FIRST MERCHANTS CORP — Call Transcript 2026

Thank you for standing by, and welcome to the First Merchants Corporation first 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 may refer to non-GAAP measures, which are intended to supplement, but not substitute for, the most directly comparable GAAP measures. The press release available on the website contains financial and other quantitative information to be discussed today, as well as a reconciliation of GAAP to non-GAAP measures. As a reminder, today's call is being recorded. I'll now turn the conference over to Mr. Mark Hardwick, CEO. Mr. Hardwick, you may begin. Good morning, and welcome to First Merchants' first 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'll see today's presenters and members of our executive management team. Joining me on the call are Mike Stewart, our President, John Martin, our Chief Credit Officer, and Michele Kawiecki, our Chief Financial Officer. Slide four highlights our footprint and financial scale. We now operate 127 banking centers, reflecting the addition of southern Indiana following the First Savings acquisition. Total assets stand at $21.1 billion, with $15.3 billion in loans and $16.5 billion in deposits. Adjusted performance metrics remain strong, including an adjusted ROA of 1.25% and an adjusted return on tangible common equity exceeding 14%, reflecting the underlying strength of our earnings engine. Turning to slide five, First quarter reported net income was $27.7 million, or $0.45 per diluted share. Reported results included two notable non-core items. First, the legal close of First Savings acquisition on February 1st resulted in $17 million of one-time acquisition related expenses. Second, during the quarter, we strategically repositioned $357 million of mortgage loans from held for investment to held for sale, and we expect to complete the sale of these loans by the end of the second quarter. These loans carry a weighted average coupon of 3.46%, and the liquidity provided by their sale will be used to immediately pay down higher cost deposits, and over time, will be deployed into commercial loans at a 6%+ yield. This repositioning resulted in a $29.8 million mark-to-market charge in the quarter, with a tangible book value earned back of approximately four years. Excluding these items, adjusted earnings per share totaled $1.03, up from $0.94 a year ago, representing 9.6% growth, driven primarily by net interest margin expansion and solid fee income growth. Our tangible common equity ratio remains strong at 9%, even after completing the acquisition and continuing disciplined share repurchases, including $24.9 million in the first quarter. 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 6. 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 on slide 7. As Mark stated earlier, the first quarter was busy with the closing of First Savings Bank and the preparation for the May integration date. The legal close increased our overall loan portfolio size with organic growth relatively flat during the first quarter. After the strong fourth quarter loan growth, declines in our sponsor and investment real estate portfolio outpaced our C&I growth within our regional banking markets. The portfolio declines were normal course payoffs that simply stacked in the quarter, sponsors selling their portfolio, companies that we had financed, or real estate projects that achieved secondary market takeouts. I expect growth in both these portfolios to resume in the second quarter. Our regional banking teams, inclusive of the new team in southern Indiana, continue to deliver solid loan growth. It's very pleasing to see our Midwest economy continuing to expand, our clients' businesses continuing to grow, and see our bankers continuing to win new relationships. New loan production during the first quarter for our real estate and our asset base teams was at record level and demonstrates the value of our diversified loan origination teams. While this quarter's organic growth was flat, I remain confident in our expected mid-single-digit loan growth through the course of 2026. Let's turn to slide 8, deposits. During the first quarter, our core relationship focused deposit franchise continued to show growth through the commercial, consumer, and our Southern Indiana market. The bullet points below the table detail that total deposit decline came from public funds, consumer CDs, and repayment of First Savings broker deposits. Each of these deposit categories is a higher cost source of funds as compared to the primary and operating accounts, which generated increases during the first quarter. Michele will be reviewing net interest margin improvement during the quarter, which was a direct result of the disciplined deposit and loan pricing. Our continued deployment of new and enhanced products during the quarter, our digital platforms wrapped with smart and effective marketing, continued to deliver quality growth within our markets. Our people are a strength in meeting the financial needs within our communities. During the quarter, we added new teammates within our sponsor, investment real estate, community banking, and private wealth teams to build on our brand and momentum. Before turning the call over to Michele, one last comment regarding First Savings Bank. Our integration efforts are on track. The engagement of their team continues to be strong. On-site training and preparation for the May integration are advancing as scheduled. Our model of community banking in Southern Indiana has demonstrated its strength. Turnover of frontline personnel has been minimal, and as the prior pages demonstrated via the growth in loans and core deposits, their clients continue to be patient during the transition. The specialty verticals have continued to show consistent production in new business during the quarter. This production will continue to contribute to the fee income of First Merchants as a bulk of the originations are sold. I do want to highlight their SBA business model as a direct enhancement to the rest of First Merchants' franchise. Having the ability to offer SBA product solutions to our clients is a natural extension of being a community and commercially focused organization. The new SBA team will be the fulfillment team for all of our existing consumer, small business, and community bank teams. There are early successes that I expect to build post-integration. I'm going to turn the call over now to Michele to review in more detail the composition of our balance sheet and the drivers on the income statement. Michele? Thanks, Mike, and good morning, everyone. Slide 9 covers our first quarter performance, including two months of operating results from First Savings following the February 1st closing of the acquisition. There was meaningful growth in total revenues in Q1. Net interest income grew $12.2 million and non-interest income grew $2.5 million linked quarter. This resulted in a $6.3 million increase in overall pre-tax, pre-provision earnings of $78.7 million. Tangible book value per share declined 2.8% linked quarter, but increased 7.3% over the same period in prior year. The linked quarter decrease was due to the impact of the acquisition and share buybacks. However, dilution from the First Savings acquisition at close was less than what we had estimated at announcement. Actual tangible book value dilution was only 2.4% versus 4.8% that we shared at announcement, and the tangible book value earn back is now estimated to be 2.4 years. The difference was primarily driven by a lower interest rate mark, which totaled $53.1 million at closing. Slide 10 shows details of our investment portfolio. The bond portfolio declined from $3.4 billion to $3.3 billion due to changes in valuation and principal payments. First Savings had a $252 million bond portfolio that we sold at closing, creating liquidity for future loan growth. Expected cash flows from scheduled principal and interest payments and bond maturities through the remainder of 2026 totals $276.7 million, with a roll-off yield of approximately 3.24%. We plan to continue to use future cash flows generated from the bond portfolio to fund higher-yielding loan growth. Slide 11 covers our loan portfolio. The loan portfolio yield declined by 23 basis points from the prior quarter to 6.09%, which was impacted by the lower day count in the first quarter and repricing of assets due to the Fed rate cuts in late 2025. During the quarter, new and renewed loans were originated at an average yield of 6.18%. The allowance for credit losses is shown on slide 12. This quarter, we had net charge-offs of $10.3 million and recorded a $4.9 million provision. The transfer of $357 million of loans to held for sale reduced the loan balances requiring reserve coverage and contributed to a lower provision than the prior quarter. At closing, we also recorded a $22.3 million increase to the allowance related to the credit discount on the First Savings loan portfolio. As a result, the allowance for credit losses totaled $212.5 million at the end of the quarter, representing a coverage ratio of 1.39%. Slide 13 shows details of our deposit portfolio. The rate paid on deposits declined meaningfully by 23 basis points to 2.09% this quarter. Our team strategically reduced deposit rates following the Fed's rate cuts late last year, resulting in a $4.6 million reduction in deposit interest expense in the first quarter, even as deposits grew by $1.2 billion with the addition of First Savings. As noted on our slide, our non-interest-bearing deposits increased to 23% this quarter, up from 16% last quarter. This was driven by the redesign of our consumer checking account products. This change more accurately reflects the strength and quality of our deposit franchise. On slide 14, net interest income on a fully tax equivalent basis of $157.7 million increased $12.4 million linked-quarter and was up $21.3 million from the same period in prior year. Net interest income was positively impacted by a $1.2 million recovery from the successful resolution of a nonaccrual loan. As a reminder, we had a $3.3 million recovery last quarter. Our quarterly net interest margin of 3.35% increased six basis points from prior quarter, despite the lower day count in the quarter, which reduced margin by five basis points. Our strong core margin reflected our continued pricing discipline. Next, on slide 15, shows the details of noninterest income, which totaled $5.8 million on a reported basis and $35.6 million on a normalized basis. Customer-related fees were strong with quarter-over-quarter growth in wealth management fees and gains on sales of loans. Moving to slide 16, non-interest expense for the quarter totaled to $125.1 million and included $17 million in acquisition related costs. The acquisition costs were primarily incurred in the salaries and benefits and the professional and other outside services categories. First quarter expenses also included $1.1 million of annual benefit plan expense, as well as a one-time charge of $900,000 for the write-down of a building. The cost synergies we expect to gain from the First Savings acquisition are on track, and Legacy First Merchants expenses are in line with the guidance I provided last quarter. Slide 17 shows our capital ratios. The tangible common equity ratio declined to 9% due to the acquisition and share repurchases. Since the beginning of the year, we have repurchased more than 700,000 shares for $27.6 million year to date. We remain well capitalized with the common equity tier one ratio at 11.22% and are well positioned to support continued balance sheet growth. That concludes my remarks, and I will now turn it over to our Chief Credit Officer, John Martin, to discuss asset quality. Thanks, Michele, and good morning. My remarks begin on slide 18. This quarter, we streamlined the credit slides and moved the detailed loan portfolio trend page to the appendix for reference. In today's remarks, I'll focus on portfolio insights, asset quality, and the asset quality roll forward, highlighting both the diversity and overall credit quality of the portfolio. On slide 18, total loans ended the quarter at approximately $15.3 billion, with overall credit performance remaining solid. C&I line utilization increased modestly to 51%, which we view as healthy borrower activity rather than stress. Our shared national credit portfolio totals about $1 billion across 90 well-diversified borrowers with no outsized single name exposure. In sponsor finance, outstandings are approximately $832 million, supported by strong credit metrics, conservative leverage, and healthy coverage ratios. We remain disciplined on structure and intentionally underwrite with room for downside. Within CRE, retail is our largest exposure at $859 million and is largely credit tenant and triple net leased, performing as expected. Construction lending totals about $900 million across commercial and residential projects, with continued emphasis on borrower equity and prudent underwriting. From a concentration standpoint, we remain well within regulatory levels with CRE construction at 40% of capital and total CRE around 181%, providing the flexibility to selectively grow while maintaining a strong risk profile. Overall, we are pleased with portfolio performance and remain focused on balance growth and disciplined credit risk management. On slide 19, let me briefly touch on asset quality. Our overall asset quality remains stable, and our metrics are performing within expectations. As at quarter end, nonaccruals remained manageable with the largest relationship tied to income producing real estate, including a $9.9 million multifamily construction credit and two office-related exposures totaling roughly $12 million. These credits are well-known, closely monitored, and reflect areas of CRE we've been proactively managing. Importantly, we are not seeing broad-based deterioration across the portfolio. Credit issues remain idiosyncratic rather than systemic, with no meaningful migration beyond a small number of relationships. Charge-off activity and criticized asset trends remain in line with expectations, and reserve coverage continues to appropriately reflect the portfolio's risk profile. Overall, we are comfortable with asset quality trends and remain focused on early identification, active management, and disciplined resolution where necessary. On slide 20, turning to non-performing asset migration. During the quarter, we added a $12 million nonaccrual office relationship, which was largely offset by a payoff of a $12.9 million multifamily construction credit. Overall, NPA levels remain well controlled with movement driven by a small number of individual credits rather than systemic deterioration. Resolution activity continues to progress as expected, and we remain focused on early engagement and disciplined management where stress arises. Taken together, asset quality and NPA trends reinforce our view that credit risk is contained and easily manageable. I'll turn it back to Mark to discuss our capital position and outlook. Thanks, John. Good report. Turning now to slide 21. Our long-term track record of shareholder value creation remains a key strength. Tangible book value per share has grown at a 7.5% compound annual growth rate over the last 10 years. Given the earnings enhancements created by First Savings acquisition and the modest balance sheet repositioning, I'm particularly pleased with the limited tangible book value dilution from year-end 2025 through March 31 of 2026, which Michele highlighted in her comments as well. It's just really pleasing to be at this point with what was a pretty modest tangible book value reduction and such strength in the earnings stream. It's a good place for us to be. Slide 22 highlights our 11.7% total asset CAGR over the past decade, reflecting a consistent strategy of organic growth complemented by disciplined value accretive acquisitions that expand our demographic and geographic footprint. The First Savings acquisition is well aligned with this strategy and meaningfully strengthens our presence in a high-growth Indiana market. We look forward to building on our Midwestern strength throughout the rest of 2026 by focusing on our people, our clients, our products, and technology. I hope it's clear that organic growth is our top priority for the year. We're going to get through the integration on mid-May, May 15. We've got great momentum with the First Savings team, as Mike Stewart highlighted. Thank you for your continued support and investment in First Merchants, and we are happy to take questions at this time. Thank you. At this time, we'll conduct a question and answer session. As a reminder to ask the question, you need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Daniel Tamayo of Raymond James. Your line is now open. Thank you. Good morning, everyone. Maybe first just starting on the loan growth side. Seasonally down in the first quarter, you had the loan sale in there. Mike, you sounded pretty bullish on loan growth prospects going forward. Maybe just give us a little bit more color, if you can, on what's driving that and thoughts on pay downs, the timing of the slowing going forward, and if you're still comfortable with, I think we talked about 6%-8% growth for the year last quarter. If that number still holds. Thanks. Yeah. Good morning, Dan. Well, let's start with the end. Yes, I do feel confident with that mid-single digit growth rate and reaffirm that. What kind of demonstrates that in my confidence level is if you really take a look at our commercial pipelines. They're as strong as they have been historically. What I've tried to talk about there is in that first quarter, we just had some stacked normal course payoffs that were underneath what we would look at in a normal run rate of production. The payoffs were a little bit higher. Remember, we also had a really strong fourth quarter, and some of those anticipated fourth quarter payoffs didn't happen until the first quarter. It's the investment real estate portfolio that was paying along with the sponsor book, and both of those production levels were really strong during the quarter. We'll see the growth come back into those business units. That community bank model, which is the core C&I that sits in our franchise, demonstrates a really good growth rate there, which is really fundamental for us. Another point of view that I'd just share is that I know where we stand as of yesterday, and that growth is coming through in a really strong manner. If you look at how we think about normal course of loan amortizations and what we think about normal course of payoffs, it was just a little bit higher, but nothing unexpected out of the blue of people leaving for undue reasons. The production level that we had, which is on pace for about $2 billion if we got it in the first quarter, just that we were stacked with some payoffs and feel really good about where pipelines are. Where those two business units are already driving record provisions and bringing it into manifesting our balance sheet, and then where I've seen our current April footing through Q2. Mike, I'd love to just add. You made this in your actual comments earlier, but the pay downs really came exactly the way we would hope they would come. Maybe not the timing. Yeah. It was investment real estate moving into the secondary market, which is what we always expect and anticipate, which is great for credit quality. Then the sponsor book exactly as you would anticipate that over time those sponsors liquidate those companies, sell them to maybe another sponsor, et cetera. It's anticipated. It was just a little more first-quarter heavy than what we had expected. Yeah, that's exactly what I'm trying to say. Yeah. Some of it we thought might have happened in the fourth quarter. It bled over to this, and some of what we might have had teed up in the second quarter. It happened early because the secondary markets are good with real estate. Yes. Great. Very helpful. Thanks, guys. Maybe for Michele, on the margin, just curious where you see that moving going forward. You'll have the loan sale happening in the second quarter. I'm curious how you're thinking about the impact from that. I don't know if you gave more specific timing or you're able to yet, other than in the second quarter. Just curious how that impacts the margin, just overall thoughts for the rest of the year. Yeah. Well, I'll address the loan sale first. As Mark said in his comments, the loans that we're selling have a weighted average coupon of 3.46%. Immediately once we get that liquidity, we'll pay down some of our higher cost deposits. I would say those are probably averaging about maybe 3.80%. Over time, we will invest that liquidity in loans. Of course, that will happen over the course of the next 18-24 months. We'll get some margin pickup over time. It won't be immediate. It'll be a little more neutral right out of the gate. For margin over the next few quarters, just because the day count in Q1 always depresses our margin by five basis points. Once we get into Q2, Q3, Q4, we will see margin tick up a few basis points. If anything, just because of the day count and also just because I think some of the repricing from rate cuts last year, we've already seen some of that. I think rates that we pay on deposits will be relatively steady. I would expect there to be a few basis points of pickup on margin through the year. Okay, that's inclusive of the 5 basis points reversal, I guess, from the first quarter. Just to call it a handful of basis points up from the first quarter level of margin. Yes, that's correct. Okay. All right, great. Okay, well, I appreciate that color. I will step back. Thank you. Thanks, Danny. Thank you. One moment for our next question. Our next question comes from the line of Russell Gunther of Stephens. Your line is now open. Hey, good morning, guys. Good morning, Russell. Morning. I wanted to see if you could touch a bit more on the deposit migration into non-interest bearing this quarter. Perhaps how you're thinking about the sustainability of the remix, whether you assume any runoff from the consumer product redesign. Then as a follow-up, Michele, you touched on this a bit, but just overall cost of deposits going forward, assuming a Fed on pause, do you think you have the ability to flex that lower from here or is there kind of a slight upward bias to overall deposit costs going forward? Well, I'll start with the deposit account, our checking account redesign. We've migrated those customers to our newly designed checking accounts. We've been tracking whether there's any runoff. It's been very stable, and I think pretty well-received. We're not anticipating any runoff. I would expect our non-interest bearing to maintain that 22%-23% level that we're seeing today. On the deposit rates, deposit rates are pretty competitive, and I don't anticipate that we'll be lowering deposit rates meaningfully through the year. I would expect it to be overall more steady. Got it. Okay. Thank you. I'm just going to add a little bit more on that. We worked at the end of last year to redesign our consumer core checking. Now what happens is we don't have any paying small interest-bearing. It all went to non-interest-bearing. That's where the big shift, if you look from the prior quarter, is. It is what I was trying to point out is our core primary account activity. I didn't talk about it, but both in unit and in dollars continues to grow. That new product set that we call Prosper and Prosper Plus is being well received in the marketplace with the new features and functionalities with some of the new digital platforms. It aligns then with how we want to represent it in non-interest-bearing deposits now. Yeah. We're in year two of very strategically remixing the deposit base. That's right. to be as core as possible with less dependence on CDs and public funds. It just takes time, but we're really pleased with the progress we're making. I appreciate all the color and it's nice to see. Maybe switching gears for me from a capital perspective, healthy levels of CET1 with the deal close. Do you have a sense of the potential impact from the Basel III proposal on RWAs and CET1? Then from an overall kind of capital return perspective, would you guys expect to remain active with the buyback here? We have evaluated the capital proposals, and I would say right now our estimate is that it will benefit us probably somewhere between 50-80 basis points, somewhere in that range. It's really driven mostly from some of the risk-weighted asset relief, particularly on the mortgage product. That's our estimate at this time. We'll keep an eye on where it gets finalized. From just capital management perspective, yeah, given where our valuation is, we will continue to be active in the buyback space in the coming quarters. Okay, great. Very helpful. Thank you guys for taking my question. