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What changed in FIRST MERCHANTS CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FIRST MERCHANTS CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+389 added−392 removedSource: 10-K (2026-02-25) vs 10-K (2025-02-24)

Top changes in FIRST MERCHANTS CORP's 2025 10-K

389 paragraphs added · 392 removed · 309 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

124 edited+18 added−29 removed88 unchanged
Biggest changeDISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL The daily average balance sheet amounts, the related interest income or interest expense, and average rates earned or paid are presented in the following table: Average Balance Interest Income / Expense Average Rate Average Balance Interest Income / Expense Average Rate Average Balance Interest Income / Expense Average Rate (Dollars in Thousands) 2024 2023 2022 Assets: Interest-bearing deposits $ 418,163 $ 16,992 4.06 % $ 431,581 $ 17,719 4.11 % $ 296,863 $ 2,503 0.84 % Federal Home Loan Bank stock 41,736 3,527 8.45 41,319 3,052 7.39 35,580 1,176 3.31 Investment securities: (1) Taxable 1,759,578 36,086 2.05 1,854,438 35,207 1.90 2,056,586 38,354 1.86 Tax-exempt (2) 2,200,466 67,705 3.08 2,366,475 73,566 3.11 2,653,611 85,292 3.21 Total Investment Securities 3,960,044 103,791 2.62 4,220,913 108,773 2.58 4,710,197 123,646 2.63 Loans held for sale 29,650 1,792 6.04 21,766 1,292 5.94 14,715 692 4.70 Loans: (3) Commercial 8,687,638 641,393 7.38 8,519,706 603,611 7.08 7,877,271 380,621 4.83 Real estate mortgage 2,158,743 94,890 4.40 2,035,488 82,183 4.04 1,471,802 51,853 3.52 HELOC and installment 830,079 65,577 7.90 830,006 60,751 7.32 785,520 37,302 4.75 Tax-exempt (2) 928,214 43,370 4.67 891,008 40,448 4.54 793,743 31,803 4.01 Total Loans 12,634,324 847,022 6.70 12,297,974 788,285 6.41 10,943,051 502,271 4.59 Total Earning Assets 17,054,267 971,332 5.69 % 16,991,787 917,829 5.40 % 15,985,691 629,596 3.94 % Total Non-earning Assets 1,346,228 1,194,720 1,234,311 Total Assets $ 18,400,495 $ 18,186,507 $ 17,220,002 Liabilities: Interest-bearing deposits: Interest-bearing deposits $ 5,506,492 $ 157,984 2.87 % $ 5,435,733 $ 138,012 2.54 % $ 5,206,131 $ 32,511 0.62 % Money market deposits 3,061,461 106,026 3.46 2,884,271 83,777 2.90 2,915,397 19,170 0.66 Savings deposits 1,463,707 14,587 1.00 1,694,230 14,606 0.86 1,927,122 5,019 0.26 Certificates and other time deposits 2,413,900 107,530 4.45 1,923,268 69,697 3.62 881,176 6,239 0.71 Total Interest-bearing Deposits 12,445,560 386,127 3.10 11,937,502 306,092 2.56 10,929,826 62,939 0.58 Borrowings 1,005,017 40,765 4.06 1,111,472 42,394 3.81 888,392 21,864 2.46 Total Interest-bearing Liabilities 13,450,577 426,892 3.17 13,048,974 348,486 2.67 11,818,218 84,803 0.72 Noninterest-bearing deposits 2,371,004 2,783,996 3,268,417 Other liabilities 326,423 226,275 160,922 Total Liabilities 16,148,004 16,059,245 15,247,557 Stockholders' Equity 2,252,491 2,127,262 1,972,445 Total Liabilities and Stockholders' Equity $ 18,400,495 426,892 $ 18,186,507 348,486 $ 17,220,002 84,803 Net Interest Income (FTE) $ 544,440 $ 569,343 $ 544,793 Net Interest Spread (FTE) (4) 2.52 % 2.73 % 3.22 % Net Interest Margin (FTE): Interest Income (FTE) / Average Earning Assets 5.69 % 5.40 % 3.94 % Interest Expense / Average Earning Assets 2.50 % 2.05 % 0.53 % Net Interest Margin (FTE) (5) 3.19 % 3.35 % 3.41 % ______________________________ (1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
Biggest changeDISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL The daily average balance sheet amounts, the related interest income or interest expense, and average rates earned or paid are presented in the following table: Average Balance Interest Income / Expense Average Rate Average Balance Interest Income / Expense Average Rate Average Balance Interest Income / Expense Average Rate (Dollars in Thousands) 2025 2024 2023 Assets: Interest-bearing deposits $ 272,164 $ 8,127 2.99 % $ 418,163 $ 16,992 4.06 % $ 431,581 $ 17,719 4.11 % Federal Home Loan Bank stock 46,289 4,209 9.09 41,736 3,527 8.45 41,319 3,052 7.39 Investment securities: (1) Taxable 1,585,375 32,662 2.06 1,759,578 36,086 2.05 1,854,438 35,207 1.90 Tax-exempt (2) 2,040,082 63,230 3.10 2,200,466 67,705 3.08 2,366,475 73,566 3.11 Total Investment Securities 3,625,457 95,892 2.64 3,960,044 103,791 2.62 4,220,913 108,773 2.58 Loans held for sale 26,199 1,603 6.12 29,650 1,792 6.04 21,766 1,292 5.94 Loans: (3) Commercial 9,091,847 621,298 6.83 8,687,638 641,393 7.38 8,519,706 603,611 7.08 Real estate mortgage 2,211,726 101,203 4.58 2,158,743 94,890 4.40 2,035,488 82,183 4.04 HELOC and installment 846,430 62,323 7.36 830,079 65,577 7.90 830,006 60,751 7.32 Tax-exempt (2) 1,144,476 54,857 4.79 928,214 43,370 4.67 891,008 40,448 4.54 Total Loans 13,320,678 841,284 6.32 12,634,324 847,022 6.70 12,297,974 788,285 6.41 Total Earning Assets 17,264,588 949,512 5.50 % 17,054,267 971,332 5.69 % 16,991,787 917,829 5.40 % Total Non-earning Assets 1,369,364 1,346,228 1,194,720 Total Assets $ 18,633,952 $ 18,400,495 $ 18,186,507 Liabilities: Interest-bearing deposits: Interest-bearing deposits $ 5,580,592 $ 141,945 2.54 % $ 5,506,492 $ 157,984 2.87 % $ 5,435,733 $ 138,012 2.54 % Money market deposits 3,762,100 118,188 3.14 3,061,461 106,026 3.46 2,884,271 83,777 2.90 Savings deposits 1,278,138 9,962 0.78 1,463,707 14,587 1.00 1,694,230 14,606 0.86 Certificates and other time deposits 2,016,857 74,184 3.68 2,413,900 107,530 4.45 1,923,268 69,697 3.62 Total Interest-bearing Deposits 12,637,687 344,279 2.72 12,445,560 386,127 3.10 11,937,502 306,092 2.56 Borrowings 1,138,760 44,500 3.91 1,005,017 40,765 4.06 1,111,472 42,394 3.81 Total Interest-bearing Liabilities 13,776,447 388,779 2.82 13,450,577 426,892 3.17 13,048,974 348,486 2.67 Noninterest-bearing deposits 2,178,427 2,371,004 2,783,996 Other liabilities 303,578 326,423 226,275 Total Liabilities 16,258,452 16,148,004 16,059,245 Stockholders' Equity 2,375,500 2,252,491 2,127,262 Total Liabilities and Stockholders' Equity $ 18,633,952 $ 18,400,495 $ 18,186,507 Net Interest Income (FTE) $ 560,733 $ 544,440 $ 569,343 Net Interest Spread (FTE) (4) 2.68 % 2.52 % 2.73 % Net Interest Margin (FTE): Interest Income (FTE) / Average Earning Assets 5.50 % 5.69 % 5.40 % Interest Expense / Average Earning Assets 2.25 % 2.50 % 2.05 % Net Interest Margin (FTE) (5) 3.25 % 3.19 % 3.35 % ______________________________ (1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
Under the BHC Act, the Federal Reserve has the authority to require a bank holding company to terminate any activity or relinquish control of a non-bank subsidiary (other than a non-bank subsidiary of a bank) upon the determination that such activity constitutes a serious risk to the financial stability of any bank subsidiary.
Under the BHC Act, the Federal Reserve has the authority to require a bank holding company to terminate any activity or relinquish control of a non-bank subsidiary (other than a non-bank subsidiary of a bank) upon a determination that such activity constitutes a serious risk to the financial stability of any bank subsidiary.
Specifically, Basel III requires the Corporation and the Bank to maintain: • a minimum ratio of CET1 to risk-weighted assets of a least 4.5 percent, plus the 2.5 percent capital conservation buffer effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7.0 percent; • a minimum ratio of tier 1 capital to risk-weighted assets of at least 6.0 percent, plus the 2.5 percent capital conservation buffer effectively resulting in a minimum tier 1 capital ratio of 8.5 percent; • a minimum ratio of total capital (tier 1 plus tier 2 capital) to risk-weighted assets of at least 8.0 percent, plus the 2.5 percent capital conservation buffer effectively resulting in a minimum total capital ratio of 10.5 percent; and • a minimum leverage ratio of 4.0 percent, calculated as the ratio of tier 1 capital to adjusted average consolidated assets.
Specifically, Basel III requires the Corporation and the Bank to maintain: • a minimum ratio of CET1 to risk-weighted assets of at least 4.5 percent, plus the 2.5 percent capital conservation buffer effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7.0 percent; • a minimum ratio of tier 1 capital to risk-weighted assets of at least 6.0 percent, plus the 2.5 percent capital conservation buffer effectively resulting in a minimum tier 1 capital ratio of 8.5 percent; • a minimum ratio of total capital (tier 1 plus tier 2 capital) to risk-weighted assets of at least 8.0 percent, plus the 2.5 percent capital conservation buffer effectively resulting in a minimum total capital ratio of 10.5 percent; and • a minimum leverage ratio of 4.0 percent, calculated as the ratio of tier 1 capital to adjusted average consolidated assets.
Dividend Limitations The Corporation’s principal source of funds for dividend payments to shareholders is dividends received from the Bank. Banking regulations limit the maximum amount of dividends that a bank may pay without requesting prior approval of regulatory agencies.
Dividend Limitations The Corporation’s principal source of funds for dividend payments to shareholders is dividends received from the Bank. Banking regulations limit the maximum amount of dividends that a bank may pay without requesting prior approval from regulatory agencies.
Failure to comply with consumer protection requirements may also result in the Corporation’s failure to obtain any required bank regulatory approval for merger or acquisition transactions that it may wish to pursue or prohibition from engaging in such transactions even if approval is not required.
Failure to comply with consumer protection requirements may also result in the Corporation’s failure to obtain any required bank regulatory approval for merger or acquisition transactions that it may wish to pursue or the prohibition from engaging in such transactions even if approval is not required.
In addition, banks are required to adopt a customer identification program as part of their BSA compliance program, and are required to file Suspicious Activity Reports when they detect certain known or suspected violations of federal law or suspicious transactions related to a money laundering activity or a violation of the BSA.
In addition, banks are required to adopt a customer identification program as part of their BSA compliance program, and are required to file Suspicious Activity Reports when they detect certain known or suspected violations of federal law or suspicious transactions related to money laundering activity or a violation of the BSA.
Unrealized losses that have not been recorded through an allowance for credit losses are recognized in other comprehensive loss. Adjustments to the allowance are reported in the income statement as a component of the provision for credit losses.
Unrealized losses that have not been recorded through an allowance for credit losses are recognized in other comprehensive income (loss). Adjustments to the allowance are reported in the income statement as a component of the provision for credit losses.
Among other things, the Dodd-Frank Act has resulted, and in the future will likely result, in: • increases to the cost of the Corporation’s operations due to greater regulatory oversight, supervision and examination of banks and bank holding companies, including higher deposit insurance premiums; • limitations on the Corporation’s ability to raise additional capital through the use of trust preferred securities, as new issuances of these securities can no longer be included as tier 1 capital; • reduced flexibility for the Corporation to generate or originate certain revenue-producing assets based on increased regulatory capital standards; • limitations on the Corporation’s ability to expand consumer product and service offerings due to stricter consumer protection laws and regulations; and • as the Corporation’s assets now exceed $10 billion, compliance with the Durbin Amendment has resulted in a material reduction of interchange fee income paid by merchants when debit cards are used as payment.
Among other things, the Dodd-Frank Act has resulted, and in the future will likely result, in: • increases in the cost of the Corporation’s operations due to greater regulatory oversight, supervision and examination of banks and bank holding companies, including higher deposit insurance premiums; • limitations on the Corporation’s ability to raise additional capital through the use of trust preferred securities, as new issuances of these securities can no longer be included as tier 1 capital; • reduced flexibility for the Corporation to generate or originate certain revenue-producing assets as a result of increased regulatory capital standards; • limitations on the Corporation’s ability to expand consumer product and service offerings due to stricter consumer protection laws and regulations; and • as the Corporation’s assets now exceed $10 billion, compliance with the Durbin Amendment has resulted in a material reduction of interchange fee income paid by merchants when debit cards are used as payment.
BUSINESS AVAILABLE INFORMATION The Corporation makes its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, available on its website at https://www.firstmerchants.com without charge, as soon as reasonably practicable, after such reports are electronically filed with, or furnished to, the Securities and Exchange Commission.
AVAILABLE INFORMATION The Corporation makes its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, available on its website at https://www.firstmerchants.com without charge, as soon as reasonably practicable, after such reports are electronically filed with, or furnished to, the Securities and Exchange Commission.
A banking entity that engages in proprietary trading (which excludes the exceptions discussed above) or covered fund-related activities or investments, and has total consolidated assets of more than $10 billion for two years, must implement and maintain a compliance program that meets certain minimum requirements and must also maintain certain documentation with respect to covered fund activities, in each case, as described in the Volcker Rule.
A banking entity that engages in proprietary trading (which excludes the exceptions discussed above) or covered fund-related activities or investments, and has total consolidated assets of more than $10 billion for two consecutive years, must implement and maintain a compliance program that meets certain minimum requirements and must also maintain certain documentation with respect to covered fund activities, in each case, as described in the Volcker Rule.
The Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Economic Growth Act”), which was enacted in May 2018, repealed or modified several provisions of the Dodd-Frank Act. In particular, the asset threshold at which banks are subject to annual company-run stress tests were increased from $10 billion to $250 billion under the Economic Growth Act.
The Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Economic Growth Act”), which was enacted in May 2018, repealed or modified several provisions of the Dodd-Frank Act. In particular, the asset threshold at which banks are subject to annual company-run stress tests was increased from $10 billion to $250 billion under the Economic Growth Act.
Federal law extensively regulates various aspects of the banking business such as reserve requirements, truth-in-lending and truth-in-savings disclosures, equal credit opportunity, fair credit reporting, trading in securities and other aspects of banking operations. Current federal law also requires banks, among other things, to make deposited funds available within specified time periods.
Federal law extensively regulates various aspects of the banking business such as reserve requirements, truth-in-lending and truth-in-savings disclosures, equal credit opportunity, fair credit reporting, trading in securities and other aspects of banking operations. Federal law also requires banks, among other things, to make deposited funds available within specified time periods.
The Corporation’s ability to engage in certain merger or acquisition transactions, whether or not any regulatory approval is required, will be dependent upon the Corporation’s bank regulators’ views at the time as to the capital levels, quality of management and the Corporation’s overall condition, and their assessment of a variety of other factors.
The Corporation’s ability to engage in certain merger or acquisition transactions, whether or not any regulatory approval is required, will be dependent upon the Corporation’s regulators’ views at the time as to the capital levels, quality of management and the Corporation’s overall condition, and their assessment of a variety of other factors.
Basel III also provides for a “countercyclical capital buffer” that is applicable to only certain covered institutions and is not expected to have any current applicability to the Corporation or the Bank. The aforementioned capital conservation buffer is designed to absorb losses during periods of economic stress.
Basel III also provides for a “countercyclical capital buffer” that is applicable to only certain covered institutions and is not expected to have any current applicability to the Corporation or the Bank. The capital conservation buffer is designed to absorb losses during periods of economic stress.
Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the bank’s retained income (as defined under the regulations) for the current year plus those for the previous two years, subject to the capital requirements described above.
Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the bank’s retained income (as defined under the regulations) for the current year plus retained income for the previous two years, subject to the capital requirements described above.
The changes resulting from the Dodd-Frank Act have impacted the profitability of the Corporation’s business activities, required changes to certain business practices, and imposed more stringent capital, liquidity and leverage requirements, and, when fully implemented, may further adversely affect our business.
The changes resulting from the Dodd-Frank Act have impacted the profitability of the Corporation’s business activities, required changes to certain business practices, and imposed more stringent capital, liquidity and leverage requirements, and, when fully implemented, may further adversely affect the Corporation’s business.
Anti-Money Laundering and the USA Patriot Act A major focus of governmental policy on financial institutions in recent years has been aimed at combating money laundering and terrorist financing.
BUSINESS Anti-Money Laundering and the USA PATRIOT Act A major focus of governmental policy on financial institutions in recent years has been aimed at combating money laundering and terrorist financing.
LOAN PORTFOLIO Loans are generated from customers primarily in Indiana, Illinois, Ohio, and Michigan and are typically secured by specific items of collateral, including real property, consumer assets, and business assets.
BUSINESS LOAN PORTFOLIO Loans are generated from customers primarily in Indiana, Ohio, and Michigan and are typically secured by specific items of collateral, including real property, consumer assets, and business assets.
However, for purposes of disclosure, the consumer loans are classified as follows: loans that are less than 30 days past due are Pass, loans 30-89 days past due are Special Mention and loans greater than 89 days past due are Substandard.
However, for purposes of disclosure, consumer loans are classified as follows: loans that are less than 30 days past due are Pass, loans 30-89 days past due are Special Mention and loans greater than 89 days past due are Substandard.
BUSINESS Dodd-Frank Wall Street Reform and Consumer Protection Act The Dodd-Frank Act has had a broad impact on the financial services industry, including significant regulatory and compliance changes.
