			(5,500)
Less: Other real estate owned and foreclosure expenses	(121)			(942)			(750)			(1,849)
Adjusted noninterest expense (non-GAAP)	$	94,941		$	91,915		$	277,781		$	275,628

Net interest income (GAAP)	$	133,665		$	131,110		$	396,949		$	386,744
Plus: FTE adjustment	6,209			5,883			18,535			17,538
Net interest income (FTE) (non-GAAP)	$	139,874		$	136,993		$	415,484		$	404,282

Noninterest income (GAAP)	$	32,477		$	24,866		$	93,828		$	82,838
Less: Net realized losses on sales of available for sale securities	—			9,114			8			9,165
Adjusted noninterest income (non-GAAP)	$	32,477		$	33,980		$	93,836		$	92,003
Adjusted revenue (non-GAAP)	$	172,351		$	170,973		$	509,320		$	496,285
Efficiency ratio (non-GAAP)	55.09		%	53.76		%	54.54		%	55.54		%

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NET INTEREST INCOME

Net interest income is the most significant component of our earnings, comprising 80.9 percent of total revenue for the nine months ended September 30, 2025. 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.

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 2025 and 2024. The FTE analysis portrays the income tax benefits associated with tax-exempt assets and helps to facilitate a comparison between taxable and tax-exempt assets. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on an FTE basis. Therefore, management believes these measures provide useful information for both management and investors by allowing them to make peer comparisons. 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.

Average Balance Sheet

Three months ended September 30, 2025 and 2024

Total average earning assets increased $292.5 million, or 1.7 percent, to $17.3 billion for the three months ended September 30, 2025, compared to the same period in 2024. This increase was primarily driven by a $722.2 million, or 5.7 percent, increase in average total loans, which reached $13.4 billion. Average commercial loans and tax-exempt loans increased $465.5 million and $209.1 million, respectively. These increases were partially offset by a $412.4 million decline in average investment securities and a $22.8 million decline in interest-bearing deposits, reflecting a strategic shift away from lower-yielding assets.

Total average deposits increased $205.4 million year-over-year. Total average interest-bearing deposits increased $396.0 million, primarily due to increases in money market deposits and interest-bearing demand deposits, partially offset by reductions in certificates and other time deposits and savings deposits. Average noninterest-bearing deposits declined $190.6 million, as clients continued to migrate balances into interest-bearing products in response to the rate environment.

Average borrowings remained relatively flat, as a $29.0 million increase in FHLB advances was offset by a $30.7 million decline in subordinated debt. The decline reflects the Corporation’s redemption of $30.0 million of Level One subordinated notes in the first quarter of 2025.

Nine months ended September 30, 2025 and 2024

Total average earning assets remained relatively flat at $17.1 billion for the nine months ended September 30, 2025, compared to the same period in 2024. Average loans increased $593.9 million, or 4.7 percent, to $13.2 billion, driven by growth of $323.1 million in commercial and $217.5 million in tax-exempt loans. This loan growth was offset by a $380.8 million decline in investment securities and a $124.6 million decline in interest-bearing cash balances, consistent with the Corporation’s strategy to reallocate assets toward higher-yielding loans.

Total average deposits declined modestly by $171.2 million, or 1.2 percent, year-over-year to $14.7 billion. While average interest-bearing deposits were essentially flat, the deposit mix shifted in line with the Corporation's funding strategy. Money market balances grew by $614.8 million, while certificates and other time deposits decreased $451.3 million due to intentional pricing actions aimed at reducing reliance on higher-cost CDs. Savings deposits also decreased $213.8 million. Average noninterest-bearing deposits declined $190.1 million, reflecting continued client migration to interest-bearing alternatives. These changes align with the Corporation's strategy to emphasize growth in non-maturity deposits while managing overall funding costs.

Average borrowings increased $204.5 million, primarily due to a $196.5 million increase in FHLB advances and a $46.8 million increase in federal funds purchased. These increases were partially offset by a $37.1 million decline in subordinated debt, primarily driven by the Corporation’s redemption of $30.0 million of subordinated debt in the first quarter of 2025. The increase in borrowings supported loan growth and helped manage deposit runoff while optimizing the Corporation’s overall cost of funds.

Interest Income/Expense and Average Yields

Three months ended September 30, 2025 and 2024

Net interest income on an FTE basis increased by 2.1 percent to $139.9 million for the three months ended September 30, 2025, compared to $137.0 million for the three months ended September 30, 2024. Net interest margin on an FTE basis increased slightly to 3.24 percent, up from 3.23 percent in the prior year quarter. This improvement was driven by a 34 basis point reduction in the cost of interest-bearing liabilities, which declined to 2.94 percent from 3.28 percent, offsetting a 24 basis point decrease in asset yields to 5.58 percent. The Corporation recognized $0.9 million of fair value accretion income on purchased loans, contributing approximately 2 basis points to net interest margin in the three months ended September 30, 2025. This compares to $1.4 million, or 4 basis points, in the same period of 2024.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Interest income on an FTE basis decreased $5.7 million compared to the same period in the prior year, primarily due to lower yields on variable rate loans following the Federal Open Market Committee's 100 basis point rate reduction in the second half of 2024 and a 25 basis point rate reduction in the third quarter of 2025. Approximately 70.1 percent of the Corporation's loan portfolio was variable rate as of September 30, 2025. New and renewed loans yielded 6.84 percent for the three months ended September 30, 2025 compared to 7.70 percent for the same period in 2024.

Interest expense on deposits declined $8.0 million, reflecting lower rates across all deposit categories. The total cost of interest-bearing liabilities decreased 34 basis points, to 2.94 percent for the three months ended September 30, 2025, down from 3.28 percent for the three months ended September 30, 2024. This reduction in funding costs more than offset the decline in asset yields and resulted in a 10 basis point improvement in the FTE net interest spread, which increased to 2.64 percent from 2.54 percent. The average balance of total interest-bearing liabilities increased modestly year-over-year, indicating that the improvement in spread was primarily rate-driven.

