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

SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _______ to _______

FIRST MERCHANTS CORPORATION
(Exact name of registrant as specified in its charter)

Indiana
(State or other jurisdiction of incorporation)
001-4134235-1544218
(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 ClassTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.125 stated value per shareFRMEThe Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/100th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series AFRMEPThe 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.
1

TABLE OF CONTENTS

FIRST MERCHANTS CORPORATION

Page No.
Item 1. 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
   
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
2

GLOSSARY OF DEFINED TERMS

FIRST MERCHANTS CORPORATION

ACL - LoansAllowance for Credit Losses on Loans
ASCAccounting Standards Codification
ASUAccounting Standards Update
BankFirst 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.)
CET1Common Equity Tier 1
CODMChief operating decision maker
CorporationFirst Merchants Corporation
CRACommunity Reinvestment Act
Credit AgreementCredit agreement entered into on September 30, 2024 with U.S. Bank, N.A.
Credit FacilityRevolving line of credit related to Credit Agreement entered into on September 30, 2024
ESPPEmployee Stock Purchase Plan
Exchange Ratio0.85 share of the Corporation's stock pursuant to the Merger Agreement
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
Federal ReserveBoard of Governors of the Federal Reserve System
FHLBFederal Home Loan Bank
First SavingsFirst Savings Financial Group, Inc.
FMC Trust IIFirst Merchants Capital Trust II
FTEFully taxable equivalent
GAAPU.S. Generally Accepted Accounting Principles
IRAInflation Reduction Act of 2022
Level OneLevel One Bancorp, Inc., which was acquired by the Corporation on April 1, 2022.
MergerThe merger of First Savings with and into the Corporation pursuant to the Merger Agreement
Merger AgreementAgreement and Plan of Merger entered into on September 24, 2025 with First Savings
OBBBAThe One Big Beautiful Bill Act, signed into law on July 4th, 2025
Old SecondOld Second National Bank
RSAsRestricted Stock Awards
Senior DebtFixed-to-Floating Rate Senior Notes due 2028
Subordinated DebtFixed-to-Floating Rate Subordinated Notes due 2028
SOFRSecured Overnight Financing Rate


3
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 deposits168,706 298,891 
Investment securities available for sale1,386,903 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 sale23,190 18,663 
Loans13,591,174 12,854,359 
Less: Allowance for credit losses - loans(194,468)(192,757)
Net loans13,396,706 12,661,602 
Premises and equipment121,771 129,743 
Federal Home Loan Bank stock47,264 41,690 
Interest receivable89,102 91,829 
Goodwill712,002 712,002 
Other intangibles15,298 19,828 
Cash surrender value of life insurance306,583 304,906 
Other real estate owned1,270 4,948 
Tax asset, deferred and receivable89,758 92,387 
Other assets369,509 387,169 
TOTAL ASSETS$18,811,629 $18,311,969 
LIABILITIES
Deposits:
Noninterest-bearing$2,100,570 $2,325,579 
Interest-bearing12,769,409 12,196,047 
Total Deposits14,869,979 14,521,626 
Borrowings:
Federal funds purchased199,370 99,226 
Securities sold under repurchase agreements122,226 142,876 
Federal Home Loan Bank advances798,626 822,554 
Subordinated debentures and other borrowings57,632 93,529 
Total Borrowings1,177,854 1,158,185 
Interest payable18,240 16,102 
Other liabilities333,154 311,073 
Total Liabilities16,399,227 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 capital1,158,026 1,188,768 
Retained earnings1,377,966 1,272,528 
Accumulated other comprehensive loss(155,864)(188,685)
Total Stockholders' Equity2,412,402 2,304,983 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$18,811,629 $18,311,969 


See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
4
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,
 2025202420252024
INTEREST INCOME    
Loans receivable:  
Taxable$200,406 $206,680 $583,307 $606,116 
Tax exempt11,173 8,622 32,510 25,242 
Investment securities:   
Taxable8,288 9,263 24,926 27,062 
Tax exempt12,460 13,509 37,493 40,733 
Deposits with financial institutions1,676 2,154 5,940 11,642 
Federal Home Loan Bank stock1,092 855 3,172 2,569 
Total Interest Income235,095 241,083 687,348 713,364 
INTEREST EXPENSE    
Deposits90,821 98,856 255,609 296,292 
Federal funds purchased224 329 2,001 455 
Securities sold under repurchase agreements654 700 2,059 2,377 
Federal Home Loan Bank advances8,638 8,544 27,716 21,715 
Subordinated debentures and other borrowings1,093 1,544 3,014 5,781 
Total Interest Expense101,430 109,973 290,399 326,620 
NET INTEREST INCOME133,665 131,110 396,949 386,744 
Provision for credit losses4,300 5,000 14,100 31,500 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES129,365 126,110 382,849 355,244 
NONINTEREST INCOME    
Service charges on deposit accounts8,921 8,361 25,559 24,482 
Fiduciary and wealth management fees8,842 8,525 26,317 25,550 
Card payment fees5,007 5,121 14,465 14,360 
Net gains and fees on sales of loans4,983 6,764 15,854 15,159 
Derivative hedge fees1,097 736 2,332 1,488 
Other customer fees414 344 1,230 1,231 
Earnings on bank-owned life insurance1,667 2,755 5,759 6,276 
Net realized losses on sales of available for sale securities— (9,114)(8)(9,165)
Other income1,546 1,374 2,320 3,457 
Total Noninterest Income32,477 24,866 93,828 82,838 
NONINTEREST EXPENSES    
Salaries and employee benefits57,317 55,223 166,826 165,730 
Net occupancy7,057 6,994 21,118 21,052 
Equipment6,998 6,949 20,933 19,774 
Marketing2,120 1,836 5,470 4,807 
Outside data processing fees6,943 7,150 19,979 21,111 
Printing and office supplies311 378 930 1,085 
Intangible asset amortization1,499 1,772 4,530 5,500 
FDIC assessments3,526 3,720 10,726 11,285 
Other real estate owned and foreclosure expenses121 942 750 1,849 
Professional and other outside services3,718 3,035 10,720 10,809 
Other expenses6,951 6,630 21,079 19,975 
Total Noninterest Expenses96,561 94,629 283,061 282,977 
INCOME BEFORE INCOME TAX65,281 56,347 193,616 155,105 
Income tax expense8,516 7,160 24,680 18,052 
NET INCOME56,765 49,187 168,936 137,053 
Preferred stock dividends468 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.