Dodd-Frank Wall Street Reform and Consumer Protection Act The Dodd-Frank Act has had a broad impact on the financial services industry, including significant regulatory and compliance changes.
BUSINESS Violations of applicable consumer protection laws can result in significant potential liability from litigation brought by customers, including actual damages, restitution and attorneys’ fees.
Violations of applicable consumer protection laws can result in significant potential liability from litigation brought by customers, including actual damages, restitution and attorneys’ fees.
The CFPB also has the authority to obtain cease and desist orders providing for affirmative relief or monetary penalties. The Dodd-Frank Act does not prevent states from adopting stricter consumer protection standards. State regulation of financial products and potential enforcement actions could also adversely affect our business, financial condition or results of operations.
The CFPB also has the authority to obtain cease and desist orders providing for affirmative relief or monetary penalties. The Dodd-Frank Act does not prevent states from adopting stricter consumer protection standards. State regulation of financial products and potential enforcement actions could also adversely affect the Corporation’s business, financial condition or results of operations.
Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing investment in and credit to low- and moderate-income individuals and small businesses in those communities. These factors are also considered in evaluating mergers, acquisitions and applications to open a branch or facility.
Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing investments in, and credit, to low- and moderate-income individuals and small businesses in those communities. These factors are also considered in evaluating mergers, acquisitions and applications to open a branch or facility.
The BHC Act requires the Corporation to obtain the prior approval of the Federal Reserve before: • acquiring direct or indirect control or ownership of any voting shares of any bank or bank holding company if, after such acquisition, the bank holding company will directly or indirectly own or control more than 5 percent of the voting shares of the bank or bank holding company; • merging or consolidating with another bank holding company; or • acquiring substantially all of the assets of any bank.
The BHC Act requires the Corporation to obtain the prior approval of the Federal Reserve before: • acquiring direct or indirect control or ownership of any voting shares of any bank or bank holding company if, after such acquisition, the bank holding company will directly or indirectly own or control more than five percent of the voting shares of the bank or bank holding company; • merging or consolidating with another bank holding company; or • acquiring substantially all of the assets of any bank.
There were no issuers included in the investment securities portfolio at December 31, 2024, 2023 or 2022 where the aggregate carrying value of any one issuer exceeded 10 percent of the Corporation’s stockholders’ equity at those dates. The term “issuer” excludes the U.S. Government and its sponsored agencies and corporations.
There were no issuers included in the investment securities portfolio at December 31, 2025, 2024 or 2023 where the aggregate carrying value of any one issuer exceeded 10 percent of the Corporation’s stockholders’ equity at those dates. The term “issuer” excludes the U.S. Government and its sponsored agencies and corporations.
The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies including, in the case of both the Bank and the Corporation, the Basel III requirements discussed above under “- Capital Adequacy Guidelines for Bank Holding Companies (Basel III)” and, in the case of the Bank, the “prompt corrective action” requirements discussed below under “- FDIC Improvement Act of 1991 (FDICIA).” Under the regulations, a capital category is assigned to the regulated entity, which is largely determined by four ratios that are calculated according to the applicable regulations: total risk-based capital, tier 1 risk-based capital, common equity tier 1 capital, and tier 1 leverage ratios.
The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies including, in the case of both the Bank and the Corporation, the Basel III requirements discussed above under “- Capital Adequacy Guidelines for Bank Holding Companies (Basel III)” and, in the case of the Bank, the “prompt corrective action” requirements discussed below under “- FDIC Improvement Act of 1991 (FDICIA).” Under the regulations, a capital category is assigned to the regulated entity, which is largely determined by four ratios that are calculated according to the applicable regulations: total risk-based capital, tier 1 risk-based capital, CET1 capital, and tier 1 leverage ratios.
Talent Assessment, Succession Planning and Career Path : Over 1,400 of our employees participated in our annual Calibration Process (9 Box Talent Assessment) with the goal of identifying specific development action plans to help retain employees with high potential and performance, increase job satisfaction and improve productivity. Talent calibration supports succession and career planning for the Corporation.
Talent Assessment, Succession Planning and Career Path : Over 1,500 of our employees participated in our annual Calibration Process (9 Box Talent Assessment) with the goal of identifying specific development action plans to help retain employees with high potential and performance, increase job satisfaction and improve productivity. Talent calibration supports succession and career planning for the Corporation.
Tier 1 capital consists of CET1 and additional tier 1 capital instruments meeting the specified requirements of Basel III. Under Basel III, in order to avoid limitations on capital distributions, including dividends, the Corporation must hold a capital conservation buffer of 2.50 percent above the adequately capitalized CET1, tier 1 and total capital to risk-weighted assets ratios.
Tier 1 capital consists of CET1 and additional tier 1 capital instruments meeting the specified requirements of Basel III. Under Basel III, in order to avoid limitations on capital distributions, including dividends, the Corporation must hold a capital conservation buffer of 2.5 percent above the adequately capitalized CET1, tier 1 and total capital to risk-weighted assets ratios.
Additional Matters The Corporation and the Bank are subject to the Federal Reserve Act, which restricts financial transactions between banks and affiliated companies. The statute limits credit transactions between banks, affiliated companies and its executive officers and its affiliates. The statute prescribes terms and conditions for bank affiliate transactions deemed to be consistent with safe and sound banking practices.
Additional Matters The Corporation and the Bank are subject to the Federal Reserve Act, which restricts financial transactions between banks and affiliated companies. The statute limits credit transactions between banks, affiliated companies and their executive officers and their affiliates. The statute prescribes terms and conditions for bank affiliate transactions deemed to be consistent with safe and sound banking practices.
It cannot be predicted with certainty whether such legislation or administrative action will be enacted or the extent to which the banking industry, the Corporation or the Bank would be affected. 13 PART I: ITEM 1. BUSINESS STATISTICAL DATA The following tables set forth statistical data on the Corporation and its subsidiaries.
It cannot be predicted with certainty whether such legislation or administrative action will be enacted or the extent to which the banking industry, the Corporation or the Bank would be affected. 12 PART I: ITEM 1. BUSINESS STATISTICAL DATA The following tables set forth statistical data on the Corporation and its subsidiaries.
DEPOSITS The average balances, interest expense and average rates on deposits for the years ended December 31, 2024, 2023 and 2022 are presented in the Part I. Item I. Business section titled “DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY, INTEREST RATES AND INTEREST DIFFERENTIAL” of this Annual Report on Form 10-K.
DEPOSITS The average balances, interest expense and average rates on deposits for the years ended December 31, 2025, 2024 and 2023 are presented in the Part I. Item I. Business section titled “DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY, INTEREST RATES AND INTEREST DIFFERENTIAL” of this Annual Report on Form 10-K.
The Basel III liquidity framework requires banks and bank holding companies to measure their liquidity against specific liquidity tests that, although similar in some respects to liquidity measures historically applied by banks and regulators for management and supervisory purposes, is now required by regulation.
The Basel III liquidity framework requires banks and bank holding companies to measure their liquidity against specific liquidity tests that, although similar in some respects to liquidity measures historically applied by banks and regulators for management and supervisory purposes, are now required by regulation.
Details of the ACL - Loans and nonperforming loans are discussed within the “LOAN QUALITY” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K. 20 PART I: ITEM 1.
Details of the ACL - Loans and nonperforming loans are discussed within the “LOAN QUALITY” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K. 19 PART I: ITEM 1.
The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs. From these discussions, the Corporation’s management is comfortable that the classifications are proper.
The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs. From these discussions, the Corporation’s management is comfortable that the classifications are appropriate.
Fair value of securities classified as Level 3 in the valuation hierarchy were determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.
The fair value of securities classified as Level 3 in the valuation hierarchy was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.
Historical loss rates associated with securities having similar grades as those in the Corporation’s portfolio have been insignificant. Furthermore, as of December 31, 2024, there were no past due principal and interest payments associated with these securities.
Historical loss rates associated with securities having similar grades as those in the Corporation’s portfolio have been insignificant. Furthermore, as of December 31, 2025, there were no past due principal and interest payments associated with these securities.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including the Corporation. Those filings are accessible on the SEC’s website at http://www.sec.gov.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including the Corporation. Those filings are accessible on the SEC’s website at https://www.sec.gov .
BUSINESS Office of Foreign Assets Control Regulation The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others which are administered by the U.S. Treasury Department Office of Foreign Assets Control.
Office of Foreign Assets Control Regulation The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others which are administered by the U.S. Treasury Department Office of Foreign Assets Control (“OFAC”).
If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through the income statement. For investment securities available for sale that do not meet the aforementioned criteria, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors.
If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through the income statement. For investment securities available for sale that do not meet the criteria described above, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors.
The Corporation did not record an allowance for credit losses on its investment securities available for sale as the unrealized losses were attributable to changes in interest rates, not credit quality. 16 PART I: ITEM 1.
The Corporation did not record an allowance for credit losses on its investment securities available for sale as the unrealized losses were attributable to changes in interest rates, not credit quality. 15 PART I: ITEM 1.
Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer broader range of products and services as well as better pricing for those products and services than we can. Finally, the Bank’s competitors may choose to offer lower loan interest rates and pay higher deposit rates.
Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as more competitive pricing for those products and services than we can. Finally, the Bank’s competitors may choose to offer lower loan interest rates and pay higher deposit rates.
Additionally, when presented with a choice, the Bank believes that many of their targeted clients prefer to deal with an institution that favors local decision making as opposed to where many important decisions regarding a client’s financial affairs are made outside the local community. 6 PART I: ITEM 1.
Additionally, when presented with a choice, the Bank believes that many of its targeted clients prefer to deal with an institution that favors local decision making as opposed to institutions where many important decisions regarding a client’s financial affairs are made outside the local community. 6 PART I: ITEM 1.
If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.
If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security.
These laws include, but are not limited to: • the Equal Credit Opportunity Act (prohibiting discrimination on the basis of race, religion or other prohibited factors in the extension of credit); • the Fair Credit Reporting Act (governing the provision of consumer information to credit reporting agencies and the use of consumer information); • the Truth-In-Lending Act (governing disclosures of credit terms to consumer borrowers); • the Truth-in-Savings Act (which requires disclosure of deposit terms to consumers); • the Electronic Funds Transfer Act (governing automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services); • the Fair Debt Collection Act (governing the manner in which consumer debts may be collected by collection agencies); • the Right to Financial Privacy Act (which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records); • the Home Mortgage Disclosure Act and Regulation C, requiring financial institutions to provide certain information about home mortgage and refinanced loans; and • the respective state-law counterparts to the above laws, as applicable, as well as state usury laws and laws regarding unfair and deceptive acts and practices. 11 PART I: ITEM 1.
These laws include, but are not limited to: • the Equal Credit Opportunity Act (prohibiting discrimination on the basis of race, religion or other prohibited factors in the extension of credit); • the Fair Credit Reporting Act (governing the provision and use of consumer information to, and by, credit reporting agencies); • the Truth-In-Lending Act (governing disclosures of credit terms to consumer borrowers); • the Truth-in-Savings Act (which requires disclosure of deposit terms to consumers); • the Electronic Funds Transfer Act (governing automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services); • the Fair Debt Collection Act (governing the manner in which consumer debts may be collected by collection agencies); • the Right to Financial Privacy Act (which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records); • the Home Mortgage Disclosure Act and Regulation C (“HMDA”), requiring financial institutions to provide certain information about home mortgage origination and refinancing loans; and • the respective state-law counterparts to the above laws, as applicable, as well as state usury laws and laws regarding unfair and deceptive acts and practices.
“Significantly undercapitalized” banks are subject to various requirements and restrictions, including an order by the FDIC to sell sufficient voting stock to become “adequately capitalized”, requirements to reduce total assets and cease receipt of deposits from correspondent banks, and restrictions on compensation of executive officers.
“Significantly undercapitalized” banks are subject to various requirements and restrictions, including, among other things, an order by the FDIC to sell sufficient voting stock to become “adequately capitalized”, requirements to reduce total assets and cease receipt of deposits from correspondent banks, and restrictions on compensation of executive officers.
The Volcker Rule also prohibited banking institutions from having an ownership interest in a hedge fund or private equity fund. In June 2020, the federal bank regulatory agencies finalized amendments to the Volcker Rule’s restrictions on ownership interests in and relationships with covered funds.
The Volcker Rule also generally prohibits banking institutions from having an ownership interest in a hedge fund or private equity fund. In June 2020, the federal bank regulatory agencies finalized amendments to the Volcker Rule’s restrictions on ownership interests in and relationships with covered funds.
PROVISION FOR CREDIT LOSSES Credit losses are a cost of doing business in the banking industry. Although management emphasizes the early detection and charge-off of loan losses, it is inevitable that certain losses, which have not been specifically identified, exist in the portfolio.
PROVISION FOR CREDIT LOSSES Credit losses are an inherent cost of doing business in the banking industry. Although management emphasizes the early detection and charge-off of loan losses, it is inevitable that certain losses, which have not been specifically identified, exist in the portfolio.
The balance of the allowance for credit losses on investment securities held to maturity remained unchanged at $245,000 as of December 31, 2024 and December 31, 2023 based on application of the long-term historical credit rate, as published by Moody’s, for similarly rated securities.
The balance of the allowance for credit losses on investment securities held to maturity remained unchanged at $245,000 as of December 31, 2025 and December 31, 2024 based on application of the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities.
As the quarter ended December 31, 2019, was the fourth consecutive quarter that the Bank reported assets exceeding $10 billion, effective as of the beginning of the second quarter of 2020, the Bank and its affiliates became subject to CFPB supervisory and enforcement authority.
Because the quarter ended December 31, 2019 represented the fourth consecutive quarter that the Bank reported assets exceeding $10 billion, effective as of the beginning of the second quarter of 2020, the Bank and its affiliates became subject to CFPB supervisory and enforcement authority.
Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required. 12 PART I: ITEM 1.
Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution, including causing applicable bank regulatory authorities to not approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total risk-based capital, tier 1 capital and common equity tier 1 capital, in each case, to risk-weighted assets, and of tier 1 capital to average assets, or leverage ratio, all of which are calculated as defined in the regulations.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total risk-based capital, tier 1 capital and CET1 capital, in each case, to risk-weighted assets, and of tier 1 capital to average assets (the leverage ratio), all of which are calculated as defined in the regulations.
Federal bank regulators, state attorneys general and state and local consumer protection agencies may also seek to enforce consumer protection requirements and obtain these and other remedies, including regulatory sanctions, customer rescission rights, action by the state and local attorneys general in each jurisdiction in which we operate and civil money penalties.
Federal bank regulators, state attorneys general and state and local consumer protection agencies may also seek to enforce consumer protection requirements and obtain these and other remedies, including regulatory sanctions, customer rescission rights, action by state and local attorneys general in each jurisdiction in which the Corporation operates and civil money penalties.
Significant elements of the laws and regulations applicable to the Corporation and its subsidiaries are described below. The description is qualified in its entirety by reference to the full text of the statues, regulations and policies that are described. Also, such statutes, regulations and policies are continually under review by Congress and state legislatures and federal and state regulatory agencies.
Significant elements of the laws and regulations applicable to the Corporation and its subsidiaries are described below. This description is qualified in its entirety by reference to the full text of the applicable statutes, regulations, and policies. Such statutes, regulations and policies are continually under review by Congress and state legislatures and federal and state regulatory agencies.
As of December 31, 2024, the Bank was “well capitalized” based on the “prompt corrective action” ratios described above.
As of December 31, 2025, the Bank was “well capitalized” based on the “prompt corrective action” ratios described above.
Education Assistance : First Merchants offers an education assistance program that supports full- and part-time colleagues as they seek degree programs that will help them advance their careers. In 2024, over 50 employees participated in this program.
Education Assistance : First Merchants offers an education assistance program that supports full- and part-time colleagues as they seek degree programs that will help them advance their careers. In 2025, over 55 employees participated in this program.
It is subject to the supervision of, and regulation by the Board of Governors of the Federal Reserve (“Federal Reserve”) under the BHC Act, as amended. Bank holding companies are required to file periodic reports with and are subject to periodic examination by the Federal Reserve.
It is subject to the supervision of, and regulation by the Board of Governors of the Federal Reserve (“Federal Reserve”) under the Bank Holding Act of 1956, as amended (“BHC Act”). Bank holding companies are required to file periodic reports with and are subject to periodic examination by the Federal Reserve.
The standards set forth in the guidelines are intended to ensure the security and confidentiality of customer records and information, protect against any anticipated threats or hazards to the security or integrity of such records and protect against unauthorized access to or use of such records or information that could result in substantial harm or inconvenience to any customer.
The standards set forth in the guidelines are intended to ensure the security and confidentiality of customer records and information, protect against any anticipated threats or hazards to the security or integrity of such records and protect against unauthorized access to or use of such records or information that could result in substantial harm or inconvenience to any customer. 11 PART I: ITEM 1.
It should be noted that a bank’s capital category is determined solely for the purpose of applying the FDIC’s “prompt corrective action” regulations and that the capital category may not constitute an accurate representation of the bank’s overall financial condition or prospects. 9 PART I: ITEM 1.
It should be noted that a bank’s capital category is determined solely for the purpose of applying the FDIC’s “prompt corrective action” regulations and that the capital category may not constitute an accurate representation of the bank’s overall financial condition or prospects.
The Bank also faces competition from many other types of institutions, including, without limitation savings and loans associations, credit unions, finance companies, brokerage firms, insurance companies, and other financial intermediaries. The financial services industry continues to become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation.
The Bank also faces competition from many other types of institutions, including, without limitation savings and loans associations, credit unions, finance companies, brokerage firms, insurance companies, and other financial intermediaries. The financial services industry has become increasingly competitive as a result of legislative, regulatory and technological changes and continued consolidation.
At December 31, 2024, 2023, 2022, 2021 and 2020, OREO did not include any acquired assets. In addition to the nonperforming loans discussed above, management also identified loans totaling $746.1 million and $515.2 million as of December 31, 2024 and 2023, respectively, that were deemed to be risk graded criticized.
