First Merchants Corporation

Thank you for standing by and welcome to the First Merchants Corporation second quarter 2026 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 involves risks and uncertainties. Further information is contained within the press release, which we encourage you to review. Additionally, management would 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 and non-gap measures. As a reminder, today's call is being recorded. I would now like to turn the conference over to Mr. Mark Hardwick, CEO. Mr. Hardwick, you may begin.

Good morning and welcome to First Merchants' second quarter 2026 conference call. Thanks for the introduction and for covering the forward-looking statement on page two. We released our earnings yesterday after markets closed, and today's presentation materials are available via the link on page three of the earnings release. Turning to slide three, you will see today's presenters and members of our executive management team. Joining me on the call are Mike Stewart, our president, John Martin, chief credit officer, and Michele Kawiecki, our Chief Financial Officer. Slide four highlights our footprint and financial scale. We now operate 126 banking centers reflecting the addition of Southern Indiana following the first savings acquisition. Total assets stand at 21.3 billion with 15.5 billion in loans and 16.8 billion in deposits. Turning to slide five, Second quarter reported net income totaled $43.5 million or 70 cents per diluted share. Second quarter results were negatively impacted by two loans that were moved to non-accrual status with specific reserves taken against them. We are disappointed by these two downgrades and we are confident they're not representative of the overall portfolio. We've remained confident in our outlook as John will highlight later in the presentation, and we're happy to answer any questions that you might have during the Q&A session. Adjusted pre-tax pre-provision earnings increased to $84.6 million for the quarter, an increase of 7.5% over the first quarter of 2020. Net interest margin expanded to 3.38%. and loan and deposit growth returned to more traditional levels. Year to date net income on slide six totaled 71.2 million, excluding the mortgage loan sale from the first quarter and acquisition related expenses from both the first and second quarter adjusted EPS totaled $1.77 per share. The previously announced mortgage loan sale is now complete. adding $271 million of liquidity to our balance sheet. Our integration and related expense savings are now complete and positioned well for next quarter. Our balance sheet continues to grow organically reflecting strong production levels. Tangible common equity remains strong at 8.99% and we continue as we continued our share repurchase activity throughout the first half of this year. All of these factors position us well for improved performance during the second half of 2026. And now Mike Stewart will discuss our line of business momentum.

Thank you, Mark, and good morning to all. Our business strategy is summarized on slide seven. As stated on the top of the slide, building our Midwestern strength by growing organically remains our primary objective as a company. Our four primary business units work together in delivering financial solutions for businesses and consumers focused primarily on the maps you see starting on slide eight. Let's turn to slide eight. After a flat first quarter of loan growth, the second quarter picked up the pace with nearly 6% annualized growth, both in the commercial and consumer business sector. The increase came within our three-state footprint and was driven by the community, corporate, asset-based, and investment real estate teams working with our current client base and adding new names. Our Midwest economies continue to expand, our clients' businesses continue to grow, and our bankers continue to win new relationships. The same is true for the consumer teams within small business, mortgage, and private wealth. The full loan portfolio trend is summarized on page 27 for your reference. We remain confident in our expected mid single-digit loan growth through the end of 2026. Let's turn to slide nine, deposits. Second quarter deposits grew at a 6.5% annualized rate. The robust commercial growth was primarily attributed to public fund increases due to seasonal tax collection and a large temporary deposit increase from a client's sale of their business. This client is working with our private banking team on investment management and trust service solutions for their family. The large consumer decline was also seasonal and primarily due to consumer tax refund payments being spent. The seasonality of tax payments between public entities and our consumer deposits accounts, depository accounts will normalize to the balance of the year. The 3% year-to-date decline in total deposits was due to declines in maturity deposit balances and the balance sheet repositioning of the first savings brokered deposits in the first quarter. On a year-to-date basis, consumer non-maturity deposit balances grew 3% with net increases in households. Michele will be reviewing our continued net interest margin improvement, which was a direct result of discipline, deposit, and loan pricing. Michele?