Nine months ended September 30, 2025 and 2024

Net interest income on an FTE basis increased by 2.8 percent to $415.5 million for the nine months ended September 30, 2025, compared to $404.3 million for the same period in 2024. Net interest margin on an FTE basis improved to 3.23 percent, up from 3.16 percent in the prior-year period. This improvement was driven by a 41 basis point reduction in the cost of interest-bearing liabilities, which declined to 2.83 percent from 3.24 percent, offsetting a 23 basis point decrease in asset yields to 5.49 percent. The Corporation recognized $3.0 million of fair value accretion income on purchased loans, contributing approximately 2 basis points to net interest margin in the nine months ended September 30, 2025. This compares to $4.3 million, or 3 basis points, in the same period of 2024.

Interest income on an FTE basis decreased $25.0 million year-over-year, primarily due to lower yields on variable rate loans following the Federal Open Market Committee's 100 basis point rate reduction in the second half of 2024 and 25 basis point cut in the third quarter of 2025. New and renewed loans yielded 6.95 percent for the nine months ended September 30, 2025 compared to 7.94 percent for the same period in 2024.

Interest expense on deposits decreased $40.7 million, reflecting lower rates across all deposit categories. The total cost of interest-bearing liabilities decreased 41 basis points, to 2.83 percent for the nine months ended September 30, 2025, down from 3.24 percent for the same period in 2024. This reduction in funding costs more than offset the decline in asset yields and resulted in an 18 basis point improvement in the FTE net interest spread, which increased to 2.66 percent from 2.48 percent.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 nine months ended September 30, 2025 and 2024.


(Dollars in Thousands)	Three Months Ended
	September 30, 2025						September 30, 2024
	Average Balance		Interest Income / Expense		Average Rate		Average Balance		Interest Income / Expense		Average Rate
Assets:

Interest-bearing deposits	$	229,271	$	1,676	2.92	%	$	252,113	$	2,154	3.42	%
Federal Home Loan Bank stock	47,278		1,092		9.24		41,730		855		8.20
Investment Securities: (1)
Taxable	1,567,594		8,288		2.11		1,789,526		9,263		2.07
Tax-Exempt (2)	2,036,379		15,772		3.10		2,226,823		17,100		3.07
Total Investment Securities	3,603,973		24,060		2.67		4,016,349		26,363		2.63
Loans held for sale	26,165		401		6.13		31,991		483		6.04
Loans: (3)
Commercial	9,165,241		158,469		6.92		8,699,733		164,922		7.58
Real estate mortgage	2,217,524		25,676		4.63		2,183,095		24,333		4.46
HELOC and installment	851,239		15,860		7.45		832,222		16,942		8.14
Tax-Exempt (2)	1,142,210		14,070		4.93		933,125		10,914		4.68
Total Loans	13,402,379		214,476		6.40		12,680,166		217,594		6.86
Total Earning Assets	17,282,901		241,304		5.58	%	16,990,358		246,966		5.82	%
Total Non-Earning Assets	1,354,680						1,370,222
Total Assets	$	18,637,581					$	18,360,580
Liabilities:
Interest-Bearing Deposits:
Interest-bearing deposits	$	5,600,373	$	37,463	2.68	%	$	5,455,298	$	40,450	2.97	%
Money market deposits	3,843,537		31,709		3.30		2,974,188		25,950		3.49
Savings deposits	1,269,539		2,605		0.82		1,425,047		4,208		1.18
Certificates and other time deposits	2,036,704		19,044		3.74		2,499,655		28,248		4.52
Total Interest-Bearing Deposits	12,750,153		90,821		2.85		12,354,188		98,856		3.20
Borrowings	1,072,145		10,609		3.96		1,071,440		11,117		4.15
Total Interest-Bearing Liabilities	13,822,298		101,430		2.94		13,425,628		109,973		3.28
Noninterest-bearing deposits	2,157,708						2,348,266
Other liabilities	289,604						335,139
Total Liabilities	16,269,610						16,109,033
Stockholders' Equity	2,367,971						2,251,547
Total Liabilities and Stockholders' Equity	$	18,637,581					$	18,360,580
Net Interest Income (FTE)			$	139,874					$	136,993
Net Interest Spread (FTE) (4)					2.64	%					2.54	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.58	%					5.82	%
Interest Expense / Average Earning Assets					2.34	%					2.59	%
Net Interest Margin (FTE) (5)					3.24	%					3.23	%

(1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed utilizing a 30/360 day basis.
(2) Tax-exempt securities and loans are presented on an FTE basis, using a marginal tax rate of 21 percent for 2025 and 2024. These totals eq ual $6,209 and $5,883 for the three months ended September 30, 2025 and 2024, respectively.
(3) Nonaccruing loans have been included in the average balances.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



(Dollars in Thousands)	Nine Months Ended
	September 30, 2025						September 30, 2024
	Average Balance		Interest Income / Expense		Average Rate		Average Balance		Interest Income / Expense		Average Rate
Assets:
Federal Funds Sold
Interest-bearing deposits	$	258,396	$	5,940	3.07	%	$	383,007	$	11,642	4.05	%
Federal Home Loan Bank stock	45,964		3,172		9.20		41,748		2,569		8.20
Investment Securities: (1)
Taxable	1,602,343		24,926		2.07		1,787,119		27,062		2.02
Tax-Exempt (2)	2,041,755		47,459		3.10		2,237,759		51,561		3.07
Total Investment Securities	3,644,098		72,385		2.65		4,024,878		78,623		2.60
Loans held for sale	24,175		1,109		6.12		27,735		1,242		5.97
Loans: (3)
Commercial	8,982,171		460,349		6.83		8,659,088		484,979		7.47
Real estate mortgage	2,203,263		75,184		4.55		2,159,738		70,489		4.35
HELOC and installment	838,420		46,665		7.42		825,060		49,406		7.98
Tax-Exempt (2)	1,138,814		41,079		4.81		921,286		31,952		4.62
Total Loans	13,186,843		624,386		6.31		12,592,907		638,068		6.76
Total Earning Assets	17,135,301		705,883		5.49	%	17,042,540		730,902		5.72	%
Total Non-Earning Assets	1,361,817						1,331,830
Total Assets	$	18,497,118					$	18,374,370
Liabilities:
Interest-Bearing Deposits:
Interest-bearing deposits	$	5,556,274	$	107,372	2.58	%	$	5,487,106	$	120,935	2.94	%
Money market deposits	3,633,314		86,375		3.17		3,018,526		80,563		3.56
Savings deposits	1,283,856		7,563		0.79		1,497,620		11,485		1.02
Certificates and other time deposits	1,996,406		54,299		3.63		2,447,684		83,309		4.54
Total Interest-Bearing Deposits	12,469,850		255,609		2.73		12,450,936		296,292		3.17
Borrowings	1,194,498		34,790		3.88		990,022		30,328		4.08
Total Interest-Bearing Liabilities	13,664,348		290,399		2.83		13,440,958		326,620		3.24
Noninterest-bearing deposits	2,185,044						2,375,120
Other liabilities	298,008						325,873
Total Liabilities	16,147,400						16,141,951
Stockholders' Equity	2,349,718						2,232,419
Total Liabilities and Stockholders' Equity	$	18,497,118					$	18,374,370
Net Interest Income (FTE)			$	415,484					$	404,282
Net Interest Spread (FTE) (4)					2.66	%					2.48	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.49	%					5.72	%
Interest Expense / Average Earning Assets					2.26	%					2.56	%
Net Interest Margin (FTE) (5)					3.23	%					3.16	%