At December 31, 2025, 2024, 2023, 2022 and 2021, OREO did not include any acquired assets. In addition to the nonperforming loans discussed above, management also identified loans totaling $584.0 million and $746.1 million as of December 31, 2025 and 2024, respectively, that were deemed to be risk graded criticized.
As of December 31, 2024, the amount available for dividends from the Corporation’s subsidiaries (both banking and non-banking), without prior regulatory approval or notice, was $283.4 million. Brokered Deposits Under FDIC regulations, no FDIC-insured depository institution can accept brokered deposits unless it (i) is well capitalized, or (ii) is adequately capitalized and received a waiver from the FDIC.
As of December 31, 2025, the amount available for dividends from the Corporation’s subsidiaries (both banking and non-banking), without prior regulatory approval or notice, was $228.9 million. Brokered Deposits Under FDIC regulations, no FDIC-insured depository institution can accept brokered deposits unless it (i) is well capitalized, or (ii) is adequately capitalized and has received a waiver from the FDIC.
The Federal Reserve also has rules governing routing and exclusivity that require issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product. Volcker Rule The Volcker Rule, which was adopted under the Dodd-Frank Act, places certain limitations on the trading activity of insured depository institutions and their affiliates subject to certain exceptions.
BUSINESS rules governing routing and exclusivity that require issuers to offer at least two unaffiliated networks for routing transactions on each debit or prepaid product. Volcker Rule The Volcker Rule, which was adopted under the Dodd-Frank Act, places certain limitations on the trading activity of insured depository institutions and their affiliates subject to certain exceptions.
At December 31, 2024, 2023, 2022, 2021, and 2020, the remaining fair value discount on acquired loans was $17.4 million, $23.2 million, $31.3 million, $10.9 million, and $23.0 million, respectively. 18 PART I: ITEM 1.
At December 31, 2025, 2024, 2023, 2022, and 2021, the remaining fair value discount on acquired loans was $13.4 million, $17.4 million, $23.2 million, $31.3 million, and $10.9 million, respectively. 17 PART I: ITEM 1.
Additionally, under the FDICIA, a bank holding company is required to guarantee the compliance of any subsidiary bank that may become “undercapitalized” (as defined in the FDICIA section of this Form 10-K) with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal banking agency.
Additionally, under the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), a bank holding company is required to guarantee the compliance of any subsidiary bank that may become “undercapitalized” (as defined in the FDICIA section of this Form 10-K) with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal banking agency.
Accordingly, the provision for credit losses - loans is charged to earnings on an anticipatory basis and recognized credit losses, net of recoveries, are deducted from the established allowance. Over time, all net credit losses are charged to earnings.
Accordingly, the provision for credit losses - loans is charged to earnings on a forward-looking basis and recognized credit losses, net of recoveries, are deducted from the established allowance. Over time, all net credit losses are charged to earnings.
BUSINESS LOAN MATURITIES The following tables present the maturity distribution of our loan portfolio, excluding loans held for sale, by collateral classification at December 31, 2024 according to contractual maturities of (1) one year or less, (2) after one year but within five years and (3) after five years.
BUSINESS LOAN MATURITIES The following tables present the maturity distribution of the loan portfolio, excluding loans held for sale, by collateral classification at December 31, 2025, based on contractual maturities of (1) one year or less, (2) after one year but within five years, and (3) after five years.
The cost and yield for Federal Home Loan Bank stock is included in the table below. 2024 2023 2022 (Dollars in Thousands) Cost Yield Cost Yield Cost Yield Federal Home Loan Bank stock $ 41,691 8.5 % $ 41,769 7.3 % $ 38,525 3.1 % Total $ 41,691 8.5 % $ 41,769 7.3 % $ 38,525 3.1 % The Corporation’s Federal Home Loan Bank stock is primarily in the Federal Home Loan Bank of Indianapolis and it continued to produce sufficient financial results to pay dividends.
The cost and yield for Federal Home Loan Bank stock is included in the table below. 2025 2024 2023 (Dollars in Thousands) Cost Yield Cost Yield Cost Yield Federal Home Loan Bank stock $ 47,245 8.9 % $ 41,691 8.5 % $ 41,769 7.3 % Total $ 47,245 8.9 % $ 41,691 8.5 % $ 41,769 7.3 % The Corporation’s Federal Home Loan Bank stock is primarily in the Federal Home Loan Bank of Indianapolis and it continued to produce sufficient financial results to pay dividends.
The Corporation has gained trust in the data for two reasons: (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis; and (b) actual gains or losses resulting from the sale of certain securities has proven the data to be accurate over time.
The Corporation has confidence in the data for two reasons: (a) independent spot testing of the data through periodic market quotes obtained from various brokers on a periodic basis; and (b) actual gains or losses resulting from the sale of certain securities has proven the data to be accurate over time.
Certain merger or acquisition transactions, including those involving the acquisition of a depository institution or the assumption of the deposits of any depository institution, require formal approval from various bank regulatory authorities, which will be subject to a variety of factors and considerations.
Certain merger or acquisition transactions, including those involving the acquisition of a depository institution or the assumption of the deposits of any depository institution, require formal approval from various bank regulatory authorities, which will be subject to a variety of factors and considerations. COMPETITION The Bank operates in Indiana, Ohio, and Michigan counties.
The applicable federal regulators regularly conduct CRA examinations to assess the performance of financial institutions and assign one of four ratings to the institution’s records of meeting the credit needs of its community. These ratings are outstanding, satisfactory, needs to improve or substantial noncompliance. During its last examination, a rating of satisfactory was received by the Bank.
The applicable federal regulators regularly conduct CRA examinations to assess the performance of financial institutions and assign one of four ratings to the institution’s records of meeting the credit needs of its community. These ratings are “outstanding,” “satisfactory,” “needs to improve,” or “substantial noncompliance.” During its last examination, a rating of “satisfactory” was received by the Bank.
SUMMARY OF CREDIT LOSS EXPERIENCE The following table summarizes the credit loss experience, by collateral segment, for the years indicated: (Dollars in Thousands) 2024 2023 2022 2021 2020 Allowance for credit losses - loans: Balances, January 1 $ 204,934 $ 223,277 $ 195,397 $ 130,648 $ 80,284 Impact of adopting ASC 326 — — — 74,055 — Balances, January 1, 2021 Post-ASC 326 adoption 204,934 223,277 195,397 204,703 80,284 Charge-offs: Commercial (1) (50,199) (23,264) (1,215) (5,849) (8,536) Commercial real estate (2) (352) (116) (3,017) (4,533) (313) Construction — — — (6) — Consumer — — — — (643) Residential — — — — (993) Consumer & Residential (3,692) (4,659) (2,369) (1,496) — Total Charge-offs (54,243) (28,039) (6,601) (11,884) (10,485) Recoveries: Commercial (1) 3,153 995 872 724 819 Commercial real estate (2) 236 60 1,096 580 431 Construction — — 863 1 — Consumer — — — — 260 Residential — — — — 666 Consumer & Residential 1,477 1,341 1,096 1,273 — Total Recoveries 4,866 2,396 3,927 2,578 2,176 Net Charge-offs (49,377) (25,643) (2,674) (9,306) (8,309) Provision for credit losses - loans 37,200 7,300 — — 58,673 CECL Day 1 non-PCD provision for credit losses - loans — — 13,955 — — CECL Day 1 PCD ACL - loans — — 16,599 — — Balances, December 31 $ 192,757 $ 204,934 $ 223,277 $ 195,397 $ 130,648 Ratio of net charge-offs during the period to average loans outstanding during the period 0.39 % 0.21 % 0.02 % 0.10 % 0.09 % (1) Category includes commercial and industrial, agricultural land, production and other loans to farmers, and other commercial loans.
SUMMARY OF CREDIT LOSS EXPERIENCE The following table summarizes the credit loss experience, by collateral segment, for the years indicated: (Dollars in Thousands) 2025 2024 2023 2022 2021 Allowance for credit losses - loans: Balances, January 1 $ 192,757 $ 204,934 $ 223,277 $ 195,397 $ 130,648 Impact of adopting ASC 326 — — — — 74,055 Balances, January 1, Post-ASC 326 adoption 192,757 204,934 223,277 195,397 204,703 Charge-offs: Commercial (1) (17,676) (50,199) (23,264) (1,215) (5,849) Commercial real estate (2) (866) (352) (116) (3,017) (4,533) Construction (64) — — — (6) Consumer & Residential (5,615) (3,692) (4,659) (2,369) (1,496) Total Charge-offs (24,221) (54,243) (28,039) (6,601) (11,884) Recoveries: Commercial (1) 4,205 3,153 995 872 724 Commercial real estate (2) 224 236 60 1,096 580 Construction 1 — — 863 1 Consumer & Residential 1,381 1,477 1,341 1,096 1,273 Total Recoveries 5,811 4,866 2,396 3,927 2,578 Net Charge-offs (18,410) (49,377) (25,643) (2,674) (9,306) Provision for credit losses - loans 21,250 37,200 7,300 — — CECL Day 1 non-PCD provision for credit losses - loans — — — 13,955 — CECL Day 1 PCD ACL - loans — — — 16,599 — Balances, December 31 $ 195,597 $ 192,757 $ 204,934 $ 223,277 $ 195,397 Ratio of net charge-offs during the period to average loans outstanding during the period 0.14 % 0.39 % 0.21 % 0.02 % 0.10 % (1) Category includes commercial and industrial, agricultural land, production and other loans to farmers, and other commercial loans.
The following are the Corporation’s regulatory capital ratios as of December 31, 2024: Corporation Basel III Minimum Capital Required (1) Total risk-based capital to risk-weighted assets 13.31 % 10.50 % Tier 1 capital to risk-weighted assets 11.59 % 8.50 % Common equity tier 1 capital to risk-weighted assets 11.43 % 7.00 % Tier 1 capital to average assets 9.96 % 4.00 % (1) The Basel III Minimum Capital Required are inclusive of the 2.5 percent capital conservation buffer where applicable.
The following are the Corporation’s regulatory capital ratios as of December 31, 2025: Corporation Basel III Minimum Capital Required (1) Total risk-based capital to risk-weighted assets 13.41 % 10.50 % Tier 1 capital to risk-weighted assets 11.86 % 8.50 % Common equity tier 1 capital to risk-weighted assets 11.70 % 7.00 % Tier 1 capital to average assets 10.24 % 4.00 % (1) The Basel III Minimum Capital Required are inclusive of the 2.5 percent capital conservation buffer where applicable.
Banks with lower capital levels are deemed to be “undercapitalized”, “significantly undercapitalized” or “critically undercapitalized”, depending on their actual levels. The appropriate federal regulatory agency may also downgrade a bank to the next lower capital category upon a determination that the bank is in an unsafe or unsound practice.
Banks with lower capital levels are deemed to be “undercapitalized”, “significantly undercapitalized” or “critically undercapitalized”, depending on their actual levels. The appropriate federal regulatory agency may also 8 PART I: ITEM 1. BUSINESS downgrade a bank to the next lower capital category upon a determination that the bank is engaging in unsafe or unsound practice or condition.
The following table summarizes the amortized cost, gross unrealized gains and losses and approximate fair value of investment securities available for sale at the dates indicated. Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale at December 31, 2024 U.S.
The following tables summarize the amortized cost, gross unrealized gains and losses and approximate fair value of investment securities available for sale at the dates indicated. Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale at December 31, 2025 U.S.
An upward adjustment of no more than 1 cent to the issuer’s debit card interchange fee is allowed if the card issuer develops and implements policies and procedures reasonably designed to achieve certain fraud-prevention standards.
An upward adjustment of no more than 1 cent to the issuer’s debit card interchange fee is allowed if the card issuer develops and implements policies and procedures reasonably designed to achieve certain fraud-prevention standards. The Federal Reserve also has 9 PART I: ITEM 1.
The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities held to maturity from the estimate of credit losses. With regard to U.S. Government-sponsored agency and U.S.
The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities held to maturity from the estimate of credit losses. With regard to U.S. Government-sponsored agency and mortgage-backed securities, all such securities are issued by a U.S.
Banks, securities firms and insurance companies can operate as affiliates under the umbrella of a financial holding company, which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking.
Banks, securities firms and insurance companies can operate as affiliates under the umbrella of a financial holding company, which can offer a broad range of financial services, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking.
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets. 14 PART I: ITEM 1.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities. (5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets. 13 PART I: ITEM 1.
BUSINESS SHORT-TERM BORROWINGS Borrowings maturing in one year or less are included in the following table: Years Ended (Dollars in Thousands) December 31, 2024 December 31, 2023 December 31, 2022 Federal funds purchased $ 99,226 $ — $ 171,560 Securities sold under repurchase agreements (short-term portion) 142,876 157,280 167,413 Federal Home Loan Bank advances (short-term portion) 95,000 60,000 460,097 Subordinated debentures and other borrowings (short-term portion) $ 1,157 $ 1,176 $ 1,182 Total short-term borrowings $ 338,259 $ 218,456 $ 800,252 Securities sold under repurchase agreements are categorized as borrowings maturing within one year and are secured by U.S.
BUSINESS SHORT-TERM BORROWINGS Borrowings maturing in one year or less are included in the following table: Years Ended (Dollars in Thousands) December 31, 2025 December 31, 2024 December 31, 2023 Federal funds purchased $ 40,000 $ 99,226 $ — Securities sold under repurchase agreements (short-term portion) 103,755 142,876 157,280 Federal Home Loan Bank advances (short-term portion) 75,000 95,000 60,000 Subordinated debentures and other borrowings (short-term portion) 1,095 1,157 1,176 Total short-term borrowings $ 219,850 $ 338,259 $ 218,456 Securities sold under repurchase agreements are categorized as borrowings maturing within one year and are secured by U.S.
The following table shows the composition of the Corporation’s loan portfolio by collateral classification, including purchased credit deteriorated loans, for the years indicated: 2024 2023 2022 2021 2020 (Dollars in Thousands) Amount % Amount % Amount % Amount % Amount % Loans at December 31: Commercial and industrial loans (1) $ 4,114,292 32.0 % $ 3,670,948 29.4 % $ 3,437,126 28.6 % $ 2,714,565 29.4 % $ 2,776,699 30.0 % Agricultural land, production and other loans to farmers 256,312 2.0 263,414 2.1 241,793 2.0 246,442 2.7 281,884 3.0 Real estate loans: Construction 792,144 6.2 957,545 7.7 835,582 6.9 523,066 5.7 484,723 5.2 Commercial real estate, non-owner occupied 2,274,016 17.7 2,400,839 19.2 2,407,475 20.1 2,135,459 23.1 2,220,949 24.0 Commercial real estate, owner occupied 1,157,944 9.0 1,162,083 9.3 1,246,528 10.4 986,720 10.7 958,501 10.4 Residential 2,374,729 18.5 2,288,921 18.4 2,096,655 17.5 1,159,127 12.5 1,234,741 13.4 Home equity 659,811 5.1 617,571 4.9 630,632 5.3 523,754 5.7 508,259 5.5 Individuals' loans for household and other personal expenditures 166,028 1.3 168,388 1.3 175,211 1.4 146,092 1.5 129,479 1.5 Public finance and other commercial loans 1,059,083 8.2 956,318 7.7 932,892 7.8 806,636 8.7 647,939 7.0 Loans 12,854,359 100.0 % 12,486,027 100.0 % 12,003,894 100.0 % 9,241,861 100.0 % 9,243,174 100.0 % Allowance for loan/credit losses (192,757) (204,934) (223,277) (195,397) (130,648) Net Loans $ 12,661,602 $ 12,281,093 $ 11,780,617 $ 9,046,464 $ 9,112,526 (1) Includes PPP loans of $2.7 million in 2023, $4.7 million in 2022, $106.6 million in 2021, and $667.1 million in 2020.
The following table shows the composition of the Corporation’s loan portfolio by collateral classification for the years indicated: 2025 2024 2023 2022 2021 (Dollars in Thousands) Amount % Amount % Amount % Amount % Amount % Loans at December 31: Commercial and industrial loans (1) $ 4,478,282 32.4 % $ 4,114,292 32.0 % $ 3,670,948 29.4 % $ 3,437,126 28.6 % $ 2,714,565 29.4 % Agricultural land, production and other loans to farmers 283,125 2.1 256,312 2.0 263,414 2.1 241,793 2.0 246,442 2.7 Real estate loans: Construction 804,775 5.8 792,144 6.2 957,545 7.7 835,582 6.9 523,066 5.7 Commercial real estate, non-owner occupied 2,338,666 17.0 2,274,016 17.7 2,400,839 19.2 2,407,475 20.1 2,135,459 23.1 Commercial real estate, owner occupied 1,237,100 9.0 1,157,944 9.0 1,162,083 9.3 1,246,528 10.4 986,720 10.7 Residential 2,420,310 17.5 2,374,729 18.5 2,288,921 18.4 2,096,655 17.5 1,159,127 12.5 Home equity 710,980 5.2 659,811 5.1 617,571 4.9 630,632 5.3 523,754 5.7 Individuals' loans for household and other personal expenditures 155,436 1.1 166,028 1.3 168,388 1.3 175,211 1.4 146,092 1.5 Public finance and other commercial loans 1,363,033 9.9 1,059,083 8.2 956,318 7.7 932,892 7.8 806,636 8.7 Loans 13,791,707 100.0 % 12,854,359 100.0 % 12,486,027 100.0 % 12,003,894 100.0 % 9,241,861 100.0 % Allowance for credit losses - loans (195,597) (192,757) (204,934) (223,277) (195,397) Net loans $ 13,596,110 $ 12,661,602 $ 12,281,093 $ 11,780,617 $ 9,046,464 (1) Includes PPP loans of $2.7 million in 2023, $4.7 million in 2022, and $106.6 million in 2021.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

27 edited+12 added−4 removed131 unchanged
Biggest changeHowever, the Corporation’s insurance coverage may not cover all claims against the Corporation or continue to be available to the Corporation at a reasonable cost. As a result, the Corporation may be exposed to substantial uninsured liabilities, which could adversely affect the Corporation’s results of operations and financial condition. • The Corporation’s controls and procedures may fail or be circumvented.