5
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,
2025202420252024
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 period43,178 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 tax34,111 60,154 32,821 24,145 
Comprehensive income$90,876 $109,341 $201,757 $161,198 


See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

6
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 StockNon-Cumulative Preferred StockCommon StockAdditionalAccumulated
Other
SharesAmountSharesAmountSharesAmountPaid in
Capital		Retained
Earnings		Comprehensive
Loss		Total
Balances, June 30, 2025125 $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 StockNon-Cumulative Preferred StockCommon StockAdditionalAccumulated
Other
SharesAmountSharesAmountSharesAmountPaid in
Capital		Retained
Earnings		Comprehensive
Loss		Total
Balances, June 30, 2024125 $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 














7
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 StockNon-Cumulative Preferred StockCommon StockAdditionalAccumulated
Other
SharesAmountSharesAmountSharesAmountPaid in
Capital		Retained
Earnings		Comprehensive
 Loss		Total
Balances, December 31, 2024125 $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 StockNon-Cumulative Preferred StockCommon StockAdditionalAccumulated
Other
SharesAmountSharesAmountSharesAmountPaid in
Capital		Retained
Earnings		Comprehensive
Loss		Total
Balances, December 31, 2023125$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, 2024125 $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.
8
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,
20252024
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 losses14,100 31,500 
Depreciation and amortization23,718 10,602 
Change in deferred taxes(2,095)3,128 
Share-based compensation4,916 4,191 
Loans originated for sale(358,898)(775,504)
Proceeds from sales of loans held for sale366,363 773,446 
Gains on sales of loans held for sale(11,992)(10,508)
Net losses on sales and redemptions of securities available for sale8 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 receivable2,727 5,585 
Change in interest payable2,138 (319)
Other adjustments(1,228)16,643 
Net cash provided by operating activities202,934 198,706 
Cash Flows from Investing Activities:
Net change in interest-bearing deposits130,185 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 sale47,991 33,346 
Securities held to maturity76,183 72,938 
Purchases of Federal Home Loan Bank stock(5,644)— 
Redemptions of Federal Home Loan Bank stock70 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 owned6,072 325 
Proceeds from life insurance benefits4,082 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 deposits307,586 (308,714)
Certificates of deposit and other time deposits40,767 140,074 
Proceeds from borrowings854,091 551,851 
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 plans480 511 
Stock issued under dividend reinvestment and stock purchase plans1,737 1,676 
Stock options exercised330 900 
Repurchase of common stock(36,476)(49,955)
Net cash provided (used) by financing activities270,595 (225,751)
Net Change in Cash and Cash Equivalents463 (27,930)
Cash and Cash Equivalents, January 187,616 112,649 
Cash and Cash Equivalents, September 30
$88,079 $84,719 
Additional cash flow information:
Interest paid$288,261 $327,443 
Income tax paid18,397 6,407 
Loans transferred to other real estate owned2,202 699 
Fixed assets transferred to other real estate owned— 69 
Non-cash investing activities using trade date accounting70,182 17,749 
ROU assets obtained in exchange for new operating lease liabilities692 6,918 
Qualified affordable housing investments obtained in exchange for funding commitments20,000 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.
9

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.





10

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 
Loans7,410 
Premises and equipment3,233 
Interest receivable and other assets21 
Total Assets$11,083 
Liabilities
Deposits$267,448 
Interest payable and other liabilities692 
Total Liabilities$268,140 












11

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 municipal990,867 92 116,383 874,576 
U.S. Government-sponsored mortgage-backed securities491,164 1,320 69,146 423,338 
Foreign investment1,500 — — 1,500 
Corporate obligations9,970 — 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 municipal996,541 19 133,386 863,174 
U.S. Government-sponsored mortgage-backed securities519,943 403 88,724 431,622 
Corporate obligations12,960 — 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 LossesNet Carrying AmountGross 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 municipal1,072,380 245 1,072,135 684 163,944 909,120 
U.S. Government-sponsored mortgage-backed securities592,923 — 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 LossesNet Carrying AmountGross 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 municipal1,085,921 245 1,085,676 299 185,784 900,436 
U.S. Government-sponsored mortgage-backed securities641,513 — 641,513 — 102,343 539,170 
Foreign investment1,500 — 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.

12

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 investmentTotal
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.

13

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 Months12 Months or LongerTotal
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 municipal8,549 118 854,844 116,265 863,393 116,383 
U.S. Government-sponsored mortgage-backed securities5,436 224 321,624 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 $198,314 
Less than 12 Months12 Months or LongerTotal
Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
Investment securities available for sale at December 31, 2024
U.S. Government-sponsored agency securities$— $— $79,381 $16,081 $79,381 $16,081 
State and municipal40,398 2,115 820,663 131,271 861,061 133,386 
U.S. Government-sponsored mortgage-backed securities82,724 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 municipal116,383 602
U.S. Government-sponsored mortgage-backed securities69,146 95
Corporate obligations378 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 municipal133,386 611
U.S. Government-sponsored mortgage-backed securities88,724 127
Corporate obligations662 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, 2025December 31, 2024
Investments available for sale reported at less than historical cost:  
Historical cost$1,475,226 $1,592,597 
Fair value1,276,912 1,353,744 
Gross unrealized losses$198,314 $238,853 
Percentage of the Corporation's investment securities available for sale in an unrealized loss position92.1 %97.6 %