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Brandon Nosal of Hovde Group. Your line is now open. Hey. Good morning, everybody. Hope you're doing well. Morning. Morning. Maybe just sticking with capital for a moment. As we all know, pro forma readings came in stronger than expected, even with the repositioning of the mortgage portfolio. Totally get that you want to remain active in the buyback and loan growth is going to pick up here. I'm just curious if you see any other need for additional balance sheet optimization over the course of the year. No. If you mean additional loan or bond sales, we're not anticipating anything else. We think this is kind of perfect for 2026. It gives us liquidity so that we can continue a mid- to high-single-digit loan growth number that we talk about. It allows us to stay really diligent with deposit pricing and just remix the loan book, at this point, because we're cognizant of the loan-to-deposit ratio as well, from lower yielding loans in our portfolio with a little longer duration to higher yielding loans with shorter duration. At least in the coming months, I'm not anticipating anything further. We do evaluate all the time just what our options are. Really, we're pleased with the earn back. Especially the modeling of this, the way Michele talked about it, is we just assumed our mid- to high-single-digit loan growth would continue in a normal course, is the way we budgeted for a couple of years. Then said if we redeploy this money out of mortgages into commercial, over a 24-month window, what kind of pickup do we have? That's how the four-year earn back was calculated. I'm pretty confident that we'll be able to accelerate some of that. This year we'll be using that liquidity for current loan growth. You can model it a lot of different ways. We think the four-year earn back is the most conservative, but I just want to be sure everyone understands how we're thinking about it. Yep, that's helpful color, Mark. Thank you. Maybe pivoting to a question on First Savings. Now with the deal on the books and closed, can you just give us your latest thinking on how you view their three specialty businesses now that you've had time to see them in action? Heard your commentary on SBA, but I guess, I'm more curious about First-Lien HELOC and the triple net lease product. Yeah. It might be a good point to just reiterate how well the integration process is going. The connectivity of our teams is the best it's ever been in an acquisition. I'm going to let Mike jump into that answer because Mike's never been closer on the ground to every single action that we're taking, especially in those verticals. I'm really pleased with where we stand today and excited about getting through the integration, moving forward, and every day that we own the company, the more excited I am about the verticals. Yeah. Let's start with the triple net lease. Nice thing about since the end of the year through the close through now, their production has remained very stable, which is a good thing in my opinion. They were originating the triple net lease on, I'll say, somewhat of a national basis, and they would sell that portfolio or put it on the balance sheet. It's an extension of investment real estate. It's an extension of what we understood, but we really didn't focus on. It feels natural for us to be able to continue to support how Tony and team is continuing to generate triple net lease businesses in a originate model. It gives us options to put it on the balance sheet if we so choose, or sell. The First-Lien HELOC business is a unique business for us. They built a really nice model that also has continued to have similar production levels as they were through this period of time. That has been, for them, a complete originate and sell. We've got buyers on that and secondary servicers. It's a fee generation business that there is some of that on our balance sheet today. It was on their balance sheet. We've just kind of modeled that we'll keep our balance sheet flat for the First-Lien HELOC, and as they continue to generate new business, it turns into fee income, much like our current mortgage business originate and sell model. Like I referenced with SBA, they built a really nice infrastructure and ability to not only originate, but obviously underwrite and service and collect, which is just not a model that we had built. They were doing around $100 million of SBA transactions last year. That first quarter production is actually higher than they were, again, during this noise period of time with First Merchants. First Merchants SBA production last year was less than $10 million. Our infrastructure of small business banking and community banking looks to them as a new product set to continue to fulfill community banking and SBA products, in our own backyard, which they really weren't overlapping with us. It's just a natural extension of actually probably bringing them more volume and not letting them be the fulfillment team and whatnot. That's how I'm viewing those three verticals, and we're watching it through integration day. Then my team hears regularly what I call day two. We're going to continue to figure out where do we want to go with growing the businesses or continue to incorporate into our core models. Mike, I think it's worth just adding, it's part of the reason we're so bullish about loan growth for the remainder of the year. The verticals are a really nice add. We've stayed exactly in the credit kind of profile and size that First Savings operated the business. We do see opportunity to mostly just in the size of credits, to start to make some adjustments, especially you think about the triple net lease business. It is a lever that we could use. So far, we've said, "Well, hey, let's just maintain the growth profile and the size of each credit exactly the way it is." I would just say it leans on the small side. Excited about how it can continue to help facilitate our growth in the future. All right. Thank you for taking my questions. Appreciate it. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Damon DelMonte of KBW. Your line is now open. Hey, good morning, everyone. Hope you're all doing well today. First question, regarding the margin. Michele, hoping you could give a little color on the expectation for the fair value accretion marks that we could expect going forward. Yeah. For the first two months of us having the First Savings acquisition, I think we've recorded probably maybe $1.5 million of fair value accretion. That's on a two-month basis. I would consider the run rate on a go-forward basis to probably be fairly similar. Okay. Great. Okay. Could you kind of give us a little guidance on the outlook for the combined expense base here in the second quarter as you get a full impact from FSFG? Sure. I think I'd reiterate the guidance that I gave last quarter on legacy First Merchants. On the legacy First Merchants space, I had given guidance that we expected a 3%-5% increase year-over-year. Then you add in First Savings, but in the back half of the year, of course, recognizing the cost synergies that we're on track to achieve. When you put all those pieces together, the quarterly expense total, like on a quarterly run rate, will probably be somewhere between $111 million-$114 million. You think that level is kind of like once the savings hit, so that's kind of like almost like an exit rate of 20 in the fourth quarter? Yeah. Yes. Okay. Got it. Okay, great. I guess just lastly, when you think about kind of just market disruption, broadly speaking, and opportunity to maybe pick up commercial lending teams, are there any plans to add to certain areas of the footprint? Or do you feel that the efforts you've put forth in recent years is sufficient, and you kind of have a good team at the table right now? Dan, it's Mike Stewart. Yes, we look very optimistically and very active right now, strategically in overlap markets where being able to add quality talent in our markets would just augment our branding and growth. We're very active in that space, especially. I would just say in the Michigan market in particular. That being also said, I referenced that we've had to continue strategic hires along the way. That's part of our business model of 2026. Six new bankers through asset-based lending, through investment real estate, through a sponsor, but more importantly, our core community bank, with several more joining soon in treasury management, just continues to build. I feel like the infrastructure that's there. That's not including what we've recently done in our private wealth group, which I think as you saw that had really nice fee growth as we continue to win investors. Great. Appreciate that, Mike. That's all that I had. Thanks a lot, everyone. Yeah. Thank you. One moment for our next question. Our next question comes from the line of Nathan Race of Piper Sandler. Your line is now open. Hi, everyone. Good morning. Thanks for taking the questions. Michele, I was wondering if you could kind of just frame up the income expectations for the second quarter and just generally you're still thinking kind of mid- or high-single-digit growth for the full year and just what you're contemplating perhaps coming from First Savings, if you're thinking maybe that some of the verticals that you discussed earlier, whether it's single-tenant lease or first-lien HELOC, could be a driver for some gain on sale revenue going forward, just given that I imagine those relationships don't really come with deposits. Yeah. When you look at our Q1 normalized level of total non-interest income, it was $35.6 million. When I think about where that goes in the coming quarters, I would expect to get a full quarter, a full three months of First Savings with the expectations that we have on gains on sales of loans coming from those verticals as well as our mortgage business. I would expect Q1 to see a lift of about 3%-4% in the coming quarters. I think that's how you can think about what kind of lift you'll see Q2, Q3, Q4. Okay. 3%-4% lift in the second quarter, and then. Mm-hmm similar trajectory in the back half of the year? Yeah. Okay. Got you. I jumped on late, so I apologize, John, if you could kind of touch on the drivers for the charge-offs in the quarter. Were there any kind of marked First Savings loans that came through in some of those charge-offs? Just generally, how you're thinking about some resolutions of some of the NPA inflows from First Savings, and just kind of the legacy resolutions as well going forward. Yeah. The charge-offs for the first quarter were really legacy First Merchants. There were two names that I mentioned in my comments that came out of the portfolio, more idiosyncratic, normal course kind of charge-offs out of the regional bank and not a sponsored finance. It wasn't really driven at all by the charge-offs coming out of First Savings. The asset quality there thus far, and it's early, it's been fine. I look forward to resolution. We run processes every quarter and assess what's in that NPA bucket and just keep our eye on the level, actively working with borrowers to work out credits as well as any other strategic loan sale if we choose to go that direction. For the most part, it's just normal course charge-off that happened in the first quarter. It was higher. We had a couple of names that we had been working for some time that just finally came to a head and we moved down. Got it. Assuming maybe charge-offs kind of normalize to the levels that we saw during last year, do you guys see a need to provide for that high single-digit loan growth guidance that you reiterated and just kind of grow into your unallocated excess reserves? I know there's a number of inputs involved just given CECL and so forth, but just curious how you guys are thinking about maybe needing to provide for growth this year. Yeah. Typically, we start with a goal of providing for our loan growth, and then it really just has to get adjusted based on the economic model. Right now, I think we're in a really good place when we look at the different economic scenarios that we run and kind of within that range. Okay. Got it. I appreciate all the color. Thank you, everyone. Thanks, Nathan Race. Thank you. One moment for our next question. Our next question comes to the line of Brian Martin of Brean Capital. Your line is now open. Hey, good morning, everyone. I'll say, just one thought, Michele, you talked about the roll-off rate on the securities. Just on the loans, can you just remind us now with FSFG, what's repricing over the balance of the year and what type of pickup you get on what's coming due? Yeah. Well, I know one of the things that generally you're interested in, Brian, is on the fixed-rate loans. Like our fixed-rate loan maturities, we've got about $100 million that matures at a rate of about 4.5% each quarter. There's definitely a tailwind there. As you know, two-thirds of our portfolio reprices pretty much immediately with any rate changes. The rate changes that we had in the back half of the year, I feel like a lot of that asset repricing is already reflected in our overall portfolio yields. Got you. Okay. All right. I think, Mike, I was going to ask you about the people you hired, but it sounds like you've maybe hired 5-6 people recently. Just want to get a sense if they're already kind of included in the loan pickup or anything that's coming from them is not yet in kind of the run rate. They're not in the run rate yet. I think it was just smart first quarter additions. First quarter is typically a time when bonuses get paid and people that were actively looking to move make that determination, and we were in tune with that. Yeah. I would add on top of that, Brian, in the guidance that I gave, I don't know if you recall my remarks when I gave the year-over-year increase on legacy First Merchants expense base of 3%-5%. The reason why it's leaning a little bit higher than we normally operate is because we did anticipate hiring and adding to our commercial team and our private wealth team, which is what Mike is talking about. That is built into the guidance that I provided. Yeah, I started to mention earlier, I think we added 15 FTEs in that space last year, and we have 10 in the plan this year. We're really pleased with the opportunity, the individuals that are available to us that are interested in First Merchants and their performance once they're on the team. When Mike talks about the new 10 or so that we're hiring, we're not anticipating immediate performance. Yeah. All those were hired in the first quarter, or were some of those hired last year? No, 15 were throughout the year last year, a little more back end. We have 10 planned this year that- I referenced 6 in commercial and 2 in private wealth, but. Those were last year. A couple of them also. No, that was in this quarter. Yeah, so we're off and running like we wanted to. That production You know, should start to see itself on the back half of this year. Yeah. Yeah. Got you. Okay. I think, Michele, just kind of on the margin for a minute, given the day count and the change there, and I know there was $1 million of benefit. I mean, is the jumping off point maybe a little bit lower than where it ended, but you still maybe see a 4 or 5 basis point pickup just given the day count or 3-4 or whatever, something off of the current level. That's how to think about kind of going into 2Q. Yeah. No, I think that's right. We will see. I do expect to see that kind of pick up. I would just say, I know we've talked about a lot of the pieces on our earnings. Overall, I feel like consensus is in the right place. I feel like it reflects what we expect to deliver this year. I did want to make sure that I made that point to kind of reiterate consensus. Got you. Okay. Last two for me, just the tax rate, and then I think just there's some commentary recently about commitment to the SBA by the government. I guess maybe you said, and I joined late, so if you already talked about the SBA or any potential impact, is there any thoughts if that changes your outlook on the SBA business? Yeah, on the SBA, not yet. Our chair, Jean Wojtowicz, is in the SBA business and has her own company. That's what they do. We've had a really good understanding of SBA for a long time. We've now acquired a significant business in that space through First Savings. We feel like we have a good handle on it, and we're excited about the future. Okay. Brian, just to respond to your tax rate question, 13% effective tax rate is what we would expect on a normal quarterly basis. 13%. Okay. I think you said, Michele, the accretion, is it around $3 million? It was kind of breaking up when you were saying that, but I guess what the quarterly accretion you're thinking about with a full quarter in there, is that kind of the range of $3 million-$4 million type of number? It won't quite be that high. It was $1.5 million over the first 2 months that we had First Savings, and so I expect it to be a little over $2 million per quarter. Two, just from their piece of it, plus the legacy. Yeah. Yeah. Got you. Correct. Okay. Yeah. I mean, the remaining pieces, aside from First Savings, it's typically ran about $1 million or so, sometimes a little less, depending on what we see. Yeah. Okay. Perfect. Thank you for taking the questions, and congrats on the quarter and the transaction. Thanks, Brian. Thank you, Brian. Thank you. I'm showing no further questions at this time. I'll now turn it back to Mark Hardwick for closing comments. Yeah, thank you. My closing comments really are just to try to stay as high level as possible, is we remain incredibly optimistic about the remainder of the year. Some of it, there's no way that you can see it. It's just what we see and what we feel is just the speed of play just keeps improving. I feel like the culture of our company is so strong. We have incredible teamwork, and I feel like a sense of urgency that I haven't maybe felt in the past, just throughout all the lines of business. People are just getting after it and producing results. That also just includes our ability to handle something like First Savings. For us to continue to run the business and to build great relationships and ensure an effective integration is an area where I'm incredibly confident. The drivers of our performance continue to be really good. Our balance sheet growth, as we've talked about, we remain optimistic. Even though the quarter was flat, we feel great about the remainder of the year. Margin management is in probably the best place it's been in a while. It's been challenging since 2023, since Silicon Valley, and I feel like we are in as good a spot as we've been in a while. Fee income has been growing double digits for really an extended period of time, and we were just kind of walking through all those categories that we disclosed in the slides and just the growth rates year-over-year were all in the double digit range. Our expense control has been something we've been great at for years. We've got adequate capital. It's allowing us to be active in share repurchase space. If we're going to trade at these levels, then we're going to be active in buying back our own shares. I think it just sets us up for a really strong 2026 and kind of feeds into 2027. I appreciate your investment in the company and I'm happy to continue to have one-on-one discussions with any interested investors or current investors for that matter. Thanks for your time. We appreciate it, and we'll talk to you next quarter. This concludes today's conference. Thank you for your participation and have a great day. You may now disconnect.