Biggest changeAs a result, the Corporation may be exposed to substantial uninsured liabilities, which could adversely affect the Corporation’s results of operations and financial condition. • The Corporation’s controls and procedures may fail or be circumvented. Management regularly reviews and updates the Corporation’s internal controls, disclosure controls and procedures, and corporate governance policies and procedures.
Management has established an Information Security Committee in order to assist executive management and the Board of Directors of the Bank in fulfilling their oversight responsibilities related to information security. The Committee reports its activities, key conclusions and recommendations to the Enterprise Risk Management Committee and the Board’s Risk and Credit Policy Committee of the Board on a quarterly basis.
Management has established an Information Security Committee in order to assist executive management and the Board of Directors of the Bank in fulfilling their oversight responsibilities related to information security. The Committee reports its activities, key conclusions and recommendations to the Enterprise Risk Management Committee and the Board’s Risk and Credit Policy Committee on a quarterly basis.
The Board considers cybersecurity risks in business strategy by getting updates on the Bank’s cybersecurity risk assessment. It assesses the experience of management personnel responsible for preventing, mitigating, detecting and remediating any cyber incidents, including the Chief Information Security Officer. In 2022, the Board appointed Jason Sondhi to its Board of Directors. Mr. Sondhi is the Board’s cybersecurity expert. Mr.
The Board considers cybersecurity risks in business strategy by getting updates on the Bank’s cybersecurity risk assessment. It assesses the experience of management personnel responsible for preventing, mitigating, detecting and remediating any cyber incidents, including the Chief Information Security Officer (“CISO”). In 2022, the Board appointed Jason Sondhi to its Board of Directors. Mr. Sondhi is the Board’s cybersecurity expert.
Sondhi has experience managing companies who provide endpoint detection and incident response, vulnerability scans, security information and event management, security employee training and vCISO services. • The Corporation continually encounters technological change. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services.
Mr. Sondhi has experience managing companies who provide endpoint detection and incident response, vulnerability scans, security information and event management, security employee training and vCISO services. • The Corporation continually encounters technological change. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services.
In addition, the scope and content of U.S. banking regulators’ policies on incentive compensation, as well as changes to these policies, could adversely affect our ability to hire, retain and motivate our key employees. 28 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C. • Changes in tax legislation could materially impact the Corporation’s business and financial results and the Corporation may have exposure to tax liabilities that are larger than it anticipates.
In addition, the scope and content of U.S. banking regulators’ policies on incentive compensation, as well as changes to these policies, could adversely affect our ability to hire, retain and motivate our key employees. 27 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C. • Changes in tax legislation could materially impact the Corporation’s business and financial results and the Corporation may have exposure to tax liabilities that are larger than it anticipates.
At December 31, 2024, the Corporation had goodwill of $712.0 million recorded on its consolidated balance sheet. Under ASC 350, Intangibles – Goodwill and Other, the Corporation is required to evaluate goodwill for impairment on an annual basis, as well as on an interim basis, if events or changes indicate that the asset may be impaired.
At December 31, 2025, the Corporation had goodwill of $712.0 million recorded on its Consolidated Balance Sheet. Under ASC 350, Intangibles – Goodwill and Other, the Corporation is required to evaluate goodwill for impairment on an annual basis, as well as on an interim basis, if events or changes indicate that the asset may be impaired.
Various federal and state laws and regulations limit the amount of dividends that the bank subsidiaries may pay to the Corporation. 23 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C. • Acquisitions may not produce revenue enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties.
Various federal and state laws and regulations limit the amount of dividends that the bank subsidiaries may pay to the Corporation. 22 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C. • Acquisitions may not produce revenue enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties.
Rapid changes in interest rates makes it challenging for the Bank to balance its loan and deposit portfolios, which may adversely affect the Corporation’s results of operations by reducing asset yields or spreads or having other adverse impacts on our business.
Rapid changes in interest rates make it challenging for the Bank to balance its loan and deposit portfolios, which may adversely affect the Corporation’s results of operations by reducing asset yields or spreads or having other adverse impacts on our business.
Current market uncertainties and other external factors may impact the competitive landscape for deposits in the banking industry in an unpredictable manner. In addition, the rising interest rate environment has continued to increase competition for liquidity and the premium at which liquidity is available to meet funding needs.
Current market uncertainties and other external factors may impact the competitive landscape for deposits in the banking industry in an unpredictable manner. In addition, the elevated interest rate environment has continued to increase competition for liquidity and the premium at which liquidity is available to meet funding needs.
At the Information Security Committee, security-related policies and standards are reviewed and approved, annual risk assessment results and action plans are noted, annual penetration test reports shared, current security incidents discussed, and relevant cyber risks and trends are presented. 24 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C.
At the Information Security Committee, security-related policies and standards are reviewed and approved, annual risk assessment results and action plans are noted, annual penetration test reports shared, current security incidents discussed, and relevant cyber risks and trends are presented. 23 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C.
The Corporation adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments as amended, on January 1, 2021, which replaced the previous “incurred loss” model for measuring credit losses with an “expected life of loan loss” model described above, referred to as the CECL model.
The Corporation adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments as amended, on January 1, 2021, which replaced the previous “incurred loss” model for measuring credit losses with an “expected life of loan loss” model, referred to as the CECL model.
As a result, the Corporation may not be able to effectively mitigate its risk exposures in particular market environments or against particular types of risk, which could have a material adverse effect on our results of operations and financial condition. 25 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C. • The Corporation’s reported financial results depend on management’s selection of accounting methods and certain assumptions and estimates.
As a result, the Corporation may not be able to effectively mitigate its risk exposures in particular market environments or against particular types of risk, which could have a material adverse effect on our results of operations and financial condition. • The Corporation’s reported financial results depend on management’s selection of accounting methods and certain assumptions and estimates.
As part of the Corporation’s liquidity management, a number of funding sources are used, including core deposits and repayments and maturities of loans and investments. Sources also include brokered certificates of deposit, repurchase agreements, federal funds purchased and FHLB advances.
As part of the Corporation’s liquidity management, a number of funding sources are used, including core deposits and repayments and maturities of loans and investments. Sources also include brokered certificates of deposit, repurchase agreements, federal funds purchased and Federal Home Loan Bank (“FHLB”) advances.
Furthermore, the Corporation’s business operations may be disrupted due to vendors and third-party service providers being unable to work or provide services effectively during such a health crisis, including because of illness, quarantines or other government actions. 22 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C.
Furthermore, the Corporation’s business operations may be disrupted due to vendors and third-party service providers being unable to work or provide services effectively during such a health crisis, including because of illness, quarantines or other government actions.
New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. 26 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C. • Climate change and related legislative and regulatory initiatives may materially affect the Corporation’s business and results of operations.
New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. • Climate change and related legislative and regulatory initiatives may materially affect the Corporation’s business and results of operations.
Moreover, governmental and regulatory actions taken in response to an epidemic, a pandemic or another infectious disease outbreak may include decreased interest rates, which could adversely impact the Corporation’s interest margins and may lead to decreases in the Corporation’s net interest income.
Moreover, governmental and regulatory actions taken in response to an epidemic, a pandemic or another 21 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C. infectious disease outbreak may include decreased interest rates, which could adversely impact the Corporation’s interest margins and may lead to decreases in the Corporation’s net interest income.
Although the Corporation takes steps to minimize reputation risk in dealing with customers and other constituencies, the Corporation is inherently exposed to this risk. • Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to the Corporation’s environmental, social and governance practices may impose additional costs on the Corporation or expose it to new or additional risks.
Although the Corporation takes steps to minimize reputation risk in dealing with customers and other constituencies, the Corporation is inherently exposed to this risk. 25 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C. • Evolving expectations from customers, regulators, investors, and other stakeholders with respect to the Corporation’s environmental, social and governance practices may impose additional costs on the Corporation or expose it to new or additional risks.
Conversely, decreases in interest rates could result in an acceleration of loan prepayments. 27 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C. In response to easing inflation pressures, the Federal Reserve is expected to decrease the target federal funds rate in 2025.
Conversely, decreases in interest rates could result in an acceleration of loan prepayments. 26 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C. In response to easing inflation pressures, the Federal Reserve decreased the target federal funds rate in 2024 and 2025, but uncertainty remains concerning inflation and interest rates.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our business, financial condition or results of operations. • Significant legal actions could subject the Corporation to substantial uninsured liabilities. The Corporation is from time to time subject to claims related to its operations.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our business, financial condition or results of operations. 24 PART I: ITEM 1A., ITEM 1B., AND ITEM 1C. • Significant legal actions could subject the Corporation to substantial uninsured liabilities.
Management regularly reviews and updates the Corporation’s internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.
Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, access to capital, and our stock price.
The expectations of customers, regulators, investors, and other stakeholders related to the Corporation’s environmental, social and governance (“ESG”) practices and disclosure continue to evolve. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, access to capital, and our stock price.
If the Corporation cannot effectively manage these service providers, the service parties fail to materially perform, or the Corporation was to falter in any of the other noted areas, its business or performance could be negatively impacted. • The Corporation is subject to environmental liability risk associated with our Bank branches and any real estate collateral we acquire upon foreclosure.
If the Corporation cannot effectively manage these service providers, the service parties fail to materially perform, or the Corporation was to falter in any of the other noted areas, its business or performance could be negatively impacted. • The Corporation is subject to risks and challenges related to its development and use of artificial intelligence.
The lack of empirical data surrounding the credit and other financial risks posed by climate change make it impossible to predict how specifically climate change may impact our financial condition and results of operations.
The lack of legislative or regulatory certainty surrounding climate risk management and practices make it impossible to predict how specifically climate change may impact our financial condition and results of operations.
The global business community has increased its political and social awareness surrounding the state of the global environment and the issue of climate change. Further, the U.S. Congress, state legislatures and federal and state regulatory agencies continue to propose numerous initiatives related to climate change.
The global business community has continued its political and social awareness surrounding the state of the global environment and the issue of climate change. Further, state legislatures and federal and state regulatory agencies continue to propose numerous initiatives related to climate change. At the same time, some policymakers have adopted or are considering adopting, requirements that constrain climate change initiatives.
Although the Corporation adheres to industry standard practices in conducting thorough due diligence of vendors and contract management, should a vendor experience a breach, similar to the MOVEit breach in 2023 which impacted a vendor utilized by the Bank, the Bank could still suffer reputational harm, and potentially financial losses.
Although the Corporation adheres to industry standard practices in conducting thorough due diligence of vendors and contract management, should a vendor experience a breach, the Bank could still suffer reputational harm, and potentially financial losses. Expanded use of cloud-based technologies and providing our customers more internet-based product offerings to continue to remain competitive will serve to increase these potential risks.
These claims and legal actions, including supervisory actions by the Corporation’s regulators, could involve large monetary claims and significant defense costs. To protect itself from the cost of these claims, the Corporation maintains insurance coverage in amounts and with deductibles that it believes are appropriate for its operations.
The Corporation is from time to time subject to claims related to its operations. These claims and legal actions, including supervisory actions by the Corporation’s regulators, could involve large monetary claims and significant defense costs.
Expanded use of cloud-based technologies and providing our customers more internet-based product offerings to continue to remain competitive will serve to increase these potential risks. The Corporation’s third-party management program helps to mitigate risks posed by reliance on third and fourth parties.
The Corporation’s Third-Party Risk Management Program helps to mitigate risks posed by reliance on third and fourth parties.
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Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights.
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The Corporation and its third-party vendors, clients, counterparties, and other market participants use and develop artificial intelligence technologies, including machine-learning and generative artificial intelligence tools, and generative artificial intelligence models.
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Increased ESG-related compliance costs for the Corporation as well as among our suppliers, vendors and various other parties within our supply chain could result in increases to our overall operational costs.
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This use may expose the Corporation to various risks and potential liabilities, including: enhanced governmental or regulatory scrutiny; litigation; ethical concerns; confidentiality and security risks; intellectual property concerns over data rights and protection; heightened susceptibility to, and increased frequency and severity of, cyberattacks; inaccurate or biased algorithms or underlying datasets; and misuse or misappropriation.
Removed
Similar and even more expansive initiatives are expected under the current administration, including potentially increasing supervisory expectations with respect to banks’ risk management practices, accounting for the effects of climate change in stress testing scenarios and systemic risk assessments, revising expectations for credit portfolio concentrations based on climate-related factors and encouraging investment by banks in climate-related initiatives and lending to communities disproportionately impacted by the effects of climate change.
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These factors could adversely affect our business, reputation, and financial results. In addition, poor implementation of artificial intelligence by the Corporation or its third-party service providers could subject the Corporation to additional risks that we may not adequately predict or mitigate.
Removed
For example, changes in reference rates linked to financial instruments, such as the Secured Overnight Financing Rate (“SOFR”), may adversely affect the value of financial instruments the Corporation holds or issues and related net interest income.
Added
Failure to strategically embrace artificial intelligence or to achieve expected effectiveness, productivity, or cost reductions from artificial intelligence adoption may result in a competitive disadvantage.
Added
We could experience a material adverse effect on our operating results, customer relationships, and growth opportunities if: we cannot offer new artificial intelligence-facilitated technologies as quickly as our competitors; our competitors develop more cost-effective solutions or product offerings; our employees do not adopt such technologies expediently; or we are unable to source necessary components, including reliable third-party technology solutions and service providers.
Added
The use of artificial intelligence solutions may also introduce operational and control risks, including potential errors in outputs, challenges in oversight and accountability, increased vulnerability to system failures or cyber incidents, and the risk that these technologies may not perform as intended under complex or unforeseen circumstances.
Added
These risks could materially disrupt our business operations and adversely affect our financial condition and reputation.
Added
The evolving legal, regulatory, and compliance framework for artificial intelligence, both in the U.S. and internationally, may impact our ability to protect our data and intellectual property against infringing use, require changes to our artificial intelligence implementation, and increase our compliance costs and the risk of non-compliance.
Added
Although the Corporation has established governance, risk management, and control frameworks intended to oversee the use of artificial intelligence, these frameworks may not identify or mitigate all current or emerging risks associated with rapidly evolving technologies.
Added
Additionally, we may not be able to control how third-party artificial intelligence solutions we use are developed or maintained, including the source and quality of training data or the frequency and nature of model updates.
Added
We may also be unable to govern or protect the integrity of the data we input into such tools, specifically how that data is retained, reused, co-mingled with other data, or disclosed, even where we have sought protections with respect to these matters. • The Corporation is subject to environmental liability risk associated with our Bank branches and any real estate collateral we acquire upon foreclosure.
Added
To protect itself from the cost of these claims, the Corporation maintains insurance coverage in amounts and with deductibles that it believes are appropriate for its operations. However, the Corporation’s insurance coverage may not cover all claims against the Corporation or continue to be available to the Corporation at a reasonable cost.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Corporation’s Information Security Committee consists of members with diverse experience, including the Corporation’s leaders from information security, enterprise risk management, legal, bank protection, internal audit and various business units. The Corporation’s information security professionals have a range of varying cybersecurity experience and education, many of whom have substantial experience assessing and managing cybersecurity initiatives and hold certain cybersecurity certificates.
Biggest changeManagement has established an Information Security Committee in order to assist executive management and the Board of Directors in fulfilling their oversight responsibilities related to information security. The Corporation’s Information Security Committee consists of members with diverse experience, including the Corporation’s leaders from information security, technology, enterprise risk management, legal, bank protection, internal audit and various business units.
Although the Corporation adheres to industry standard practices in conducting thorough due diligence of vendors and contract management, should a vendor experience a breach the bank could still suffer reputational harm, and potentially financial losses. Expanded use of cloud-based technologies and providing our customers more internet-based product offerings to continue to remain competitive will serve to increase these potential risks.
Although the Corporation adheres to industry standard practices in conducting thorough due diligence of vendors and contract management, should a vendor experience a breach, the Corporation could still suffer reputational harm and potentially financial losses. Expanded use of cloud-based technologies and providing our customers more internet-based product offerings to continue to remain competitive will serve to increase these potential risks.
Despite the significant resources and security measures used by the Corporation, the incentives for threat actors to obtain financial payment information and customer non-public information, or to conduct ransomware will continue to exist. Cyber breach statistics over the past several years evidence the targeting of numerous banking institutions and credit bureaus.
Despite the significant resources and security measures used by the Corporation, the incentives for threat actors to obtain financial payment information and customer non-public information, or to conduct ransomware attacks, will continue to exist. Cyber breach statistics over the past several years evidence the targeting of numerous banking institutions and credit bureaus.
The Corporation’s third party risk management program helps to mitigate risks posed by reliance on third and fourth parties. Governance of third parties includes a due diligence and risk assessment prior to contract execution, with oversight completed based on a frequency defined by the third parties risk profile.
The Corporation’s Third-Party Risk Management Program helps to mitigate risks posed by reliance on third and fourth parties. Governance of third parties includes a due diligence and risk assessment prior to contract execution, with oversight completed based on a frequency defined by the third party’s risk profile.
ITEM 1C. THE CORPORATION’S CYBERSECURITY PROCESSES, POLICIES AND GOVERNANCE. The increased use of, and dependence on, information management systems in order to engage with customers and conduct business necessarily creates cyber risk.
ITEM 1C. CYBERSECURITY CYBERSECURITY PROCESSES, POLICIES AND GOVERNANCE The increased use of, and dependence on, information management systems in order to engage with customers and conduct business necessarily creates cyber risk.
The result of these could be reputational harm, financial losses, or litigation and regulatory fines for the Bank. The Corporation operates in a fashion that allows operational risk to be in line with its risk appetite.
The result of these could be reputational harm, financial losses, or litigation and regulatory fines to the Corporation. The Corporation operates in a fashion that allows operational risk to be in line with its risk appetite.
Phishing attempts have also significantly increased and political conflict also presents cyber threats by nation states. Operational risk is inherent in the Corporation’s activities and can present itself in numerous ways, including internal or external fraud, business disruptions or failures, noncompliance with applicable laws and regulations, cyber breach, or failure of third parties, among other events.