14

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 SaleHeld to Maturity
Amortized CostFair ValueAmortized CostFair Value
Maturity Distribution at September 30, 2025
Due in one year or less$— $— $6,564 $6,581 
Due after one through five years15,819 15,559 120,072 116,636 
Due after five through ten years228,429 212,224 219,809 200,035 
Due after ten years848,393 735,782 1,056,365 866,043 
 1,092,641 963,565 1,402,810 1,189,295 
U.S. Government-sponsored mortgage-backed securities491,164 423,338 592,923 517,769 
Total investment securities$1,583,805 $1,386,903 $1,995,733 $1,707,064 

Available for SaleHeld to Maturity
Amortized CostFair ValueAmortized CostFair 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 years12,189 11,857 124,004 117,999 
Due after five through ten years168,338 151,467 174,533 154,533 
Due after ten years922,636 789,734 1,129,147 906,564 
 1,104,963 954,853 1,432,952 1,184,350 
U.S. Government-sponsored mortgage-backed securities519,943 431,622 641,513 539,170 
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,
2025202420252024
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)













15

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, 2025December 31, 2024
Commercial and industrial loans$4,604,895 $4,114,292 
Agricultural land, production and other loans to farmers275,817 256,312 
Real estate loans:
Construction789,021 792,144 
Commercial real estate, non-owner occupied2,304,889 2,274,016 
Commercial real estate, owner occupied1,232,117 1,157,944 
Residential2,412,783 2,374,729 
Home equity687,021 659,811 
Individuals' loans for household and other personal expenditures138,703 166,028 
Public finance and other commercial loans1,145,928 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.


16

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)
20252024202320222021PriorRevolving loans amortized cost basisRevolving loans converted to termTotal
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 Mention1,843 29,466 20,153 2,449 6,163 687 39,995 — 100,756 
Substandard271 4,335 3,306 2,828 16,868 19,370 62,651 — 109,629 
Doubtful401 582 — — 500 141 1,684 — 3,308 
Total Commercial and industrial loans1,230,713 903,781 290,784 150,380 117,804 97,854 1,813,579 — 4,604,895 
Current period gross charge-offs3,047 938 2,223 130 3,685 1,469 — — 11,492 
Agricultural land, production and other loans to farmers
Pass58,346 19,030 21,557 25,456 24,039 46,138 63,114 — 257,680 
Special Mention594 1,656 26 507 — 1,506 1,367 — 5,656 
Substandard4,937 2,185 240 683 — 3,126 1,310 — 12,481 
Total Agricultural land, production and other loans to farmers63,877 22,871 21,823 26,646 24,039 50,770 65,791 — 275,817 
Real estate loans:
Construction
Pass180,692 309,001 129,822 17,639 11,553 10,325 13,803 — 672,835 
Special Mention40,597 6,104 — — — — — — 46,701 
Substandard2,637 23,045 — 43,769 — 34 — — 69,485 
Total Construction223,926 338,150 129,822 61,408 11,553 10,359 13,803 — 789,021 
Current period gross charge-offs— 63 — — — — — — 63 
Commercial real estate, non-owner occupied
Pass363,617 314,160 276,753 282,620 386,878 493,783 29,859 — 2,147,670 
Special Mention53,226 16,512 9,666 4,555 1,406 5,350 100 — 90,815 
Substandard57,552 416 — 5,348 1,806 1,199 83 — 66,404 
Total Commercial real estate, non-owner occupied474,395 331,088 286,419 292,523 390,090 500,332 30,042 — 2,304,889 
Current period gross charge-offs— — 1 451 — 16 — — 468 
Commercial real estate, owner occupied
Pass248,570 136,935 141,532 156,278 192,605 257,141 38,377 — 1,171,438 
Special Mention348 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 occupied248,918 167,831 149,333 163,994 201,990 261,276 38,775 — 1,232,117 
Current period gross charge-offs— 243 152 — — 3 — — 398 
Residential
Pass199,663 197,804 412,661 631,381 364,189 551,936 7,147 47 2,364,828 
Special Mention167 1,205 7,041 8,397 5,059 5,697 346 — 27,912 
Substandard334 1,125 4,342 6,302 4,586 3,173 181 — 20,043 
Total Residential200,164 200,134 424,044 646,080 373,834 560,806 7,674 47 2,412,783 
Current period gross charge-offs— 91 622 565 94 163 — — 1,535 
Home equity
Pass7,892 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 
Substandard60 — — 90 108 257 2,312 355 3,182 
Total Home Equity7,952 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
Pass30,452 18,917 13,964 21,794 6,121 4,386 41,385 374 137,393 
Special Mention129 246 260 133 118 8 197 218 1,309 
Substandard— — — 1 — — — — 1 
Total Individuals' loans for household and other personal expenditures30,581 19,163 14,224 21,928 6,239 4,394 41,582 592 138,703 
Current period gross charge-offs158 427 463 326 142 79 — — 1,595 
Public finance and other commercial loans
Pass89,786 146,232 52,786 200,013 188,117 426,442 42,552 — 1,145,928 
Total Public finance and other commercial loans89,786 146,232 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 
17