Speaker 10: Thank you for standing by, and welcome to the First Merchants Corporation first 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 may refer to non-GAAP measures, which are intended to supplement, but not substitute for, the most directly comparable GAAP measures. The press release available on the website contains financial and other quantitative information to be discussed today, as well as a reconciliation of GAAP to non-GAAP measures. As a reminder, today's call is being recorded. I'll now turn the conference over to Mr. Mark Hardwick, CEO. Mr. Hardwick, you may begin. Thank you for standing by, and welcome to the First Merchants Corporation first quarter 2026 earnings conference call. thank you for standing by and welcome to the first merchants corporation first 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. 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. 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 GAAP measures. additionally management may refer to non-gaap measures which are intended to supplement but not substitute for the most directly comparable gaap measures The press release available on the website contains financial and other quantitative information to be discussed today, as well as a reconciliation of GAAP to non-GAAP measures. the press release available on the website contains financial and other quantitative information to be discussed today as well as a reconciliation of gaap to non-gaap measures As a reminder, today's call is being recorded. as a reminder today's call is being recorded I'll now turn the conference over to Mr. Mark Hardwick, CEO. i'll now turn the conference over to mr mark hardwick ceo Mr. Hardwick, you may begin. mr hardwick you may begin

Speaker 6: Good morning, and welcome to First Merchants' first 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'll see today's presenters and members of our executive management team. Joining me on the call are Mike Stewart, our President, John Martin, our Chief Credit Officer, and Michele Kawiecki, our Chief Financial Officer. Slide four highlights our footprint and financial scale. We now operate 127 banking centers, reflecting the addition of southern Indiana following the First Savings acquisition. Total assets stand at $21.1 billion, with $15.3 billion in loans and $16.5 billion in deposits. Good morning, and welcome to First Merchants' first quarter 2026 conference call. good morning and welcome to first merchants' first quarter 2026 conference call Thanks for the introduction and for covering the forward-looking statement on page two. 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. 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'll see today's presenters and members of our executive management team. turning to slide three you'll see today's presenters and members of our executive management team Joining me on the call are Mike Stewart, our President, John Martin, our Chief Credit Officer, and Michele Kawiecki, our Chief Financial Officer. joining me on the call are mike stewart our president john martin our chief credit officer and michele kawiecki our chief financial officer Slide four highlights our footprint and financial scale. slide four highlights our footprint and financial scale We now operate 127 banking centers, reflecting the addition of southern Indiana following the First Savings acquisition. we now operate 127 banking centers reflecting the addition of southern indiana following the first savings acquisition Total assets stand at $21.1 billion, with $15.3 billion in loans and $16.5 billion in deposits. total assets stand at $21.1 billion with $15.3 billion in loans and $16.5 billion in deposits Adjusted performance metrics remain strong, including an adjusted ROA of 1.25% and an adjusted return on tangible common equity exceeding 14%, reflecting the underlying strength of our earnings engine. Turning to slide five, First quarter reported net income was $27.7 million, or $0.45 per diluted share. Reported results included two notable non-core items. First, the legal close of First Savings acquisition on February 1st resulted in $17 million of one-time acquisition related expenses. Second, during the quarter, we strategically repositioned $357 million of mortgage loans from held for investment to held for sale, and we expect to complete the sale of these loans by the end of the second quarter. Adjusted performance metrics remain strong, including an adjusted ROA of 1.25% and an adjusted return on tangible common equity exceeding 14%, reflecting the underlying strength of our earnings engine. adjusted performance metrics remain strong including an adjusted roa of 1.25% and an adjusted return on tangible common equity exceeding 14% reflecting the underlying strength of our earnings engine Turning to slide five, First quarter reported net income was $27.7 million, or $0.45 per diluted share. turning to slide five first quarter reported net income was $27.7 million or $0.45 per diluted share Reported results included two notable non-core items. reported results included two notable non-core items First, the legal close of First Savings acquisition on February 1st resulted in $17 million of one-time acquisition related expenses. first the legal close of first savings acquisition on february 1st resulted in $17 million of one-time acquisition related expenses Second, during the quarter, we strategically repositioned $357 million of mortgage loans from held for investment to held for sale, and we expect to complete the sale of these loans by the end of the second quarter. second during the quarter we strategically repositioned $357 million of mortgage loans from held for investment to held for sale and we expect to complete the sale of these loans by the end of the second quarter These loans carry a weighted average coupon of 3.46%, and the liquidity provided by their sale will be used to immediately pay down higher cost deposits, and over time, will be deployed into commercial loans at a 6%+ yield. This repositioning resulted in a $29.8 million mark-to-market charge in the quarter, with a tangible book value earned back of approximately four years. Excluding these items, adjusted earnings per share totaled $1.03, up from $0.94 a year ago, representing 9.6% growth, driven primarily by net interest margin expansion and solid fee income growth. Our tangible common equity ratio remains strong at 9%, even after completing the acquisition and continuing disciplined share repurchases, including $24.9 million in the first quarter. Now Mike Stewart will discuss our line of business momentum. These loans carry a weighted average coupon of 3.46%, and the liquidity provided by their sale will be used to immediately pay down higher cost deposits, and over time, will be deployed into commercial loans at a 6%+ yield. these loans carry a weighted average coupon of 3.46% and the liquidity provided by their sale will be used to immediately pay down higher cost deposits and over time will be deployed into commercial loans at a 6%+ yield This repositioning resulted in a $29.8 million mark-to-market charge in the quarter, with a tangible book value earned back of approximately four years. this repositioning resulted in a $29.8 million mark-to-market charge in the quarter with a tangible book value earned back of approximately four years Excluding these items, adjusted earnings per share totaled $1.03, up from $0.94 a year ago, representing 9.6% growth, driven primarily by net interest margin expansion and solid fee income growth. excluding these items adjusted earnings per share totaled $1.03 up from $0.94 a year ago representing 9.6% growth driven primarily by net interest margin expansion and solid fee income growth Our tangible common equity ratio remains strong at 9%, even after completing the acquisition and continuing disciplined share repurchases, including $24.9 million in the first quarter. our tangible common equity ratio remains strong at 9% even after completing the acquisition and continuing disciplined share repurchases including $24.9 million in the first quarter Now Mike Stewart will discuss our line of business momentum. now mike stewart will discuss our line of business momentum

Speaker 8: Thank you, Mark, and good morning to all. Our business strategy is summarized on Slide 6. 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 on slide 7. As Mark stated earlier, the first quarter was busy with the closing of First Savings Bank and the preparation for the May integration date. The legal close increased our overall loan portfolio size with organic growth relatively flat during the first quarter. After the strong fourth quarter loan growth, declines in our sponsor and investment real estate portfolio outpaced our C&I growth within our regional banking markets. Thank you, Mark, and good morning to all. thank you mark and good morning to all Our business strategy is summarized on Slide 6. our business strategy is summarized on slide 6 Building our Midwestern strength by growing organically remains our primary objective as a company. 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 on slide 7. our four primary business units work together in delivering financial solutions for businesses and consumers focused primarily on the maps you see on slide 7 As Mark stated earlier, the first quarter was busy with the closing of First Savings Bank and the preparation for the May integration date. as mark stated earlier the first quarter was busy with the closing of first savings bank and the preparation for the may integration date The legal close increased our overall loan portfolio size with organic growth relatively flat during the first quarter. the legal close increased our overall loan portfolio size with organic growth relatively flat during the first quarter After the strong fourth quarter loan growth, declines in our sponsor and investment real estate portfolio outpaced our C&I growth within our regional banking markets. after the strong fourth quarter loan growth declines in our sponsor and investment real estate portfolio outpaced our c&i growth within our regional banking markets The portfolio declines were normal course payoffs that simply stacked in the quarter, sponsors selling their portfolio, companies that we had financed, or real estate projects that achieved secondary market takeouts. I expect growth in both these portfolios to resume in the second quarter. Our regional banking teams, inclusive of the new team in southern Indiana, continue to deliver solid loan growth. It's very pleasing to see our Midwest economy continuing to expand, our clients' businesses continuing to grow, and see our bankers continuing to win new relationships. New loan production during the first quarter for our real estate and our asset base teams was at record level and demonstrates the value of our diversified loan origination teams. While this quarter's organic growth was flat, I remain confident in our expected mid-single-digit loan growth through the course of 2026. Let's turn to slide 8, deposits. The portfolio declines were normal course payoffs that simply stacked in the quarter, sponsors selling their portfolio, companies that we had financed, or real estate projects that achieved secondary market takeouts. the portfolio declines were normal course payoffs that simply stacked in the quarter sponsors selling their portfolio companies that we had financed or real estate projects that achieved secondary market takeouts I expect growth in both these portfolios to resume in the second quarter. i expect growth in both these portfolios to resume in the second quarter Our regional banking teams, inclusive of the new team in southern Indiana, continue to deliver solid loan growth. our regional banking teams inclusive of the new team in southern indiana continue to deliver solid loan growth It's very pleasing to see our Midwest economy continuing to expand, our clients' businesses continuing to grow, and see our bankers continuing to win new relationships. it's very pleasing to see our midwest economy continuing to expand our clients' businesses continuing to grow and see our bankers continuing to win new relationships New loan production during the first quarter for our real estate and our asset base teams was at record level and demonstrates the value of our diversified loan origination teams. new loan production during the first quarter for our real estate and our asset base teams was at record level and demonstrates the value of our diversified loan origination teams While this quarter's organic growth was flat, I remain confident in our expected mid-single-digit loan growth through the course of 2026. while this quarter's organic growth was flat i remain confident in our expected mid-single-digit loan growth through the course of 2026 Let's turn to slide 8, deposits. let's turn to slide 8 deposits During the first quarter, our core relationship focused deposit franchise continued to show growth through the commercial, consumer, and our Southern Indiana market. The bullet points below the table detail that total deposit decline came from public funds, consumer CDs, and repayment of First Savings broker deposits. Each of these deposit categories is a higher cost source of funds as compared to the primary and operating accounts, which generated increases during the first quarter. Michele will be reviewing net interest margin improvement during the quarter, which was a direct result of the disciplined deposit and loan pricing. Our continued deployment of new and enhanced products during the quarter, our digital platforms wrapped with smart and effective marketing, continued to deliver quality growth within our markets. Our people are a strength in meeting the financial needs within our communities. During the first quarter, our core relationship focused deposit franchise continued to show growth through the commercial, consumer, and our Southern Indiana market. The bullet points below the table detail that total deposit decline came from public funds, consumer CDs, and repayment of First Savings broker deposits. during the first quarter our core relationship focused deposit franchise continued to show growth through the commercial consumer and our southern indiana market. the bullet points below the table detail that total deposit decline came from public funds consumer cds and repayment of first savings broker deposits Each of these deposit categories is a higher cost source of funds as compared to the primary and operating accounts, which generated increases during the first quarter. each of these deposit categories is a higher cost source of funds as compared to the primary and operating accounts which generated increases during the first quarter Michele will be reviewing net interest margin improvement during the quarter, which was a direct result of the disciplined deposit and loan pricing. michele will be reviewing net interest margin improvement during the quarter which was a direct result of the disciplined deposit and loan pricing Our continued deployment of new and enhanced products during the quarter, our digital platforms wrapped with smart and effective marketing, continued to deliver quality growth within our markets. our continued deployment of new and enhanced products during the quarter our digital platforms wrapped with smart and effective marketing continued to deliver quality growth within our markets Our people are a strength in meeting the financial needs within our communities. our people are a strength in meeting the financial needs within our communities During the quarter, we added new teammates within our sponsor, investment real estate, community banking, and private wealth teams to build on our brand and momentum. Before turning the call over to Michele, one last comment regarding First Savings Bank. Our integration efforts are on track. The engagement of their team continues to be strong. On-site training and preparation for the May integration are advancing as scheduled. Our model of community banking in Southern Indiana has demonstrated its strength. Turnover of frontline personnel has been minimal, and as the prior pages demonstrated via the growth in loans and core deposits, their clients continue to be patient during the transition. The specialty verticals have continued to show consistent production in new business during the quarter. This production will continue to contribute to the fee income of First Merchants as a bulk of the originations are sold. During the quarter, we added new teammates within our sponsor, investment real estate, community banking, and private wealth teams to build on our brand and momentum. during the quarter we added new teammates within our sponsor investment real estate community banking and private wealth teams to build on our brand and momentum Before turning the call over to Michele, one last comment regarding First Savings Bank. before turning the call over to michele one last comment regarding first savings bank Our integration efforts are on track. our integration efforts are on track The engagement of their team continues to be strong. the engagement of their team continues to be strong On-site training and preparation for the May integration are advancing as scheduled. on-site training and preparation for the may integration are advancing as scheduled Our model of community banking in Southern Indiana has demonstrated its strength. our model of community banking in southern indiana has demonstrated its strength Turnover of frontline personnel has been minimal, and as the prior pages demonstrated via the growth in loans and core deposits, their clients continue to be patient during the transition. turnover of frontline personnel has been minimal and as the prior pages demonstrated via the growth in loans and core deposits their clients continue to be patient during the transition The specialty verticals have continued to show consistent production in new business during the quarter. the specialty verticals have continued to show consistent production in new business during the quarter This production will continue to contribute to the fee income of First Merchants as a bulk of the originations are sold. this production will continue to contribute to the fee income of first merchants as a bulk of the originations are sold I do want to highlight their SBA business model as a direct enhancement to the rest of First Merchants' franchise. Having the ability to offer SBA product solutions to our clients is a natural extension of being a community and commercially focused organization. The new SBA team will be the fulfillment team for all of our existing consumer, small business, and community bank teams. There are early successes that I expect to build post-integration. I'm going to turn the call over now to Michele to review in more detail the composition of our balance sheet and the drivers on the income statement. Michele? I do want to highlight their SBA business model as a direct enhancement to the rest of First Merchants' franchise. i do want to highlight their sba business model as a direct enhancement to the rest of first merchants' franchise Having the ability to offer SBA product solutions to our clients is a natural extension of being a community and commercially focused organization. having the ability to offer sba product solutions to our clients is a natural extension of being a community and commercially focused organization The new SBA team will be the fulfillment team for all of our existing consumer, small business, and community bank teams. the new sba team will be the fulfillment team for all of our existing consumer small business and community bank teams There are early successes that I expect to build post-integration. there are early successes that i expect to build post-integration I'm going to turn the call over now to Michele to review in more detail the composition of our balance sheet and the drivers on the income statement. i'm going to turn the call over now to michele to review in more detail the composition of our balance sheet and the drivers on the income statement Michele? michele

