Transcript: First Merchants Q2 2026 Earnings Conference Call

First Merchants (NASDAQ: FRME ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

70 per diluted share, impacted by two loans moved to nonaccrual status. 38%. The company completed a mortgage loan sale, adding $271 million of liquidity, and continued share repurchase activities throughout the first half of 2026. 5% annualized rate.

The integration of the First Savings acquisition is complete, with cost synergies on track and ongoing efforts in expanding the Midwestern footprint. Noninterest income saw a 10% year-over-year increase, with strong performance in customer-related fees and gains on sales of loans. Management expressed confidence in mid-single-digit loan growth for the remainder of 2026 and emphasized a stable credit portfolio despite specific downgrades. Future guidance suggests a stable net interest margin with slight improvements expected, assuming no further Fed rate changes.

The company remains focused on organic growth and disciplined capital return, including continued share repurchases. Full Transcript OPERATOR Thank you for standing by and welcome to the First Merchants Corporation second quarter 2026 earnings conference call. Before we begin, management would like to remind you that today's call contains forward-looking statements with respect to the future performance and financial condition of First Merchants Corporation that involve risks and uncertainties. Further information is contained within the press release which we encourage you to review.

Additionally, management would refer to non-GAAP measures which are intended to supplement but not substitute for the most directly comparable 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 and non-GAAP measures. As a reminder, today's call is being recorded. I would now like to turn the conference over to Mr.

Mark Hardwick, CEO. Mr. Hardwick, you may begin. Mark Hardwick, Chief Executive Officer Good morning and welcome to First Merchants' second quarter 2026 conference call.

Thanks for the introduction and for covering the forward-looking statement on page two. We released our earnings yesterday after markets closed and today's presentation materials are available via the link on page 3 of the earnings release. Turning to slide 3, you will see today's presenters and members of our executive management team. Joining me on the call are Mike Stewart, our President, John Martin, Chief Credit Officer, and Michelle Kabieski, our Chief Financial Officer.

Slide 4 highlights our footprint and financial scale. We now operate 126 banking centers reflecting the addition of Southern Indiana following the First Savings acquisition. 8 billion in deposits. Turning to slide 5.

70 per diluted share. Second quarter results were negatively impacted by two loans that were moved to nonaccrual status with specific reserves taken against them. We are disappointed by these two downgrades and we are confident they are not representative of the overall portfolio. We remain confident in our outlook as John will highlight later in the presentation and we're happy to answer any questions that you might have during the Q&A session.

5% over the first quarter of 2026. 38% and loan and deposit growth returned to more traditional levels year to date. 2 million. 77 per share.

The previously announced mortgage loan sale is now complete, adding $271 million of liquidity to our balance sheet. Our integration and related expense savings are now complete and positioned well for next quarter. Our balance sheet continues to grow organically reflecting strong production levels. 99% and we continued our share repurchase activity throughout the first half of this year.

All of these factors position us well for improved performance during the second half of 2026. And now Mike Stewart will discuss our line of business momentum. Mike Stewart, President Thank you, Mark, and good morning to all. Our business strategy is summarized on slide 7.

As stated on the top of the slide, building our Midwestern strength by growing organically remains our primary objective as a company. Our four primary business units work together in delivering financial solutions for businesses and consumers focused primarily on the maps you see starting on slide 8. Let's turn to slide 8. After a flat first quarter of loan growth, the second quarter picked up the pace with nearly 6% annualized growth both in the commercial and consumer business segments.

The increase came within our three-state footprint and was driven by the community, corporate, asset-based and investment real estate teams working with our current client base and adding new names. Our Midwest economies continue to expand, our clients' businesses continue to grow and our bankers continue to win new relationships. The sa