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)
20242023202220212020PriorRevolving loans amortized cost basisRevolving loans converted to termTotal
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 Mention14,982 13,282 20,837 1,097 2,222 348 41,187 — 93,955 
Substandard29,238 32,285 26,973 7,249 1,081 1,134 75,649 513 174,122 
Doubtful1,473 606 — — — — — — 2,079 
Total Commercial and industrial loans1,359,867 539,311 244,687 166,561 58,942 51,036 1,693,245 643 4,114,292 
Current period gross charge-offs1,242 39,087 341 8,605 500 424 — — 50,199 
Agricultural land, production and other loans to farmers
Pass28,600 23,070 30,518 26,442 27,105 29,930 84,502 — 250,167 
Special Mention169 — 245 — 446 422 528 — 1,810 
Substandard2,554 48 800 682 34 81 136 — 4,335 
Total Agricultural land, production and other loans to farmers31,323 23,118 31,563 27,124 27,585 30,433 85,166 — 256,312 
Real estate loans:
Construction
Pass241,622 203,829 114,794 31,864 6,398 8,549 12,836 — 619,892 
Special Mention74,879 21,853 19,019 15,214 — 40 — — 131,005 
Substandard22,305 — 18,292 — — — — — 40,597 
Doubtful— — — 650 — — — — 650 
Total Construction338,806 225,682 152,105 47,728 6,398 8,589 12,836 — 792,144 
Commercial real estate, non-owner occupied
Pass383,279 275,907 342,442 406,289 327,372 278,362 19,863 — 2,033,514 
Special Mention79,440 9,051 35,230 12,975 5,287 28,200 — — 170,183 
Substandard34,215 2,506 6,737 6,656 18,607 1,598 — — 70,319 
Total Commercial real estate, non-owner occupied496,934 287,464 384,409 425,920 351,266 308,160 19,863 — 2,274,016 
Current period gross charge-offs— 339 3 — — 1 — — 343 
Commercial real estate, owner occupied
Pass194,703 141,964 164,725 217,319 198,314 127,431 31,573 — 1,076,029 
Special Mention1,887 11,013 7,555 9,910 8,603 1,951 460 — 41,379 
Substandard13,310 7,669 3,189 11,294 1,522 3,552 — — 40,536 
Total Commercial real estate, owner occupied209,900 160,646 175,469 238,523 208,439 132,934 32,033 — 1,157,944 
Current period gross charge-offs— — — — 9 — — — 9 
Residential
Pass221,016 413,552 672,713 397,192 326,154 293,785 8,887 13 2,333,312 
Special Mention1,528 1,953 6,228 4,102 2,891 3,152 150 — 20,004 
Substandard1,306 1,912 8,849 3,989 1,216 3,794 347 — 21,413 
Total Residential223,850 417,417 687,790 405,283 330,261 300,731 9,384 13 2,374,729 
Current period gross charge-offs— 173 779 136 20 288 — — 1,396 
Home equity
Pass6,788 4,354 24,810 51,313 10,486 3,976 535,132 12,124 648,983 
Special Mention38 — 375 285 297 69 4,568 442 6,074 
Substandard61 — 572 815 — 96 2,244 966 4,754 
Total Home Equity6,887 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
Pass40,819 21,867 31,356 10,520 2,276 4,693 53,180 180 164,891 
Special Mention153 234 347 175 59 40 128 — 1,136 
Substandard— — — — — — — 1 1 
Total Individuals' loans for household and other personal expenditures40,972 22,101 31,703 10,695 2,335 4,733 53,308 181 166,028 
Current period gross charge-offs208 920 523 184 47 80 — — 1,962 
Public finance and other commercial loans
Pass161,072 53,750 203,884 195,066 146,377 298,802 132 — 1,059,083 
Total Public finance and other commercial loans161,072 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 
18

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
Current30-59 Days
Past Due		60-89 Days
Past Due		90 Days or More Past DueTotalLoans > 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 farmers275,364 — 217 236 275,817 — 
Real estate loans:
Construction728,758 47,341 — 12,922 789,021 — 
Commercial real estate, non-owner occupied2,292,354 5,727 4,907 1,901 2,304,889 1,329 
Commercial real estate, owner occupied1,216,776 9,037 564 5,740 1,232,117 — 
Residential2,368,841 13,926 11,279 18,737 2,412,783 423 
Home equity677,667 4,662 1,631 3,061 687,021 19 
Individuals' loans for household and other personal expenditures137,393 927 382 1 138,703 — 
Public finance and other commercial loans1,145,928 — — — 1,145,928 — 
Loans$13,434,790 $83,468 $24,468 $48,448 $13,591,174 $1,925 

December 31, 2024
Current30-59 Days
Past Due		60-89 Days
Past Due		90 Days or More Past DueTotalLoans > 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 farmers256,148 164 — — 256,312 — 
Real estate loans:
Construction761,819 4,332 22,005 3,988 792,144 3,683 
Commercial real estate, non-owner occupied2,259,549 2,407 1,718 10,342 2,274,016 — 
Commercial real estate, owner occupied1,153,861 3,783 — 300 1,157,944 — 
Residential2,337,002 12,302 6,606 18,819 2,374,729 208 
Home equity649,238 4,431 1,569 4,573 659,811 — 
Individuals' loans for household and other personal expenditures164,891 926 210 1 166,028 1 
Public finance and other commercial loans1,059,083 — — — 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, 2025December 31, 2024
Nonaccrual LoansNonaccrual Loans with no Allowance for Credit LossesNonaccrual LoansNonaccrual 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 farmers254 — 75 — 
Real estate loans:
Construction12,922 12,889 24,629 22,650 
Commercial real estate, non-owner occupied6,693 5,823 12,118 10,153 
Commercial real estate, owner occupied6,622 4,973 2,440 1,904 
Residential25,487 — 21,491 — 
Home equity4,346 — 4,924 — 
Individuals' loans for household and other personal expenditures17 — 6 — 
Loans$65,740 $26,398 $73,773 $39,644 