Speaker 7: Thanks, Mike, and good morning, everyone. Slide 9 covers our first quarter performance, including two months of operating results from First Savings following the February 1st closing of the acquisition. There was meaningful growth in total revenues in Q1. Net interest income grew $12.2 million and non-interest income grew $2.5 million linked quarter. This resulted in a $6.3 million increase in overall pre-tax, pre-provision earnings of $78.7 million. Tangible book value per share declined 2.8% linked quarter, but increased 7.3% over the same period in prior year. The linked quarter decrease was due to the impact of the acquisition and share buybacks. However, dilution from the First Savings acquisition at close was less than what we had estimated at announcement. Actual tangible book value dilution was only 2.4% versus 4.8% that we shared at announcement, and the tangible book value earn back is now estimated to be 2.4 years. Thanks, Mike, and good morning, everyone. thanks mike and good morning everyone Slide 9 covers our first quarter performance, including two months of operating results from First Savings following the February 1st closing of the acquisition. slide 9 covers our first quarter performance including two months of operating results from first savings following the february 1st closing of the acquisition There was meaningful growth in total revenues in Q1. there was meaningful growth in total revenues in q1 Net interest income grew $12.2 million and non-interest income grew $2.5 million linked quarter. net interest income grew $12.2 million and non-interest income grew $2.5 million linked quarter This resulted in a $6.3 million increase in overall pre-tax, pre-provision earnings of $78.7 million. this resulted in a $6.3 million increase in overall pre-tax pre-provision earnings of $78.7 million Tangible book value per share declined 2.8% linked quarter, but increased 7.3% over the same period in prior year. tangible book value per share declined 2.8% linked quarter but increased 7.3% over the same period in prior year The linked quarter decrease was due to the impact of the acquisition and share buybacks. the linked quarter decrease was due to the impact of the acquisition and share buybacks However, dilution from the First Savings acquisition at close was less than what we had estimated at announcement. however dilution from the first savings acquisition at close was less than what we had estimated at announcement Actual tangible book value dilution was only 2.4% versus 4.8% that we shared at announcement, and the tangible book value earn back is now estimated to be 2.4 years. actual tangible book value dilution was only 2.4% versus 4.8% that we shared at announcement and the tangible book value earn back is now estimated to be 2.4 years The difference was primarily driven by a lower interest rate mark, which totaled $53.1 million at closing. Slide 10 shows details of our investment portfolio. The bond portfolio declined from $3.4 billion to $3.3 billion due to changes in valuation and principal payments. First Savings had a $252 million bond portfolio that we sold at closing, creating liquidity for future loan growth. Expected cash flows from scheduled principal and interest payments and bond maturities through the remainder of 2026 totals $276.7 million, with a roll-off yield of approximately 3.24%. We plan to continue to use future cash flows generated from the bond portfolio to fund higher-yielding loan growth. Slide 11 covers our loan portfolio. The difference was primarily driven by a lower interest rate mark, which totaled $53.1 million at closing. the difference was primarily driven by a lower interest rate mark which totaled $53.1 million at closing Slide 10 shows details of our investment portfolio. slide 10 shows details of our investment portfolio The bond portfolio declined from $3.4 billion to $3.3 billion due to changes in valuation and principal payments. the bond portfolio declined from $3.4 billion to $3.3 billion due to changes in valuation and principal payments First Savings had a $252 million bond portfolio that we sold at closing, creating liquidity for future loan growth. first savings had a $252 million bond portfolio that we sold at closing creating liquidity for future loan growth Expected cash flows from scheduled principal and interest payments and bond maturities through the remainder of 2026 totals $276.7 million, with a roll-off yield of approximately 3.24%. expected cash flows from scheduled principal and interest payments and bond maturities through the remainder of 2026 totals $276.7 million with a roll-off yield of approximately 3.24% We plan to continue to use future cash flows generated from the bond portfolio to fund higher-yielding loan growth. we plan to continue to use future cash flows generated from the bond portfolio to fund higher-yielding loan growth Slide 11 covers our loan portfolio. slide 11 covers our loan portfolio The loan portfolio yield declined by 23 basis points from the prior quarter to 6.09%, which was impacted by the lower day count in the first quarter and repricing of assets due to the Fed rate cuts in late 2025. During the quarter, new and renewed loans were originated at an average yield of 6.18%. The allowance for credit losses is shown on slide 12. This quarter, we had net charge-offs of $10.3 million and recorded a $4.9 million provision. The transfer of $357 million of loans to held for sale reduced the loan balances requiring reserve coverage and contributed to a lower provision than the prior quarter. At closing, we also recorded a $22.3 million increase to the allowance related to the credit discount on the First Savings loan portfolio. The loan portfolio yield declined by 23 basis points from the prior quarter to 6.09%, which was impacted by the lower day count in the first quarter and repricing of assets due to the Fed rate cuts in late 2025. the loan portfolio yield declined by 23 basis points from the prior quarter to 6.09% which was impacted by the lower day count in the first quarter and repricing of assets due to the fed rate cuts in late 2025 During the quarter, new and renewed loans were originated at an average yield of 6.18%. during the quarter new and renewed loans were originated at an average yield of 6.18% The allowance for credit losses is shown on slide 12. the allowance for credit losses is shown on slide 12 This quarter, we had net charge-offs of $10.3 million and recorded a $4.9 million provision. this quarter we had net charge-offs of $10.3 million and recorded a $4.9 million provision The transfer of $357 million of loans to held for sale reduced the loan balances requiring reserve coverage and contributed to a lower provision than the prior quarter. the transfer of $357 million of loans to held for sale reduced the loan balances requiring reserve coverage and contributed to a lower provision than the prior quarter At closing, we also recorded a $22.3 million increase to the allowance related to the credit discount on the First Savings loan portfolio. at closing we also recorded a $22.3 million increase to the allowance related to the credit discount on the first savings loan portfolio As a result, the allowance for credit losses totaled $212.5 million at the end of the quarter, representing a coverage ratio of 1.39%. Slide 13 shows details of our deposit portfolio. The rate paid on deposits declined meaningfully by 23 basis points to 2.09% this quarter. Our team strategically reduced deposit rates following the Fed's rate cuts late last year, resulting in a $4.6 million reduction in deposit interest expense in the first quarter, even as deposits grew by $1.2 billion with the addition of First Savings. As noted on our slide, our non-interest-bearing deposits increased to 23% this quarter, up from 16% last quarter. This was driven by the redesign of our consumer checking account products. This change more accurately reflects the strength and quality of our deposit franchise. As a result, the allowance for credit losses totaled $212.5 million at the end of the quarter, representing a coverage ratio of 1.39%. as a result the allowance for credit losses totaled $212.5 million at the end of the quarter representing a coverage ratio of 1.39% Slide 13 shows details of our deposit portfolio. slide 13 shows details of our deposit portfolio The rate paid on deposits declined meaningfully by 23 basis points to 2.09% this quarter. the rate paid on deposits declined meaningfully by 23 basis points to 2.09% this quarter Our team strategically reduced deposit rates following the Fed's rate cuts late last year, resulting in a $4.6 million reduction in deposit interest expense in the first quarter, even as deposits grew by $1.2 billion with the addition of First Savings. As noted on our slide, our non-interest-bearing deposits increased to 23% this quarter, up from 16% last quarter. our team strategically reduced deposit rates following the fed's rate cuts late last year resulting in a $4.6 million reduction in deposit interest expense in the first quarter even as deposits grew by $1.2 billion with the addition of first savings. as noted on our slide our non-interest-bearing deposits increased to 23% this quarter up from 16% last quarter This was driven by the redesign of our consumer checking account products. this was driven by the redesign of our consumer checking account products This change more accurately reflects the strength and quality of our deposit franchise. this change more accurately reflects the strength and quality of our deposit franchise On slide 14, net interest income on a fully tax equivalent basis of $157.7 million increased $12.4 million linked-quarter and was up $21.3 million from the same period in prior year. Net interest income was positively impacted by a $1.2 million recovery from the successful resolution of a nonaccrual loan. As a reminder, we had a $3.3 million recovery last quarter. Our quarterly net interest margin of 3.35% increased six basis points from prior quarter, despite the lower day count in the quarter, which reduced margin by five basis points. Our strong core margin reflected our continued pricing discipline. Next, on slide 15, shows the details of noninterest income, which totaled $5.8 million on a reported basis and $35.6 million on a normalized basis. Customer-related fees were strong with quarter-over-quarter growth in wealth management fees and gains on sales of loans. On slide 14, net interest income on a fully tax equivalent basis of $157.7 million increased $12.4 million linked-quarter and was up $21.3 million from the same period in prior year. on slide 14 net interest income on a fully tax equivalent basis of $157.7 million increased $12.4 million linked-quarter and was up $21.3 million from the same period in prior year Net interest income was positively impacted by a $1.2 million recovery from the successful resolution of a nonaccrual loan. net interest income was positively impacted by a $1.2 million recovery from the successful resolution of a nonaccrual loan As a reminder, we had a $3.3 million recovery last quarter. as a reminder we had a $3.3 million recovery last quarter Our quarterly net interest margin of 3.35% increased six basis points from prior quarter, despite the lower day count in the quarter, which reduced margin by five basis points. our quarterly net interest margin of 3.35% increased six basis points from prior quarter despite the lower day count in the quarter which reduced margin by five basis points Our strong core margin reflected our continued pricing discipline. our strong core margin reflected our continued pricing discipline Next, on slide 15, shows the details of noninterest income, which totaled $5.8 million on a reported basis and $35.6 million on a normalized basis. next on slide 15 shows the details of noninterest income which totaled $5.8 million on a reported basis and $35.6 million on a normalized basis Customer-related fees were strong with quarter-over-quarter growth in wealth management fees and gains on sales of loans. customer-related fees were strong with quarter-over-quarter growth in wealth management fees and gains on sales of loans Moving to slide 16, non-interest expense for the quarter totaled to $125.1 million and included $17 million in acquisition related costs. The acquisition costs were primarily incurred in the salaries and benefits and the professional and other outside services categories. First quarter expenses also included $1.1 million of annual benefit plan expense, as well as a one-time charge of $900,000 for the write-down of a building. The cost synergies we expect to gain from the First Savings acquisition are on track, and Legacy First Merchants expenses are in line with the guidance I provided last quarter. Slide 17 shows our capital ratios. The tangible common equity ratio declined to 9% due to the acquisition and share repurchases. Since the beginning of the year, we have repurchased more than 700,000 shares for $27.6 million year to date. Moving to slide 16, non-interest expense for the quarter totaled to $125.1 million and included $17 million in acquisition related costs. moving to slide 16 non-interest expense for the quarter totaled to $125.1 million and included $17 million in acquisition related costs The acquisition costs were primarily incurred in the salaries and benefits and the professional and other outside services categories. the acquisition costs were primarily incurred in the salaries and benefits and the professional and other outside services categories First quarter expenses also included $1.1 million of annual benefit plan expense, as well as a one-time charge of $900,000 for the write-down of a building. first quarter expenses also included $1.1 million of annual benefit plan expense as well as a one-time charge of $900,000 for the write-down of a building The cost synergies we expect to gain from the First Savings acquisition are on track, and Legacy First Merchants expenses are in line with the guidance I provided last quarter. the cost synergies we expect to gain from the first savings acquisition are on track and legacy first merchants expenses are in line with the guidance i provided last quarter Slide 17 shows our capital ratios. slide 17 shows our capital ratios The tangible common equity ratio declined to 9% due to the acquisition and share repurchases. the tangible common equity ratio declined to 9% due to the acquisition and share repurchases Since the beginning of the year, we have repurchased more than 700,000 shares for $27.6 million year to date. since the beginning of the year we have repurchased more than 700,000 shares for $27.6 million year to date We remain well capitalized with the common equity tier one ratio at 11.22% and are well positioned to support continued balance sheet growth. That concludes my remarks, and I will now turn it over to our Chief Credit Officer, John Martin, to discuss asset quality. We remain well capitalized with the common equity tier one ratio at 11.22% and are well positioned to support continued balance sheet growth. we remain well capitalized with the common equity tier one ratio at 11.22% and are well positioned to support continued balance sheet growth That concludes my remarks, and I will now turn it over to our Chief Credit Officer, John Martin, to discuss asset quality. that concludes my remarks and i will now turn it over to our chief credit officer john martin to discuss asset quality

Speaker 5: Thanks, Michele, and good morning. My remarks begin on slide 18. This quarter, we streamlined the credit slides and moved the detailed loan portfolio trend page to the appendix for reference. In today's remarks, I'll focus on portfolio insights, asset quality, and the asset quality roll forward, highlighting both the diversity and overall credit quality of the portfolio. On slide 18, total loans ended the quarter at approximately $15.3 billion, with overall credit performance remaining solid. C&I line utilization increased modestly to 51%, which we view as healthy borrower activity rather than stress. Our shared national credit portfolio totals about $1 billion across 90 well-diversified borrowers with no outsized single name exposure. In sponsor finance, outstandings are approximately $832 million, supported by strong credit metrics, conservative leverage, and healthy coverage ratios. We remain disciplined on structure and intentionally underwrite with room for downside. Thanks, Michele, and good morning. thanks michele and good morning My remarks begin on slide 18. my remarks begin on slide 18 This quarter, we streamlined the credit slides and moved the detailed loan portfolio trend page to the appendix for reference. this quarter we streamlined the credit slides and moved the detailed loan portfolio trend page to the appendix for reference In today's remarks, I'll focus on portfolio insights, asset quality, and the asset quality roll forward, highlighting both the diversity and overall credit quality of the portfolio. in today's remarks i'll focus on portfolio insights asset quality and the asset quality roll forward highlighting both the diversity and overall credit quality of the portfolio On slide 18, total loans ended the quarter at approximately $15.3 billion, with overall credit performance remaining solid. on slide 18 total loans ended the quarter at approximately $15.3 billion with overall credit performance remaining solid C&I line utilization increased modestly to 51%, which we view as healthy borrower activity rather than stress. c&i line utilization increased modestly to 51% which we view as healthy borrower activity rather than stress Our shared national credit portfolio totals about $1 billion across 90 well-diversified borrowers with no outsized single name exposure. our shared national credit portfolio totals about $1 billion across 90 well-diversified borrowers with no outsized single name exposure In sponsor finance, outstandings are approximately $832 million, supported by strong credit metrics, conservative leverage, and healthy coverage ratios. in sponsor finance outstandings are approximately $832 million supported by strong credit metrics conservative leverage and healthy coverage ratios We remain disciplined on structure and intentionally underwrite with room for downside. we remain disciplined on structure and intentionally underwrite with room for downside Within CRE, retail is our largest exposure at $859 million and is largely credit tenant and triple net leased, performing as expected. Construction lending totals about $900 million across commercial and residential projects, with continued emphasis on borrower equity and prudent underwriting. From a concentration standpoint, we remain well within regulatory levels with CRE construction at 40% of capital and total CRE around 181%, providing the flexibility to selectively grow while maintaining a strong risk profile. Overall, we are pleased with portfolio performance and remain focused on balance growth and disciplined credit risk management. On slide 19, let me briefly touch on asset quality. Our overall asset quality remains stable, and our metrics are performing within expectations. As at quarter end, nonaccruals remained manageable with the largest relationship tied to income producing real estate, including a $9.9 million multifamily construction credit and two office-related exposures totaling roughly $12 million. Within CRE, retail is our largest exposure at $859 million and is largely credit tenant and triple net leased, performing as expected. within cre retail is our largest exposure at $859 million and is largely credit tenant and triple net leased performing as expected Construction lending totals about $900 million across commercial and residential projects, with continued emphasis on borrower equity and prudent underwriting. construction lending totals about $900 million across commercial and residential projects with continued emphasis on borrower equity and prudent underwriting From a concentration standpoint, we remain well within regulatory levels with CRE construction at 40% of capital and total CRE around 181%, providing the flexibility to selectively grow while maintaining a strong risk profile. from a concentration standpoint we remain well within regulatory levels with cre construction at 40% of capital and total cre around 181% providing the flexibility to selectively grow while maintaining a strong risk profile Overall, we are pleased with portfolio performance and remain focused on balance growth and disciplined credit risk management. overall we are pleased with portfolio performance and remain focused on balance growth and disciplined credit risk management On slide 19, let me briefly touch on asset quality. on slide 19 let me briefly touch on asset quality Our overall asset quality remains stable, and our metrics are performing within expectations. our overall asset quality remains stable and our metrics are performing within expectations As at quarter end, nonaccruals remained manageable with the largest relationship tied to income producing real estate, including a $9.9 million multifamily construction credit and two office-related exposures totaling roughly $12 million. as at quarter end nonaccruals remained manageable with the largest relationship tied to income producing real estate including a $9.9 million multifamily construction credit and two office-related exposures totaling roughly $12 million These credits are well-known, closely monitored, and reflect areas of CRE we've been proactively managing. Importantly, we are not seeing broad-based deterioration across the portfolio. Credit issues remain idiosyncratic rather than systemic, with no meaningful migration beyond a small number of relationships. Charge-off activity and criticized asset trends remain in line with expectations, and reserve coverage continues to appropriately reflect the portfolio's risk profile. Overall, we are comfortable with asset quality trends and remain focused on early identification, active management, and disciplined resolution where necessary. On slide 20, turning to non-performing asset migration. During the quarter, we added a $12 million nonaccrual office relationship, which was largely offset by a payoff of a $12.9 million multifamily construction credit. These credits are well-known, closely monitored, and reflect areas of CRE we've been proactively managing. these credits are well-known closely monitored and reflect areas of cre we've been proactively managing Importantly, we are not seeing broad-based deterioration across the portfolio. importantly we are not seeing broad-based deterioration across the portfolio Credit issues remain idiosyncratic rather than systemic, with no meaningful migration beyond a small number of relationships. credit issues remain idiosyncratic rather than systemic with no meaningful migration beyond a small number of relationships Charge-off activity and criticized asset trends remain in line with expectations, and reserve coverage continues to appropriately reflect the portfolio's risk profile. charge-off activity and criticized asset trends remain in line with expectations and reserve coverage continues to appropriately reflect the portfolio's risk profile Overall, we are comfortable with asset quality trends and remain focused on early identification, active management, and disciplined resolution where necessary. overall we are comfortable with asset quality trends and remain focused on early identification active management and disciplined resolution where necessary On slide 20, turning to non-performing asset migration. on slide 20 turning to non-performing asset migration During the quarter, we added a $12 million nonaccrual office relationship, which was largely offset by a payoff of a $12.9 million multifamily construction credit. during the quarter we added a $12 million nonaccrual office relationship which was largely offset by a payoff of a $12.9 million multifamily construction credit Overall, NPA levels remain well controlled with movement driven by a small number of individual credits rather than systemic deterioration. Resolution activity continues to progress as expected, and we remain focused on early engagement and disciplined management where stress arises. Taken together, asset quality and NPA trends reinforce our view that credit risk is contained and easily manageable. I'll turn it back to Mark to discuss our capital position and outlook. Overall, NPA levels remain well controlled with movement driven by a small number of individual credits rather than systemic deterioration. overall npa levels remain well controlled with movement driven by a small number of individual credits rather than systemic deterioration Resolution activity continues to progress as expected, and we remain focused on early engagement and disciplined management where stress arises. resolution activity continues to progress as expected and we remain focused on early engagement and disciplined management where stress arises Taken together, asset quality and NPA trends reinforce our view that credit risk is contained and easily manageable. taken together asset quality and npa trends reinforce our view that credit risk is contained and easily manageable I'll turn it back to Mark to discuss our capital position and outlook. i'll turn it back to mark to discuss our capital position and outlook

