First Merchants reports Q2 EPS of $0.70, takes $29.7M reserve on two nonaccrual credits

First Merchants Corporation disclosed its financial results for the second quarter ended June 30, 2026 via press release. The specific financial metrics (revenue, earnings, loan growth, credit quality) are contained in the attached press release exhibit but are not detailed in the body of this 8-K filing.

The company scheduled an earnings conference call and webcast for July 23, 2026 at 9:00 a.m. Eastern Time to discuss the second quarter 2026 results. A slide presentation for the call is provided as an exhibit to this filing.

First Merchants reported second quarter 2026 net income of $43.5 million, or $0.70 per diluted share, up from $0.45 in the prior quarter but down from $0.98 in the year-ago quarter. Adjusted earnings were $0.74 per share. Results were impacted by two commercial lending relationships placed on nonaccrual status after quarter-end, based on conditions existing at June 30, 2026, resulting in elevated provision expense.

First Merchants completed the sale of $271.1 million of mortgage loans with a weighted average rate of 3.43%. These loans had been transferred to held-for-sale and marked to fair value in the first quarter. Proceeds were used to fund loan growth and pay down high-cost funding. Organic loan growth totaled $221.7 million, or 5.8% annualized, on a linked quarter basis.

First Merchants successfully completed the systems conversion of First Savings Financial Group in mid-May, further strengthening its statewide Indiana franchise. The acquisition contributed $1.7 billion in deposits. Acquisition-related costs of $3.8 million were incurred during the quarter, down from $17.0 million in the prior quarter.

Second quarter 2026 diluted earnings per share were $0.70, down from $0.98 in the prior-year quarter. The decline was driven by a $33.0 million provision for credit losses, of which $29.7 million was specific reserves for two newly non-accrual commercial credits: a $28.1 million authorized wireless retailer and a $13.7 million commercial and residential roofing contractor. Excluding $3.8 million of acquisition-related expenses, adjusted EPS was $0.74.

First Merchants achieved strong organic loan growth of $221.7 million in the second quarter, representing 5.8% annualized growth. Commercial loans grew approximately $171 million, led by C&I growth of $113 million (including $66 million in Regional Banking) and CRE Non-Owner Occupied growth of $80 million. Consumer loans grew approximately $51 million, driven by residential mortgage and home equity. Commercial pipelines remained strong at quarter end.

The company completed the sale of mortgage loans with a fair value of $271.1 million and a weighted average rate of 3.43%. This sale resulted in a $29.8 million net loss recorded in the first quarter 2026 when the loans were reclassified to held for sale, which impacted year-to-date results.

First Merchants completed the system integration of First Savings during the second quarter 2026, following the legal close of the acquisition on February 1, 2026. The integration added approximately $2.5 billion in assets and expanded the company's presence in Southern Indiana, where it now holds the number one deposit market share rank.

First Merchants repurchased 336,145 shares for $13.4 million in the second quarter and 976,631 shares for $38.3 million year to date. The company maintained a tangible common equity ratio of 8.99%, above its 8.00% target, and a total risk-based capital ratio of 12.98%, demonstrating continued capital strength despite the elevated provision and acquisition integration costs.