First Merchants Corporation

Thank you for standing by and welcome to the First Merchants Corporation third 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 the 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-GAAP 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 a 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. Mr. Hardwick, you may begin.

Good morning, and welcome to First Merchant's third quarter 2025 conference call. Thanks for the introduction and for covering the forward-looking statement on page two. We released our earnings yesterday after the market closed, and you can access today's slides by following the link on the third page of our earnings release. On page three 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 Kaviaski. Slide four has a map with all 111 banking centers, a few awards that we've received recently, and some Q3 financial highlights, including a 1.22% return on assets for the nine months ended September 30, 2025. On slide five, our strong balance sheet and earnings performance reflect strength and resilience of our business model. We delivered another 9% loan growth quarter and 98 cents of earnings per share. ROA totaled 122, the same as our year-to-date number I mentioned previously, and the efficiency ratio was 55 percent, which is consistent with the high performance we strive for. As you all know, we announced the acquisition of First Savings Financial Group on September 25th, adding approximately $2.4 billion in assets and expanding our presence into southern Indiana, which is part of the Louisville MSA. We are confident in our ability and excited about building on their meaningful deposit franchise to create a true community bank in southern Indiana, much like we've done in previous acquisitions. Citizens Bank in the northwest part of Indiana and IEB in Fort Wayne are two great examples of acquisitions where we saw potential and successfully built them into high-performing parts of the First Merchants franchise over time. We also believe their verticals will prove beneficial by enhancing fee income through their originate and sell models for SBA loans and First Lane HELOCs by adding an additional loan growth and liquidity lever through their triple net leasing business. And we will now have an SBA product offering available throughout our current footprint. You may know that we have completed 8 million of SBA originations so far in 2025, while first savings has originated over 100 million. Our commercial and small business teams are excited to finally have a more robust offering for our communities. Larry Myers will be joining our board of directors on the close of the acquisition, and Tony Shane will stay on board to lead their verticals and enhance the financial expertise of our commercial team. We anticipate a mid-first quarter closing, a mid-second quarter integration, and are confident in achieving the announced three-year earn-back. On slide six, year-to-date net income totaled $167.5 million, an increase of $31.9 million, or 23.5% from the nine months ended 2024, while earnings per share totaled $2.90, an increase of $0.59, or 25.5% during the same period. Michelle will discuss our capital position to include our tangible common equity of 9.18%, which provides meaningful capital flexibility. And John will discuss non-performing asset data to include our NPA plus 90 days past due to total loans of just 0.51%, down from 0.62% a year ago. Now, Mike Stewart will discuss our line of business momentum.

Thank you, Mark, and good morning to all. Allow me to share some context for my portion of this call. I'm calling in today from Charleston, South Carolina, where the First Savings Bank SBL team is gathered. SBL stands for Small Business Lending and represents First Savings Bank's dedicated 45-person team that has a national footprint delivering SBA loans. They gather once a year in person to review their accomplishments and prepare for their upcoming year. And I am pleased to be able to meet this team later this morning as an early bridge to the integration with First Merchants. So back to our earnings call. The business strategy summarized on slide seven remains unchanged. We are a commercially focused organization across all these business segments and our primary markets of Indiana, Michigan, and Ohio. So turn to slide eight. As Mark stated earlier, this was another great quarter of loan growth across all segments and across all markets. It is 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. 268 million in commercial loan growth for the quarter, over 10% annualized. 699 million of loan growth year-to-date, over 9% annualized. CapEx financing, increased usage of revolvers, M&A financings, and new business conversion are the drivers of this growth. Another encouraging 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 our loan growth and increasing market share activities into the fourth quarter. The consumer segment also shared in the balance sheet growth with residential mortgage, HELOC, and private banking relationships driving the 21 million of loan growth for the quarter. Pipelines for these segments also ended at consistent levels to June. So we can turn to slide nine, deposits. I will start with the consumer segment on the bottom page, which was the driver of our deposit growth during the quarter, 96 million in total. The mix is particularly pleasing with the non-maturity categories growing at nearly 5% annualized. Maturity categories also grew by 27 million. The primary driver of the non-maturity balance increase is market share and household growth. Note the last two bullet points on this page. Maturity deposit balances have decreased 198 million year-to-date with non-maturity deposit balances increasing by 178. Commercial business segment on top of this page has a similar story. While total deposits declined by 23 million in aggregate, core relationship or operating account balances grew by 4.9% or 56 million. Improving the mix of all deposit categories has been the focus of our teams for the past year and has been accomplished by focusing on primary, core accounts, and deposit cost. Overall, I'm gratified with the active engagement our teams are having with their clients. We have continued our pricing discipline, specifically maturity deposits and public funds, and remain hyper-focused on relationships and converting single product users into a broader bank relationship. So before I turn the call over to Michelle, one last comment regarding First Savings Bank. I'm excited to be working directly with them. Larry, his executive team, and his board have been welcoming and supportive of building their market presence in southern Indiana with First Merchants as a partner. I have already spent time with their teams, visiting banking centers, and meeting their clients. They have a strong reputation within Jeffersonville, New Albany, and their southern Indiana footprint. Their community bank model and reputation are well established. Continuing their growth within this community will be our priority as their branch network and commercial capabilities are well positioned. Being able to meet their SBL team and other verticals is also a priority for me as these businesses drive a solid fee generating revenue stream for the bank. So, Michelle, I'll let you take it from here.