(1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed utilizing a 30/360 day basis.
(2) Tax-exempt securities and loans are presented on an FTE basis, using a marginal tax rate of 21 percent for 2025 and 2024. These totals equal $18,535 and $17,538 for the nine months ended September 30, 2025 and 2024, respectively.
(3) Nonaccruing loans have been included in the average balances.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NONINTEREST INCOME

Noninterest income totaled $32.5 million for the three months ended September 30, 2025, a $7.6 million, or 30.6 percent, increase compared to the same period in 2024. Customer related fees totaling $29.3 million for the three months ended September 30, 2025 remained stable as compared to the same period in the prior year. The third quarter of 2025 included no sales of available for sale securities, compared to $9.1 million in losses on sales of available for sale securities during the same period of 2024. This increase was partially offset by a decrease of $1.8 million in net gains and fees on sales of loans for the three months ended September 30, 2025 compared to the same period in 2024.

For the nine months ended September 30, 2025, noninterest income totaled $93.8 million, representing an $11.0 million, or 13.3 percent, increase over the same period in 2024. Customer related fees increased $3.5 million, including an increase in service charges on deposit accounts, derivative hedge fees and treasury management fees. Additionally, the Company recognized $9.2 million of realized losses on sales of available for sales securities during the nine months ended September 30, 2024. These increases were partially offset by a decrease in other income due to lower contributions from CRA-related activities.

NONINTEREST EXPENSE

Noninterest expense totaled $96.6 million for the three months ended September 30, 2025, a $1.9 million, or 2.0 percent, increase from the third quarter of 2024. Salaries and employee benefits expense increased by $2.1 million, primarily due to higher salaries and incentives and severance costs during the three months ended September 30, 2025, compared to the same period in 2024.

For the nine months ended September 30, 2025, noninterest expense remained flat at $283.1 million compared to the same period in 2024. Modest increases in salaries and employee benefits, equipment and other expenses totaling $3.4 million were offset by comparable decreases in outside data processing fees, other real estate owned and foreclosure expense, and intangible asset amortization.

INCOME TAXES

Income tax expense for the three months ended September 30, 2025 was $8.5 million on pre-tax income of $65.3 million. For the same period in 2024, income tax expense was $7.2 million on pre-tax income of $56.3 million. The effective income tax rates for the third quarter of 2025 and 2024 were 13.0 percent and 12.7 percent, respectively.

Income tax expense for the nine months ended September 30, 2025 was $24.7 million on pre-tax income of $193.6 million. For the same period in 2024, income tax expense was $18.1 million on pre-tax income of $155.1 million. The effective income tax rates for the nine months ended September 30, 2025 and 2024 were 12.7 percent and 11.6 percent, respectively.

The higher effective income tax rate for the three and nine months ended September 30, 2025 when compared to the same period in 2024 was primarily a result of tax-exempt interest income being a smaller portion of pre-tax income in 2025.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act and the restoration of favorable tax treatment for certain business provisions. As of September 30, 2025, the provisions have not had a material impact to our consolidated financial statements.

The detailed reconciliation of federal statutory to actual tax expense is shown in NOTE 11. INCOME TAX of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

CAPITAL

Preferred Stock

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 September 30, 2025 and December 31, 2024. During the three and nine months ended September 30, 2025 and 2024, the Corporation declared and paid dividends of $46.88 per share (equivalent to $0.4688 per depository share) and $140.64 per share, respectively, equal to $0.5 million and $1.4 million, respectively. The Series A preferred stock qualifies as tier 1 capital for purposes of the regulatory capital calculations.

Stock Repurchase Program

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 September 30, 2024. During the nine months ended September 30, 2024, the Corporation repurchased approximately 1.5 million shares of its common stock under its share repurchase program, for total considerations of $50.0 million, at an average price of $33.72. As of September 30, 2024 the Corporation had approximately 1.2 million shares at an aggregate value of $24.6 million available to repurchase under the program. The stock repurchase program approved in 2021 was discontinued as of March 18, 2025.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 nine months ended September 30, 2025, the Corporation repurchased 0.2 million and 0.9 million shares of its common stock, respectively, under the program, for total consideration of $6.5 million and $36.5 million, respectively. The average purchase prices were $39.86 and $38.83 per share, respectively. As of September 30, 2025, approximately 2.0 million shares remained available for repurchase under the program, with an aggregate remaining authorization of $63.5 million.

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 and nine months ended September 30, 2025, the Corporation recorded excise tax of $32,000 and $0.3 million, respectively. During the three and nine months ended September 30, 2024, the Corporation recorded excise tax of $25,000 and $0.5 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.

Regulatory Capital

Capital adequacy is an important indicator of financial stability and performance. The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category. The assigned capital category is largely determined by four ratios that are calculated according to the regulations: total risk-based capital, tier 1 risk-based capital, common equity tier 1 ("CET1"), and tier 1 leverage ratios. The ratios are intended to measure capital relative to assets and credit risk associated with those assets and off-balance sheet exposures of the entity. The capital category assigned to an entity can also be affected by qualitative judgments made by regulatory agencies about the risk inherent in the entity's activities that are not part of the calculated ratios.