Speaker 6: Thanks, John. Good report. Turning now to slide 21. Our long-term track record of shareholder value creation remains a key strength. Tangible book value per share has grown at a 7.5% compound annual growth rate over the last 10 years. Given the earnings enhancements created by First Savings acquisition and the modest balance sheet repositioning, I'm particularly pleased with the limited tangible book value dilution from year-end 2025 through March 31 of 2026, which Michele highlighted in her comments as well. It's just really pleasing to be at this point with what was a pretty modest tangible book value reduction and such strength in the earnings stream. It's a good place for us to be. Slide 22 highlights our 11.7% total asset CAGR over the past decade, reflecting a consistent strategy of organic growth complemented by disciplined value accretive acquisitions that expand our demographic and geographic footprint. Thanks, John. thanks john Good report. good report Turning now to slide 21. turning now to slide 21 Our long-term track record of shareholder value creation remains a key strength. our long-term track record of shareholder value creation remains a key strength Tangible book value per share has grown at a 7.5% compound annual growth rate over the last 10 years. tangible book value per share has grown at a 7.5% compound annual growth rate over the last 10 years Given the earnings enhancements created by First Savings acquisition and the modest balance sheet repositioning, I'm particularly pleased with the limited tangible book value dilution from year-end 2025 through March 31 of 2026, which Michele highlighted in her comments as well. given the earnings enhancements created by first savings acquisition and the modest balance sheet repositioning i'm particularly pleased with the limited tangible book value dilution from year-end 2025 through march 31 of 2026 which michele highlighted in her comments as well It's just really pleasing to be at this point with what was a pretty modest tangible book value reduction and such strength in the earnings stream. it's just really pleasing to be at this point with what was a pretty modest tangible book value reduction and such strength in the earnings stream It's a good place for us to be. it's a good place for us to be Slide 22 highlights our 11.7% total asset CAGR over the past decade, reflecting a consistent strategy of organic growth complemented by disciplined value accretive acquisitions that expand our demographic and geographic footprint. slide 22 highlights our 11.7% total asset cagr over the past decade reflecting a consistent strategy of organic growth complemented by disciplined value accretive acquisitions that expand our demographic and geographic footprint The First Savings acquisition is well aligned with this strategy and meaningfully strengthens our presence in a high-growth Indiana market. We look forward to building on our Midwestern strength throughout the rest of 2026 by focusing on our people, our clients, our products, and technology. I hope it's clear that organic growth is our top priority for the year. We're going to get through the integration on mid-May, May 15. We've got great momentum with the First Savings team, as Mike Stewart highlighted. Thank you for your continued support and investment in First Merchants, and we are happy to take questions at this time. The First Savings acquisition is well aligned with this strategy and meaningfully strengthens our presence in a high-growth Indiana market. the first savings acquisition is well aligned with this strategy and meaningfully strengthens our presence in a high-growth indiana market We look forward to building on our Midwestern strength throughout the rest of 2026 by focusing on our people, our clients, our products, and technology. we look forward to building on our midwestern strength throughout the rest of 2026 by focusing on our people our clients our products and technology I hope it's clear that organic growth is our top priority for the year. i hope it's clear that organic growth is our top priority for the year We're going to get through the integration on mid-May, May 15. we're going to get through the integration on mid-may may 15 We've got great momentum with the First Savings team, as Mike Stewart highlighted. we've got great momentum with the first savings team as mike stewart highlighted Thank you for your continued support and investment in First Merchants, and we are happy to take questions at this time. thank you for your continued support and investment in first merchants and we are happy to take questions at this time

Speaker 10: Thank you. At this time, we'll conduct a question and answer session. As a reminder to ask the question, you need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Daniel Tamayo of Raymond James. Your line is now open. Thank you. thank you At this time, we'll conduct a question and answer session. at this time we'll conduct a question and answer session As a reminder to ask the question, you need to press star one one on your telephone and wait for your name to be announced. as a reminder to ask the question you need to press star one one on your telephone and wait for your name to be announced To withdraw your question, please press star one one again. to withdraw your question please press star one one again Please stand by while we compile the Q&A roster. please stand by while we compile the q&a roster Our first question comes from the line of Daniel Tamayo of Raymond James. our first question comes from the line of daniel tamayo of raymond james Your line is now open. your line is now open

Speaker 4: Thank you. Good morning, everyone. Maybe first just starting on the loan growth side. Seasonally down in the first quarter, you had the loan sale in there. Mike, you sounded pretty bullish on loan growth prospects going forward. Maybe just give us a little bit more color, if you can, on what's driving that and thoughts on pay downs, the timing of the slowing going forward, and if you're still comfortable with, I think we talked about 6%-8% growth for the year last quarter. If that number still holds. Thanks. Thank you. thank you Good morning, everyone. good morning everyone Maybe first just starting on the loan growth side. maybe first just starting on the loan growth side Seasonally down in the first quarter, you had the loan sale in there. seasonally down in the first quarter you had the loan sale in there Mike, you sounded pretty bullish on loan growth prospects going forward. mike you sounded pretty bullish on loan growth prospects going forward Maybe just give us a little bit more color, if you can, on what's driving that and thoughts on pay downs, the timing of the slowing going forward, and if you're still comfortable with, I think we talked about 6%-8% growth for the year last quarter. maybe just give us a little bit more color if you can on what's driving that and thoughts on pay downs the timing of the slowing going forward and if you're still comfortable with i think we talked about 6%-8% growth for the year last quarter If that number still holds. if that number still holds Thanks. thanks

Speaker 8: Yeah. Good morning, Dan. Well, let's start with the end. Yes, I do feel confident with that mid-single digit growth rate and reaffirm that. What kind of demonstrates that in my confidence level is if you really take a look at our commercial pipelines. They're as strong as they have been historically. What I've tried to talk about there is in that first quarter, we just had some stacked normal course payoffs that were underneath what we would look at in a normal run rate of production. The payoffs were a little bit higher. Remember, we also had a really strong fourth quarter, and some of those anticipated fourth quarter payoffs didn't happen until the first quarter. It's the investment real estate portfolio that was paying along with the sponsor book, and both of those production levels were really strong during the quarter. Yeah. yeah Good morning, Dan. good morning dan Well, let's start with the end. well let's start with the end Yes, I do feel confident with that mid-single digit growth rate and reaffirm that. yes i do feel confident with that mid-single digit growth rate and reaffirm that What kind of demonstrates that in my confidence level is if you really take a look at our commercial pipelines. what kind of demonstrates that in my confidence level is if you really take a look at our commercial pipelines They're as strong as they have been historically. they're as strong as they have been historically What I've tried to talk about there is in that first quarter, we just had some stacked normal course payoffs that were underneath what we would look at in a normal run rate of production. what i've tried to talk about there is in that first quarter we just had some stacked normal course payoffs that were underneath what we would look at in a normal run rate of production The payoffs were a little bit higher. the payoffs were a little bit higher Remember, we also had a really strong fourth quarter, and some of those anticipated fourth quarter payoffs didn't happen until the first quarter. remember we also had a really strong fourth quarter and some of those anticipated fourth quarter payoffs didn't happen until the first quarter It's the investment real estate portfolio that was paying along with the sponsor book, and both of those production levels were really strong during the quarter. it's the investment real estate portfolio that was paying along with the sponsor book and both of those production levels were really strong during the quarter We'll see the growth come back into those business units. That community bank model, which is the core C&I that sits in our franchise, demonstrates a really good growth rate there, which is really fundamental for us. Another point of view that I'd just share is that I know where we stand as of yesterday, and that growth is coming through in a really strong manner. If you look at how we think about normal course of loan amortizations and what we think about normal course of payoffs, it was just a little bit higher, but nothing unexpected out of the blue of people leaving for undue reasons. The production level that we had, which is on pace for about $2 billion if we got it in the first quarter, just that we were stacked with some payoffs and feel really good about where pipelines are. We'll see the growth come back into those business units. we'll see the growth come back into those business units That community bank model, which is the core C&I that sits in our franchise, demonstrates a really good growth rate there, which is really fundamental for us. that community bank model which is the core c&i that sits in our franchise demonstrates a really good growth rate there which is really fundamental for us Another point of view that I'd just share is that I know where we stand as of yesterday, and that growth is coming through in a really strong manner. another point of view that i'd just share is that i know where we stand as of yesterday and that growth is coming through in a really strong manner If you look at how we think about normal course of loan amortizations and what we think about normal course of payoffs, it was just a little bit higher, but nothing unexpected out of the blue of people leaving for undue reasons. if you look at how we think about normal course of loan amortizations and what we think about normal course of payoffs it was just a little bit higher but nothing unexpected out of the blue of people leaving for undue reasons The production level that we had, which is on pace for about $2 billion if we got it in the first quarter, just that we were stacked with some payoffs and feel really good about where pipelines are. the production level that we had which is on pace for about $2 billion if we got it in the first quarter just that we were stacked with some payoffs and feel really good about where pipelines are Where those two business units are already driving record provisions and bringing it into manifesting our balance sheet, and then where I've seen our current April footing through Q2. Where those two business units are already driving record provisions and bringing it into manifesting our balance sheet, and then where I've seen our current April footing through Q2. where those two business units are already driving record provisions and bringing it into manifesting our balance sheet and then where i've seen our current april footing through q2

Speaker 6: Mike, I'd love to just add. You made this in your actual comments earlier, but the pay downs really came exactly the way we would hope they would come. Maybe not the timing. Mike, I'd love to just add. mike i'd love to just add You made this in your actual comments earlier, but the pay downs really came exactly the way we would hope they would come. you made this in your actual comments earlier but the pay downs really came exactly the way we would hope they would come Maybe not the timing. maybe not the timing

Speaker 8: Yeah. Yeah. yeah

Speaker 6: It was investment real estate moving into the secondary market, which is what we always expect and anticipate, which is great for credit quality. Then the sponsor book exactly as you would anticipate that over time those sponsors liquidate those companies, sell them to maybe another sponsor, et cetera. It's anticipated. It was just a little more first-quarter heavy than what we had expected. It was investment real estate moving into the secondary market, which is what we always expect and anticipate, which is great for credit quality. it was investment real estate moving into the secondary market which is what we always expect and anticipate which is great for credit quality Then the sponsor book exactly as you would anticipate that over time those sponsors liquidate those companies, sell them to maybe another sponsor, et cetera. then the sponsor book exactly as you would anticipate that over time those sponsors liquidate those companies sell them to maybe another sponsor et cetera It's anticipated. it's anticipated It was just a little more first-quarter heavy than what we had expected. it was just a little more first-quarter heavy than what we had expected

Speaker 8: Yeah, that's exactly what I'm trying to say. Yeah, that's exactly what I'm trying to say. yeah that's exactly what i'm trying to say

Speaker 6: Yeah. Yeah. yeah

Speaker 8: Some of it we thought might have happened in the fourth quarter. It bled over to this, and some of what we might have had teed up in the second quarter. It happened early because the secondary markets are good with real estate. Some of it we thought might have happened in the fourth quarter. some of it we thought might have happened in the fourth quarter It bled over to this, and some of what we might have had teed up in the second quarter. it bled over to this and some of what we might have had teed up in the second quarter It happened early because the secondary markets are good with real estate. it happened early because the secondary markets are good with real estate

Speaker 6: Yes. Yes. yes

Speaker 4: Great. Very helpful. Thanks, guys. Maybe for Michele, on the margin, just curious where you see that moving going forward. You'll have the loan sale happening in the second quarter. I'm curious how you're thinking about the impact from that. I don't know if you gave more specific timing or you're able to yet, other than in the second quarter. Just curious how that impacts the margin, just overall thoughts for the rest of the year. Great. great Very helpful. very helpful Thanks, guys. thanks guys Maybe for Michele, on the margin, just curious where you see that moving going forward. maybe for michele on the margin just curious where you see that moving going forward You'll have the loan sale happening in the second quarter. you'll have the loan sale happening in the second quarter I'm curious how you're thinking about the impact from that. i'm curious how you're thinking about the impact from that I don't know if you gave more specific timing or you're able to yet, other than in the second quarter. i don't know if you gave more specific timing or you're able to yet other than in the second quarter Just curious how that impacts the margin, just overall thoughts for the rest of the year. just curious how that impacts the margin just overall thoughts for the rest of the year

Speaker 7: Yeah. Well, I'll address the loan sale first. As Mark said in his comments, the loans that we're selling have a weighted average coupon of 3.46%. Immediately once we get that liquidity, we'll pay down some of our higher cost deposits. I would say those are probably averaging about maybe 3.80%. Over time, we will invest that liquidity in loans. Of course, that will happen over the course of the next 18-24 months. We'll get some margin pickup over time. It won't be immediate. It'll be a little more neutral right out of the gate. For margin over the next few quarters, just because the day count in Q1 always depresses our margin by five basis points. Once we get into Q2, Q3, Q4, we will see margin tick up a few basis points. Yeah. yeah Well, I'll address the loan sale first. well i'll address the loan sale first As Mark said in his comments, the loans that we're selling have a weighted average coupon of 3.46%. as mark said in his comments the loans that we're selling have a weighted average coupon of 3.46% Immediately once we get that liquidity, we'll pay down some of our higher cost deposits. immediately once we get that liquidity we'll pay down some of our higher cost deposits I would say those are probably averaging about maybe 3.80%. i would say those are probably averaging about maybe 3.80% Over time, we will invest that liquidity in loans. over time we will invest that liquidity in loans Of course, that will happen over the course of the next 18-24 months. of course that will happen over the course of the next 18-24 months We'll get some margin pickup over time. we'll get some margin pickup over time It won't be immediate. it won't be immediate It'll be a little more neutral right out of the gate. it'll be a little more neutral right out of the gate For margin over the next few quarters, just because the day count in Q1 always depresses our margin by five basis points. for margin over the next few quarters just because the day count in q1 always depresses our margin by five basis points Once we get into Q2, Q3, Q4, we will see margin tick up a few basis points. once we get into q2 q3 q4 we will see margin tick up a few basis points If anything, just because of the day count and also just because I think some of the repricing from rate cuts last year, we've already seen some of that. I think rates that we pay on deposits will be relatively steady. I would expect there to be a few basis points of pickup on margin through the year. If anything, just because of the day count and also just because I think some of the repricing from rate cuts last year, we've already seen some of that. if anything just because of the day count and also just because i think some of the repricing from rate cuts last year we've already seen some of that I think rates that we pay on deposits will be relatively steady. i think rates that we pay on deposits will be relatively steady I would expect there to be a few basis points of pickup on margin through the year. i would expect there to be a few basis points of pickup on margin through the year

Speaker 4: Okay, that's inclusive of the 5 basis points reversal, I guess, from the first quarter. Just to call it a handful of basis points up from the first quarter level of margin. Okay, that's inclusive of the 5 basis points reversal, I guess, from the first quarter. okay that's inclusive of the 5 basis points reversal i guess from the first quarter Just to call it a handful of basis points up from the first quarter level of margin. just to call it a handful of basis points up from the first quarter level of margin

Speaker 7: Yes, that's correct. Yes, that's correct. yes that's correct

Speaker 4: Okay. All right, great. Okay, well, I appreciate that color. I will step back. Thank you. Okay. okay All right, great. all right great Okay, well, I appreciate that color. okay well i appreciate that color I will step back. i will step back Thank you. thank you

Speaker 8: Thanks, Danny. Thanks, Danny. thanks danny

Speaker 10: Thank you. One moment for our next question. Our next question comes from the line of Russell Gunther of Stephens. Your line is now open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from the line of Russell Gunther of Stephens. our next question comes from the line of russell gunther of stephens Your line is now open. your line is now open

Speaker 11: Hey, good morning, guys. Hey, good morning, guys. hey good morning guys

Speaker 6: Good morning, Russell. Good morning, Russell. good morning russell

Speaker 11: Morning. I wanted to see if you could touch a bit more on the deposit migration into non-interest bearing this quarter. Perhaps how you're thinking about the sustainability of the remix, whether you assume any runoff from the consumer product redesign. Then as a follow-up, Michele, you touched on this a bit, but just overall cost of deposits going forward, assuming a Fed on pause, do you think you have the ability to flex that lower from here or is there kind of a slight upward bias to overall deposit costs going forward? Morning. morning I wanted to see if you could touch a bit more on the deposit migration into non-interest bearing this quarter. i wanted to see if you could touch a bit more on the deposit migration into non-interest bearing this quarter Perhaps how you're thinking about the sustainability of the remix, whether you assume any runoff from the consumer product redesign. perhaps how you're thinking about the sustainability of the remix whether you assume any runoff from the consumer product redesign Then as a follow-up, Michele, you touched on this a bit, but just overall cost of deposits going forward, assuming a Fed on pause, do you think you have the ability to flex that lower from here or is there kind of a slight upward bias to overall deposit costs going forward? then as a follow-up michele you touched on this a bit but just overall cost of deposits going forward assuming a fed on pause do you think you have the ability to flex that lower from here or is there kind of a slight upward bias to overall deposit costs going forward