Phishing attempts have also significantly increased and political conflict also presents cyber threats from nation states. Operational risk is inherent in the Corporation’s activities and can present itself in numerous ways, including internal or external fraud, business disruptions or failures, noncompliance with applicable laws and regulations, cyber breaches, or failure of third parties, among other events.
The ERM Program includes managing material risks from cybersecurity threats. Use of third-party software and services also exposes the Corporation to cybersecurity risk as numerous service providers host critical data or have direct contact with our bank customers.
The ERM Program includes processes for identifying, assessing, and managing material risks from cybersecurity threats. Use of third-party software and services also exposes the Corporation to cybersecurity risk as numerous service providers host critical data or have direct contact with our customers.
Policies over information security are Board-approved and various types of control testing is conducted throughout the year, both by internal and external parties. Findings are actioned on throughout the year and reported to various committees.
Information security policies are Board-approved and various types of control testing are conducted throughout the year, both by internal and external parties. Findings are remediated throughout the year and reported to various committees.
The Corporation has adopted the National Institute of Standards and Technology (NIST) Cybersecurity Framework for the management and development of cybersecurity controls and is an active participant in the financial sector information sharing organization structure, known as the Financial Services Information Sharing and Analysis Center.
The Corporation has adopted the National Institute of Standards and Technology (NIST) Cybersecurity Framework for the management and development of cybersecurity controls and is an active participant in the financial sector information sharing organization structure, known as the Financial Services Information Sharing and Analysis Center. The Corporation’s CISO is responsible for assessing and managing the Corporation’s risks from cybersecurity threats.
The Corporation’s Board of Directors has delegated primary responsibility for oversight of cybersecurity risk to its Risk and Credit Policy Committee, with its Audit Committee also considering cyber risk as part of financial oversight. The Information Security Department provides an annual update to the Risk and Credit Policy Committee of the Board on the state of the Information Security Program.
The Corporation’s Board of Directors has delegated primary responsibility for oversight of cybersecurity risk to its Risk and Credit Policy Committee, with its Audit Committee also considering cyber risk as part of financial oversight.
The Committee reports its activities, key conclusions and recommendations to the Enterprise Risk Management Committee and the Board’s Risk and Credit Policy Committee of the Board on a quarterly basis.
These third parties participate in testing and validation processes, as well as the execution of certain program-related controls. The Committee reports its activities, key conclusions and recommendations to the Enterprise Risk Management Committee and the Board’s Risk and Credit Policy Committee of the Board on a quarterly basis.
The Information Security Department conducts cyber incident tabletop exercises on an ongoing basis. These exercises vary by topic, but may include internal incident response teams, executive management, and third parties that provide services across forensic, legal, and public relations capabilities.
These exercises vary by topic, but may include internal incident response teams, executive management, and third parties that provide services across forensic, legal, and public relations capabilities. The purpose of these tabletops is to simulate a cyber event and work through the event using our Incident Response Plan.
The Board considers cybersecurity risks in business strategy by getting updates on the Bank’s cybersecurity risk assessment. It assesses the experience of management personnel responsible for preventing, mitigating, detecting and remediating any cyber incidents, including the Chief Information Security Officer. In 2022, the Board appointed Jason Sondhi to its Board of Directors. Mr.
It assesses the experience of management personnel responsible for preventing, mitigating, detecting and remediating any cyber incidents, including the CISO. In 2022, the Board appointed Jason Sondhi to its Board of Directors. Mr. Sondhi has experience managing companies that provide endpoint detection and incident response, vulnerability scans, security information and event management, security employee training and vCISO services. Mr.
The purpose of these tabletops is to simulate a cyber event and work through the event using our Incident Response Plan. This allows our incident response team to become familiar with the logistics of the plan, as well as provide feedback to improve the process and plan.
This allows our incident response team to become familiar with the logistics of the plan, as well as provide feedback to improve the process and plan. External subject matter experts, such as Bank legal counsel, forensic advisors, marketing agency and insurance broker may participate in these exercises.
This cybersecurity “deep dive” includes review of key security incidents and review of the Information Security Policy, Information Security Program, the Incident Response Plan, and the Acceptable Use Policy. The Board is then presented with the update by the Chair of the Risk and Credit Policy Committee.
The Information Security Department provides an annual update on the state of the Information Security Program, which includes a comprehensive review of key security incidents, the Information Security Policy, Information Security Program, the Incident Response Plan, and the Acceptable Use Policy. This update incorporates quantitative and qualitative analyses and is benchmarked against the Board-approved risk appetite.
The Corporation’s Chief Information Security Officer (CISO) is responsible for assessing and managing the Corporation’s risks from cybersecurity threats. The CISO is an active Certified Information Security Systems Professional and has been with the organization for 18 years with over 21 years of experience in technology infrastructure and security.
The CISO holds a Certified Information Security Systems Professional credential and has been with the organization for 19 years with over 22 years of experience in technology infrastructure and security. The Information Security Department conducts cyber incident tabletop exercises on an ongoing basis.
Sondhi has experience managing companies who provide endpoint detection and incident response, vulnerability scans, security information and event management, security employee training and vCISO services. Mr. Sondhi’s cybersecurity expertise assists the Board in overseeing management’s cybersecurity related efforts. 30 PART I: ITEM 2., ITEM 3. AND ITEM 4.
Sondhi’s cybersecurity expertise assists the Board in overseeing management’s cybersecurity related efforts. 29 PART I: ITEM 2., ITEM 3. AND ITEM 4.
The Corporation uses multiple assessors, consultants, auditors and other third parties in the fulfillment of the information security program. These third parties participate in testing and validation processes, as well as the execution of certain program-related controls.
The Corporation’s information security professionals have a range of varying cybersecurity experience and education, many of whom have substantial experience assessing and managing cybersecurity initiatives and hold certain cybersecurity certificates. The Corporation uses multiple assessors, consultants, auditors and other third parties in the fulfillment of the information security program.
Removed
External subject matter experts, such as Bank legal counsel, forensic advisors, marketing agency and insurance broker participate in these exercises. Management has established an Information Security Committee in order to assist executive management and the Board of Directors of the Bank in fulfilling their oversight responsibilities related to information security.
Added
The annual update is presented to the Enterprise Risk Management Committee and the Risk and Credit Policy Committee of the Board, with a summary to the full Board. The Board considers cybersecurity risks in business strategy by getting updates on the Bank’s cybersecurity risk assessment.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES. The headquarters of the Corporation and the Bank are located at 200 East Jackson Street, Muncie, Indiana. The building is owned by the Bank. The Bank conducts business through numerous facilities owned and leased. Of the 110 banking offices operated by the Bank, 87 are owned and 23 are leased from non-affiliated third parties.
Biggest changeITEM 2. PROPERTIES The headquarters of the Corporation and the Bank are located at 200 East Jackson Street, Muncie, Indiana. The building is owned by the Bank. The Bank conducts business through numerous facilities owned and leased. Of the 111 banking offices operated by the Bank, 88 are owned and 23 are leased from non-affiliated third parties.
None of the properties owned by the Corporation are subject to any major encumbrances. The net investment of the Corporation and subsidiaries in real estate and equipment at December 31, 2024 was $129.7 million.
None of the properties owned by the Corporation are subject to any material encumbrances. The net investment of the Corporation and subsidiaries in real estate and equipment at December 31, 2025 was $121.1 million.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS . There are no pending legal proceedings, other than litigation incidental to the ordinary course of business of the Corporation and its subsidiaries, of a material nature to which the Corporation or its subsidiaries is a party, or of which any of their properties are subject.
Biggest changeITEM 3. LEGAL PROCEEDINGS There are no pending legal proceedings, other than litigation incidental to the ordinary course of business of the Corporation and its subsidiaries, of a material nature to which the Corporation or its subsidiaries are a party, or to which any of their properties are subject.
None of the routine legal proceedings, individually or in the aggregate, in which the Corporation or its affiliates are involved are expected to have a material adverse impact on the financial position or the results of operations of the Corporation. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 31 PART II: ITEM 5. AND ITEM 6. PART II
None of the routine legal proceedings, individually or in the aggregate, in which the Corporation or its affiliates are involved are expected to have a material adverse impact on the financial condition or the results of operations of the Corporation. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 30 PART II: ITEM 5. AND ITEM 6. PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 31 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 32 Item 6. [Reserved] 34 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7A. Quantitative and Qualitative Disclosure about Market Risk 51 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 30 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 6. [Reserved] 33 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A. Quantitative and Qualitative Disclosure A bout Market Risk 52 Item 8.
Financial Statements and Supplementary Data 52 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 108 Item 9A. Controls and Procedures 108
Financial Statements and Supplementary Data 53 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 108 Item 9A. Controls and Procedures 108

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES The following table presents information relating to our purchases of equity securities during the three months ended December 31, 2024, as follows: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as part of Publicly announced Plans or Programs Maximum Number of Shares that may yet be Purchased Under the Plans or Programs (2) October, 2024 88,494 $ 37.43 88,348 1,116,985 November, 2024 78,858 $ 36.99 78,553 1,038,432 December, 2024 — $ — — 1,038,432 Total 167,352 166,901 (1) During the three months ended December 31, 2024, there were 166,901 shares repurchased pursuant to the Corporation’s share repurchase program described in note (2) below.
Biggest changePURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES The following table presents information relating to the Corporation’s purchases of equity securities during the three months ended December 31, 2025, as follows: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as part of Publicly announced Plans or Programs (2) Maximum Number of Shares that may yet be Purchased Under the Plans or Programs (2) October, 2025 — $ — — 1,987,729 November, 2025 311 $ 36.01 — 1,987,729 December, 2025 272,044 $ 38.29 271,953 1,715,776 Total 272,355 271,953 (1) During the three months ended December 31, 2025, there were 271,953 shares repurchased pursuant to the Corporation’s share repurchase program described in Note (2) below.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. PERFORMANCE GRAPH The following graph compares the cumulative five year total return to shareholders on First Merchants Corporation’s common stock relative to the cumulative total returns of the Russell 2000 Index and the KBW Nasdaq Regional Banking Index.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES PERFORMANCE GRAPH — Comparison of Five‑Year Cumulative Total Return The following graph compares the cumulative five-year total return to shareholders of First Merchants Corporation’s common stock relative to the cumulative total returns of the Russell 2000 Index and the KBW Nasdaq Regional Banking Index.
EQUITY COMPENSATION PLAN INFORMATION See Item 12 of Part III of this Annual Report on Form 10-K for information regarding securities authorized for issuance under equity compensation plans. 33 PART II: ITEM 5. AND ITEM 6.
EQUITY COMPENSATION PLAN INFORMATION See Item 12 of Part III of this Annual Report on Form 10-K for information regarding securities authorized for issuance under equity compensation plans. 32 PART II: ITEM 5. AND ITEM 6.
The amounts in October 2024 and November 2024 also include 146 and 305 shares, respectively, repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of the Corporation’s restricted stock awards and are not a part of the Corporation’s share repurchase program described in note (2) below.
The amounts in November 2025 and December 2025 include 311 and 91 shares, respectively, repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of the Corporation’s restricted stock awards and are not a part of the Corporation’s share repurchase program described in Note (2) below.
COMMON STOCK LISTING First Merchants Corporation common stock is traded on the Nasdaq Global Select Market under the symbol FRME. At the close of business on February 19, 2025, the number of shares outstanding was 58,535,244. There were 3,912 stockholders of record on that date. 32 PART II: ITEM 5. AND ITEM 6.
COMMON STOCK LISTING First Merchants Corporation common stock is traded on the Nasdaq Global Select Market under the symbol FRME. At the close of business on February 19, 2026, the number of shares outstanding was 63,392,748. There were 3,842 stockholders of record on that date. 31 PART II: ITEM 5. AND ITEM 6.
(2) On January 27, 2021, the Board of Directors of the Corporation approved a stock repurchase program of up to 3,333,000 shares of the Corporation’s outstanding common stock; provided, however, that the total aggregate investment in shares repurchased under the program may not exceed $100,000,000. The program does not have an expiration date.
(2) On March 18, 2025, the Board of Directors of the Corporation approved a stock repurchase program of up to 2,927,000 shares of the Corporation’s outstanding common stock; provided, however, that the total aggregate investment in shares repurchased under the program may not exceed $100.0 million.
The graph assumes that the value of the investment in the Corporation’s common stock and in each of the indexes (including reinvestment of dividends) was $100 on December 31, 2019 and tracks it through December 31, 2024.
The graph assumes that the value of the Corporation’s common stock and each of the indexes, assuming reinvestment of dividends, was $100 on December 31, 2020 and tracks those values through December 31, 2025.
However, it may be discontinued by the Board at any time. Since commencing the program, the Corporation has repurchased a total of 2,294,568 shares of common stock for a total aggregate investment of $81.6 million.
The program does not have an expiration date and may be discontinued by the Board at any time. Since commencing the program, the Corporation has repurchased a total of 1,211,224 shares of common stock for a total aggregate investment of $46.9 million.
Period Ending Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 First Merchants Corporation $ 100.00 $ 93.07 $ 107.02 $ 108.22 $ 101.92 $ 113.97 Russell 2000 Index 100.00 119.96 137.74 109.59 128.14 142.93 KBW Nasdaq Regional Banking Index 100.00 91.29 124.74 116.10 115.64 130.90 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Period Ending Index 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 First Merchants Corporation $ 100.00 $ 114.99 $ 116.27 $ 109.51 $ 122.46 $ 119.34 Russell 2000 Index 100.00 114.82 91.35 106.82 119.46 134.40 KBW Nasdaq Regional Banking Index 100.00 136.64 127.17 126.67 143.39 152.71 The stock price performance included in this graph is not necessarily indicative of future stock price performance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

123 edited+49 added−49 removed71 unchanged
Biggest changeMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Corporation’s and Bank’s actual and required capital ratios as of December 31, 2024 and December 31, 2023 were as follows: Prompt Corrective Action Thresholds Actual Basel III Minimum Capital Required Well Capitalized December 31, 2024 Amount Ratio Amount Ratio Amount Ratio Total risk-based capital to risk-weighted assets First Merchants Corporation $ 2,030,362 13.31 % $ 1,601,175 10.50 % N/A N/A First Merchants Bank 1,967,738 12.89 1,602,417 10.50 $ 1,526,112 10.00 % Tier 1 capital to risk-weighted assets First Merchants Corporation $ 1,767,468 11.59 % $ 1,296,189 8.50 % N/A N/A First Merchants Bank 1,776,738 11.64 1,297,195 8.50 $ 1,220,889 8.00 % Common equity tier 1 capital to risk-weighted assets First Merchants Corporation $ 1,742,468 11.43 % $ 1,067,450 7.00 % N/A N/A First Merchants Bank 1,776,738 11.64 1,068,278 7.00 $ 991,973 6.50 % Tier 1 capital to average assets First Merchants Corporation $ 1,767,468 9.96 % $ 710,089 4.00 % N/A N/A First Merchants Bank 1,776,738 9.92 716,172 4.00 $ 895,215 5.00 % Prompt Corrective Action Thresholds Actual Basel III Minimum Capital Required Well Capitalized December 31, 2023 Amount Ratio Amount Ratio Amount Ratio Total risk-based capital to risk-weighted assets First Merchants Corporation $ 2,021,124 13.67 % $ 1,552,685 10.50 % N/A N/A First Merchants Bank 1,931,810 13.06 1,553,600 10.50 $ 1,479,619 10.00 % Tier 1 capital to risk-weighted assets First Merchants Corporation $ 1,703,626 11.52 % $ 1,256,935 8.50 % N/A N/A First Merchants Bank 1,746,299 11.80 1,257,676 8.50 $ 1,183,695 8.00 % Common equity tier 1 capital to risk-weighted assets First Merchants Corporation $ 1,678,626 11.35 % $ 1,035,123 7.00 % N/A N/A First Merchants Bank 1,746,299 11.80 1,035,733 7.00 $ 961,752 6.50 % Tier 1 capital to average assets First Merchants Corporation $ 1,703,626 9.64 % $ 707,091 4.00 % N/A N/A First Merchants Bank 1,746,299 9.89 706,331 4.00 $ 882,913 5.00 % On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $70.0 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due October 30, 2028 in the aggregate principal amount of $65.0 million.
Biggest changeMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Prompt Corrective Action Thresholds Actual Basel III Minimum Capital Required Well Capitalized December 31, 2024 Amount Ratio Amount Ratio Amount Ratio Total risk-based capital to risk-weighted assets First Merchants Corporation $ 2,030,362 13.31 % $ 1,601,175 10.50 % N/A N/A First Merchants Bank 1,967,738 12.89 1,602,417 10.50 $ 1,526,112 10.00 % Tier 1 capital to risk-weighted assets First Merchants Corporation $ 1,767,468 11.59 % $ 1,296,189 8.50 % N/A N/A First Merchants Bank 1,776,738 11.64 1,297,195 8.50 $ 1,220,889 8.00 % Common equity tier 1 capital to risk-weighted assets First Merchants Corporation $ 1,742,468 11.43 % $ 1,067,450 7.00 % N/A N/A First Merchants Bank 1,776,738 11.64 1,068,278 7.00 $ 991,973 6.50 % Tier 1 capital to average assets First Merchants Corporation $ 1,767,468 9.96 % $ 710,089 4.00 % N/A N/A First Merchants Bank 1,776,738 9.92 716,172 4.00 $ 895,215 5.00 % On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $70.0 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5.0 million and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due October 30, 2028 in the aggregate principal amount of $65.0 million.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The historical consolidated financial data discussed below reflects our historical results of operations and financial condition and should be read in conjunction with our financial statements and related notes thereto presented in Item 8 of this Annual Report on Form 10-K.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The historical consolidated financial data discussed below reflects historical results of operations and financial condition and should be read in conjunction with our financial statements and related notes thereto presented in Item 8 of this Annual Report on Form 10-K.
The increase was primarily driven by an increase in commercial and industrial, public finance and other commercial loans, and residential real estate loans. Partially offsetting those increases was a decrease in construction and non-owner occupied commercial real estate loans. Additional details of the changes in the Corporation’s loan portfolio are discussed within NOTE 5.
