Financial Analysis

BORROWINGS The following table summarizes the Corporations borrowings as of December 31, 2025 and 2024: December 31, 2025 December 31, 2024 Federal funds purchased $ 40,000 $ 99,226 Securities sold under repurchase agreements 103,755 142,876 Federal Home Loan Bank advances 798,549 822,554 Subordinated debentures and other borrowings 57,630 93,529 Total borrowings $ 999,934 $ 1,158,185 Securities sold under repurchase agreements consist of obligations of the Bank to other parties and are secured by U.S. Government-Sponsored Enterprise obligations. The maximum amount of outstanding agreements at any month-end during 2025 and 2024 totaled $169.1 million and $194.2 million, respectively, and the average of such agreements totaled $127.9 million and $136.0 million during 2025 and 2024, respectively. Transfers Accounted For As Secured Borrowings The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of December 31, 2025 and 2024 were: December 31, 2025 Remaining Contractual Maturity of the Agreements Overnight and Continuous Up to 30 Days 30-90 Days Greater Than 90 Days Total U.S. Government-sponsored mortgage-backed securities $ 103,755 $ $ $ $ 103,755 December 31, 2024 Remaining Contractual Maturity of the Agreements Overnight and Continuous Up to 30 Days 30-90 Days Greater Than 90 Days Total U.S. Government-sponsored mortgage-backed securities $ 142,876 $ $ $ $ 142,876 Contractual maturities of borrowings as of December 31, 2025, are …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

SHARE-BASED COMPENSATION Stock options and Restricted Stock Awards (RSAs) have been issued to directors, officers and other management employees under the Corporations 2024 Long-term Equity Incentive Plan, the 2019 Long-term Equity Incentive Plan, the Level One Bancorp, Inc. 2007 Stock Option Plan and the Equity Compensation Plan for Non-Employee Directors. The stock options, which have a ten-year life, become 100 percent vested based on time ranging from one year to two years and are fully exercisable when vested. Option exercise prices equal the Corporations common stock closing price on Nasdaq on the date of grant. The RSAs issued to employees and non-employee directors provide for the issuance of shares of the Corporations common stock at no cost to the holder and generally vest after three years. The RSAs vest only if the employee is actively employed by the Corporation on the vesting date. For non-employee directors, the RSAs vest only if the non-employee director remains as an active board member on the vesting date. The RSAs for employees and non-employee directors are either immediately vested at retirement, disability or death, or continue to vest after retirement, disability or death, depending on the plan under which the shares were granted. The Corporations 2024 Employee Stock Purchase Plan (ESPP) provides eligible employees of the Corporation and its subsidiaries an opportunity to purchase shares of common stock of the Corporation through quarterly offerings fin …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

FAIR VALUES OF FINANCIAL INSTRUMENTS The Corporation uses fair value measurements to adjust certain assets and liabilities and to provide fair value disclosures. Accounting Standards Codification (ASC) 820 defines fair value, establishes a framework for measuring it and expands related disclosure requirements. It applies only when other accounting guidance requires or permits fair value measurement and does not expand its use to new circumstances. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It represents an exit price at the measurement date. Market participants are buyers and sellers, who are independent, knowledgeable, and willing and able to transact in the principal (or most advantageous) market for the asset or liability being measured. The Corporation values its assets and liabilities in the principal market where it sells the asset or transfers the liability with the greatest volume and level of activity. If no principal market exists, valuation is based on the most advantageous market one that maximizes the assets sale price or minimizes the liabilitys transfer cost. Valuation inputs reflect assumptions that market participants would use to price an asset or liability. These inputs are categorized as either observable or unobservable. Observable inputs are based on market data from independent sources and reflect assumptions market participants would use. Unobser …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

GOODWILL AND OTHER INTANGIBLES The Corporations goodwill was $712.0 million for the years ended December 31, 2025 and 2024. During the fourth quarter of 2025 and 2024, the Corporation performed its annual goodwill impairment testing and the fair value exceeded the Corporations carrying value. Based on the analysis performed, the Corporation concluded goodwill was not impaired as of December 31, 2025 and 2024. For additional details related to impairment testing, see the GOODWILL section of Managements Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K. The carrying basis and accumulated amortization of recognized core deposit and other intangibles are noted below. 2025 2024 Gross carrying amount $ 123,285 $ 123,285 Accumulated amortization (109,485) (103,457) Total core deposit and other intangibles $ 13,800 $ 19,828 The core deposit intangibles and other intangibles are being amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of two to ten years. Amortization expense for the years ended December 31, 2025, 2024 and 2023, was $6.0 million, $7.3 million and $8.7 million, respectively. Estimated future amortization expense is summarized as follows: Amortization Expense 2026 $ 4,910 2027 3,603 2028 2,852 2029 1,137 2030 806 After 2030 492 $ 13,800 …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