There are five capital categories defined in the regulations, ranging from well capitalized to critically undercapitalized. Classification of a bank in any of the undercapitalized categories can result in actions by regulators that could have a material effect on a bank's operations. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total risk-based capital, tier 1 capital, and CET1 capital, in each case, to risk-weighted assets, and of tier 1 capital to average assets, or leverage ratio, all of which are calculated as defined in the regulations. Banks with lower capital levels are deemed to be undercapitalized, significantly undercapitalized or critically undercapitalized, depending on their actual levels. The appropriate federal regulatory agency may also downgrade a bank to the next lower capital category upon a determination that the bank is in an unsafe or unsound practice. Banks are required to monitor closely their capital levels and to notify their appropriate regulatory agency of any basis for a change in capital category.

Basel III requires the Corporation and the Bank to maintain the minimum capital and leverage ratios as defined in the regulation and as illustrated in the table below, which capital to risk-weighted asset ratios include a 2.5 percent capital conservation buffer. Under Basel III, in order to avoid limitations on capital distributions, including dividends, the Corporation must hold a 2.5 percent capital conservation buffer above the adequately capitalized CET1 to risk-weighted assets ratio (which buffer is reflected in the required ratios below). Under Basel III, the Corporation and Bank elected to opt-out of including accumulated other comprehensive income in regulatory capital. As of September 30, 2025, 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.

As part of a March 27, 2020 joint statement of federal banking regulators, an interim final rule that allowed banking organizations to mitigate the effects of the CECL accounting standard on their regulatory capital was announced. Banking organizations could elect to mitigate the estimated cumulative regulatory capital effects of CECL for up to two years. This two-year delay was to be in addition to the three-year transition period that federal banking regulators had already made available. While the Consolidated Appropriations Act of 2021 provided for a further extension of the mandatory adoption of CECL until January 1, 2022, the federal banking regulators elected to not provide a similar extension to the two year mitigation period applicable to regulatory capital effects. Instead, the federal banking regulators require that, in order to utilize the additional two-year delay, banking organizations must have adopted the CECL standard no later than December 31, 2020, as required by the Coronavirus Aid, Relief and Economic Security Act, or CARES Act. As a result, because implementation of the CECL standard was delayed by the Corporation until January 1, 2021, it began phasing in the cumulative effect of the adoption on its regulatory capital, at a rate of 25 percent per year, over a three-year transition period that began on January 1, 2021. Under that phase-in schedule, the cumulative effect of the adoption was fully reflected in regulatory capital on January 1, 2024.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Corporation's and Bank's actual and required capital ratios as of September 30, 2025 and December 31, 2024 were as follows:


					Prompt Corrective Action Thresholds
	Actual				Basel III Minimum Capital Required				Well Capitalized
September 30, 2025	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	2,094,242	13.04	%	$	1,686,289	10.50	%	N/A		N/A
First Merchants Bank	2,035,936		12.67		1,687,583		10.50		$	1,607,222	10.00	%
Tier 1 capital to risk-weighted assets
First Merchants Corporation	$	1,845,858	11.49	%	$	1,365,091	8.50	%	N/A		N/A
First Merchants Bank	1,834,899		11.42		1,366,138		8.50		$	1,285,777	8.00	%
Common equity tier 1 capital to risk-weighted assets
First Merchants Corporation	$	1,820,858	11.34	%	$	1,124,192	7.00	%	N/A		N/A
First Merchants Bank	1,834,899		11.42		1,125,055		7.00		$	1,044,694	6.50	%
Tier 1 capital to average assets
First Merchants Corporation	$	1,845,858	10.30	%	$	716,612	4.00	%	N/A		N/A
First Merchants Bank	1,834,899		10.14		723,685		4.00		$	904,606	5.00	%


					Prompt Corrective Action Thresholds
	Actual				Basel III Minimum Capital Required				Well Capitalized
December 31, 2024	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	2,030,362	13.31	%	$	1,601,175	10.50	%	N/A		N/A
First Merchants Bank	1,967,738		12.89		1,602,417		10.50		$	1,526,112	10.00	%
Tier 1 capital to risk-weighted assets
First Merchants Corporation	$	1,767,468	11.59	%	$	1,296,189	8.50	%	N/A		N/A
First Merchants Bank	1,776,738		11.64		1,297,195		8.50		$	1,220,889	8.00	%
Common equity tier 1 capital to risk-weighted assets
First Merchants Corporation	$	1,742,468	11.43	%	$	1,067,450	7.00	%	N/A		N/A
First Merchants Bank	1,776,738		11.64		1,068,278		7.00		$	991,973	6.50	%
Tier 1 capital to average assets
First Merchants Corporation	$	1,767,468	9.96	%	$	710,089	4.00	%	N/A		N/A
First Merchants Bank	1,776,738		9.92		716,172		4.00		$	895,215	5.00	%

On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $70.0 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5.0 million and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due October 30, 2028 in the aggregate principal amount of $65.0 million. The Corporation exercised its right to redeem $65.0 million of the Subordinated Debt on the scheduled interest payment date during the first half of 2024 and the Corporation exercised its right to redeem the $5.0 million of the Senior Debt on the scheduled interest payment date of July 30, 2025.

On April 1, 2022, the Corporation assumed $30.0 million of subordinated notes in conjunction with its acquisition of Level One. On February 14, 2025, the Corporation, through its trustee, distributed notice of redemption of all $30.0 million in principal amount of its 4.75 percent Fixed-to-Floating Subordinated Notes due December 18, 2029. The Corporation exercised its right to redeem $30 million of the subordinated debt on the scheduled interest payment date of March 18, 2025.

Management believes the disclosed capital ratios are meaningful measurements for evaluating the safety and soundness of the Corporation. Traditionally, the banking regulators have assessed bank and bank holding company capital adequacy based on both the amount and the composition of capital, the calculation of which is prescribed in federal banking regulations. The Federal Reserve focuses its assessment of capital adequacy on a component of tier 1 capital known as CET1. Because the Federal Reserve has long indicated that voting common stockholders equity (essentially tier 1 risk-based capital less preferred stock and non-controlling interest in subsidiaries) generally should be the dominant element in tier 1 risk-based capital, this focus on CET1 is consistent with existing capital adequacy categories. Tier I regulatory capital consists primarily of total common stockholders’ equity and subordinated debentures issued to business trusts categorized as qualifying borrowings, less non-qualifying intangible assets and unrealized net securities gains or losses.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

A reconciliation of regulatory measures are detailed in the following table as of the dates indicated.