Speaker 7: Well, I'll start with the deposit account, our checking account redesign. We've migrated those customers to our newly designed checking accounts. We've been tracking whether there's any runoff. It's been very stable, and I think pretty well-received. We're not anticipating any runoff. I would expect our non-interest bearing to maintain that 22%-23% level that we're seeing today. On the deposit rates, deposit rates are pretty competitive, and I don't anticipate that we'll be lowering deposit rates meaningfully through the year. I would expect it to be overall more steady. Well, I'll start with the deposit account, our checking account redesign. well i'll start with the deposit account our checking account redesign We've migrated those customers to our newly designed checking accounts. we've migrated those customers to our newly designed checking accounts We've been tracking whether there's any runoff. we've been tracking whether there's any runoff It's been very stable, and I think pretty well-received. it's been very stable and i think pretty well-received We're not anticipating any runoff. we're not anticipating any runoff I would expect our non-interest bearing to maintain that 22%-23% level that we're seeing today. i would expect our non-interest bearing to maintain that 22%-23% level that we're seeing today On the deposit rates, deposit rates are pretty competitive, and I don't anticipate that we'll be lowering deposit rates meaningfully through the year. on the deposit rates deposit rates are pretty competitive and i don't anticipate that we'll be lowering deposit rates meaningfully through the year I would expect it to be overall more steady. i would expect it to be overall more steady

Speaker 11: Got it. Okay. Thank you. Got it. got it Okay. okay Thank you. thank you

Speaker 8: I'm just going to add a little bit more on that. We worked at the end of last year to redesign our consumer core checking. Now what happens is we don't have any paying small interest-bearing. It all went to non-interest-bearing. That's where the big shift, if you look from the prior quarter, is. It is what I was trying to point out is our core primary account activity. I didn't talk about it, but both in unit and in dollars continues to grow. That new product set that we call Prosper and Prosper Plus is being well received in the marketplace with the new features and functionalities with some of the new digital platforms. It aligns then with how we want to represent it in non-interest-bearing deposits now. I'm just going to add a little bit more on that. i'm just going to add a little bit more on that We worked at the end of last year to redesign our consumer core checking. we worked at the end of last year to redesign our consumer core checking Now what happens is we don't have any paying small interest-bearing. now what happens is we don't have any paying small interest-bearing It all went to non-interest-bearing. it all went to non-interest-bearing That's where the big shift, if you look from the prior quarter, is. that's where the big shift if you look from the prior quarter is It is what I was trying to point out is our core primary account activity. it is what i was trying to point out is our core primary account activity I didn't talk about it, but both in unit and in dollars continues to grow. i didn't talk about it but both in unit and in dollars continues to grow That new product set that we call Prosper and Prosper Plus is being well received in the marketplace with the new features and functionalities with some of the new digital platforms. that new product set that we call prosper and prosper plus is being well received in the marketplace with the new features and functionalities with some of the new digital platforms It aligns then with how we want to represent it in non-interest-bearing deposits now. it aligns then with how we want to represent it in non-interest-bearing deposits now

Speaker 6: Yeah. We're in year two of very strategically remixing the deposit base. Yeah. yeah We're in year two of very strategically remixing the deposit base. we're in year two of very strategically remixing the deposit base

Speaker 8: That's right. That's right. that's right

Speaker 6: to be as core as possible with less dependence on CDs and public funds. It just takes time, but we're really pleased with the progress we're making. to be as core as possible with less dependence on CDs and public funds. to be as core as possible with less dependence on cds and public funds It just takes time, but we're really pleased with the progress we're making. it just takes time but we're really pleased with the progress we're making

Speaker 11: I appreciate all the color and it's nice to see. Maybe switching gears for me from a capital perspective, healthy levels of CET1 with the deal close. Do you have a sense of the potential impact from the Basel III proposal on RWAs and CET1? Then from an overall kind of capital return perspective, would you guys expect to remain active with the buyback here? I appreciate all the color and it's nice to see. i appreciate all the color and it's nice to see Maybe switching gears for me from a capital perspective, healthy levels of CET1 with the deal close. maybe switching gears for me from a capital perspective healthy levels of cet1 with the deal close Do you have a sense of the potential impact from the Basel III proposal on RWAs and CET1? do you have a sense of the potential impact from the basel iii proposal on rwas and cet1 Then from an overall kind of capital return perspective, would you guys expect to remain active with the buyback here? then from an overall kind of capital return perspective would you guys expect to remain active with the buyback here

Speaker 7: We have evaluated the capital proposals, and I would say right now our estimate is that it will benefit us probably somewhere between 50-80 basis points, somewhere in that range. It's really driven mostly from some of the risk-weighted asset relief, particularly on the mortgage product. That's our estimate at this time. We'll keep an eye on where it gets finalized. From just capital management perspective, yeah, given where our valuation is, we will continue to be active in the buyback space in the coming quarters. We have evaluated the capital proposals, and I would say right now our estimate is that it will benefit us probably somewhere between 50-80 basis points, somewhere in that range. we have evaluated the capital proposals and i would say right now our estimate is that it will benefit us probably somewhere between 50-80 basis points somewhere in that range It's really driven mostly from some of the risk-weighted asset relief, particularly on the mortgage product. it's really driven mostly from some of the risk-weighted asset relief particularly on the mortgage product That's our estimate at this time. that's our estimate at this time We'll keep an eye on where it gets finalized. From just capital management perspective, yeah, given where our valuation is, we will continue to be active in the buyback space in the coming quarters. we'll keep an eye on where it gets finalized. from just capital management perspective yeah given where our valuation is we will continue to be active in the buyback space in the coming quarters

Speaker 11: Okay, great. Very helpful. Thank you guys for taking my question. Okay, great. okay great Very helpful. very helpful Thank you guys for taking my question. thank you guys for taking my question

Speaker 6: Thank you. Thank you. thank you

Speaker 10: Thank you. One moment for our next question. Our next question comes from the line of Brandon Nosal of Hovde Group. Your line is now open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from the line of Brandon Nosal of Hovde Group. our next question comes from the line of brandon nosal of hovde group Your line is now open. your line is now open

Speaker 1: Hey. Good morning, everybody. Hope you're doing well. Hey. hey Good morning, everybody. good morning everybody Hope you're doing well. hope you're doing well

Speaker 6: Morning. Morning. morning

Speaker 1: Morning. Maybe just sticking with capital for a moment. As we all know, pro forma readings came in stronger than expected, even with the repositioning of the mortgage portfolio. Totally get that you want to remain active in the buyback and loan growth is going to pick up here. I'm just curious if you see any other need for additional balance sheet optimization over the course of the year. Morning. morning Maybe just sticking with capital for a moment. maybe just sticking with capital for a moment As we all know, pro forma readings came in stronger than expected, even with the repositioning of the mortgage portfolio. as we all know pro forma readings came in stronger than expected even with the repositioning of the mortgage portfolio Totally get that you want to remain active in the buyback and loan growth is going to pick up here. totally get that you want to remain active in the buyback and loan growth is going to pick up here I'm just curious if you see any other need for additional balance sheet optimization over the course of the year. i'm just curious if you see any other need for additional balance sheet optimization over the course of the year

Speaker 6: No. If you mean additional loan or bond sales, we're not anticipating anything else. We think this is kind of perfect for 2026. It gives us liquidity so that we can continue a mid- to high-single-digit loan growth number that we talk about. It allows us to stay really diligent with deposit pricing and just remix the loan book, at this point, because we're cognizant of the loan-to-deposit ratio as well, from lower yielding loans in our portfolio with a little longer duration to higher yielding loans with shorter duration. At least in the coming months, I'm not anticipating anything further. We do evaluate all the time just what our options are. Really, we're pleased with the earn back. No. no If you mean additional loan or bond sales, we're not anticipating anything else. if you mean additional loan or bond sales we're not anticipating anything else We think this is kind of perfect for 2026. we think this is kind of perfect for 2026 It gives us liquidity so that we can continue a mid- to high-single-digit loan growth number that we talk about. it gives us liquidity so that we can continue a mid- to high-single-digit loan growth number that we talk about It allows us to stay really diligent with deposit pricing and just remix the loan book, at this point, because we're cognizant of the loan-to-deposit ratio as well, from lower yielding loans in our portfolio with a little longer duration to higher yielding loans with shorter duration. it allows us to stay really diligent with deposit pricing and just remix the loan book at this point because we're cognizant of the loan-to-deposit ratio as well from lower yielding loans in our portfolio with a little longer duration to higher yielding loans with shorter duration At least in the coming months, I'm not anticipating anything further. at least in the coming months i'm not anticipating anything further We do evaluate all the time just what our options are. we do evaluate all the time just what our options are Really, we're pleased with the earn back. really we're pleased with the earn back Especially the modeling of this, the way Michele talked about it, is we just assumed our mid- to high-single-digit loan growth would continue in a normal course, is the way we budgeted for a couple of years. Then said if we redeploy this money out of mortgages into commercial, over a 24-month window, what kind of pickup do we have? That's how the four-year earn back was calculated. I'm pretty confident that we'll be able to accelerate some of that. This year we'll be using that liquidity for current loan growth. You can model it a lot of different ways. We think the four-year earn back is the most conservative, but I just want to be sure everyone understands how we're thinking about it. Especially the modeling of this, the way Michele talked about it, is we just assumed our mid- to high-single-digit loan growth would continue in a normal course, is the way we budgeted for a couple of years. especially the modeling of this the way michele talked about it is we just assumed our mid- to high-single-digit loan growth would continue in a normal course is the way we budgeted for a couple of years Then said if we redeploy this money out of mortgages into commercial, over a 24-month window, what kind of pickup do we have? then said if we redeploy this money out of mortgages into commercial over a 24-month window what kind of pickup do we have That's how the four-year earn back was calculated. that's how the four-year earn back was calculated I'm pretty confident that we'll be able to accelerate some of that. i'm pretty confident that we'll be able to accelerate some of that This year we'll be using that liquidity for current loan growth. this year we'll be using that liquidity for current loan growth You can model it a lot of different ways. you can model it a lot of different ways We think the four-year earn back is the most conservative, but I just want to be sure everyone understands how we're thinking about it. we think the four-year earn back is the most conservative but i just want to be sure everyone understands how we're thinking about it

Speaker 1: Yep, that's helpful color, Mark. Thank you. Maybe pivoting to a question on First Savings. Now with the deal on the books and closed, can you just give us your latest thinking on how you view their three specialty businesses now that you've had time to see them in action? Heard your commentary on SBA, but I guess, I'm more curious about First-Lien HELOC and the triple net lease product. Yep, that's helpful color, Mark. yep that's helpful color mark Thank you. thank you Maybe pivoting to a question on First Savings. maybe pivoting to a question on first savings Now with the deal on the books and closed, can you just give us your latest thinking on how you view their three specialty businesses now that you've had time to see them in action? now with the deal on the books and closed can you just give us your latest thinking on how you view their three specialty businesses now that you've had time to see them in action Heard your commentary on SBA, but I guess, I'm more curious about First-Lien HELOC and the triple net lease product. heard your commentary on sba but i guess i'm more curious about first-lien heloc and the triple net lease product

Speaker 6: Yeah. It might be a good point to just reiterate how well the integration process is going. The connectivity of our teams is the best it's ever been in an acquisition. I'm going to let Mike jump into that answer because Mike's never been closer on the ground to every single action that we're taking, especially in those verticals. I'm really pleased with where we stand today and excited about getting through the integration, moving forward, and every day that we own the company, the more excited I am about the verticals. Yeah. yeah It might be a good point to just reiterate how well the integration process is going. it might be a good point to just reiterate how well the integration process is going The connectivity of our teams is the best it's ever been in an acquisition. the connectivity of our teams is the best it's ever been in an acquisition I'm going to let Mike jump into that answer because Mike's never been closer on the ground to every single action that we're taking, especially in those verticals. i'm going to let mike jump into that answer because mike's never been closer on the ground to every single action that we're taking especially in those verticals I'm really pleased with where we stand today and excited about getting through the integration, moving forward, and every day that we own the company, the more excited I am about the verticals. i'm really pleased with where we stand today and excited about getting through the integration moving forward and every day that we own the company the more excited i am about the verticals

Speaker 8: Yeah. Let's start with the triple net lease. Nice thing about since the end of the year through the close through now, their production has remained very stable, which is a good thing in my opinion. They were originating the triple net lease on, I'll say, somewhat of a national basis, and they would sell that portfolio or put it on the balance sheet. It's an extension of investment real estate. It's an extension of what we understood, but we really didn't focus on. It feels natural for us to be able to continue to support how Tony and team is continuing to generate triple net lease businesses in a originate model. It gives us options to put it on the balance sheet if we so choose, or sell. The First-Lien HELOC business is a unique business for us. Yeah. yeah Let's start with the triple net lease. let's start with the triple net lease Nice thing about since the end of the year through the close through now, their production has remained very stable, which is a good thing in my opinion. nice thing about since the end of the year through the close through now their production has remained very stable which is a good thing in my opinion They were originating the triple net lease on, I'll say, somewhat of a national basis, and they would sell that portfolio or put it on the balance sheet. they were originating the triple net lease on i'll say somewhat of a national basis and they would sell that portfolio or put it on the balance sheet It's an extension of investment real estate. it's an extension of investment real estate It's an extension of what we understood, but we really didn't focus on. it's an extension of what we understood but we really didn't focus on It feels natural for us to be able to continue to support how Tony and team is continuing to generate triple net lease businesses in a originate model. it feels natural for us to be able to continue to support how tony and team is continuing to generate triple net lease businesses in a originate model It gives us options to put it on the balance sheet if we so choose, or sell. it gives us options to put it on the balance sheet if we so choose or sell The First-Lien HELOC business is a unique business for us. the first-lien heloc business is a unique business for us They built a really nice model that also has continued to have similar production levels as they were through this period of time. That has been, for them, a complete originate and sell. We've got buyers on that and secondary servicers. It's a fee generation business that there is some of that on our balance sheet today. It was on their balance sheet. We've just kind of modeled that we'll keep our balance sheet flat for the First-Lien HELOC, and as they continue to generate new business, it turns into fee income, much like our current mortgage business originate and sell model. Like I referenced with SBA, they built a really nice infrastructure and ability to not only originate, but obviously underwrite and service and collect, which is just not a model that we had built. They built a really nice model that also has continued to have similar production levels as they were through this period of time. they built a really nice model that also has continued to have similar production levels as they were through this period of time That has been, for them, a complete originate and sell. that has been for them a complete originate and sell We've got buyers on that and secondary servicers. we've got buyers on that and secondary servicers It's a fee generation business that there is some of that on our balance sheet today. it's a fee generation business that there is some of that on our balance sheet today It was on their balance sheet. it was on their balance sheet We've just kind of modeled that we'll keep our balance sheet flat for the First-Lien HELOC, and as they continue to generate new business, it turns into fee income, much like our current mortgage business originate and sell model. we've just kind of modeled that we'll keep our balance sheet flat for the first-lien heloc and as they continue to generate new business it turns into fee income much like our current mortgage business originate and sell model Like I referenced with SBA, they built a really nice infrastructure and ability to not only originate, but obviously underwrite and service and collect, which is just not a model that we had built. like i referenced with sba they built a really nice infrastructure and ability to not only originate but obviously underwrite and service and collect which is just not a model that we had built They were doing around $100 million of SBA transactions last year. That first quarter production is actually higher than they were, again, during this noise period of time with First Merchants. First Merchants SBA production last year was less than $10 million. Our infrastructure of small business banking and community banking looks to them as a new product set to continue to fulfill community banking and SBA products, in our own backyard, which they really weren't overlapping with us. It's just a natural extension of actually probably bringing them more volume and not letting them be the fulfillment team and whatnot. That's how I'm viewing those three verticals, and we're watching it through integration day. Then my team hears regularly what I call day two. They were doing around $100 million of SBA transactions last year. they were doing around $100 million of sba transactions last year That first quarter production is actually higher than they were, again, during this noise period of time with First Merchants. that first quarter production is actually higher than they were again during this noise period of time with first merchants First Merchants SBA production last year was less than $10 million. first merchants sba production last year was less than $10 million Our infrastructure of small business banking and community banking looks to them as a new product set to continue to fulfill community banking and SBA products, in our own backyard, which they really weren't overlapping with us. our infrastructure of small business banking and community banking looks to them as a new product set to continue to fulfill community banking and sba products in our own backyard which they really weren't overlapping with us It's just a natural extension of actually probably bringing them more volume and not letting them be the fulfillment team and whatnot. it's just a natural extension of actually probably bringing them more volume and not letting them be the fulfillment team and whatnot That's how I'm viewing those three verticals, and we're watching it through integration day. that's how i'm viewing those three verticals and we're watching it through integration day Then my team hears regularly what I call day two. then my team hears regularly what i call day two We're going to continue to figure out where do we want to go with growing the businesses or continue to incorporate into our core models. We're going to continue to figure out where do we want to go with growing the businesses or continue to incorporate into our core models. we're going to continue to figure out where do we want to go with growing the businesses or continue to incorporate into our core models