INCOME TAXES Income tax expense consists of the following components for the years ended December 31, 2025, 2024, and 2023: 2025 2024 2023 Income Tax Expense for the Year Ended December 31: Currently Payable: Federal $ 30,471 $ 27,979 $ 29,351 State 423 723 (504) Deferred: Federal 1,106 1,548 4,613 State 1,113 76 1,986 Income Tax Expense $ 33,113 $ 30,326 $ 35,446 The reconciliation between income tax expense expected at the U.S. federal statutory tax rate and the reported income tax expense is summarized in the following table for years ended December 31, 2025, 2024 and 2023: 2025 2024 2023 Amount % Amount % Amount % Income Before Income Taxes $ 259,114 $ 231,728 $ 259,232 Federal Statutory Income Tax at 21% $ 54,414 21.0 % $ 48,663 21.0 % $ 54,439 21.0 % State & Local Taxes, Net of Federal Income Tax Effect (1) 1,213 0.5 % 631 0.3 % 1,171 0.4 % Tax-exempt Interest Income (18,512) (7.1) % (17,509) (7.5) % (18,193) (7.0) % Non-deductible FDIC Premiums 600 0.2 % 624 0.3 % 454 0.2 % Earnings on Life Insurance (1,599) (0.6) % (1,777) (0.8) % (1,753) (0.7) % Other Non-taxable/Non-deductible Items 720 0.2 % 521 0.2 % (9) % Tax Credits (3,662) (1.4) % (2,018) (0.9) % (331) (0.1) % Other (61) % 1,191 0.5 % (332) (0.1) % Income Tax Expense & Effective Tax Rate $ 33,113 12.8 % $ 30,326 13.1 % $ 35,446 13.7 % (1) State taxes in Illinois make up the majority (greater than 50 percent) of the State & Local Taxes, Net of Federal Income Tax Effect for periods ended December 31, …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

GENERAL LITIGATION AND REGULATORY EXAMINATIONS The Corporation is subject to claims and lawsuits that arise primarily in the ordinary course of business. Additionally, the Corporation is also subject to periodic examinations by various regulatory agencies. It is the general opinion of management that the disposition or ultimate resolution of any such routine litigation or regulatory examinations will not have a material adverse effect on the consolidated financial position, results of operations and cash flow of the Corporation.

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LEASES The Corporation enters into leases for certain retail branches, office space, land and equipment. Operating leases are included in other assets and the lease liability is included in other liabilities in the Consolidated Balance Sheets. The Corporation does not have any finance leases. Right-of-use (ROU) assets represent the Corporations right to use an underlying asset for the lease term and lease liabilities represent the Corporations obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Corporation uses its incremental borrowing rate at commencement date in determining the present value of lease payments when the rate implicit in a lease is not known. The Corporations incremental borrowing rate is based on the FHLB amortizing advance rate, adjusted for the lease term and other factors. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Corporations leases are generally for periods of five to twenty years with various renewal options. The exercise of such lease renewal options is not included in the present value of lease obligations unless it is reasonably certain that the option will be exercised. The Corporation has lease agreements which contain both lease and non-lease compone …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

RECENT ACCOUNTING CHANGES ADOPTED IN 2025 FASB Accounting Standards Update No. 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures Summary - In the fourth quarter of 2025, the Corporation adopted ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . This ASU enhances existing income tax disclosure requirements by requiring more detailed information about the effective tax rate reconciliation and income taxes paid. The amendments require enhanced disclosure of significant reconciling items in the effective tax rate reconciliation, including disclosure of specific categories within the rate reconciliation when quantitative thresholds are met. In addition, entities are required to disclose income taxes paid (net of refunds received), disaggregated by federal, state, and foreign jurisdictions, as well as by individual jurisdictions that are significant to the entity. The amendments are effective for annual periods beginning after December 15, 2024. The Corporation adopted the amendments for the year ended December 31, 2025. The guidance may be applied on a prospective basis; retrospective application is also permitted. The adoption did not have a material effect on the Corporations financial statements or related disclosures. See NOTE 19. INCOME TAXES of the Notes to Consolidated Financial Statements for additional information. NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED The Corporation continually monitors potential accounti …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