The increase was primarily driven by an increase in commercial and industrial, public finance and other commercial loans, and residential real estate loans. Partially offsetting those increases was a decrease in construction and commercial real estate, non-owner occupied loans. Additional details of the changes in the Corporation’s loan portfolio are discussed within NOTE 5.
This negatively impacted the value of the borrower's business and resulted in their inability to repay principal and interest. The second borrower provided notification of its plans to cease operations, which resulted in their inability to repay principal and interest and a charge-off for the Corporation.
This negatively impacted the value of the borrower’s business and resulted in their inability to repay the principal and interest. The second borrower provided notification of its plans to cease operations, which resulted in their inability to repay principal and interest and a charge-off for the Corporation.
In management’s view, certain non-GAAP financial measures, when taken together with the corresponding GAAP financial measures and ratios, provide meaningful supplemental information regarding our performance. We believe investors benefit from referring to these non-GAAP financial measures and ratios in assessing our operating results and related trends, and when forecasting future periods.
In management’s view, certain non-GAAP financial measures, when taken together with the corresponding GAAP financial measures and ratios, provide meaningful supplemental information regarding our performance. We believe investors benefit from referring to these non-GAAP financial measures and ratios in assessing our operating results, related trends, and when forecasting future periods.
LOANS AND ALLOWANCE FOR CREDIT LOSSES of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. The CECL allowance is maintained through the provision for credit losses - loans, which is a charge against earnings.
LOANS AND ALLOWANCE FOR CREDIT LOSSES of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. The CECL allowance is maintained through the provision for credit losses, which is a charge against earnings.
LOANS AND ALLOWANCE FOR CREDIT LOSSES of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, and the “LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
LOANS AND ALLOWANCE FOR CREDIT LOSSES of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K and within the “LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS A reconciliation of GAAP measures to regulatory measures (non-GAAP) are detailed in the following table for the periods indicated.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS A reconciliation of GAAP measures to regulatory measures are detailed in the following table for the periods indicated.
BORROWINGS of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. The Corporation’s other liabilities as of December 31, 2024 increased $22.0 million from the same period in 2023, primarily due to an increase in unfunded commitments related to the Corporation’s LIHTC partnerships which totaled $35.8 million.
BORROWINGS of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. The Corporation’s other liabilities as of December 31, 2024 increased $22.0 million from December 31, 2023, primarily due to an increase in unfunded commitments related to the Corporation’s LIHTC partnerships which totaled $35.8 million.
These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor.
These adjustments may either increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor.
Results for rising 200 and 100 basis points and falling 200 and 100 basis points interest rate scenarios are listed below based upon the Corporation’s rate sensitive assets and liabilities at December 31, 2024 and 2023. The change from the base case represents cumulative net interest income over a twelve-month time horizon.
Results for rising 100 and 200 basis points and falling 100 and 200 basis points interest rate scenarios are listed below based upon the Corporation’s rate sensitive assets and liabilities at December 31, 2025 and 2024. The change from the base case represents cumulative net interest income over a twelve-month time horizon.
Assumptions and methodologies regarding the interest rate or balance behavior of indeterminate maturity products, such as savings, money market, interest-bearing and demand deposits, reflect management’s best estimate of expected future behavior. Historical retention rate assumptions are applied to nonmaturity deposits for modeling purposes.
Assumptions and methodologies regarding the interest rate or balance behavior of indeterminate maturity products, such as savings, money market, interest-bearing and demand deposits, reflect management’s best estimate of expected future behavior. Historical retention rate assumptions are applied to non-maturity deposits for modeling purposes.
The Bank includes 110 banking locations in Indiana, Ohio, and Michigan. In addition to its branch network, the Corporation offers comprehensive electronic and mobile delivery channels to its customers. The Corporation’s business activities are currently limited to one significant business segment, which is community banking.
The Bank includes 111 banking locations in Indiana, Ohio, and Michigan. In addition to its branch network, the Corporation offers comprehensive electronic and mobile delivery channels to its customers. The Corporation’s business activities are currently limited to one significant business segment, which is community banking.
The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category. The assigned capital category is largely determined by four ratios that are calculated according to the regulations: total risk-based capital, tier 1 risk-based capital, common equity tier 1 ("CET1"), and tier 1 leverage ratios.
The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category. The assigned capital category is largely determined by four ratios that are calculated according to the regulations: total risk-based capital, tier 1 risk-based capital, CET1, and tier 1 leverage ratios.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table presents the Corporation’s average balance sheet, interest income/interest expense, and the average rate as a percent of average earning assets/liabilities for the years ended December 31, 2024, 2023 and 2022.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table presents the Corporation’s average balance sheet, interest income/interest expense, and the average rate as a percent of average earning assets/liabilities for the years ended December 31, 2025, 2024 and 2023.
The comparative rising 200 and 100 basis points and falling 200 and 100 basis points scenarios below, as of December 31, 2024 and 2023, assume further interest rate changes in addition to the base simulation discussed above. These changes are immediate and parallel changes to the base case scenario.
The comparative rising 100 and 200 basis points and falling 100 and 200 basis points scenarios below, as of December 31, 2025 and 2024, assume further interest rate changes in addition to the base simulation discussed above. These changes are immediate and parallel changes to the base case scenario.
See our cautionary “Statement Regarding Forward-Looking Statements.” For a more complete discussion of the factors that could affect our future results, see “Risk Factors” under Item 1A of this Annual Report on Form 10-K. OVERVIEW First Merchants Corporation (the “Corporation”) is a financial holding company headquartered in Muncie, Indiana and was organized in September 1982.
See our cautionary “Statement Regarding Forward-Looking Statements.” For a more complete discussion of the factors that could affect our future results, see “Risk Factors” under Item 1A of this Annual Report on Form 10-K. OVERVIEW The Corporation is a financial holding company headquartered in Muncie, Indiana and was organized in September 1982.
For the twelve months ended December 31, 2024, the Corporation recorded excise tax of $0.5 million, related to its share repurchase during the period, which is reflected in Stockholders’ Equity as a component of additional paid-in capital. Regulatory Capital Capital adequacy is an important indicator of financial stability and performance.
For the twelve months ended December 31, 2025 and 2024, the Corporation recorded excise tax of $0.4 million and $0.5 million, respectively, related to its share repurchase during the period, which is reflected in stockholders’ equity as a component of additional paid-in capital. Regulatory Capital Capital adequacy is an important indicator of financial stability and performance.
The most stable source of liability-funded liquidity for both the long-term and short-term is deposit growth and retention in the core deposit base. Federal funds purchased and securities sold under agreements to repurchase are also considered a source of liquidity. In addition, FHLB advances and Federal Reserve Discount Window borrowings are utilized as a funding source.
The most stable source of liability-funded liquidity for both the long-term and short-term is deposit growth and retention in the core deposit base. Federal funds purchased and securities sold under agreements to repurchase are considered additional sources of liquidity. In addition, FHLB advances and Federal Reserve Discount Window borrowings are utilized as a funding source.
The amount of allowance represents management’s best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. Relevant available information includes historical credit loss experience, current conditions and reasonable and supportable economic forecasts.
The amount of the allowance represents management’s best estimate of current expected credit losses on loans considering available information obtained from internal and external sources that is relevant to assessing exposure to credit loss over the contractual term of the instrument. Relevant available information includes historical credit loss experience, current conditions and reasonable and supportable economic forecasts.
LOANS AND ALLOWANCE FOR CREDIT LOSSES of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K and within the “LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations. 36 PART II: ITEM 7. AND ITEM 7A.
LOANS AND ALLOWANCE FOR CREDIT LOSSES of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, and the “LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations. 37 PART II: ITEM 7. AND ITEM 7A.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total risk-based capital, tier 1 capital, and common equity tier 1 capital, in each case, to risk-weighted assets, and of tier 1 capital to average assets, or leverage ratio, all of which are calculated as defined in the regulations.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total risk-based capital, tier 1 capital, and CET 1 capital, in each case, to risk-weighted assets, and of tier 1 capital to average assets, or leverage ratio, all of which are calculated as defined in the regulations.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities. (5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets. 42 PART II: ITEM 7.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities. (5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets. 43 PART II: ITEM 7.
When adjusting for certain non-recurring items, 2024 adjusted net income available to common stockholders was $203.3 million and adjusted diluted earnings per common share totaled $3.47, compared to 2023 $236.7 million and $3.98, respectively. These adjusted net income and earnings per share amounts are non-GAAP measures.
When adjusting for certain non-recurring items, adjusted net income available to common stockholders for the year ended 2024 was $203.3 million and adjusted diluted earnings per common share totaled $3.47, compared to $236.7 million and $3.98, respectively, for the year ended 2023. These adjusted net income and earnings per share amounts are non-GAAP measures.
Nonaccrual loans as of December 31, 2024 totaled $73.8 million, an increase of $20.2 million from December 31, 2023, primarily due to a $24.1 million increase in non-accrual balances within the construction loan class. The increase was offset by a $3.6 million decrease in non-accrual balances within the residential loan class.
Nonaccrual loans as of December 31, 2024 totaled $73.8 million, an increase of $20.2 million from December 31, 2023, primarily due to a $24.1 million increase in nonaccrual balances within the construction loan class. The increase was partially offset by a $3.6 million decrease in nonaccrual balances within the residential loan class.
The determination of the provision for credit losses in any period is based on management’s continuing review and evaluation of the loan portfolio, and its judgment as to the impact of current economic conditions on the portfolio. The Corporation continues to monitor economic forecast changes, loan growth and credit quality to determine provision needs in the future.
The determination of the provision for credit losses in any period is based on management’s continuing review and evaluation of the loan portfolio, and its judgment as to the impact of current economic conditions on the portfolio. The Corporation continues to monitor economic forecast changes, loan growth and credit quality to determine provision needs in subsequent periods.
Only 29.4 percent of deposits are uninsured and our available liquidity is ample to cover those when considering both on balance sheet sources of liquidity and unused capacity from the Federal Reserve Discount Window, FHLB and unsecured borrowing sources. Total borrowings increased $129.4 million as of December 31, 2024, compared to December 31, 2023.
Only 29.4 percent of deposits were uninsured and our available liquidity was ample to cover those when considering both on balance sheet sources of liquidity and unused capacity from the Federal Reserve Discount Window, FHLB and unsecured borrowing sources. Total borrowings increased $129.4 million as of December 31, 2024, compared to December 31, 2023.
GAP/Interest Rate Sensitivity Reports and Net Interest Income Simulation Modeling are constructed, presented and monitored quarterly. Management believes that the Corporation’s liquidity and interest sensitivity position at December 31, 2024, remained adequate to meet the Corporation’s primary goal of achieving optimum interest margins while avoiding undue interest rate risk. 49 PART II: ITEM 7. AND ITEM 7A.
GAP/Interest Rate Sensitivity Reports and Net Interest Income Simulation Modeling are constructed, presented and monitored quarterly. Management believes that the Corporation’s liquidity and interest sensitivity position at December 31, 2025, remained adequate to meet the Corporation’s primary goal of achieving optimum interest margins while avoiding undue interest rate risk. 50 PART II: ITEM 7. AND ITEM 7A.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS DEPOSITS AND BORROWINGS The table below reflects the level of deposits and borrowed funds at December 31, 2024 and 2023.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS DEPOSITS AND BORROWINGS The table below reflects the level of deposits and borrowed funds at December 31, 2025 and 2024.
Noninterest bearing deposits represents 16.0 percent of the deposit portfolio, down slightly from 16.9 percent as of December 31, 2023. The decline is the result of a mix shift occurring across the industry as clients move into higher yielding deposit products. The average account balance within the deposit portfolio was $35,000 at December 31, 2024.
Noninterest bearing deposits represented 16.0 percent of the deposit portfolio, down slightly from 16.9 percent as of December 31, 2023. The decline is the result of a mix shift occurring across the industry as clients moved into higher yielding deposit products. The average account balance within the deposit portfolio was $35,000 at December 31, 2024.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table presents the Corporation’s interest rate sensitivity analysis as of December 31, 2024.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table presents the Corporation’s interest rate sensitivity analysis as of December 31, 2025.
Banks with lower capital levels are deemed to be undercapitalized, significantly undercapitalized or critically undercapitalized, depending on their actual levels. The appropriate federal regulatory agency may also downgrade a bank to the next lower capital category upon a determination that the bank is in an unsafe or unsound practice.
Banks with lower capital levels are deemed to be undercapitalized, significantly undercapitalized or critically undercapitalized, depending on their actual levels. The appropriate federal regulatory agency may also downgrade a bank to the next lower capital category upon a determination that the bank is engaged in unsafe or unsound practices.
Tier I regulatory capital consists primarily of total common stockholders’ equity and subordinated debentures issued to business trusts categorized as qualifying borrowings, less non-qualifying intangible assets and unrealized net securities gains or losses. 45 PART II: ITEM 7. AND ITEM 7A.
Tier 1 regulatory capital consists primarily of total common stockholders’ equity and subordinated debentures issued to business trusts categorized as qualifying borrowings, less non-qualifying intangible assets and unrealized net securities gains or losses. 46 PART II: ITEM 7. AND ITEM 7A.
GOODWILL During the fourth quarter of 2024 and 2023, the Corporation performed its annual goodwill impairment testing and the fair value exceeded the Corporation’s carrying value. Based on the analysis performed, the Corporation concluded goodwill was not impaired as of December 31, 2024 and 2023. 48 PART II: ITEM 7. AND ITEM 7A.
GOODWILL During the fourth quarter of 2025 and 2024, the Corporation performed its annual goodwill impairment testing and the fair value exceeded the Corporation’s carrying value. Based on the analysis performed, the Corporation concluded goodwill was not impaired as of December 31, 2025 and 2024. 49 PART II: ITEM 7. AND ITEM 7A.
The tables within the “NON-GAAP FINANCIAL MEASURES” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations reconcile traditional GAAP measures to these non-GAAP financial measures at December 31, 2024 and December 31, 2023. 46 PART II: ITEM 7. AND ITEM 7A.
The tables within the “NON-GAAP FINANCIAL MEASURES” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations reconcile traditional GAAP measures to these non-GAAP financial measures at December 31, 2025 and December 31, 2024. 47 PART II: ITEM 7. AND ITEM 7A.
Non-GAAP financial measures such as tangible common equity to tangible assets, tangible earnings per share, return on average tangible assets and return on average tangible equity are important measures of the strength of the Corporation’s capital and ability to generate earnings on tangible common equity invested by our shareholders.
Non-GAAP financial measures such as tangible common stockholders’ equity to tangible assets, diluted tangible net income per common share, return on average tangible assets and return on average tangible common stockholders’ equity are important measures of the strength of the Corporation's capital and ability to generate earnings on tangible common equity invested by our shareholders.
The Corporation’s tangible common equity measures are capital adequacy metrics that are meaningful to the Corporation, as well as analysts and investors, in assessing the Corporation’s use of equity and in facilitating period-to-period and company-to-company comparisons. Tangible common equity to tangible assets ratio was 8.81 percent at December 31, 2024, and 8.40 percent at December 31, 2023.
The Corporation’s tangible common equity measures are capital adequacy metrics that are meaningful to the Corporation, as well as analysts and investors, in assessing the Corporation’s use of equity and in facilitating period-to-period and company-to-company comparisons. The tangible common equity to tangible assets ratio was 9.38 percent at December 31, 2025, and 8.81 percent at December 31, 2024.
Additionally, the interest rate risk is included as part of the Corporation’s interest simulation discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK”. Subordinated debentures and term loans decreased $65.1 million compared to December 31, 2023.
Additionally, the interest rate risk is included as part of the Corporation’s interest simulation discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK”. Subordinated debentures and term loans decreased $35.9 million compared to December 31, 2024.
Based on management’s judgment as to the appropriate level of the ACL - Loans, the amount provided in any period may be greater or less than net loan losses for the same period.
Based on management’s judgment as to the appropriate level of the allowance for credit losses, the amount provided in any period may be greater or less than net loan losses for the same period.
These non-GAAP measures provide useful supplemental information and may assist investors in analyzing the Corporation’s financial position without regard to the effects of intangible assets and preferred stock, but do retain the effect of accumulated other comprehensive gains (losses) in shareholder’s equity.
These non-GAAP measures provide useful supplemental information and may assist investors in analyzing the Corporation’s financial position without regard to the effects of intangible assets and preferred stock, but do retain the effect of accumulated other comprehensive income (loss) in stockholders’ equity.
Securities classified as held to maturity and that are maturing in one year or less totaled $5.3 million at December 31, 2024. In addition, other types of assets such as cash and interest-bearing deposits with other banks, federal funds sold and loans maturing within one year are sources of liquidity.
Securities classified as held to maturity and maturing in one year or less totaled $7.0 million at December 31, 2025. In addition, other types of assets such as cash and interest-bearing deposits with other banks, federal funds sold and loans maturing within one year are sources of liquidity.
The Corporation had $25.0 million of outstanding preferred stock at December 31, 2024 and 2023. During the twelve months ended December 31, 2024, the Corporation declared and paid dividends of $187.52 per share (equivalent to $1.88 per depositary share), equal to $1.9 million.
The Corporation had $25.0 million of outstanding preferred stock at December 31, 2025 and 2024. During the twelve months ended December 31, 2025 and 2024, the Corporation declared and paid dividends of $187.52 per share (equivalent to $1.88 per depositary share), totaling approximately $1.9 million, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Corporation’s premises and equipment decreased $4.2 million from December 31, 2023 primarily due to the sale of five Illinois branches. Additional details of the Corporation’s divestiture of assets related to the Old Second National Bank branch sale is discussed within NOTE 2.
The Corporation’s premises and equipment decreased $4.2 million from December 31, 2023 primarily due to the sale of five Illinois branches. Additional details of the Corporation’s divestiture of assets related to the Old Second National Bank branch sale is discussed within NOTE 2.
INCOME TAX of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. The Corporation’s tax asset, deferred and receivable decreased from $99.9 million at December 31, 2023 to $92.4 million at December 31, 2024.
INCOME TAXES of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. The Corporation’s tax asset, deferred and receivable decreased from $92.4 million at December 31, 2024 to $78.7 million at December 31, 2025.