Speaker 6: Mike, I think it's worth just adding, it's part of the reason we're so bullish about loan growth for the remainder of the year. The verticals are a really nice add. We've stayed exactly in the credit kind of profile and size that First Savings operated the business. We do see opportunity to mostly just in the size of credits, to start to make some adjustments, especially you think about the triple net lease business. It is a lever that we could use. So far, we've said, "Well, hey, let's just maintain the growth profile and the size of each credit exactly the way it is." I would just say it leans on the small side. Excited about how it can continue to help facilitate our growth in the future. Mike, I think it's worth just adding, it's part of the reason we're so bullish about loan growth for the remainder of the year. mike i think it's worth just adding it's part of the reason we're so bullish about loan growth for the remainder of the year The verticals are a really nice add. the verticals are a really nice add We've stayed exactly in the credit kind of profile and size that First Savings operated the business. we've stayed exactly in the credit kind of profile and size that first savings operated the business We do see opportunity to mostly just in the size of credits, to start to make some adjustments, especially you think about the triple net lease business. we do see opportunity to mostly just in the size of credits to start to make some adjustments especially you think about the triple net lease business It is a lever that we could use. it is a lever that we could use So far, we've said, "Well, hey, let's just maintain the growth profile and the size of each credit exactly the way it is." I would just say it leans on the small side. so far we've said "well hey let's just maintain the growth profile and the size of each credit exactly the way it is." i would just say it leans on the small side Excited about how it can continue to help facilitate our growth in the future. excited about how it can continue to help facilitate our growth in the future

Speaker 1: All right. Thank you for taking my questions. Appreciate it. All right. all right Thank you for taking my questions. thank you for taking my questions Appreciate it. appreciate it

Speaker 6: Thank you. Thank you. thank you

Speaker 10: Thank you. One moment for our next question. Our next question comes from the line of Damon DelMonte of KBW. Your line is now open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from the line of Damon DelMonte of KBW. our next question comes from the line of damon delmonte of kbw Your line is now open. your line is now open

Speaker 3: Hey, good morning, everyone. Hope you're all doing well today. First question, regarding the margin. Michele, hoping you could give a little color on the expectation for the fair value accretion marks that we could expect going forward. Hey, good morning, everyone. hey good morning everyone Hope you're all doing well today. hope you're all doing well today First question, regarding the margin. first question regarding the margin Michele, hoping you could give a little color on the expectation for the fair value accretion marks that we could expect going forward. michele hoping you could give a little color on the expectation for the fair value accretion marks that we could expect going forward

Speaker 7: Yeah. For the first two months of us having the First Savings acquisition, I think we've recorded probably maybe $1.5 million of fair value accretion. That's on a two-month basis. I would consider the run rate on a go-forward basis to probably be fairly similar. Yeah. yeah For the first two months of us having the First Savings acquisition, I think we've recorded probably maybe $1.5 million of fair value accretion. for the first two months of us having the first savings acquisition i think we've recorded probably maybe $1.5 million of fair value accretion That's on a two-month basis. that's on a two-month basis I would consider the run rate on a go-forward basis to probably be fairly similar. i would consider the run rate on a go-forward basis to probably be fairly similar

Speaker 3: Okay. Great. Okay. Could you kind of give us a little guidance on the outlook for the combined expense base here in the second quarter as you get a full impact from FSFG? Okay. okay Great. great Okay. okay Could you kind of give us a little guidance on the outlook for the combined expense base here in the second quarter as you get a full impact from FSFG? could you kind of give us a little guidance on the outlook for the combined expense base here in the second quarter as you get a full impact from fsfg

Speaker 7: Sure. I think I'd reiterate the guidance that I gave last quarter on legacy First Merchants. On the legacy First Merchants space, I had given guidance that we expected a 3%-5% increase year-over-year. Then you add in First Savings, but in the back half of the year, of course, recognizing the cost synergies that we're on track to achieve. When you put all those pieces together, the quarterly expense total, like on a quarterly run rate, will probably be somewhere between $111 million-$114 million. Sure. sure I think I'd reiterate the guidance that I gave last quarter on legacy First Merchants. i think i'd reiterate the guidance that i gave last quarter on legacy first merchants On the legacy First Merchants space, I had given guidance that we expected a 3%-5% increase year-over-year. on the legacy first merchants space i had given guidance that we expected a 3%-5% increase year-over-year Then you add in First Savings, but in the back half of the year, of course, recognizing the cost synergies that we're on track to achieve. then you add in first savings but in the back half of the year of course recognizing the cost synergies that we're on track to achieve When you put all those pieces together, the quarterly expense total, like on a quarterly run rate, will probably be somewhere between $111 million-$114 million. when you put all those pieces together the quarterly expense total like on a quarterly run rate will probably be somewhere between $111 million-$114 million

Speaker 3: You think that level is kind of like once the savings hit, so that's kind of like almost like an exit rate of 20 in the fourth quarter? You think that level is kind of like once the savings hit, so that's kind of like almost like an exit rate of 20 in the fourth quarter? you think that level is kind of like once the savings hit so that's kind of like almost like an exit rate of 20 in the fourth quarter

Speaker 7: Yeah. Yes. Yeah. yeah Yes. yes

Speaker 3: Okay. Got it. Okay, great. I guess just lastly, when you think about kind of just market disruption, broadly speaking, and opportunity to maybe pick up commercial lending teams, are there any plans to add to certain areas of the footprint? Or do you feel that the efforts you've put forth in recent years is sufficient, and you kind of have a good team at the table right now? Okay. okay Got it. got it Okay, great. okay great I guess just lastly, when you think about kind of just market disruption, broadly speaking, and opportunity to maybe pick up commercial lending teams, are there any plans to add to certain areas of the footprint? i guess just lastly when you think about kind of just market disruption broadly speaking and opportunity to maybe pick up commercial lending teams are there any plans to add to certain areas of the footprint Or do you feel that the efforts you've put forth in recent years is sufficient, and you kind of have a good team at the table right now? or do you feel that the efforts you've put forth in recent years is sufficient and you kind of have a good team at the table right now

Speaker 8: Dan, it's Mike Stewart. Yes, we look very optimistically and very active right now, strategically in overlap markets where being able to add quality talent in our markets would just augment our branding and growth. We're very active in that space, especially. I would just say in the Michigan market in particular. That being also said, I referenced that we've had to continue strategic hires along the way. That's part of our business model of 2026. Six new bankers through asset-based lending, through investment real estate, through a sponsor, but more importantly, our core community bank, with several more joining soon in treasury management, just continues to build. I feel like the infrastructure that's there. That's not including what we've recently done in our private wealth group, which I think as you saw that had really nice fee growth as we continue to win investors. Dan, it's Mike Stewart. dan it's mike stewart Yes, we look very optimistically and very active right now, strategically in overlap markets where being able to add quality talent in our markets would just augment our branding and growth. yes we look very optimistically and very active right now strategically in overlap markets where being able to add quality talent in our markets would just augment our branding and growth We're very active in that space, especially. we're very active in that space especially I would just say in the Michigan market in particular. i would just say in the michigan market in particular That being also said, I referenced that we've had to continue strategic hires along the way. that being also said i referenced that we've had to continue strategic hires along the way That's part of our business model of 2026. that's part of our business model of 2026 Six new bankers through asset-based lending, through investment real estate, through a sponsor, but more importantly, our core community bank, with several more joining soon in treasury management, just continues to build. six new bankers through asset-based lending through investment real estate through a sponsor but more importantly our core community bank with several more joining soon in treasury management just continues to build I feel like the infrastructure that's there. i feel like the infrastructure that's there That's not including what we've recently done in our private wealth group, which I think as you saw that had really nice fee growth as we continue to win investors. that's not including what we've recently done in our private wealth group which i think as you saw that had really nice fee growth as we continue to win investors

Speaker 3: Great. Appreciate that, Mike. That's all that I had. Thanks a lot, everyone. Great. great Appreciate that, Mike. appreciate that mike That's all that I had. that's all that i had Thanks a lot, everyone. thanks a lot everyone

Speaker 7: Yeah. Yeah. yeah

Speaker 10: Thank you. One moment for our next question. Our next question comes from the line of Nathan Race of Piper Sandler. Your line is now open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from the line of Nathan Race of Piper Sandler. our next question comes from the line of nathan race of piper sandler Your line is now open. your line is now open

Speaker 9: Hi, everyone. Good morning. Thanks for taking the questions. Michele, I was wondering if you could kind of just frame up the income expectations for the second quarter and just generally you're still thinking kind of mid- or high-single-digit growth for the full year and just what you're contemplating perhaps coming from First Savings, if you're thinking maybe that some of the verticals that you discussed earlier, whether it's single-tenant lease or first-lien HELOC, could be a driver for some gain on sale revenue going forward, just given that I imagine those relationships don't really come with deposits. Hi, everyone. hi everyone Good morning. good morning Thanks for taking the questions. thanks for taking the questions Michele, I was wondering if you could kind of just frame up the income expectations for the second quarter and just generally you're still thinking kind of mid- or high-single-digit growth for the full year and just what you're contemplating perhaps coming from First Savings, if you're thinking maybe that some of the verticals that you discussed earlier, whether it's single-tenant lease or first-lien HELOC, could be a driver for some gain on sale revenue going forward, just given that I imagine those relationships don't really come with deposits. michele i was wondering if you could kind of just frame up the income expectations for the second quarter and just generally you're still thinking kind of mid- or high-single-digit growth for the full year and just what you're contemplating perhaps coming from first savings if you're thinking maybe that some of the verticals that you discussed earlier whether it's single-tenant lease or first-lien heloc could be a driver for some gain on sale revenue going forward just given that i imagine those relationships don't really come with deposits

Speaker 7: Yeah. When you look at our Q1 normalized level of total non-interest income, it was $35.6 million. When I think about where that goes in the coming quarters, I would expect to get a full quarter, a full three months of First Savings with the expectations that we have on gains on sales of loans coming from those verticals as well as our mortgage business. I would expect Q1 to see a lift of about 3%-4% in the coming quarters. I think that's how you can think about what kind of lift you'll see Q2, Q3, Q4. Yeah. yeah When you look at our Q1 normalized level of total non-interest income, it was $35.6 million. when you look at our q1 normalized level of total non-interest income it was $35.6 million When I think about where that goes in the coming quarters, I would expect to get a full quarter, a full three months of First Savings with the expectations that we have on gains on sales of loans coming from those verticals as well as our mortgage business. when i think about where that goes in the coming quarters i would expect to get a full quarter a full three months of first savings with the expectations that we have on gains on sales of loans coming from those verticals as well as our mortgage business I would expect Q1 to see a lift of about 3%-4% in the coming quarters. i would expect q1 to see a lift of about 3%-4% in the coming quarters I think that's how you can think about what kind of lift you'll see Q2, Q3, Q4. i think that's how you can think about what kind of lift you'll see q2 q3 q4

Speaker 9: Okay. 3%-4% lift in the second quarter, and then. Okay. 3%-4% lift in the second quarter, and then. okay 3%-4% lift in the second quarter and then

Speaker 7: Mm-hmm Mm-hmm mm-hmm

Speaker 9: similar trajectory in the back half of the year? similar trajectory in the back half of the year? similar trajectory in the back half of the year

Speaker 7: Yeah. Yeah. yeah

Speaker 9: Okay. Got you. I jumped on late, so I apologize, John, if you could kind of touch on the drivers for the charge-offs in the quarter. Were there any kind of marked First Savings loans that came through in some of those charge-offs? Just generally, how you're thinking about some resolutions of some of the NPA inflows from First Savings, and just kind of the legacy resolutions as well going forward. Okay. okay Got you. got you I jumped on late, so I apologize, John, if you could kind of touch on the drivers for the charge-offs in the quarter. i jumped on late so i apologize john if you could kind of touch on the drivers for the charge-offs in the quarter Were there any kind of marked First Savings loans that came through in some of those charge-offs? were there any kind of marked first savings loans that came through in some of those charge-offs Just generally, how you're thinking about some resolutions of some of the NPA inflows from First Savings, and just kind of the legacy resolutions as well going forward. just generally how you're thinking about some resolutions of some of the npa inflows from first savings and just kind of the legacy resolutions as well going forward

Speaker 5: Yeah. The charge-offs for the first quarter were really legacy First Merchants. There were two names that I mentioned in my comments that came out of the portfolio, more idiosyncratic, normal course kind of charge-offs out of the regional bank and not a sponsored finance. It wasn't really driven at all by the charge-offs coming out of First Savings. The asset quality there thus far, and it's early, it's been fine. I look forward to resolution. We run processes every quarter and assess what's in that NPA bucket and just keep our eye on the level, actively working with borrowers to work out credits as well as any other strategic loan sale if we choose to go that direction. For the most part, it's just normal course charge-off that happened in the first quarter. It was higher. Yeah. yeah The charge-offs for the first quarter were really legacy First Merchants. the charge-offs for the first quarter were really legacy first merchants There were two names that I mentioned in my comments that came out of the portfolio, more idiosyncratic, normal course kind of charge-offs out of the regional bank and not a sponsored finance. there were two names that i mentioned in my comments that came out of the portfolio more idiosyncratic normal course kind of charge-offs out of the regional bank and not a sponsored finance It wasn't really driven at all by the charge-offs coming out of First Savings. it wasn't really driven at all by the charge-offs coming out of first savings The asset quality there thus far, and it's early, it's been fine. the asset quality there thus far and it's early it's been fine I look forward to resolution. i look forward to resolution We run processes every quarter and assess what's in that NPA bucket and just keep our eye on the level, actively working with borrowers to work out credits as well as any other strategic loan sale if we choose to go that direction. we run processes every quarter and assess what's in that npa bucket and just keep our eye on the level actively working with borrowers to work out credits as well as any other strategic loan sale if we choose to go that direction For the most part, it's just normal course charge-off that happened in the first quarter. for the most part it's just normal course charge-off that happened in the first quarter It was higher. it was higher We had a couple of names that we had been working for some time that just finally came to a head and we moved down. We had a couple of names that we had been working for some time that just finally came to a head and we moved down. we had a couple of names that we had been working for some time that just finally came to a head and we moved down

Speaker 9: Got it. Assuming maybe charge-offs kind of normalize to the levels that we saw during last year, do you guys see a need to provide for that high single-digit loan growth guidance that you reiterated and just kind of grow into your unallocated excess reserves? I know there's a number of inputs involved just given CECL and so forth, but just curious how you guys are thinking about maybe needing to provide for growth this year. Got it. got it Assuming maybe charge-offs kind of normalize to the levels that we saw during last year, do you guys see a need to provide for that high single-digit loan growth guidance that you reiterated and just kind of grow into your unallocated excess reserves? assuming maybe charge-offs kind of normalize to the levels that we saw during last year do you guys see a need to provide for that high single-digit loan growth guidance that you reiterated and just kind of grow into your unallocated excess reserves I know there's a number of inputs involved just given CECL and so forth, but just curious how you guys are thinking about maybe needing to provide for growth this year. i know there's a number of inputs involved just given cecl and so forth but just curious how you guys are thinking about maybe needing to provide for growth this year

Speaker 7: Yeah. Typically, we start with a goal of providing for our loan growth, and then it really just has to get adjusted based on the economic model. Right now, I think we're in a really good place when we look at the different economic scenarios that we run and kind of within that range. Yeah. yeah Typically, we start with a goal of providing for our loan growth, and then it really just has to get adjusted based on the economic model. typically we start with a goal of providing for our loan growth and then it really just has to get adjusted based on the economic model Right now, I think we're in a really good place when we look at the different economic scenarios that we run and kind of within that range. right now i think we're in a really good place when we look at the different economic scenarios that we run and kind of within that range

Speaker 9: Okay. Got it. I appreciate all the color. Thank you, everyone. Okay. okay Got it. got it I appreciate all the color. i appreciate all the color Thank you, everyone. thank you everyone

Speaker 7: Thanks, Nathan Race. Thanks, Nathan Race. thanks nathan race

Speaker 10: Thank you. One moment for our next question. Our next question comes to the line of Brian Martin of Brean Capital. Your line is now open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes to the line of Brian Martin of Brean Capital. our next question comes to the line of brian martin of brean capital Your line is now open. your line is now open