19

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 $2.8 million in the commercial and industrial loan class.
September 30, 2025
Commercial Real EstateResidential Real EstateOtherTotal Allowance on Collateral Dependent Loans
Commercial and industrial loans$— $— $37,092 $37,092 $10,594 
Real estate loans:
Construction— 12,889 — 12,889 — 
Commercial real estate, non-owner occupied21,369 — — 21,369 4,180 
Commercial real estate, owner occupied8,792 — — 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 EstateResidential Real EstateOtherTotalAllowance 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 occupied27,583 — — 27,583 4,295 
Commercial real estate, owner occupied9,748 — — 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 DelayTerm ExtensionCombination 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 %
Residential261 — — 0.01 %
Total$261 $7,724 $6,426 


20

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 DelayTerm ExtensionCombination Payment Delay & Term ExtensionCombination Interest Rate Reduction & Term ExtensionCombination 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 %
Residential493 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 DelayTerm ExtensionInterest Rate ReductionCombination Interest Rate Reduction & Term ExtensionCombination 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 %
Residential977 — — — 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 DelayTerm ExtensionInterest Rate ReductionCombination Payment Delay & Term ExtensionCombination Interest Rate Reduction & Term ExtensionCombination 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 %
Residential1,931 341 — 283 — 529 0.13 %
Home equity— 62 — 162 — — 0.03 %
Total$13,011 $39,339 $247 $22,462 $10,859 $529 



















21

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 DelayTerm ExtensionCombination 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 DelayTerm ExtensionCombination Payment Delay & Term ExtensionCombination Interest Rate Reduction & Term ExtensionCombination 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.

22

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 DelayTerm ExtensionInterest Rate ReductionCombination Interest Rate Reduction & Term ExtensionCombination 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.
23

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 DelayTerm ExtensionInterest Rate ReductionCombination Payment Delay & Term ExtensionCombination Interest Rate Reduction & Term ExtensionCombination 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
Current30-59 Days Past Due60-89 Days Past Due90+ Days Past DueTotal
Commercial and industrial loans$9,561 $— $— $3,278 $12,839 
Agricultural land, production and other loans to farmers2,177 — — — 2,177 
Real estate loans:
Commercial real estate, non-owner occupied65,717 — — — 65,717 
Residential4,275 351 647 1,764 7,037 
Home equity155 — — — 155 
Total$81,885 $351 $647 $5,042 $87,925 

24

PART I. FINANCIAL INFORMATION
ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(table dollar amounts in thousands, except share data)
(Unaudited)

September 30, 2024
Current30-59 Days Past Due60-89 Days Past Due90+ Days Past DueTotal
Commercial and industrial loans$24,445 $— $1,927 $— $26,372 
Agricultural land, production and other loans to farmers22 — — — 22 
Real estate loans:
Construction22,915 — — — 22,915 
Commercial real estate, non-owner occupied21,082 8,680 — 1,730 31,492 
Commercial real estate, owner occupied7,523 — — — 7,523 
Residential1,940 — 250 1,189 3,379 
Home equity252 — — — 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.



25

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
CommercialCommercial Real EstateConstructionConsumer & ResidentialTotal
Allowance for credit losses - loans
Balances, June 30, 2025$98,984 $46,277 $8,743 $41,312 $195,316 
Provision for credit losses - loans3,632 1,252 (2,257)1,673 4,300 
Recoveries on loans914 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 


26

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
CommercialCommercial Real EstateConstructionConsumer & ResidentialTotal
Allowance for credit losses - loans
Balances, June 30, 2024$91,217 $45,514 $14,360 $38,446 $189,537 
Provision for credit losses - loans8,456 1,873 (2,609)(2,720)5,000 
Recoveries on loans505 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
CommercialCommercial Real EstateConstructionConsumer & ResidentialTotal
Allowance for credit losses - loans
Balances, December 31, 2024$94,757 $51,099 $9,784 $37,117 $192,757 
Provision for credit losses - loans12,380 (3,198)(3,235)8,153 14,100 
Recoveries on loans3,366 107 — 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
CommercialCommercial Real EstateConstructionConsumer & ResidentialTotal
Allowance for credit losses - loans
Balances, December 31, 2023$97,348 $44,048 $24,823 $38,715 $204,934 
Provision for credit losses - loans43,249 3,476 (13,072)(2,153)31,500 
Recoveries on loans1,592 232 — 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, 2025December 31, 2024
Amounts of commitments:
Loan commitments to extend credit$5,552,327 $5,006,085 
Standby letters of credit$72,972 $71,271 


27

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, 2025December 31, 2024
Notional AmountFair ValueNotional AmountFair 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 sale50,87280039,142465
Interest rate lock commitments36,90924915,000140
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 sale28,5598713,02018
Interest rate lock commitments7,2205714,457100
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, 2025Three Months Ended September 30, 2024
Forward contracts related to mortgage loans to be delivered for saleNet gains and fees on sales of loans$(616)$(966)
Interest rate lock commitmentsNet 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, 2025Nine Months Ended September 30, 2024
Forward contracts related to mortgage loans to be delivered for saleNet gains and fees on sales of loans$(542)$(573)
Interest rate lock commitmentsNet gains and fees on sales of loans151 (15)
Total net gain (loss) recognized in income$(391)$(588)
28

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.


29

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, 2025Fair ValueQuoted 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 municipal874,576 — 872,613 1,963 
U.S. Government-sponsored mortgage-backed securities423,338 — 423,338 — 
Foreign investment1,500 — 1,500 — 
Corporate obligations9,592 — 9,561 31 
Derivative assets50,722 — 50,722 — 
Derivative liabilities49,863 — 49,863 — 


  Fair Value Measurements Using:
December 31, 2024Fair ValueQuoted 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 municipal863,174 — 860,793 2,381 
U.S. Government-sponsored mortgage-backed securities431,622 — 431,618 4 
Corporate obligations12,298 — 12,267 31 
Derivative assets77,133 — 77,133 — 
Derivative liabilities76,568 — 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 EndedNine Months Ended
 September 30, 2025September 30, 2024September 30, 2025September 30, 2024
Balance at beginning of the period$2,196 $3,224 $2,416 $3,310 
Included in other comprehensive income29 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.





30

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, 2025Fair ValueQuoted 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, 2024Fair ValueQuoted 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

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.

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, 2025Fair ValueValuation TechniqueUnobservable InputsRange (Weighted-Average)
State and municipal securities$1,963 Discounted cash flowMaturity/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 $31 Discounted cash flowRisk free rate
3 month CME Term SOFR plus 26bps
   plus premium for illiquidity (basis points)
plus 200bps
Weighted-average coupon
0%
Collateral dependent loans$66,708 Collateral based measurementsDiscount to reflect current market conditions and ultimate collectability
1% - 16%
  Weighted-average discount by loan balance
1.5%
31

PART I. FINANCIAL INFORMATION
ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(table dollar amounts in thousands, except share data)
(Unaudited)


December 31, 2024Fair ValueValuation TechniqueUnobservable InputsRange (Weighted-Average)
State and municipal securities$2,381 Discounted cash flowMaturity/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$35 Discounted cash flowRisk free rate
3 month CME Term
SOFR plus 26bps
   plus premium for illiquidity (basis points)
plus 200bps
Weighted-average coupon
0%
Collateral dependent loans$46,810 Collateral based measurementsDiscount 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 deposits168,706 168,706 — — 168,706 
Investment securities held to maturity, net of allowance for credit losses1,995,488 — 1,702,443 4,621 1,707,064 
Loans held for sale23,190 — 23,190 — 23,190 
Net loans13,396,706 — — 13,306,141 13,306,141 
Federal Home Loan Bank stock47,264 — 47,264 — 47,264 
Interest receivable89,102 — 89,102 — 89,102 
Liabilities:
Deposits$14,869,979 $12,810,405 $2,058,720 $— 14,869,125 
Borrowings:
Federal funds purchased199,370 — 199,370 — 199,370 
Securities sold under repurchase agreements122,226 — 122,218 — 122,218 
Federal Home Loan Bank advances798,626 — 803,788 — 803,788 
Subordinated debentures and other borrowings57,632 — 53,537 — 53,537 
Interest payable18,240 — 18,240 — 18,240 







32

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 deposits298,891 298,891 — — 298,891 
Investment securities held to maturity, net2,074,220 — 1,716,647 6,873 1,723,520 
Loans held for sale18,663 — 18,663 — 18,663 
Net loans12,661,602 — — 12,437,523 12,437,523 
Federal Home Loan Bank stock41,690 — 41,690 — 41,690 
Interest receivable91,829 — 91,829 — 91,829 
Liabilities:
Deposits$14,521,626 $12,502,819 $2,010,348 $— 14,513,167 
Borrowings:
Securities sold under repurchase agreements142,876 — 142,865 — 142,865 
Federal Home Loan Bank advances822,554 — 816,786 — 816,786 
Subordinated debentures and other borrowings93,529 — 84,108 — 84,108 
Interest payable16,102 — 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, 2025December 31, 2024
Investment TypeInvestmentUnfunded CommitmentInvestmentUnfunded 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,
2025202420252024
Amortization expense$4,258 $1,695 $12,379 $5,018 
Tax credits recognized5,208 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, 2025December 31, 2024
Federal funds purchased$199,370 $99,226 
Securities sold under repurchase agreements122,226 142,876 
Federal Home Loan Bank advances798,626 822,554 
Subordinated debentures and other borrowings57,632 93,529 
Total Borrowings$1,177,854 $1,158,185 
33

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 ContinuousUp to 30 Days30-90 DaysGreater Than 90 DaysTotal
U.S. Government-sponsored mortgage-backed securities$122,226 $— $— $— $122,226 

December 31, 2024
Remaining Contractual Maturity of the Agreements
Overnight and ContinuousUp to 30 Days30-90 DaysGreater Than 90 DaysTotal
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 PurchasedSecurities 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.
34

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.























35

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 SaleUnrealized Gains (Losses) on Defined Benefit PlansTotal
Balance at December 31, 2024$(188,412)$(273)$(188,685)
Other comprehensive income before reclassifications32,815 — 32,815 
Amounts reclassified from accumulated other comprehensive loss6 — 6 
Period change32,821 — 32,821 
Balance at September 30, 2025$(155,591)$(273)$(155,864)
Balance at December 31, 2023$(173,654)$(2,316)$(175,970)
Other comprehensive income before reclassifications16,905 — 16,905 
Amounts reclassified from accumulated other comprehensive loss7,240 — 7,240 
Period change24,145 — 24,145 
Balance at September 30, 2024$(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 Components20252024Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities losses reclassified into income$— $(9,114)Noninterest income - net realized losses on sales of available for sale securities
Related income tax benefit— 1,914 Income tax expense
Total reclassifications for the period, net of tax$— $(7,200)
Amount Reclassified from Accumulated Other Comprehensive Loss For the Nine Months Ended September 30,
Details about Accumulated Other Comprehensive Loss Components20252024Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities losses reclassified into income$(8)$(9,165)Noninterest income - net realized losses on sales of available for sale securities
Related income tax benefit2 1,925 Income tax expense
Total reclassifications for the period, net of tax$(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.

36

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,
 2025202420252024
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 PriceWeighted 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, 202524,286 $24.29 1.56$326 
Exercisable at September 30, 202524,286 $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 SharesWeighted-Average
Grant Date Fair Value
Unvested RSAs at January 1, 2025
554,436 $36.47 
Granted205,058 $37.66 
Vested(122,365)$40.58 
Forfeited(1,325)$38.34 
Unvested RSAs at September 30, 2025635,804 $36.06 


37

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 not 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,
2025202420252024
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 premiums171 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 Tax314 333 918 142 
Other264 107 501 320 
Actual Tax Expense$8,516 $7,160 $24,680 $18,052 
Effective Tax Rate13.0 %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,
 20252024
 Net Income Available to Common StockholdersWeighted-Average Common SharesPer Share
Amount		Net Income Available to Common StockholdersWeighted-Average Common SharesPer 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 awards261,653  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 calculation61,861 94,650 









38

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,
 20252024
 Net Income Available to Common StockholdersWeighted-Average Common SharesPer Share
Amount		Net Income Available to Common StockholdersWeighted-Average Common SharesPer 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 awards267,994  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 calculation56,523 122,134 


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.