The principal source of asset-funded liquidity is investment securities classified as available for sale, the market values of which totaled $1.4 billion at December 31, 2024, a decrease of $240.6 million, or 14.8 percent, from December 31, 2023. Securities classified as held to maturity that are maturing within a short period of time can also be a source of liquidity.
The principal source of asset-funded liquidity is investment securities classified as available for sale, the market values of which totaled $1.4 billion at December 31, 2025, an increase of $20.6 million, or 1.5 percent, from December 31, 2024. Securities classified as held to maturity that are maturing within a short period of time can also be a source of liquidity.
BORROWINGS of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K and Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “LIQUIDITY”.
Further discussion regarding FHLB advances is included in NOTE 11. BORROWINGS of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K and Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “LIQUIDITY”.
Insured deposits totaled 72.1 percent of total deposits, with the State of Indiana’s Public Deposit Insurance Fund, which insures certain public deposits, providing insurance to 15.1 percent of deposits and the FDIC providing insurance to the remaining 57.0 percent.
Insured deposits totaled 71.4 percent of total deposits, with the State of Indiana’s Public Deposit Insurance Fund, which insures certain public deposits, providing insurance to 14.0 percent of deposits and the FDIC providing insurance to the remaining 57.4 percent.
In 2023, the Corporation recorded a $7.3 million provision for credit losses - loans, which was offset by a release in reserve of $3.8 million related to the allowance for unfunded commitments, resulting in a net provision expense for the year ended December 31, 2023 of $3.5 million.
In 2024, the Corporation recorded a $37.2 million provision for credit losses - loans, which was offset by a release in reserve of $1.5 million related to the allowance for unfunded commitments, resulting in a net provision expense for the year ended December 31, 2024 of $35.7 million.
Non-GAAP financial measures such as tangible common equity to tangible assets, tangible earnings per share, return on average tangible assets and return on average tangible equity are important measures of the strength of the Corporation's capital and ability to generate earnings on tangible common equity invested by our shareholders.
Non-GAAP financial measures such as tangible common stockholders’ equity, tangible assets, tangible common stockholders’ equity to tangible assets, tangible book value per common share, tangible net income available to common stockholders, diluted tangible net income per common share, return on average tangible common stockholders’ equity and return on average tangible assets are important measures of the strength of the Corporation’s capital and ability to generate earnings on tangible common equity invested by our shareholders.
December 31, 2024 December 31, 2023 Rising 200 basis points from base case 4.1% 4.0 % Rising 100 basis points from base case 2.5% 2.1 % Falling 100 basis points from base case (2.2)% (5.0) % Falling 200 basis points from base case (4.5)% (7.8) % 50 PART II: ITEM 7. AND ITEM 7A.
December 31, 2025 December 31, 2024 Rising 200 basis points from base case 4.5 % 4.1 % Rising 100 basis points from base case 2.4 % 2.5 % Falling 100 basis points from base case (2.8) % (2.2) % Falling 200 basis points from base case (5.6) % (4.5) % 51 PART II: ITEM 7. AND ITEM 7A.
For analytical purposes, net interest income is also presented on an FTE basis in the tables that follow to reflect what our tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. The federal statutory rate of 21 percent was used for 2024, 2023, and 2022. 40 PART II: ITEM 7.
For analytical purposes, net interest income is also presented on a fully taxable equivalent (“FTE”) basis in the tables that follow to reflect what our tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. The federal statutory rate of 21 percent was used for 2025, 2024, and 2023.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Stock Repurchase Program On January 27, 2021, the Board of Directors of the Corporation approved a stock repurchase program of up to 3,333,000 shares of the Corporation’s outstanding common stock; provided, however, that the total aggregate investment in shares repurchased under the program may not exceed $100,000,000.
Stock Repurchase Program On January 27, 2021, the Board of Directors of the Corporation approved a stock repurchase program of up to 3,333,000 shares of the Corporation’s outstanding common stock; provided, however, that the total aggregate investment in shares repurchased under the program may not exceed $100.0 million.
The Corporation’s effective tax rate, which was 13.1 percent in 2024 and 13.7 percent in 2023, is lower than the blended effective statutory federal and state rates primarily due to the Corporation’s income on tax-exempt securities and loans, income generated by the subsidiaries operating in a state with no state or local income tax, income tax credits generated from investments in affordable housing projects, and tax-exempt earnings from bank-owned life insurance contracts.
The Corporation’s effective tax rate is lower than the blended effective statutory federal and state rates primarily due to tax‑exempt income earned on municipal securities and loans, income generated by subsidiaries operating in states with no state or local income tax, income tax credits generated from investments in affordable housing projects, and tax‑exempt earnings on bank‑owned life insurance contracts.
(Dollars in Thousands) December 31, 2024 December 31, 2023 December 31, 2022 Net charge-offs: Commercial and industrial loans $ 47,046 $ 22,269 $ 347 Agricultural land, production and other farm loans — — (4) Real estate loans Construction — — (863) Commercial real estate, non-owner occupied 193 20 2,817 Commercial real estate, owner occupied (77) 36 (896) Residential 1,235 471 (4) Home equity (405) 1,856 526 Individuals loans for household and other personal expenditures 1,385 991 751 Total net charge-offs $ 49,377 $ 25,643 $ 2,674 Management continually evaluates the commercial loan portfolio by including consideration of specific borrower cash flow analysis and estimated collateral values, types and amounts on nonperforming loans, past and anticipated credit loss experience, changes in the composition of the loan portfolio, and the current condition and amount of loans outstanding.
(Dollars in Thousands) December 31, 2025 December 31, 2024 December 31, 2023 Net charge-offs: Commercial and industrial loans $ 13,471 $ 47,046 $ 22,269 Real estate loans: Construction 63 — — Commercial real estate, non-owner occupied 265 193 20 Commercial real estate, owner occupied 377 (77) 36 Residential 1,794 1,235 471 Home equity 993 (405) 1,856 Individuals loans for household and other personal expenditures 1,447 1,385 991 Total net charge-offs $ 18,410 $ 49,377 $ 25,643 Management continually evaluates the commercial loan portfolio by including consideration of specific borrower cash flow analysis and estimated collateral values, types and amounts on nonperforming loans, past and anticipated credit loss experience, changes in the composition of the loan portfolio, and the current condition and amount of loans outstanding.
Annualized amounts are computed using a 30/360 day basis. (2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2024, 2023 and 2022. These totals equal $23.3 million, $23.9 million and $24.6 million, respectively. (3) Non accruing loans have been included in the average balances.
Annualized amounts are computed using a 30/360-day basis. (2) Tax-exempt securities and loans are presented on an FTE basis, using a marginal tax rate of 21 percent for 2025, 2024 and 2023. These totals equal $24.7 million, $23.3 million and $23.9 million, respectively. (3) Nonaccrual loans have been included in the average balances.
The Corporation’s allowance for credit losses - loans (“ACL - loans”) totaled $192.8 million as of December 31, 2024 and equaled 1.50 percent of total loans, compared to $204.9 million and 1.64 percent of total loans at December 31, 2023.
The Corporation’s allowance for credit losses - loans (“ACL - Loans”) totaled $195.6 million as of December 31, 2025 and equaled 1.42 percent of total loans, compared to $192.8 million and 1.50 percent of total loans at December 31, 2024.
The lower effective income tax rate in 2024 compared to 2023 was primarily driven by an increase in income tax credits generated from investments in affordable housing projects. The detailed reconciliation of federal statutory to actual tax expense is shown in NOTE 19.
The lower effective income tax rate in 2025 compared to 2024 was primarily driven by increased income tax credits generated from investments in affordable housing projects. A detailed reconciliation of the federal statutory rate to the Corporation’s effective income tax rate is shown in NOTE 19.
Summarized credit-related financial instruments at December 31, 2024 are as follows: (Dollars in Thousands) December 31, 2024 Amounts of Commitments: Loan commitments to extend credit $ 5,006,085 Standby letters of credit 71,271 $ 5,077,356 Since many of the commitments are expected to expire unused or be only partially used, the total amount of unused commitments in the preceding table does not necessarily represent future cash requirements.
Summarized credit-related financial instruments at December 31, 2025 are as follows: (Dollars in Thousands) December 31, 2025 Amounts of Commitments: Loan commitments to extend credit $ 5,586,510 Standby letters of credit 73,997 $ 5,660,507 Since many of the commitments are expected to expire unused or be only partially used, the total amount of unused commitments in the preceding table does not necessarily represent future cash requirements.
INCOME TAXES The Corporation’s federal statutory income tax rate for 2024 is 21 percent and its state tax rate varies from 0 to 9.5 percent depending on the state in which the subsidiary company operates.
INCOME TAXES The Corporation’s federal statutory income tax rate for 2025 was 21 percent, and its state income tax rate varies from 0 to 9.5 percent depending on the state in which the Corporation’s subsidiary entities operate.
(Dollars in Thousands) December 31, 2024 December 31, 2023 Nonperforming assets and loans 90-days or more delinquent: Commercial and industrial loans $ 10,100 $ 9,136 Agricultural land, production and other loans to farmers 75 58 Real estate loans Construction 28,312 520 Commercial real estate, non-owner occupied 16,838 16,652 Commercial real estate, owner occupied 2,440 3,041 Residential 21,927 25,178 Home equity 4,924 3,945 Individual's loans for household and other personal expenditures 7 19 Public finance and other commercial loans — 34 Nonperforming assets and loans 90-days or more delinquent $ 84,623 $ 58,583 PROVISION EXPENSE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS The CECL model requires the measurement of all expected credit losses for financial assets measured at amortized cost based on historical experiences, current conditions and reasonable and supportable forecasts.
(Dollars in Thousands) December 31, 2025 December 31, 2024 Nonperforming assets and loans 90-days or more delinquent: Commercial and industrial loans $ 10,861 $ 10,100 Agricultural land, production and other loans to farmers 250 75 Real estate loans: Construction 23,776 28,312 Commercial real estate, non-owner occupied 837 16,838 Commercial real estate, owner occupied 3,705 2,440 Residential 30,786 21,927 Home equity 4,238 4,924 Individual's loans for household and other personal expenditures 20 7 Nonperforming assets and loans 90-days or more delinquent $ 74,473 $ 84,623 PROVISION EXPENSE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS The CECL model requires the measurement of all expected credit losses for financial assets measured at amortized cost based on historical experiences, current conditions and reasonable and supportable forecasts.
While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond management’s control, which includes, but is not limited to, the performance of the loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward classification of assets.
While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond management’s control, including the performance of the loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward classification of assets. 34 PART II: ITEM 7. AND ITEM 7A.
Factors such as general economic activity, Federal Reserve Board monetary policy, and price volatility of competing alternative investments, can also exert significant influence on our ability to optimize the mix of assets and funding and the net interest income and margin. Net interest income is the excess of interest received from earning assets over interest paid on interest-bearing liabilities.
Factors such as general economic activity, the Federal Reserve’s monetary policy, and price volatility of competing alternative investments, can also exert significant influence on our ability to optimize the mix of assets and funding and our net interest income and net interest margin.
For reconciliations of non-GAAP measures to their most comparable GAAP measures, see “NON-GAAP FINANCIAL MEASURES” within the “Results of Operations” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations. As of December 31, 2023, total assets equaled $18.4 billion, an increase of $403.7 million, or 2.2 percent, from December 31, 2022.
For reconciliations of non-GAAP measures to their most comparable GAAP measures, see “NON-GAAP FINANCIAL MEASURES” within the “Results of Operations” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations. As of December 31, 2025, total assets equaled $19.0 billion, an increase of $713.1 million, or 3.9 percent, from December 31, 2024.
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 35 PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Allowance for Credit Losses - Loans As discussed in NOTE 5.
For a complete discussion of the Corporation’s significant accounting policies see NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. Allowance for Credit Losses - Loans As discussed in NOTE 5.
Net interest income and margin are influenced by many factors, primarily the volume and mix of earning assets, funding sources, and interest rate fluctuations. Other factors include the level of accretion income on purchased loans, prepayment risk on loan and investment-related assets, and the composition and maturity of earning assets and interest-bearing liabilities.
Net interest income and net interest margin are influenced by the volume and mix of earning assets and funding sources, as well as prevailing interest rate conditions. Other factors include accretion income on purchased loans, loan prepayment activity and the composition and maturity of earning assets and interest-bearing liabilities.
The determination of the provision amount and the adequacy of the allowance in any period is based on management’s continuing review and evaluation of the loan portfolio. 47 PART II: ITEM 7. AND ITEM 7A.
The determination of the provision amount and the adequacy of the allowance in any period is based on management’s continuing review and evaluation of the loan portfolio, including portfolio composition, credit quality trends, and changes in economic conditions. 48 PART II: ITEM 7. AND ITEM 7A.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Corporation’s total loan balance, excluding loans held for sale, increased $368.3 million, ending December 31, 2024 at $12.9 billion. At December 31, 2024, the ACL - Loans totaled $192.8 million, which represents a decrease of $12.2 million from December 31, 2023.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Corporation’s total loan balance, excluding loans held for sale, increased $937.3 million, ending December 31, 2025 at $13.8 billion. At December 31, 2025, the ACL - Loans totaled $195.6 million, which represents an increase of $2.8 million from December 31, 2024.
The total available remaining borrowing capacity from the FHLB and Federal Reserve at December 31, 2024 was $733.1 million and $2.5 billion, respectively.
The total available remaining borrowing capacity from the FHLB and Federal Reserve at December 31, 2025 was $819.9 million and $5.3 billion, respectively.
The largest decrease of $7.6 million was in salaries and employee benefits which resulted primarily from $6.3 million in charges in 2023 related to early retirement and severance costs.
Noninterest expense totaled $379.3 million in 2024, a decrease of $9.0 million, or 2.3 percent from 2023. The largest decrease of $7.6 million was in salaries and employee benefits which resulted primarily from $6.3 million in charges in 2023 related to early retirement and severance costs.
At December 31, 2024, total borrowings from the FHLB were $822.6 million and there was $10,000 of outstanding borrowings from the Federal Reserve Discount Window. The Bank has pledged certain mortgage loans and investments to the FHLB and Federal Reserve.
At December 31, 2025, total borrowings from the FHLB were $798.5 million and there were no outstanding borrowings from the Federal Reserve Discount Window. The Bank has pledged certain mortgage loans and investments to the FHLB and Federal Reserve.
These decreases were offset by a $2.7 million increase in equipment expense and a $2.0 million increase in outside data processing expenses as the Corporation continued to invest in customer facing digital solutions throughout 2024. Noninterest expense totaled $388.3 million in 2023, an increase of $32.6 million, or 9.2 percent from 2022.
These decreases were offset by a $2.7 million increase in equipment expense and a $2.0 million increase in outside data processing expenses as the Corporation continued to invest in customer facing digital solutions throughout 2024.
As of December 31, 2024, the Bank met all capital adequacy requirements to be considered well capitalized under the fully phased-in Basel III capital rules. There is no threshold for well capitalized status for bank holding companies.
The Corporation and Bank have elected to opt-out of including accumulated other comprehensive income in regulatory capital. As of December 31, 2025, the Bank met all capital adequacy requirements to be considered well capitalized under the fully phased-in Basel III capital rules. There is no threshold for well capitalized status for bank holding companies.
ADJUSTED NET INCOME AND DILUTED EARNINGS PER COMMON SHARE - non-GAAP (Dollars In Thousands, Except Per Share Amounts) Years Ended December 31, 2024 December 31, 2023 December 31, 2022 Net Income Available to Common Stockholders - GAAP $ 199,527 $ 221,911 $ 220,683 Adjustments: PPP loan income — (49) (3,207) Net realized losses/(gains) on sales of available for sale securities 20,757 6,930 (1,194) Gain on branch sale (19,983) — — Acquisition-related expenses — — 16,531 Acquisition-related provision expense — — 16,755 Non-core expenses 1,2 4,243 12,682 — Tax on adjustments (1,229) (4,767) (7,084) Adjusted Net Income Available to Common Stockholders - non-GAAP $ 203,315 $ 236,707 $ 242,484 Average Diluted Common Shares Outstanding (in thousands) 58,533 59,489 57,950 Diluted Earnings Per Common Share - GAAP $ 3.41 $ 3.73 $ 3.81 Adjustments: PPP loan income — — (0.06) Net realized losses/(gains) on sales of available for sale securities 0.35 0.12 (0.02) Gain on branch sale (0.34) — — Acquisition-related expenses — — 0.28 Acquisition-related provision expense — — 0.30 Non-core expenses 0.07 0.21 — Tax on adjustments (0.02) (0.08) (0.12) Adjusted Diluted Earnings Per Common Share - non-GAAP $ 3.47 $ 3.98 $ 4.19 1 Non-core expenses in 2024 included $0.8 million of costs directly related to the branch sale, $1.1 million from the FDIC special assessment, and $2.4 million from digital platform conversion costs. 2 Non-core expenses in 2023 included $4.3 million from the FDIC special assessment, $6.3 million from early retirement and severance costs, and $2.1 million from a lease termination. 39 PART II: ITEM 7.
ADJUSTED NET INCOME AND DILUTED EARNINGS PER COMMON SHARE (NON-GAAP) (Dollars In Thousands, Except Per Share Amounts) Years Ended December 31, 2025 December 31, 2024 December 31, 2023 Net income available to common stockholders (GAAP) $ 224,126 $ 199,527 $ 221,911 Adjustments: PPP loan income — — (49) Net realized losses on sales of available for sale securities 8 20,757 6,930 Gain on branch sale — (19,983) — Acquisition-related expenses 800 — — Non-core expenses (1),(2),(3) (110) 4,243 12,682 Tax on adjustments (169) (1,229) (4,767) Adjusted net income available to common stockholders (non-GAAP) $ 224,655 $ 203,315 $ 236,707 Average diluted common shares outstanding (in thousands) 57,726 58,533 59,489 Diluted earnings per common share (GAAP) $ 3.88 $ 3.41 $ 3.73 Adjustments: Net realized losses on sales of available for sale securities — 0.35 0.12 Gain on branch sale — (0.34) — Acquisition-related expenses 0.01 — — Non-core expenses (1),(2) — 0.07 0.21 Tax on adjustments — (0.02) (0.08) Adjusted diluted earnings per common share (non-GAAP) $ 3.89 $ 3.47 $ 3.98 (1) Non-core expenses in 2025 included a $0.7 million reduction in the FDIC special assessment and $0.6 million of severance costs.