PENSION AND OTHER POST RETIREMENT BENEFIT PLANS The Corporations defined-benefit pension plans, including non-qualified plans for certain employees, former employees and former non-employee directors, cover approximat e ly 9 percent of the Corporations employees. In 2005, the Board of Directors of the Corporation approved the curtailment of the accumulation of defined benefits for future services provided by certain participants in the First Merchants Corporation Retirement Plan. No additional pension benefits have been earned by any employees who had not attained both the age of 55 and accrued at least 10 years of vesting service as of March 1, 2005. The benefits are based primarily on years of service and employees pay near retirement. Contributions are intended to provide not only for benefits attributed to service-to-date, but also for those expected to be earned in the future. The table below sets forth the plans funded status and amounts recognized in the Consolidated Balance Sheets, using measurement dates of December 31, 2025 and 2024. 2025 2024 Change in Benefit Obligation: Benefit obligation at beginning of year $ 48,398 $ 55,761 Interest cost 2,538 2,632 Actuarial loss (gain) 1,762 (2,678) Benefits paid (5,393) (7,317) Benefit obligation at end of year $ 47,305 $ 48,398 Change in Plan Assets: Fair value of plan assets at beginning of year $ 79,535 $ 82,258 Actual return on plan assets 8,546 4,006 Employer contributions 654 588 Benefits paid (5,393) (7,317) End of y …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

SEGMENT INFORMATION The Corporation has one reportable segment, community banking. The Corporations reportable segment is determined by the Chief Executive Officer, who is the designated chief operating decision maker (CODM), based upon information provided about the Corporations products and services offered. The CODM will evaluate the financial performance of the Corporations business components by evaluating revenue streams, significant expenses, and budget to actual results in assessing the Corporations segment. The Corporation generates revenue primarily by providing banking services to its customers. Interest expense, provisions for credit losses and salaries and employee benefits are the significant expenses in the banking operations. The CODM evaluates performance, allocates resources and makes key operating decisions based on consolidated net income that is reported in the Consolidated Statements of Income. The measure of segment assets is reported on the Consolidated Balance Sheets as total consolidated assets. All operations are domestic. …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"BORROWINGS The following table summarizes the Corporations borrowings as of June 30, 2026 and December 31, 2025. June 30, 2026 December 31, 2025 Federal funds purchased $ $ 40,000 Securities sold under repurchase agreements 103,340 103,755 Federal Home Loan Bank advances 1,414,059 798,549 Subordinated debentures and other borrowings 86,350 57,630 Total borrowings $ 1,603,749 $ 999,934 Securities sold under repurchase agreements consist of obligations of the Bank to other parties and are secured by U.S. Government-sponsored enterprise obligations. The maximum amount of outstanding agreements at any month-end during the six months ended June 30, 2026 and 2025 totaled $120.3 million and $169.1 million, respectively, and the average balance of such agreements totaled $110.2 million and $141.7 million during the same period of 2026 and 2025, respectively. The following table presents the collateral pledged for repurchase agreements accounted for as secured borrowings as of June 30, 2026 and December 31, 2025: June 30, 2026 Remaining Contractual Maturity of the Agreements Overnight and Continuous Up to 30 Days 30-90 Days Greater Than 90 Days Total U.S. Government-sponsored mortgage-backed securities $ 103,340 $ $ $ $ 103,340 December 31, 2025 Remaining Contractual Maturity of the Agreements Overnight and Continuous Up to 30 Days 30-90 Days Greater Than 90 Days Total U.S. Government-sponsored mortgage-backed securities $ 103,755 $ $ $ $ 103,755 Contractual maturities of borrowings …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

"SHARE-BASED COMPENSATION Stock options and Restricted Stock Awards (""RSAs"") have been issued to directors, officers and other management employees under the Corporation's 2024 Long-term Equity Incentive Plan, the 2019 Long-term Equity Incentive Plan, the Level One Bancorp, Inc. 2007 Stock Option Plan and the Equity Compensation Plan for Non-Employee Directors. The stock options, which have a ten year life, become 100 percent vested based on time ranging from one year to two years and are fully exercisable when vested. Option exercise prices equal the Corporation's common stock closing price on Nasdaq on the date of grant. The RSAs issued to employees and non-employee directors provide for the issuance of shares of the Corporation's common stock at no cost to the holder and generally vest after three years. The RSAs vest only if the employee is actively employed by the Corporation on the vesting date. For non-employee directors, the RSAs vest only if the non-employee director remains as an active board member on the vesting date. The RSAs for employees and non-employee directors are either immediately vested at retirement, disability or death, or continue to vest after retirement, disability or death, depending on the plan under which the shares were granted. The Corporations 2024 Employee Stock Purchase Plan (""ESPP"") provides eligible employees of the Corporation an opportunity to purchase shares of common stock of the Corporation through quarterly offerings financed by …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