39

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.
40

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,
20252025202520242024
Income Statement:
Net interest income$133,665 $133,014 $130,270 $134,370 $131,110 
Provision for credit losses4,300 5,600 4,200 4,200 5,000 
Noninterest income32,477 31,303 30,048 42,742 24,866 
Noninterest expense96,561 93,598 92,902 96,289 94,629 
Net income available to common stockholders56,297 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 stockholders0.36 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 assets1.22 %1.23 %1.21 %1.39 %1.07 %
Return on average stockholders' equity9.51 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 loans1.43 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 loans13,614,364 13,325,542 13,027,909 12,873,022 12,687,460 
Total assets18,811,629 18,592,777 18,439,787 18,311,969 18,347,552 
Total deposits14,869,979 14,797,578 14,461,978 14,521,626 14,365,100 
Total borrowings1,177,854 1,161,077 1,343,044 1,158,185 1,081,085 
Total stockholders' equity2,412,402 2,347,952 2,332,214 2,304,983 2,302,373 
Capital Ratios:
Total stockholders' equity to assets12.82 %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 assets13.04 13.06 13.22 13.31 13.18 
Tier 1 capital to risk-weighted assets11.49 11.50 11.67 11.59 11.41 
Common equity tier 1 capital to risk-weighted assets11.34 11.35 11.50 11.43 11.25 
Tier 1 capital to average assets10.30 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.












41

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.





42

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.



















43

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 EndedNine Months Ended
September 30,June 30,September 30,September 30,September 30,
20252025202420252024
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 expenses276 — — 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 EndedNine Months Ended
September 30,September 30,September 30,September 30,
2025202420252024
Net interest income (GAAP)$133,665 $131,110 $396,949 $386,744 
FTE adjustment6,209 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 adjustment0.15 %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, 2025December 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 outstanding57,192 57,975 
Book value per common share (GAAP)$41.74 $39.33 
Tangible book value per common share (non-GAAP)$29.08 $26.78 





44

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,
2025202420252024
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 dividend469 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,
2025202420252024
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 adjustment6,209 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 %
45

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.


46

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.

47

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, 2025September 30, 2024
Average BalanceInterest
 Income /
Expense		Average
Rate		Average BalanceInterest
 Income /
Expense		Average
Rate
Assets: 
Interest-bearing deposits$229,271 $1,676 2.92 %$252,113 $2,154 3.42 %
Federal Home Loan Bank stock47,278 1,092 9.24 41,730 855 8.20 
Investment Securities: (1)
Taxable1,567,594 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 Securities3,603,973 24,060 2.67 4,016,349 26,363 2.63 
Loans held for sale26,165 401 6.13 31,991 483 6.04 
Loans: (3)
Commercial9,165,241 158,469 6.92 8,699,733 164,922 7.58 
Real estate mortgage2,217,524 25,676 4.63 2,183,095 24,333 4.46 
HELOC and installment851,239 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 Loans13,402,379 214,476 6.40 12,680,166 217,594 6.86 
Total Earning Assets17,282,901 241,304 5.58 %16,990,358 246,966 5.82 %
Total Non-Earning Assets1,354,680 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 deposits3,843,537 31,709 3.30 2,974,188 25,950 3.49 
Savings deposits1,269,539 2,605 0.82 1,425,047 4,208 1.18 
Certificates and other time deposits2,036,704 19,044 3.74 2,499,655 28,248 4.52 
Total Interest-Bearing Deposits12,750,153 90,821 2.85 12,354,188 98,856 3.20 
Borrowings1,072,145 10,609 3.96 1,071,440 11,117 4.15 
Total Interest-Bearing Liabilities13,822,298 101,430 2.94 13,425,628 109,973 3.28 
Noninterest-bearing deposits2,157,708 2,348,266 
Other liabilities289,604 335,139 
Total Liabilities16,269,610 16,109,033 
Stockholders' Equity2,367,971 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 Assets5.58 %5.82 %
Interest Expense / Average Earning Assets2.34 %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 equal $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.







48

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, 2025September 30, 2024
Average BalanceInterest
 Income /
Expense		Average
Rate		Average BalanceInterest
 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 stock45,964 3,172 9.20 41,748 2,569 8.20 
Investment Securities: (1)
 
Taxable1,602,343 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 Securities3,644,098 72,385 2.65 4,024,878 78,623 2.60 
Loans held for sale24,175 1,109 6.12 27,735 1,242 5.97 
Loans: (3)
 
Commercial8,982,171 460,349 6.83 8,659,088 484,979 7.47 
Real estate mortgage2,203,263 75,184 4.55 2,159,738 70,489 4.35 
HELOC and installment838,420 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 Loans13,186,843 624,386 6.31 12,592,907 638,068 6.76 
Total Earning Assets17,135,301 705,883 5.49 %17,042,540 730,902 5.72 %
Total Non-Earning Assets1,361,817 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 deposits3,633,314 86,375 3.17 3,018,526 80,563 3.56 
Savings deposits1,283,856 7,563 0.79 1,497,620 11,485 1.02 
Certificates and other time deposits1,996,406 54,299 3.63 2,447,684 83,309 4.54 
Total Interest-Bearing Deposits12,469,850 255,609 2.73 12,450,936 296,292 3.17 
Borrowings1,194,498 34,790 3.88 990,022 30,328 4.08 
Total Interest-Bearing Liabilities13,664,348 290,399 2.83 13,440,958 326,620 3.24 
Noninterest-bearing deposits2,185,044 2,375,120   
Other liabilities298,008 325,873   
Total Liabilities16,147,400 16,141,951   
Stockholders' Equity2,349,718 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 Assets5.49 %5.72 %
Interest Expense / Average Earning Assets2.26 %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.
    