	September 30, 2025						December 31, 2024
(Dollars in Thousands)	First Merchants Corporation			First Merchants Bank			First Merchants Corporation			First Merchants Bank
Total Risk-Based Capital
Total Stockholders' Equity (GAAP)	$	2,412,402		$	2,402,836		$	2,304,983		$	2,315,701
Adjust for Accumulated Other Comprehensive Loss (1)	155,864			153,987			188,685			186,808
Less: Preferred Stock	(25,125)			(125)			(25,125)			(125)
Add: Qualifying Capital Securities	25,000			—			25,000			—

Less: Disallowed Goodwill and Intangible Assets	(721,865)			(721,417)			(725,504)			(725,056)


Less: Disallowed Deferred Tax Assets	(418)			(382)			(571)			(590)
Total Tier 1 Capital (Regulatory)	1,845,858			1,834,899			1,767,468			1,776,738
Qualifying Subordinated Debentures	47,499			—			72,040			—
Allowance for Credit Losses Includible in Tier 2 Capital	200,885			201,037			190,854			191,000
Total Risk-Based Capital (Regulatory)	$	2,094,242		$	2,035,936		$	2,030,362		$	1,967,738

Net Risk-Weighted Assets (Regulatory)	$	16,059,891		$	16,072,217		$	15,249,287		$	15,261,118
Average Assets (Regulatory)	$	17,915,298		$	18,092,119		$	17,752,227		$	17,904,307

Total Risk-Based Capital Ratio (Regulatory)	13.04		%	12.67		%	13.31		%	12.89		%
Tier 1 Capital to Risk-Weighted Assets	11.49		%	11.42		%	11.59		%	11.64		%
Tier 1 Capital to Average Assets	10.30		%	10.14		%	9.96		%	9.92		%

CET1 Capital Ratio
Total Tier 1 Capital (Regulatory)	$	1,845,858		$	1,834,899		$	1,767,468		$	1,776,738
Less: Qualified Capital Securities	(25,000)			—			(25,000)			—


CET1 Capital (Regulatory)	$	1,820,858		$	1,834,899		$	1,742,468		$	1,776,738

Net Risk-Weighted Assets (Regulatory)	$	16,059,891		$	16,072,217		$	15,249,287		$	15,261,118
CET1 Capital Ratio (Regulatory)	11.34		%	11.42		%	11.43		%	11.64		%

(1) Includes net unrealized gains or losses on available for sale securities and amounts resulting from the application of the applicable accounting guidance for defined benefit and other postretirement plans.

In management's view, certain non-GAAP financial measures, when taken together with the corresponding GAAP financial measures and ratios, provide meaningful supplemental information regarding our performance. We believe investors benefit from referring to these non-GAAP financial measures and ratios in assessing our operating results, related trends and when forecasting future periods. However, these non-GAAP financial measures should be considered in addition to, and not a substitute for or preferable to, financial measures and ratios presented in accordance with GAAP.

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 9.18 percent at September 30, 2025, and 8.81 percent at December 31, 2024.

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.

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 September 30, 2025 and December 31, 2024.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS

The Corporation’s primary lending focus is small business and middle market commercial, commercial real estate, public finance and residential real estate, which results in portfolio diversification. Commercial loans are individually underwritten and judgmentally risk rated. They are periodically monitored and prompt corrective actions are taken on deteriorating loans. Consumer loans are typically underwritten with statistical decision-making tools and are managed throughout their life cycle on a portfolio basis.

Loan Maturities

The following tables present the maturity distribution of our loan portfolio, excluding loans held for sale, by collateral classification at September 30, 2025 according to contractual maturities of (1) one year or less, (2) after one year but within five years and (3) after five years.

The tables also present the portion of loans by loan classification that have fixed interest rates or variable interest rates that fluctuate over the life of the loans in accordance with changes in an interest rate index.


	September 30, 2025
(Dollars in Thousands)	Maturing Within 1 Year		Maturing 1-5 Years		Maturing Over 5 Years		Total
Commercial and industrial loans	$	837,474	$	3,282,238	$	485,183	$	4,604,895
Agricultural land, production and other loans to farmers	79,062		52,085		144,670		275,817
Real estate loans:
Construction	335,287		316,354		137,380		789,021
Commercial real estate, non-owner occupied	467,784		1,285,075		552,030		2,304,889
Commercial real estate, owner occupied	166,682		636,502		428,933		1,232,117
Residential	34,013		147,261		2,231,509		2,412,783
Home Equity	29,301		16,090		641,630		687,021
Individuals' loans for household and other personal expenditures	26,110		82,178		30,415		138,703
Public finance and other commercial loans	41,993		120,735		983,200		1,145,928
Total	$	2,017,706	$	5,938,518	$	5,634,950	$	13,591,174


	September 30, 2025
(Dollars in Thousands)	Maturing Within 1 Year		Maturing 1-5 Years		Maturing Over 5 Years		Total
Commercial and industrial loans	$	48,549	$	418,191	$	149,594	$	616,334
Agricultural land, production and other loans to farmers	3,834		28,487		10,177		42,498
Real estate loans:
Construction	3,187		13,422		115,798		132,407
Commercial real estate, non-owner occupied	141,819		397,151		87,381		626,351
Commercial real estate, owner occupied	109,737		288,715		83,832		482,284
Residential	26,550		98,209		879,839		1,004,598
Home Equity	15,910		8,140		9,937		33,987
Individuals' loans for household and other personal expenditures	3,426		60,037		16,711		80,174
Public finance and other commercial loans	8,346		75,846		957,213		1,041,405
Total loans with fixed interest rates	$	361,358	$	1,388,198	$	2,310,482	$	4,060,038


	September 30, 2025
(Dollars in Thousands)	Maturing Within 1 Year		Maturing 1-5 Years		Maturing Over 5 Years		Total
Commercial and industrial loans	$	788,925	$	2,864,047	$	335,589	$	3,988,561
Agricultural land, production and other loans to farmers	75,228		23,598		134,493		233,319
Real estate loans:
Construction	332,100		302,932		21,582		656,614
Commercial real estate, non-owner occupied	325,965		887,924		464,649		1,678,538
Commercial real estate, owner occupied	56,945		347,787		345,101		749,833
Residential	7,463		49,052		1,351,670		1,408,185
Home Equity	13,391		7,950		631,693		653,034
Individuals' loans for household and other personal expenditures	22,684		22,141		13,704		58,529
Public finance and other commercial loans	33,647		44,889		25,987		104,523
Total loans with variable interest rates	$	1,656,348	$	4,550,320	$	3,324,468	$	9,531,136

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Loan Quality

The quality of the loan portfolio and the amount of nonperforming loans may increase or decrease as a result of acquisitions, organic portfolio growth, problem loan recognition and resolution through collections, sales or charge-offs. The performance of any loan can be affected by external factors such as economic conditions, or internal factors specific to a particular borrower, such as the actions of a customer's internal management.

