First Merchants Corporation

Thank you for standing by and welcome to the First Merchants Corporation Second Quarter 2025 Earnings Conference Call. Before we begin, management would like to remind you that today's call contains forward-looking statements with respect to future performance and financial condition of First Merchants Corporation that involve risk and uncertainties. Further information is contained within the press release, which we encourage you to review. Additionally, management may refer to non-GAP measures, which are intended to supplement but not substitute for the most directly comparable GAP measures. The press release available on the website contains financial and other quantitative information to be discussed today as well as reconciliation of GAP to non-GAP measures. As a reminder, today's call is being recorded. I will now turn the conference over to Mr. Mark Hardwick, CEO, and Mr. Hardwick may begin.

Good morning and welcome to First Merchants Second Quarter 2025 Conference Call. Thanks for the introduction and for covering the forward-looking statement on page 2. We released our earnings yesterday after the close of the market, and you can access today's slides by following the link on the third page of our earnings release. On page 3 of our slides, you will see today's presenters and our bios, including President Mike Stewart, Chief Credit Officer John Martin, and Chief Financial Officer Michelle Kaviesky. On slide 4, we have a map of all 111 of our banking centers and some second quarter financial highlights with a few of the awards that we've received recently. On slide 5, our strong balance sheet and earnings results reflect the type of performance First Merchant shareholders have come to expect. We delivered .1% annualized loan growth and 98 cents of earnings per share. Return on assets totaled 1.23%, and our efficiency ratio was 54%, which is consistent with the high performance company we strive to be. Second quarter net income was $56.4 million, an increase of $17 million or 43% from a year ago as credit quality returned to our normal healthy levels. This improvement supported a significantly lower provision for credit losses of $5.6 million compared to $24.5 million in the second quarter of 2024. Year to date net income totaled $111.2 million, an increase of $24.3 million or 28% from the first half of 2024, while earnings per share totaling $1.92 or $1.92 increased 44 cents or 30% during the same period. We also repurchased an additional $22.1 million worth of shares this quarter, and year to date we've repurchased $31.7 million with an average price of $38.68. Our tangible common equity of .92% is above our target level and provides optimal capital flexibility given the minimal reliance on hybrid equity that's available to us if needed. Now Mike Stewart will discuss our line of business momentum.

Thank you, Mark, and good morning to all. Our business strategy summarized on slide 6 remains unchanged. We are a commercially focused organization across all these business segments and our primary markets of Indiana, Michigan, and Ohio. So let's turn to page 7. And as Mark stated earlier, this was a great quarter of loan growth across all those segments and across all the markets. It's very pleasing to see our Midwest economies continue to expand, our clients' businesses continue to grow, and see our bankers continuing to win new relationships. 262 million of commercial loan growth for the quarter. That's over 10% annualized. 430 million dollars of loan growth year to date, that's 9% annualized. CAPEX financing, increased usage of revolvers, M&A financing, and new business conversion are the primary drivers of all this growth. Another pleasing bullet point on this page is the quarter ending pipeline, which is consistent with prior quarter end and gives me optimism that we will be able to maintain loan growth and increasing market share activities through the third quarter. The consumer segment also shared in the balance sheet growth with residential mortgage, HELOC, and private banking relationships driving the 36 million of loan growth for the quarter. Pipelines for these segments also ended consistent levels to the end of March. So we can turn to slide 8 and review some deposit activity. The commercial segment was the driver of our deposit growth during the quarter. 347 million in total. Commercial businesses have been using their cash to support their working capital needs, which reduced the core or operating account balances noted under the second bullet point. Increasing revolver usage is the corollary of lower operating account balances. Tax receipt collections were the primary driver of the public fund balance increases noted under the third bullet point. For the quarter, our consumer segment experienced declines in both the non-maturity and maturity categories. We have continued our pricing discipline within our consumer segment, specifically maturity deposits, and remain hyper-focused on relationships versus single product users. Households continue to grow both during the quarter and year to date, and as the next to the last bullet point on the page says, non-maturity deposit balances have increased 108 million year to date. This is our lowest cost deposit category. The mix of deposit categories has been the focus of our teams for the past year. It is the focus on primary, core accounts, and the focus of deposit costs in general. So overall, I'm really pleased with the active engagement our teams are having with their clients as we manage the mix and deposit costs. So I'll turn the call over to Michelle, and she can review in much more detail the composition of our balance sheet and the drivers on our income statement. Michelle?