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.

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View the webcast at Summary First Merchants Corporation reported a second-quarter net income of $43.5 million or $0.70 per diluted share, impacted by two loans moved to nonaccrual status.

Adjusted pre-tax, pre-provision earnings increased to $84.6 million, up 7.5% from the previous quarter, with a net interest margin expansion to 3.38%.

The company completed a mortgage loan sale, adding $271 million of liquidity, and continued share repurchase activities throughout the first half of 2026.

Loan growth resumed with a 6% annualized increase in the commercial and consumer segments, while deposits grew at a 6.5% 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.

Total assets stand at $21.3 billion with $15.5 billion in loans and $16.8 billion in deposits.

Turning to slide 5.

Second quarter reported net income totaled $43.5 million or $0.70 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.