At September 30, 2025, nonaccrual loans totaled $65.7 million, a decrease of $8.0 million from December 31, 2024, primarily due to decreases of $11.7 million and $5.4 million in the construction and commercial real estate, non-owner occupied loan classes, respectively. The decrease was offset by an increase in the commercial real estate, owner occupied and residential loan classes of $4.2 million and $4.0 million, respectively.

At September 30, 2025, loans 90-days or more delinquent and still accruing totaled $1.9 million, a decrease of $4.0 million from December 31, 2024.

The Corporation's nonperforming assets plus accruing loans 90-days or more delinquent loans are presented in the table below.


(Dollars in Thousands)	September 30, 2025		December 31, 2024
Nonperforming Assets:
Nonaccrual loans	$	65,740	$	73,773
Other real estate owned and repossessions	1,270		4,948
Nonperforming assets	67,010		78,721
Loans 90-days or more delinquent and still accruing	1,925		5,902
Nonperforming assets and loans 90-days or more delinquent	$	68,935	$	84,623

The composition of nonperforming assets plus accruing loans 90-days or more delinquent is reflected in the following table by loan class.


(Dollars in Thousands)	September 30, 2025		December 31, 2024
Nonperforming assets and loans 90-days or more delinquent:
Commercial and industrial loans	$	9,553	$	10,100
Agricultural land, production and other loans to farmers	254		75
Real estate loans:
Construction	12,922		28,312
Commercial real estate, non-owner occupied	8,022		16,838
Commercial real estate, owner occupied	6,622		2,440
Residential	27,100		21,927
Home equity	4,445		4,924
Individuals' loans for household and other personal expenditures	17		7

Nonperforming assets and loans 90-days or more delinquent:	$	68,935	$	84,623

Provision Expense and Allowance for Credit Losses on Loans

The CECL model requires the measurement of all expected credit losses for financial assets measured at amortized cost based on historical experiences, current conditions and reasonable and supportable forecasts. CECL also requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as credit quality and underwriting standards of an organization's portfolio. Additional details of the Corporation's CECL methodology and allowance calculation 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.

The CECL allowance is maintained through the provision for credit losses, which is a charge against earnings. Based on management’s judgment as to the appropriate level of the allowance for credit losses, the amount provided in any period may be greater or less than net loan losses for the same period. The determination of the provision amount and the adequacy of the allowance in any period is based on management’s continuing review and evaluation of the loan portfolio.

The Corporation’s loan balances, excluding loans held for sale, increased $736.8 million from December 31, 2024 to $13.6 billion at September 30, 2025. At September 30, 2025, the ACL - Loans totaled $194.5 million, which represents an increase of $1.7 million from December 31, 2024. As a percentage of loans, the ACL - Loans was 1.43 percent and 1.50 percent at September 30, 2025 and December 31, 2024, respectively.

Net charge-offs totaling $5.1 million and $12.4 million were recognized for the three and nine months ended September 30, 2025, respectively, and provision for credit losses of $4.3 million and $14.1 million, respectively, were recorded for the same periods in 2025. Net charge-offs totaling $6.7 million and $48.6 million were recognized for the three and nine months ended September 30, 2024, respectively, with $5.0 million and $31.5 million in provision for credit losses recorded in the same periods in 2024, respectively.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The distribution of the net charge-offs (recoveries) for the three and nine months ended September 30, 2025 and 2024 are reflected in the following table.


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in Thousands)	2025		2024		2025		2024
Net charge-offs (recoveries):
Commercial and industrial loans	$	3,605	$	5,870	$	8,126	$	46,794

Real estate loans:
Construction	—		—		63		—
Commercial real estate, non-owner occupied	200		—		372		192
Commercial real estate, owner occupied	187		(18)		387		(73)
Residential	869		600		1,449		1,095
Home equity	(99)		(222)		961		(346)
Individuals' loans for household and other personal expenditures	386		479		1,031		944

Total net charge-offs (recoveries)	$	5,148	$	6,709	$	12,389	$	48,606

Management continually evaluates the commercial loan portfolio by including consideration of specific borrower cash flow analysis and estimated collateral values, types and amounts on nonperforming loans, past and anticipated credit loss experience, changes in the composition of the loan portfolio, and the current condition and amount of loans outstanding. The determination of the provision for credit losses in any period is based on management’s continuing review and evaluation of the loan portfolio, and its judgment as to the impact of current economic conditions on the portfolio. The Corporation continues to monitor economic forecast changes, loan growth and credit quality to determine provision needs in the future.

LIQUIDITY

Liquidity management is the process by which the Corporation ensures that adequate liquid funds are available for the holding company and its subsidiaries. These funds are necessary in order to meet financial commitments on a timely basis. These commitments include withdrawals by depositors, funding credit obligations to borrowers, paying dividends to stockholders, paying operating expenses, funding capital expenditures, and maintaining deposit reserve requirements. Liquidity is monitored and closely managed by the asset/liability committee.

The Corporation’s liquidity is dependent upon the receipt of dividends from the Bank, which is subject to certain regulatory limitations and access to other funding sources. Liquidity of the Bank is derived primarily from core deposit growth, principal payments received on loans, the sale and maturity of investment securities, net cash provided by operating activities, and access to other funding sources.

The principal source of asset-funded liquidity is investment securities classified as available for sale, the market values of which totaled $1.4 billion at September 30, 2025, an increase of $0.4 million, from December 31, 2024. Securities classified as held to maturity that are maturing within a short period of time can also be a source of liquidity. Securities classified as held to maturity and that are maturing in one year or less totaled $6.6 million at September 30, 2025. In addition, other types of assets such as cash and interest-bearing deposits with other banks, federal funds sold and loans maturing within one year are sources of liquidity.

The most stable source of liability-funded liquidity for both the long-term and short-term is deposit growth and retention in the core deposit base. Federal funds purchased and securities sold under agreements to repurchase are also considered a source of liquidity. In addition, FHLB advances and Federal Reserve Discount Window borrowings are utilized as a funding source. At September 30, 2025, total borrowings from the FHLB were $798.6 million and there were no outstanding borrowings from the Federal Reserve Discount Window. The Bank has pledged certain mortgage loans and investments to the FHLB and Federal Reserve. The total available remaining borrowing capacity from the FHLB and Federal Reserve at September 30, 2025 was $781.2 million and $5.2 billion, respectively.

The following table presents the Corporation's material cash requirements from known contractual and other obligations at September 30, 2025:


	Payments Due In
(Dollars in Thousands)	One Year or Less		Over One Year		Total
Deposits without stated maturity	$	12,810,405	$	—	$	12,810,405
Certificates and other time deposits	1,717,865		341,709		2,059,574
Securities sold under repurchase agreements	122,226		—		122,226
Federal Home Loan Bank advances	—		798,626		798,626
Federal Funds Purchased	199,370		—		199,370
Subordinated debentures and other borrowings	1,304		56,328		57,632
Total	$	14,851,170	$	1,196,663	$	16,047,833

Also, in the normal course of business, the Bank is a party to a number of other off-balance sheet activities that contain credit, market and operational risk that are not reflected in whole or in part in our consolidated financial statements. These activities primarily consist of traditional off-balance sheet credit-related financial instruments such as loan commitments and standby letters of credit.

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Summarized credit-related financial instruments at September 30, 2025 are as follows:


(Dollars in Thousands)	September 30, 2025
Amounts of commitments:
Loan commitments to extend credit	$	5,552,327
Standby and commercial letters of credit	72,972
	$	5,625,299

Since many of the commitments are expected to expire unused or be only partially used, the total amount of unused commitments in the preceding table does not necessarily represent future cash requirements.

INTEREST SENSITIVITY AND DISCLOSURE ABOUT MARKET RISK

Asset/Liability management has been an important factor in the Corporation's ability to record consistent earnings growth through periods of interest rate volatility and product deregulation. Management and the Board of Directors monitor the Corporation's liquidity and interest sensitivity positions at regular meetings to review how changes in interest rates may affect earnings. Decisions regarding investment and the pricing of loan and deposit products are made after analysis of reports designed to measure liquidity, rate sensitivity, the Corporation’s exposure to changes in net interest income given various rate scenarios and the economic and competitive environments.

It is the objective of the Corporation to monitor and manage risk exposure to net interest income caused by changes in interest rates. It is the goal of the Corporation’s Asset/Liability management function to provide optimum and stable net interest income. To accomplish this, management uses two asset liability tools. GAP/Interest Rate Sensitivity Reports and Net Interest Income Simulation Modeling are constructed, presented and monitored quarterly. Management believes that the Corporation's liquidity and interest sensitivity position at September 30, 2025, remained adequate to meet the Corporation’s primary goal of achieving optimum interest margins while avoiding undue interest rate risk.

Net interest income simulation modeling, or earnings-at-risk, measures the sensitivity of net interest income to various interest rate movements. The Corporation's asset liability process monitors simulated net interest income under three separate interest rate scenarios; base, rising and falling. Estimated net interest income for each scenario is calculated over a twelve-month horizon. The immediate and parallel changes to the base case scenario used in the model are presented below. The interest rate scenarios are used for analytical purposes and do not necessarily represent management's view of future market movements. Rather, these are intended to provide a measure of the degree of volatility interest rate movements may introduce into the earnings of the Corporation.

The base scenario is highly dependent on numerous assumptions embedded in the model, including assumptions related to future interest rates. While the base sensitivity analysis incorporates management's best estimate of interest rate and balance sheet dynamics under various market rate movements, the actual behavior and resulting earnings impact will likely differ from those projected. For certain assets, the base simulation model captures the expected prepayment behavior under changing interest rate environments. Assumptions and methodologies regarding the interest rate or balance behavior of indeterminate maturity products, such as savings, money market, interest-bearing and demand deposits, reflect management's best estimate of expected future behavior. Historical retention rate assumptions are applied to non-maturity deposits for modeling purposes.

The comparative rising 200 and 100 basis points and falling 200 and 100 basis points scenarios below, as of September 30, 2025 and December 31, 2024, assume further interest rate changes in addition to the base simulation discussed above. These changes are immediate and parallel changes to the base case scenario.

Results for the rising 200 and 100 basis points and falling 200 and 100 basis points interest rate scenarios are listed below based upon the Corporation’s rate sensitive assets and liabilities at September 30, 2025 and December 31, 2024. The change from the base scenario represents cumulative net interest income over a twelve-month time horizon. Balance sheet assumptions used for the base scenario are the same for the rising and falling simulations.


	September 30, 2025		December 31, 2024
Rising 200 basis points from base case	3.9	%	4.1	%
Rising 100 basis points from base case	2.1	%	2.5	%
Falling 100 basis points from base case	(2.5)	%	(2.2)	%
Falling 200 basis points from base case	(5.2)	%	(4.5)	%

OTHER

The Securities and Exchange Commission maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission, including the Corporation, and that address is (http://www.sec.gov).

PART I: FINANCIAL INFORMATION

ITEM 3. QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required under this item is included as part of Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the headings “LIQUIDITY” and “INTEREST SENSITIVITY AND DISCLOSURE ABOUT MARKET RISK”.

PART I: FINANCIAL INFORMATION

ITEM 4. CONTROLS AND PROCEDURES

At the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There have been no changes in the Corporation’s internal control over financial reporting identified in connection with the evaluation discussed above that occurred during the Corporation’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1., ITEM 1A., ITEM 2., ITEM 3., ITEM 4. AND ITEM 5.

(table dollar amounts in thousands, except share data)

ITEM 1. LEGAL PROCEEDINGS

There are no pending legal proceedings, other than litigation incidental to the ordinary business of the Corporation or its subsidiaries, of a material nature to which the Corporation or its subsidiaries is a party or of which any of their properties is subject. Further, there are no material legal proceedings in which any director, officer, principal shareholder, or affiliate of the Corporation, or any associate of any such director, officer or principal shareholder, is a party, or has a material interest, adverse to the Corporation or any of its subsidiaries.

None of the routine legal proceedings, individually or in the aggregate, in which the Corporation or its affiliates are involved are expected to have a material adverse impact on the financial position or the results of operations of the Corporation.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

a. None

b. None

c. Issuer Purchases of Equity Securities

The following table presents information relating to our purchases of equity securities during the three months ended September 30, 2025.


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as part of Publicly announced Plans or Programs (2)	Maximum Number of Shares that may yet be Purchased Under the Plans or Programs (2)
July, 2025	162,474	$	39.86	162,474	1,987,729
August, 2025	33,651	$	37.11	—	1,987,729
September, 2025	113	$	40.03	—	1,987,729
Total	196,238			162,474

(1) During the three months ended September 30, 2025, there were 162,474 shares repurchased pursuant to the Corporation's share repurchase program described in note (2) below. The amounts in August 2025 and September 2025 include 33,651 and 113 shares, respectively, repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of the Corporation's restricted stock awards and are not a part of the Corporation's share repurchase program described in note (2) below.

(2) 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 $100,000,000. The program does not have an expiration date. However, it may be discontinued by the Board at any time. Since commencing the program, the Corporation has repurchased a total of 939,271 shares of common stock for a total aggregate investment of $36.5 million.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

a. None

b. None

c. During the three months ended September 30, 2025, no director or officer of the Corporation adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

PART II: OTHER INFORMATION

ITEM 6. EXHIBITS


Exhibit No:			Description of Exhibits:

2.1*			Agreement and Plan of Merger between First Merchants Corporation and First Savings Financial Group, Inc. dated September 24, 2025 (Incorporated by reference to Exhibit 2.1 of registrants Form 8-K filed on September 25, 2025) (SEC No. 000-17071)
3.1			First Merchants Corporation Articles of Incorporation, as amended (Incorporated by reference to Exhibit 3.1 of registrant’s Form 8-K filed on May 22, 2024) (SEC No. 000-17071)
3.2			Bylaws of First Merchants Corporation effective as of May 20, 2024 (Incorporated by reference to Exhibit 3.2 of registrant’s Form 8-K filed on May 22, 2024) (SEC No. 001-41342)
4.1			First Merchants Corporation Amended and Restated Declaration of Trust of First Merchants Capital Trust II dated as of July 2, 2007 (Incorporated by reference to Exhibit 4.1 of registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.2			Indenture dated as of July 2, 2007 (Incorporated by reference to Exhibit 4.2 of registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.3			Guarantee Agreement dated as of July 2, 2007 (Incorporated by reference to Exhibit 4.3 of registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.4			Form of Capital Securities Certification of First Merchants Capital Trust II (Incorporated by reference to Exhibit 4.4 of registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.5			First Merchants Corporation Dividend Reinvestment and Stock Purchase Plan (Incorporated by reference to registrant’s Prospectus filed pursuant to Rule 424(b)(3) on July 17, 2020) (SEC No. 333-229527)
4.6			Upon request, the registrant agrees to furnish supplementally to the Commission a copy of the instruments defining the rights of holders of its (a) 5.00% Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million and (b) 6.75% Fixed-to-Floating Rate Subordinated Notes due 2028 in aggregate principal amount of $65 million.
4.7			Deposit Agreement by and among First Merchants Corporation, Broadridge Corporate Issuer Solutions, Inc., as depositary, and holders from time to time of the depositary receipts described therein, as amended on March 30, 2022 (Incorporated by reference to Exhibit 4.1 of registrant’s Form 8-A filed on March 30, 2022) (SEC No. 001-41342)
4.8			Form of Depositary Receipt (Incorporated by reference to Exhibit 4.2 of registrant’s Form 8-A filed on March 30, 2022) (SEC No. 001-41342)
4.9			Indenture, dated as of December 18, 2019, between First Merchants Corporation (as successor to Level One Bancorp, Inc.) and Wilmington Trust, National Association, as trustee (Incorporated by reference to Exhibit 4.1 of Level One Bancorp, Inc.’s Form 8-K filed on December 19, 2019) (SEC No. 001-38458)
4.10			First Supplemental Indenture, dated as of March 31, 2022, among First Merchants Corporation, Level One Bancorp, Inc. and Wilmington Trust, National Association, as trustee (Incorporated by reference to Exhibit 4.11 of registrant’s Form 10-K filed on March 1, 2023) (SEC No. 001-41342)
4.11			Form of 4.75% Fixed-to-Floating Rate Subordinated Notes due 2029 (Incorporated by reference to Exhibit 4.2 of Level One Bancorp, Inc.’s Form 8-K filed on December 19, 2019) (SEC No. 001-38458)
31.1			Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 (1)
31.2			Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 (1)
32			Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes - Oxley Act of 2002 (2)
101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (1)
101.SCH			Inline XBRL Taxonomy Extension Schema Document (1)
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document (1)
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document (1)
104			Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101)

(1)			Filed herewith.
(2)			Furnished herewith.
*			Schedules to the subject agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished to the Securities and Exchange Commission upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			First Merchants Corporation
			(Registrant)


October 30, 2025			by /s/ Mark K. Hardwick
			Mark K. Hardwick
			Chief Executive Officer
			(Principal Executive Officer)

October 30, 2025			by /s/ Michele M. Kawiecki
			Michele M. Kawiecki
			Executive Vice President, Chief Financial Officer
			(Principal Financial and Accounting Officer)

TABLE OF CONTENTS

Part I: Financial Information Item 4. Controls and Procedures Part Ii: Other Information Item 1. , Item 1A. , Item 2. , Item 3. , Item 4. and Item 5 Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Part Ii: Other Informationitem 6. Exhibits Item 6. Exhibits

Exhibits

FRME 10-Q Quarter ended Sept. 30, 2025

Exhibits