49

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.



50

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.















51

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
ActualBasel III Minimum Capital RequiredWell Capitalized
September 30, 2025AmountRatioAmountRatioAmountRatio
Total risk-based capital to risk-weighted assets
First Merchants Corporation$2,094,242 13.04 %$1,686,289 10.50 %N/AN/A
First Merchants Bank2,035,936 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/AN/A
First Merchants Bank1,834,899 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/AN/A
First Merchants Bank1,834,899 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/AN/A
First Merchants Bank1,834,899 10.14 723,685 4.00 $904,606 5.00 %

Prompt Corrective Action Thresholds
ActualBasel III Minimum Capital RequiredWell Capitalized
December 31, 2024AmountRatioAmountRatioAmountRatio
Total risk-based capital to risk-weighted assets
First Merchants Corporation$2,030,362 13.31 %$1,601,175 10.50 %N/AN/A
First Merchants Bank1,967,738 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/AN/A
First Merchants Bank1,776,738 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/AN/A
First Merchants Bank1,776,738 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/AN/A
First Merchants Bank1,776,738 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.














52

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, 2025December 31, 2024
(Dollars in Thousands)First Merchants CorporationFirst Merchants BankFirst Merchants CorporationFirst 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 Securities25,000 — 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 Debentures47,499 — 72,040 — 
Allowance for Credit Losses Includible in Tier 2 Capital200,885 201,037 190,854 191,000 
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 Assets11.49 %11.42 %11.59 %11.64 %
Tier 1 Capital to Average Assets10.30 %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.














53

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 farmers79,062 52,085 144,670 275,817 
Real estate loans:
Construction335,287 316,354 137,380 789,021 
Commercial real estate, non-owner occupied467,784 1,285,075 552,030 2,304,889 
Commercial real estate, owner occupied166,682 636,502 428,933 1,232,117 
Residential34,013 147,261 2,231,509 2,412,783 
Home Equity29,301 16,090 641,630 687,021 
Individuals' loans for household and other personal expenditures26,110 82,178 30,415 138,703 
Public finance and other commercial loans41,993 120,735 983,200 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 farmers3,834 28,487 10,177 42,498 
Real estate loans:
Construction3,187 13,422 115,798 132,407 
Commercial real estate, non-owner occupied141,819 397,151 87,381 626,351 
Commercial real estate, owner occupied109,737 288,715 83,832 482,284 
Residential26,550 98,209 879,839 1,004,598 
Home Equity15,910 8,140 9,937 33,987 
Individuals' loans for household and other personal expenditures3,426 60,037 16,711 80,174 
Public finance and other commercial loans8,346 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 farmers75,228 23,598 134,493 233,319 
Real estate loans:
Construction332,100 302,932 21,582 656,614 
Commercial real estate, non-owner occupied325,965 887,924 464,649 1,678,538 
Commercial real estate, owner occupied56,945 347,787 345,101 749,833 
Residential7,463 49,052 1,351,670 1,408,185 
Home Equity13,391 7,950 631,693 653,034 
Individuals' loans for household and other personal expenditures22,684 22,141 13,704 58,529 
Public finance and other commercial loans33,647 44,889 25,987 104,523 
Total loans with variable interest rates$1,656,348 $4,550,320 $3,324,468 $9,531,136 

54

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, 2025December 31, 2024
Nonperforming Assets:
Nonaccrual loans$65,740 $73,773 
Other real estate owned and repossessions1,270 4,948 
Nonperforming assets 67,010 78,721 
Loans 90-days or more delinquent and still accruing1,925 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, 2025December 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 farmers254 75 
Real estate loans:
Construction12,922 28,312 
Commercial real estate, non-owner occupied8,022 16,838 
Commercial real estate, owner occupied6,622 2,440 
Residential27,100 21,927 
Home equity4,445 4,924 
Individuals' loans for household and other personal expenditures17 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.







55

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)2025202420252024
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 occupied200 — 372 192 
Commercial real estate, owner occupied187 (18)387 (73)
Residential869 600 1,449 1,095 
Home equity(99)(222)961 (346)
Individuals' loans for household and other personal expenditures386 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 LessOver One YearTotal
Deposits without stated maturity$12,810,405 $— $12,810,405 
Certificates and other time deposits1,717,865 341,709 2,059,574 
Securities sold under repurchase agreements122,226 — 122,226 
Federal Home Loan Bank advances— 798,626 798,626 
Federal Funds Purchased199,370 — 199,370 
Subordinated debentures and other borrowings1,304 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.




56

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 credit72,972 
$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, 2025December 31, 2024
Rising 200 basis points from base case3.9 %4.1 %
Rising 100 basis points from base case2.1 %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).







57

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”.
































































58

PART I: FINANCIAL INFORMATION
ITEM 4. CONTROLS AND PROCEDURES

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.

59

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, 2025162,474 $39.86 162,474 1,987,729 
August, 202533,651 $37.11 — 1,987,729 
September, 2025113 $40.03 — 1,987,729 
Total196,238 162,474 

(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.

60

PART II: OTHER INFORMATION
ITEM 6. EXHIBITS

ITEM 6.  EXHIBITS
 
Exhibit No:Description of Exhibits:
2.1*
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
31.1
31.2
32
101.INSInline 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.SCHInline XBRL Taxonomy Extension Schema Document (1)
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LABInline XBRL Taxonomy Extension Label Linkbase Document (1)
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document (1)
104Cover 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.

61

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)

62