Speaker 2: Hey, good morning, everyone. I'll say, just one thought, Michele, you talked about the roll-off rate on the securities. Just on the loans, can you just remind us now with FSFG, what's repricing over the balance of the year and what type of pickup you get on what's coming due? Hey, good morning, everyone. hey good morning everyone I'll say, just one thought, Michele, you talked about the roll-off rate on the securities. i'll say just one thought michele you talked about the roll-off rate on the securities Just on the loans, can you just remind us now with FSFG, what's repricing over the balance of the year and what type of pickup you get on what's coming due? just on the loans can you just remind us now with fsfg what's repricing over the balance of the year and what type of pickup you get on what's coming due

Speaker 7: Yeah. Well, I know one of the things that generally you're interested in, Brian, is on the fixed-rate loans. Like our fixed-rate loan maturities, we've got about $100 million that matures at a rate of about 4.5% each quarter. There's definitely a tailwind there. As you know, two-thirds of our portfolio reprices pretty much immediately with any rate changes. The rate changes that we had in the back half of the year, I feel like a lot of that asset repricing is already reflected in our overall portfolio yields. Yeah. yeah Well, I know one of the things that generally you're interested in, Brian, is on the fixed-rate loans. well i know one of the things that generally you're interested in brian is on the fixed-rate loans Like our fixed-rate loan maturities, we've got about $100 million that matures at a rate of about 4.5% each quarter. like our fixed-rate loan maturities we've got about $100 million that matures at a rate of about 4.5% each quarter There's definitely a tailwind there. there's definitely a tailwind there As you know, two-thirds of our portfolio reprices pretty much immediately with any rate changes. as you know two-thirds of our portfolio reprices pretty much immediately with any rate changes The rate changes that we had in the back half of the year, I feel like a lot of that asset repricing is already reflected in our overall portfolio yields. the rate changes that we had in the back half of the year i feel like a lot of that asset repricing is already reflected in our overall portfolio yields

Speaker 2: Got you. Okay. All right. I think, Mike, I was going to ask you about the people you hired, but it sounds like you've maybe hired 5-6 people recently. Just want to get a sense if they're already kind of included in the loan pickup or anything that's coming from them is not yet in kind of the run rate. Got you. got you Okay. okay All right. all right I think, Mike, I was going to ask you about the people you hired, but it sounds like you've maybe hired 5-6 people recently. i think mike i was going to ask you about the people you hired but it sounds like you've maybe hired 5-6 people recently Just want to get a sense if they're already kind of included in the loan pickup or anything that's coming from them is not yet in kind of the run rate. just want to get a sense if they're already kind of included in the loan pickup or anything that's coming from them is not yet in kind of the run rate

Speaker 8: They're not in the run rate yet. I think it was just smart first quarter additions. First quarter is typically a time when bonuses get paid and people that were actively looking to move make that determination, and we were in tune with that. Yeah. They're not in the run rate yet. they're not in the run rate yet I think it was just smart first quarter additions. i think it was just smart first quarter additions First quarter is typically a time when bonuses get paid and people that were actively looking to move make that determination, and we were in tune with that. first quarter is typically a time when bonuses get paid and people that were actively looking to move make that determination and we were in tune with that Yeah. yeah

Speaker 7: I would add on top of that, Brian, in the guidance that I gave, I don't know if you recall my remarks when I gave the year-over-year increase on legacy First Merchants expense base of 3%-5%. The reason why it's leaning a little bit higher than we normally operate is because we did anticipate hiring and adding to our commercial team and our private wealth team, which is what Mike is talking about. That is built into the guidance that I provided. I would add on top of that, Brian, in the guidance that I gave, I don't know if you recall my remarks when I gave the year-over-year increase on legacy First Merchants expense base of 3%-5%. i would add on top of that brian in the guidance that i gave i don't know if you recall my remarks when i gave the year-over-year increase on legacy first merchants expense base of 3%-5% The reason why it's leaning a little bit higher than we normally operate is because we did anticipate hiring and adding to our commercial team and our private wealth team, which is what Mike is talking about. the reason why it's leaning a little bit higher than we normally operate is because we did anticipate hiring and adding to our commercial team and our private wealth team which is what mike is talking about That is built into the guidance that I provided. that is built into the guidance that i provided

Speaker 6: Yeah, I started to mention earlier, I think we added 15 FTEs in that space last year, and we have 10 in the plan this year. We're really pleased with the opportunity, the individuals that are available to us that are interested in First Merchants and their performance once they're on the team. When Mike talks about the new 10 or so that we're hiring, we're not anticipating immediate performance. Yeah, I started to mention earlier, I think we added 15 FTEs in that space last year, and we have 10 in the plan this year. yeah i started to mention earlier i think we added 15 ftes in that space last year and we have 10 in the plan this year We're really pleased with the opportunity, the individuals that are available to us that are interested in First Merchants and their performance once they're on the team. we're really pleased with the opportunity the individuals that are available to us that are interested in first merchants and their performance once they're on the team When Mike talks about the new 10 or so that we're hiring, we're not anticipating immediate performance. when mike talks about the new 10 or so that we're hiring we're not anticipating immediate performance

Speaker 2: Yeah. All those were hired in the first quarter, or were some of those hired last year? Yeah. yeah All those were hired in the first quarter, or were some of those hired last year? all those were hired in the first quarter or were some of those hired last year

Speaker 6: No, 15 were throughout the year last year, a little more back end. We have 10 planned this year that- No, 15 were throughout the year last year, a little more back end. no 15 were throughout the year last year a little more back end We have 10 planned this year that- we have 10 planned this year that-

Speaker 8: I referenced 6 in commercial and 2 in private wealth, but. I referenced 6 in commercial and 2 in private wealth, but. i referenced 6 in commercial and 2 in private wealth but

Speaker 6: Those were last year. Those were last year. those were last year

Speaker 8: A couple of them also. No, that was in this quarter. Yeah, so we're off and running like we wanted to. That production A couple of them also. a couple of them also No, that was in this quarter. no that was in this quarter Yeah, so we're off and running like we wanted to. yeah so we're off and running like we wanted to That production that production

Speaker 6: You know, should start to see itself on the back half of this year. You know, should start to see itself on the back half of this year. you know should start to see itself on the back half of this year

Speaker 2: Yeah. Yeah. yeah

Speaker 6: Yeah. Yeah. yeah

Speaker 2: Got you. Okay. I think, Michele, just kind of on the margin for a minute, given the day count and the change there, and I know there was $1 million of benefit. I mean, is the jumping off point maybe a little bit lower than where it ended, but you still maybe see a 4 or 5 basis point pickup just given the day count or 3-4 or whatever, something off of the current level. That's how to think about kind of going into 2Q. Got you. got you Okay. okay I think, Michele, just kind of on the margin for a minute, given the day count and the change there, and I know there was $1 million of benefit. i think michele just kind of on the margin for a minute given the day count and the change there and i know there was $1 million of benefit I mean, is the jumping off point maybe a little bit lower than where it ended, but you still maybe see a 4 or 5 basis point pickup just given the day count or 3-4 or whatever, something off of the current level. i mean is the jumping off point maybe a little bit lower than where it ended but you still maybe see a 4 or 5 basis point pickup just given the day count or 3-4 or whatever something off of the current level That's how to think about kind of going into 2Q. that's how to think about kind of going into 2q

Speaker 7: Yeah. No, I think that's right. We will see. I do expect to see that kind of pick up. I would just say, I know we've talked about a lot of the pieces on our earnings. Overall, I feel like consensus is in the right place. I feel like it reflects what we expect to deliver this year. I did want to make sure that I made that point to kind of reiterate consensus. Yeah. yeah No, I think that's right. no i think that's right We will see. we will see I do expect to see that kind of pick up. i do expect to see that kind of pick up I would just say, I know we've talked about a lot of the pieces on our earnings. i would just say i know we've talked about a lot of the pieces on our earnings Overall, I feel like consensus is in the right place. overall i feel like consensus is in the right place I feel like it reflects what we expect to deliver this year. i feel like it reflects what we expect to deliver this year I did want to make sure that I made that point to kind of reiterate consensus. i did want to make sure that i made that point to kind of reiterate consensus

Speaker 2: Got you. Okay. Last two for me, just the tax rate, and then I think just there's some commentary recently about commitment to the SBA by the government. I guess maybe you said, and I joined late, so if you already talked about the SBA or any potential impact, is there any thoughts if that changes your outlook on the SBA business? Got you. got you Okay. okay Last two for me, just the tax rate, and then I think just there's some commentary recently about commitment to the SBA by the government. last two for me just the tax rate and then i think just there's some commentary recently about commitment to the sba by the government I guess maybe you said, and I joined late, so if you already talked about the SBA or any potential impact, is there any thoughts if that changes your outlook on the SBA business? i guess maybe you said and i joined late so if you already talked about the sba or any potential impact is there any thoughts if that changes your outlook on the sba business

Speaker 6: Yeah, on the SBA, not yet. Our chair, Jean Wojtowicz, is in the SBA business and has her own company. That's what they do. We've had a really good understanding of SBA for a long time. We've now acquired a significant business in that space through First Savings. We feel like we have a good handle on it, and we're excited about the future. Yeah, on the SBA, not yet. yeah on the sba not yet Our chair, Jean Wojtowicz, is in the SBA business and has her own company. our chair jean wojtowicz is in the sba business and has her own company That's what they do. that's what they do We've had a really good understanding of SBA for a long time. we've had a really good understanding of sba for a long time We've now acquired a significant business in that space through First Savings. we've now acquired a significant business in that space through first savings We feel like we have a good handle on it, and we're excited about the future. we feel like we have a good handle on it and we're excited about the future

Speaker 2: Okay. Okay. okay

Speaker 7: Brian, just to respond to your tax rate question, 13% effective tax rate is what we would expect on a normal quarterly basis. Brian, just to respond to your tax rate question, 13% effective tax rate is what we would expect on a normal quarterly basis. brian just to respond to your tax rate question 13% effective tax rate is what we would expect on a normal quarterly basis

Speaker 2: 13%. Okay. I think you said, Michele, the accretion, is it around $3 million? It was kind of breaking up when you were saying that, but I guess what the quarterly accretion you're thinking about with a full quarter in there, is that kind of the range of $3 million-$4 million type of number? 13%. 13% Okay. okay I think you said, Michele, the accretion, is it around $3 million? i think you said michele the accretion is it around $3 million It was kind of breaking up when you were saying that, but I guess what the quarterly accretion you're thinking about with a full quarter in there, is that kind of the range of $3 million-$4 million type of number? it was kind of breaking up when you were saying that but i guess what the quarterly accretion you're thinking about with a full quarter in there is that kind of the range of $3 million-$4 million type of number

Speaker 7: It won't quite be that high. It was $1.5 million over the first 2 months that we had First Savings, and so I expect it to be a little over $2 million per quarter. It won't quite be that high. it won't quite be that high It was $1.5 million over the first 2 months that we had First Savings, and so I expect it to be a little over $2 million per quarter. it was $1.5 million over the first 2 months that we had first savings and so i expect it to be a little over $2 million per quarter

Speaker 2: Two, just from their piece of it, plus the legacy. Two, just from their piece of it, plus the legacy. two just from their piece of it plus the legacy

Speaker 7: Yeah. Yeah. yeah

Speaker 2: Yeah. Got you. Yeah. yeah Got you. got you

Speaker 7: Correct. Correct. correct

Speaker 2: Okay. Okay. okay

Speaker 7: Yeah. I mean, the remaining pieces, aside from First Savings, it's typically ran about $1 million or so, sometimes a little less, depending on what we see. Yeah. yeah I mean, the remaining pieces, aside from First Savings, it's typically ran about $1 million or so, sometimes a little less, depending on what we see. i mean the remaining pieces aside from first savings it's typically ran about $1 million or so sometimes a little less depending on what we see

Speaker 2: Yeah. Okay. Perfect. Thank you for taking the questions, and congrats on the quarter and the transaction. Yeah. yeah Okay. okay Perfect. perfect Thank you for taking the questions, and congrats on the quarter and the transaction. thank you for taking the questions and congrats on the quarter and the transaction

Speaker 6: Thanks, Brian. Thanks, Brian. thanks brian

Speaker 7: Thank you, Brian. Thank you, Brian. thank you brian

Speaker 10: Thank you. I'm showing no further questions at this time. I'll now turn it back to Mark Hardwick for closing comments. Thank you. thank you I'm showing no further questions at this time. i'm showing no further questions at this time I'll now turn it back to Mark Hardwick for closing comments. i'll now turn it back to mark hardwick for closing comments

Speaker 6: Yeah, thank you. My closing comments really are just to try to stay as high level as possible, is we remain incredibly optimistic about the remainder of the year. Some of it, there's no way that you can see it. It's just what we see and what we feel is just the speed of play just keeps improving. I feel like the culture of our company is so strong. We have incredible teamwork, and I feel like a sense of urgency that I haven't maybe felt in the past, just throughout all the lines of business. People are just getting after it and producing results. That also just includes our ability to handle something like First Savings. For us to continue to run the business and to build great relationships and ensure an effective integration is an area where I'm incredibly confident. Yeah, thank you. yeah thank you My closing comments really are just to try to stay as high level as possible, is we remain incredibly optimistic about the remainder of the year. my closing comments really are just to try to stay as high level as possible is we remain incredibly optimistic about the remainder of the year Some of it, there's no way that you can see it. some of it there's no way that you can see it It's just what we see and what we feel is just the speed of play just keeps improving. it's just what we see and what we feel is just the speed of play just keeps improving I feel like the culture of our company is so strong. i feel like the culture of our company is so strong We have incredible teamwork, and I feel like a sense of urgency that I haven't maybe felt in the past, just throughout all the lines of business. we have incredible teamwork and i feel like a sense of urgency that i haven't maybe felt in the past just throughout all the lines of business People are just getting after it and producing results. people are just getting after it and producing results That also just includes our ability to handle something like First Savings. that also just includes our ability to handle something like first savings For us to continue to run the business and to build great relationships and ensure an effective integration is an area where I'm incredibly confident. for us to continue to run the business and to build great relationships and ensure an effective integration is an area where i'm incredibly confident The drivers of our performance continue to be really good. Our balance sheet growth, as we've talked about, we remain optimistic. Even though the quarter was flat, we feel great about the remainder of the year. Margin management is in probably the best place it's been in a while. It's been challenging since 2023, since Silicon Valley, and I feel like we are in as good a spot as we've been in a while. Fee income has been growing double digits for really an extended period of time, and we were just kind of walking through all those categories that we disclosed in the slides and just the growth rates year-over-year were all in the double digit range. Our expense control has been something we've been great at for years. We've got adequate capital. It's allowing us to be active in share repurchase space. The drivers of our performance continue to be really good. the drivers of our performance continue to be really good Our balance sheet growth, as we've talked about, we remain optimistic. our balance sheet growth as we've talked about we remain optimistic Even though the quarter was flat, we feel great about the remainder of the year. even though the quarter was flat, we feel great about the remainder of the year Margin management is in probably the best place it's been in a while. margin management is in probably the best place it's been in a while It's been challenging since 2023, since Silicon Valley, and I feel like we are in as good a spot as we've been in a while. it's been challenging since 2023 since silicon valley and i feel like we are in as good a spot as we've been in a while Fee income has been growing double digits for really an extended period of time, and we were just kind of walking through all those categories that we disclosed in the slides and just the growth rates year-over-year were all in the double digit range. fee income has been growing double digits for really an extended period of time and we were just kind of walking through all those categories that we disclosed in the slides and just the growth rates year-over-year were all in the double digit range Our expense control has been something we've been great at for years. our expense control has been something we've been great at for years We've got adequate capital. we've got adequate capital It's allowing us to be active in share repurchase space. it's allowing us to be active in share repurchase space If we're going to trade at these levels, then we're going to be active in buying back our own shares. I think it just sets us up for a really strong 2026 and kind of feeds into 2027. I appreciate your investment in the company and I'm happy to continue to have one-on-one discussions with any interested investors or current investors for that matter. Thanks for your time. We appreciate it, and we'll talk to you next quarter. If we're going to trade at these levels, then we're going to be active in buying back our own shares. if we're going to trade at these levels then we're going to be active in buying back our own shares I think it just sets us up for a really strong 2026 and kind of feeds into 2027. i think it just sets us up for a really strong 2026 and kind of feeds into 2027 I appreciate your investment in the company and I'm happy to continue to have one-on-one discussions with any interested investors or current investors for that matter. i appreciate your investment in the company and i'm happy to continue to have one-on-one discussions with any interested investors or current investors for that matter Thanks for your time. thanks for your time We appreciate it, and we'll talk to you next quarter. we appreciate it and we'll talk to you next quarter

Speaker 10: This concludes today's conference. Thank you for your participation and have a great day. You may now disconnect. This concludes today's conference. this concludes today's conference Thank you for your participation and have a great day. thank you for your participation and have a great day You may now disconnect. you may now disconnect