Adjusted net income available to common stockholders for the year ended 2023, adjusting for certain non-recurring items, was $236.7 million and adjusted diluted earnings per common share totaled $3.98, compared to $242.5 million and $4.19, respectively, for the year ended 2022. These adjusted net income and earnings per share amounts are non-GAAP measures.
When adjusting for certain non-recurring items, adjusted net income available to common stockholders was $224.7 million and adjusted diluted earnings per common share totaled $3.89 for the year ended 2025, compared to $203.3 million and $3.47, respectively, for the year ended 2024. These adjusted net income and earnings per share amounts are non-GAAP measures.
(Dollars in Thousands) December 31, 2024 December 31, 2023 Nonperforming assets: Nonaccrual loans $ 73,773 $ 53,580 OREO and Repossessions 4,948 4,831 Nonperforming assets (NPA) 78,721 58,411 Loans 90-days or more delinquent and still accruing 5,902 172 NPAs and loans 90-days or more delinquent $ 84,623 $ 58,583 The composition of nonperforming assets plus accruing loans 90-days or more delinquent is reflected in the following table by loan class.
(Dollars in Thousands) December 31, 2025 December 31, 2024 Nonperforming assets: Nonaccrual loans $ 71,773 $ 73,773 OREO and Repossessions 658 4,948 Nonperforming assets 72,431 78,721 Loans 90-days or more delinquent and still accruing 2,042 5,902 Nonperforming assets and loans 90-days or more delinquent $ 74,473 $ 84,623 The composition of nonperforming assets plus accruing loans 90-days or more delinquent is reflected in the following table by loan class.
Only 27.9 percent of deposits were uninsured and our available liquidity was ample to cover those when considering both on balance sheet sources of liquidity and unused capacity from the Federal Reserve Discount Window, FHLB and unsecured borrowing sources. Total borrowings decreased $285.2 million as of December 31, 2023, compared to December 31, 2022.
Only 28.6 percent of deposits are uninsured and our available liquidity is sufficient to cover those when considering both on balance sheet sources of liquidity and unused capacity from the Federal Reserve Discount Window, FHLB and unsecured borrowing sources. Total borrowings decreased $158.3 million as of December 31, 2025, compared to December 31, 2024.
Adjusted earnings per share, excluding PPP loan income, net realized gains/losses on the sales of available for sale securities, acquisition-related expenses and non-core expenses, are meaningful non-GAAP financial measures for management, as they provide a meaningful foundation for period-to-period and company-to-company comparisons, which management believes will aid both investors and analysts in analyzing our financial measures and predicting future performance.
Adjusted net income available to common stockholders and adjusted diluted earnings per common share are meaningful non-GAAP financial measures for management, as they provide a meaningful foundation for period-to-period and company-to-company comparisons, which management believes will aid both investors and analysts in analyzing our financial measures and predicting future performance.
Additional details of the changes in the Corporation’s investment securities portfolio are discussed within NOTE 4. INVESTMENT SECURITIES of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 37 PART II: ITEM 7. AND ITEM 7A.
Additional details of the Corporation’s borrowings are discussed within NOTE 11. BORROWINGS of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Average Balance Interest Income / Expense Average Rate Average Balance Interest Income / Expense Average Rate Average Balance Interest Income / Expense Average Rate (Dollars in Thousands) 2024 2023 2022 Assets: Interest-bearing deposits $ 418,163 $ 16,992 4.06 % $ 431,581 $ 17,719 4.11 % $ 296,863 $ 2,503 0.84 % Federal Home Loan Bank stock 41,736 3,527 8.45 41,319 3,052 7.39 35,580 1,176 3.31 Investment securities: (1) Taxable 1,759,578 36,086 2.05 1,854,438 35,207 1.90 2,056,586 38,354 1.86 Tax-exempt (2) 2,200,466 67,705 3.08 2,366,475 73,566 3.11 2,653,611 85,292 3.21 Total Investment Securities 3,960,044 103,791 2.62 4,220,913 108,773 2.58 4,710,197 123,646 2.63 Loans held for sale 29,650 1,792 6.04 21,766 1,292 5.94 14,715 692 4.70 Loans: (3) Commercial 8,687,638 641,393 7.38 8,519,706 603,611 7.08 7,877,271 380,621 4.83 Real estate mortgage 2,158,743 94,890 4.40 2,035,488 82,183 4.04 1,471,802 51,853 3.52 HELOC and installment 830,079 65,577 7.90 830,006 60,751 7.32 785,520 37,302 4.75 Tax-exempt (2) 928,214 43,370 4.67 891,008 40,448 4.54 793,743 31,803 4.01 Total Loans 12,634,324 847,022 6.70 12,297,974 788,285 6.41 10,943,051 502,271 4.59 Total Earning Assets 17,054,267 971,332 5.69 % 16,991,787 917,829 5.40 % 15,985,691 629,596 3.94 % Total Non-earning Assets 1,346,228 1,194,720 1,234,311 Total Assets $ 18,400,495 $ 18,186,507 $ 17,220,002 Liabilities: Interest-bearing deposits: Interest-bearing deposits $ 5,506,492 $ 157,984 2.87 % $ 5,435,733 $ 138,012 2.54 % $ 5,206,131 $ 32,511 0.62 % Money market deposits 3,061,461 106,026 3.46 2,884,271 83,777 2.90 2,915,397 19,170 0.66 Savings deposits 1,463,707 14,587 1.00 1,694,230 14,606 0.86 1,927,122 5,019 0.26 Certificates and other time deposits 2,413,900 107,530 4.45 1,923,268 69,697 3.62 881,176 6,239 0.71 Total Interest-bearing Deposits 12,445,560 386,127 3.10 11,937,502 306,092 2.56 10,929,826 62,939 0.58 Borrowings 1,005,017 40,765 4.06 1,111,472 42,394 3.81 888,392 21,864 2.46 Total Interest-bearing Liabilities 13,450,577 426,892 3.17 13,048,974 348,486 2.67 11,818,218 84,803 0.72 Noninterest-bearing deposits 2,371,004 2,783,996 3,268,417 Other liabilities 326,423 226,275 160,922 Total Liabilities 16,148,004 16,059,245 15,247,557 Stockholders' Equity 2,252,491 2,127,262 1,972,445 Total Liabilities and Stockholders' Equity $ 18,400,495 426,892 $ 18,186,507 348,486 $ 17,220,002 84,803 Net Interest Income (FTE) $ 544,440 $ 569,343 $ 544,793 Net Interest Spread (FTE) (4) 2.52 % 2.73 % 3.22 % Net Interest Margin (FTE): Interest Income (FTE) / Average Earning Assets 5.69 % 5.40 % 3.94 % Interest Expense / Average Earning Assets 2.50 % 2.05 % 0.53 % Net Interest Margin (FTE) (5) 3.19 % 3.35 % 3.41 % (1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustment.
Average Balance Interest Income / Expense Average Rate Average Balance Interest Income / Expense Average Rate Average Balance Interest Income / Expense Average Rate (Dollars in Thousands) 2025 2024 2023 Assets: Interest-bearing deposits $ 272,164 $ 8,127 2.99 % $ 418,163 $ 16,992 4.06 % $ 431,581 $ 17,719 4.11 % Federal Home Loan Bank stock 46,289 4,209 9.09 41,736 3,527 8.45 41,319 3,052 7.39 Investment securities: (1) Taxable 1,585,375 32,662 2.06 1,759,578 36,086 2.05 1,854,438 35,207 1.90 Tax-exempt (2) 2,040,082 63,230 3.10 2,200,466 67,705 3.08 2,366,475 73,566 3.11 Total Investment Securities 3,625,457 95,892 2.64 3,960,044 103,791 2.62 4,220,913 108,773 2.58 Loans held for sale 26,199 1,603 6.12 29,650 1,792 6.04 21,766 1,292 5.94 Loans: (3) Commercial 9,091,847 621,298 6.83 8,687,638 641,393 7.38 8,519,706 603,611 7.08 Real estate mortgage 2,211,726 101,203 4.58 2,158,743 94,890 4.40 2,035,488 82,183 4.04 HELOC and installment 846,430 62,323 7.36 830,079 65,577 7.90 830,006 60,751 7.32 Tax-exempt (2) 1,144,476 54,857 4.79 928,214 43,370 4.67 891,008 40,448 4.54 Total Loans 13,320,678 841,284 6.32 12,634,324 847,022 6.70 12,297,974 788,285 6.41 Total Earning Assets 17,264,588 949,512 5.50 % 17,054,267 971,332 5.69 % 16,991,787 917,829 5.40 % Total Non-earning Assets 1,369,364 1,346,228 1,194,720 Total Assets $ 18,633,952 $ 18,400,495 $ 18,186,507 Liabilities: Interest-bearing deposits: Interest-bearing deposits $ 5,580,592 $ 141,945 2.54 % $ 5,506,492 $ 157,984 2.87 % $ 5,435,733 $ 138,012 2.54 % Money market deposits 3,762,100 118,188 3.14 3,061,461 106,026 3.46 2,884,271 83,777 2.90 Savings deposits 1,278,138 9,962 0.78 1,463,707 14,587 1.00 1,694,230 14,606 0.86 Certificates and other time deposits 2,016,857 74,184 3.68 2,413,900 107,530 4.45 1,923,268 69,697 3.62 Total Interest-bearing Deposits 12,637,687 344,279 2.72 12,445,560 386,127 3.10 11,937,502 306,092 2.56 Borrowings 1,138,760 44,500 3.91 1,005,017 40,765 4.06 1,111,472 42,394 3.81 Total Interest-bearing Liabilities 13,776,447 388,779 2.82 13,450,577 426,892 3.17 13,048,974 348,486 2.67 Noninterest-bearing deposits 2,178,427 2,371,004 2,783,996 Other liabilities 303,578 326,423 226,275 Total Liabilities 16,258,452 16,148,004 16,059,245 Stockholders' Equity 2,375,500 2,252,491 2,127,262 Total Liabilities and Stockholders' Equity $ 18,633,952 $ 18,400,495 $ 18,186,507 Net Interest Income (FTE) $ 560,733 $ 544,440 $ 569,343 Net Interest Spread (FTE) (4) 2.68 % 2.52 % 2.73 % Net Interest Margin (FTE): Interest Income (FTE) / Average Earning Assets 5.50 % 5.69 % 5.40 % Interest Expense / Average Earning Assets 2.25 % 2.50 % 2.05 % Net Interest Margin (FTE) (5) 3.25 % 3.19 % 3.35 % (1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustment.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS - non-GAAP (Dollars in thousands, except per share amounts) December 31, 2024 December 31, 2023 Total Stockholders' Equity (GAAP) $ 2,304,983 $ 2,247,713 Less: Preferred stock (GAAP) (25,125) (25,125) Less: Intangible assets (GAAP) (731,830) (739,101) Tangible common equity (non-GAAP) $ 1,548,028 $ 1,483,487 Total assets (GAAP) $ 18,311,969 $ 18,405,887 Less: Intangible assets (GAAP) (731,830) (739,101) Tangible assets (non-GAAP) $ 17,580,139 $ 17,666,786 Stockholders' Equity to Assets (GAAP) 12.59 % 12.21 % Tangible common equity to tangible assets (non-GAAP) 8.81 % 8.40 % Tangible common equity (non-GAAP) $ 1,548,028 $ 1,483,487 Plus: Tax benefit of intangibles (non-GAAP) 4,263 5,819 Tangible common equity, net of tax (non-GAAP) $ 1,552,291 $ 1,489,306 Common Stock outstanding (in thousands) 57,975 59,424 Book Value (GAAP) $ 39.33 $ 37.40 Tangible book value - common (non-GAAP) $ 26.78 $ 25.06 TANGIBLE EARNINGS PER SHARE, RETURN ON TANGIBLE ASSETS AND RETURN ON TANGIBLE EQUITY - non-GAAP (Dollars in thousands, except per share amounts) December 31, 2024 December 31, 2023 December 31, 2022 Average goodwill (GAAP) $ 712,002 $ 712,002 $ 671,485 Average other intangibles (GAAP) 23,298 31,331 35,885 Average deferred tax on other intangibles (GAAP) (5,005) (6,731) (7,567) Intangible adjustment (non-GAAP) $ 730,295 $ 736,602 $ 699,803 Average stockholders' equity (GAAP) $ 2,252,491 $ 2,127,262 $ 1,972,445 Average preferred stock (GAAP) (25,125) (25,125) (18,875) Intangible adjustment (non-GAAP) (730,295) (736,602) (699,803) Average tangible capital (non-GAAP) $ 1,497,071 $ 1,365,535 $ 1,253,767 Average assets (GAAP) $ 18,400,495 $ 18,186,507 $ 17,220,002 Intangible adjustment (non-GAAP) (730,295) (736,602) (699,803) Average tangible assets (non-GAAP) $ 17,670,200 $ 17,449,905 $ 16,520,199 Net income available to common stockholders (GAAP) $ 199,527 $ 221,911 $ 220,683 Other intangible amortization, net of tax (GAAP) 5,744 6,907 6,537 Preferred stock dividend 1,875 1,875 1,406 Tangible net income available to common stockholders (non-GAAP) $ 207,146 $ 230,693 $ 228,626 Per Share Data: Diluted net income available to common stockholders (GAAP) $ 3.41 $ 3.73 $ 3.81 Diluted tangible net income available to common stockholders (non-GAAP) $ 3.51 $ 3.85 $ 3.95 Ratios: Return on average GAAP capital (ROE) 8.86 % 10.43 % 11.19 % Return on average tangible capital 13.71 % 16.76 % 18.12 % Return on average assets (ROA) 1.09 % 1.23 % 1.29 % Return on average tangible assets 1.17 % 1.32 % 1.38 % Return on average tangible capital is tangible net income available to common stockholders expressed as a percentage of average tangible capital.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS TANGIBLE COMMON STOCKHOLDERS' EQUITY TO TANGIBLE ASSETS (NON-GAAP) (Dollars in Thousands, Except Per Share Amounts) December 31, 2025 December 31, 2024 Total stockholders' equity (GAAP) $ 2,466,667 $ 2,304,983 Less: Preferred stock (GAAP) (25,125) (25,125) Less: Intangible assets (GAAP) (725,802) (731,830) Tangible common stockholders' equity (non-GAAP) $ 1,715,740 $ 1,548,028 Total assets (GAAP) $ 19,025,101 $ 18,311,969 Less: Intangible assets (GAAP) (725,802) (731,830) Tangible assets (non-GAAP) $ 18,299,299 $ 17,580,139 Stockholders' equity to assets (GAAP) 12.97 % 12.59 % Tangible common stockholders' equity to tangible assets (non-GAAP) 9.38 % 8.81 % Tangible common stockholders' equity (non-GAAP) $ 1,715,740 $ 1,548,028 Plus: Tax benefit of intangibles (non-GAAP) 2,966 4,263 Tangible common stockholders' equity, net of tax (non-GAAP) $ 1,718,706 $ 1,552,291 Common stock outstanding 56,952 57,975 Book value per common share (GAAP) $ 42.87 $ 39.33 Tangible book value per common share (non-GAAP) $ 30.18 $ 26.78 DILUTED TANGIBLE NET INCOME PER COMMON SHARE, RETURN ON AVERAGE TANGIBLE ASSETS AND RETURN ON AVERAGE TANGIBLE COMMON STOCKHOLDERS' EQUITY (NON-GAAP) (Dollars in Thousands, Except Per Share Amounts) December 31, 2025 December 31, 2024 December 31, 2023 Average goodwill (GAAP) $ 712,002 $ 712,002 $ 712,002 Average other intangibles (GAAP) 16,806 23,298 31,331 Average deferred tax on other intangibles (GAAP) (3,615) (5,005) (6,731) Intangible adjustment (non-GAAP) $ 725,193 $ 730,295 $ 736,602 Average stockholders' equity (GAAP) $ 2,375,500 $ 2,252,491 $ 2,127,262 Average preferred stock (GAAP) (25,125) (25,125) (25,125) Intangible adjustment (non-GAAP) (725,193) (730,295) (736,602) Average tangible common stockholders' equity (non-GAAP) $ 1,625,182 $ 1,497,071 $ 1,365,535 Average assets (GAAP) $ 18,633,952 $ 18,400,495 $ 18,186,507 Intangible adjustment (non-GAAP) (725,193) (730,295) (736,602) Average tangible assets (non-GAAP) $ 17,908,759 $ 17,670,200 $ 17,449,905 Net income available to common stockholders (GAAP) $ 224,126 $ 199,527 $ 221,911 Other intangible amortization, net of tax (GAAP) 4,762 5,744 6,907 Tangible net income available to common stockholders (non-GAAP) 228,888 205,271 228,818 Preferred stock dividend 1,875 1,875 1,875 Tangible net income (non-GAAP) $ 230,763 $ 207,146 $ 230,693 Per Share Data: Diluted net income available to common stockholders (GAAP) $ 3.88 $ 3.41 $ 3.73 Diluted tangible net income per common share (non-GAAP) $ 3.97 $ 3.51 $ 3.85 Ratios: Return on average stockholders' equity (GAAP) 9.43 % 8.86 % 10.43 % Return on average tangible common stockholders' equity (non-GAAP) 14.08 % 13.71 % 16.76 % Return on average assets (GAAP) 1.21 % 1.09 % 1.23 % Return on average tangible assets (non-GAAP) 1.29 % 1.17 % 1.32 % Return on average tangible common stockholders’ equity is tangible net income expressed as a percentage of average tangible common stockholders’ equity.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The quantitative and qualitative disclosures about market risk information are presented in the “INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K. 51 PART II: ITEM 8.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The quantitative and qualitative disclosures about market risk information are presented in the “INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K. 52 PART II: ITEM 8.

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