FAIR VALUES OF FINANCIAL INSTRUMENTS The Corporation uses fair value measurements to adjust certain assets and liabilities and to provide fair value disclosures. ASC 820 defines fair value, establishes a framework for measuring it and expands related disclosure requirements. It applies only when other accounting guidance requires or permits fair value measurement and does not expand its use to new circumstances. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It represents an exit price at the measurement date. Market participants are buyers and sellers, who are independent, knowledgeable, and willing and able to transact in the principal (or most advantageous) market for the asset or liability being measured. The Corporation values its assets and liabilities in the principal market where it sells the asset or transfers the liability with the greatest volume and level of activity. If no principal market exists, valuation is based on the most advantageous market one that maximizes the assets sale price or minimizes the liabilitys transfer cost. Valuation inputs reflect assumptions that market participants would use to price an asset or liability. These inputs are categorized as either observable or unobservable. Observable inputs are based on market data from independent sources and reflect assumptions market participants would use. Unobservable inputs are derived from the Co …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

INCOME TAXES The following table reconciles income taxes computed at the federal statutory rate to the income tax expense and effective tax rate recorded in the Consolidated Condensed Statements of Income for the three and six months ended June 30, 2026 and 2025. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Amount % Amount % Amount % Amount % Income Before Income Taxes $ 47,750 $ 65,119 $ 74,837 $ 128,335 Federal statutory income tax at 21% $ 10,028 21.0 % $ 13,675 21.0 % $ 15,716 21.0 % $ 26,950 21.0 % State & Local taxes, net of Federal income tax effect (97) (0.2) % 297 0.5 % (569) (0.7) % 604 0.5 % Tax-exempt interest income (4,808) (10.1) % (4,643) (7.1) % (9,621) (12.9) % (9,241) (7.2) % Non-deductible FDIC premiums 310 0.6 % 162 0.2 % 493 0.7 % 291 0.2 % Tax-exempt earnings and gains on life insurance (488) (1.0) % (401) (0.7) % (1,212) (1.6) % (859) (0.7) % Other non-taxable/non-deductible items 117 0.3 % 124 0.2 % 530 0.7 % 236 0.2 % Tax credits (1,240) (2.6) % (915) (1.4) % (2,444) (3.3) % (1,818) (1.4) % Other (52) (0.1) % (12) % (192) (0.3) % 1 % Income tax expense and effective tax rate $ 3,770 7.9 % $ 8,287 12.7 % $ 2,701 3.6 % $ 16,164 12.6 % …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

GENERAL LITIGATION AND REGULATORY EXAMINATIONS The Corporation is subject to claims and lawsuits that arise primarily in the ordinary course of business. Additionally, the Corporation is also subject to periodic examinations by various regulatory agencies. It is the general opinion of management that the disposition or ultimate resolution of any such routine litigation or regulatory examinations will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Corporation.

LegalMattersAndContingenciesTextBlock

"Recent Accounting Changes Adopted in 2026 FASB Accounting Standards Update No. 2025-08 - Financial Instruments - Credit Losses (Topic 326): Purchased Loans Summary - Effective January 1, 2026, the Corporation early adopted Accounting Standards Update (""ASU"") No. 2025-08, Financial Instruments - Credit Losses (Topic 326): Purchased Loans , which expands the use of the gross-up method to certain purchased seasoned loans. Upon adoption, the Corporation recognized acquisition-date expected credit losses of $22.3 million, consisting of $15.2 million related to purchased seasoned loans and $7.1 million related to purchased credit-deteriorated loans, through the allowance for credit losses with a corresponding increase to the acquired loans amortized cost basis. The guidance was applied prospectively and did not result in a cumulative-effect adjustment to retained earnings. See NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES of the Notes to Consolidated Condensed Financial Statements for additional information. New Accounting Pronouncements Not Yet Adopted The Corporation continually monitors potential accounting pronouncements and the following pronouncements have been deemed to have the most applicability to the Corporation's financial statements: FASB Accounting Standards Update No. 2024-03 - Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses Summary - The FASB issued ASU No. 2024-03, In …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

SEGMENT INFORMATION The Corporation has one reportable segment, community banking. The Corporations reportable segment is determined by the Chief Executive Officer, who is the designated chief operating decision maker (CODM), based upon information provided about the Corporations products and services offered. The CODM evaluates the financial performance of the Corporations business components by evaluating revenue streams, significant expenses, and budget-to-actual results in assessing the Corporations segment. The Corporation generates revenue primarily by providing banking services to its customers. Interest expense, provisions for credit losses, and salaries and employee benefits are significant expenses in the Corporation's banking operations. The CODM evaluates performance, allocates resources and makes key operating decisions based on consolidated net income that is reported in the Consolidated Statements of Income. The measure of segment assets is reported on the Consolidated Balance Sheets as total consolidated assets. All operations are domestic. …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing