FIRST MERCHANTS CORP 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm Stockholders, Board of Directors, and Audit Committee First Merchants Corporation Muncie, Indiana Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of First Merchants Corporation (the “Corporation”) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Corporation as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Corporation’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2026, expressed an unqualified opinion thereon . Basis for Opinion These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Corporation’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate. Allowance for Credit Losses As described in Note 5 to the consolidated financial statements, the Corporation’s allowance for credit losses (ACL) on loans was $195.6 million at December 31, 2025. The ACL is an estimate of current expected credit losses in the loan portfolio. The determination of the ACL requires significant judgment reflecting the Corporation’s best estimate of expected future losses for the loan’s entire contractual term adjusted for expected payments when appropriate. We identified the econometric component of the ACL as a critical audit matter. The econometric component involves a high degree of subjectivity in evaluating management’s estimates, such as evaluating management’s assessment of economic forecasts and conditions and other environmental factors used to adjust historical loss rates. 53 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM How We Addressed the Matter in Our Audit The primary procedures we performed to address this critical audit matter included: • Testing the design and operating effectiveness of internal controls over the econometric component of the ACL • Obtained an understanding of the Corporation’s process over the selection of reasonable and supportable forecasts • Testing clerical and computational accuracy of the formulas within the econometric component of the calculation. • Testing of completeness and accuracy of the information and reports utilized in the econometric component of the ACL, including reports used in management review controls over the econometric component of the ACL. • Evaluating the forecast adjustment, including assessing that it is reasonable and supportable We have served as the Corporation’s auditor since at least 1982; however, an earlier year cannot be reliably determined. Forvis Mazars, LLP Indianapolis, Indiana February 25, 2026 54 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS December 31, December 31, (Dollars in Thousands, Except Share Data) 2025 2024 ASSETS Cash and due from banks $ 84,158 $ 87,616 Interest-bearing deposits 196,300 298,891 Investment securities available for sale 1,407,102 1,386,475 Investment securities held to maturity, net of allowance for credit losses of $ 245 and $ 245 (fair value of $ 1,718,287 and $ 1,723,520 ) 1,971,539 2,074,220 Loans held for sale 20,079 18,663 Loans 13,791,707 12,854,359 Less: Allowance for credit losses - loans ( 195,597 ) ( 192,757 ) Net loans 13,596,110 12,661,602 Premises and equipment 121,058 129,743 Federal Home Loan Bank stock 47,245 41,690 Interest receivable 93,374 91,829 Goodwill 712,002 712,002 Other intangibles 13,800 19,828 Cash surrender value of life insurance 308,438 304,906 Other real estate owned 658 4,948 Tax asset, deferred and receivable 78,664 92,387 Other assets 374,574 387,169 TOTAL ASSETS $ 19,025,101 $ 18,311,969 LIABILITIES Deposits: Noninterest-bearing $ 2,137,262 $ 2,325,579 Interest-bearing 13,157,593 12,196,047 Total Deposits 15,294,855 14,521,626 Borrowings: Federal funds purchased 40,000 99,226 Securities sold under repurchase agreements 103,755 142,876 Federal Home Loan Bank advances 798,549 822,554 Subordinated debentures and other borrowings 57,630 93,529 Total Borrowings 999,934 1,158,185 Interest payable 18,235 16,102 Other liabilities 245,410 311,073 Total Liabilities 16,558,434 16,006,986 COMMITMENTS AND CONTINGENT LIABILITIES STOCKHOLDERS' EQUITY Cumulative Preferred Stock, $ 1,000 par value, $ 1,000 liquidation value: Authorized - 600 cumulative shares Issued and outstanding - 125 cumulative shares 125 125 Preferred Stock, Series A, no par value, $ 2,500 liquidation preference: Authorized - 10,000 non-cumulative perpetual shares Issued and outstanding - 10,000 non-cumulative perpetual shares 25,000 25,000 Common Stock, $ 0.125 stated value: Authorized - 100,000,000 shares Issued and outstanding - 56,951,939 and 57,974,535 shares 7,119 7,247 Additional paid-in capital 1,150,816 1,188,768 Retained earnings 1,413,742 1,272,528 Accumulated other comprehensive loss ( 130,135 ) ( 188,685 ) Total Stockholders' Equity 2,466,667 2,304,983 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 19,025,101 $ 18,311,969 See notes to consolidated financial statements. 55 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands, Except Share Data) December 31, 2025 December 31, 2024 December 31, 2023 INTEREST INCOME Loans receivable: Taxable $ 786,427 $ 803,652 $ 747,837 Tax-exempt 43,415 34,262 31,954 Investment securities: Taxable 32,662 36,086 35,207 Tax-exempt 49,952 53,487 58,117 Deposits with financial institutions 8,127 16,992 17,719 Federal Home Loan Bank stock 4,209 3,527 3,052 Total Interest Income 924,792 948,006 893,886 INTEREST EXPENSE Deposits 344,279 386,127 306,092 Federal funds purchased 2,219 481 1,421 Securities sold under repurchase agreements 2,464 3,057 3,451 Federal Home Loan Bank advances 35,763 29,886 27,206 Subordinated debentures and other borrowings 4,054 7,341 10,316 Total Interest Expense 388,779 426,892 348,486 NET INTEREST INCOME 536,013 521,114 545,400 Provision for credit losses 21,250 35,700 3,500 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 514,763 485,414 541,900 NONINTEREST INCOME Service charges on deposit accounts 34,263 32,606 30,837 Fiduciary and wealth management fees 35,492 34,215 30,840 Card payment fees 19,790 19,317 18,862 Net gains and fees on sales of loans 21,275 20,840 15,659 Derivative hedge fees 3,385 3,082 3,385 Other customer fees 1,545 1,547 1,880 Earnings on bank-owned life insurance 7,613 8,464 8,347 Net realized losses on sales of available for sale securities ( 8 ) ( 20,757 ) ( 6,930 ) Gain on branch sale — 19,983 — Other income 3,579 6,283 2,722 Total Noninterest Income 126,934 125,580 105,602 NONINTEREST EXPENSE Salaries and employee benefits 225,080 221,167 228,745 Net occupancy 28,401 28,387 29,859 Equipment 28,614 26,802 24,113 Marketing 7,794 7,389 7,427 Outside data processing fees 27,488 27,140 25,165 Printing and office supplies 1,380 1,462 1,552 Intangible asset amortization 6,028 7,271 8,743 FDIC assessments 13,410 15,029 14,674 Other real estate owned and foreclosure expenses 1,525 2,076 3,318 Professional and other outside services 14,494 14,586 16,172 Other expenses 28,369 27,957 28,502 Total Noninterest Expense 382,583 379,266 388,270 Income Before Income Taxes 259,114 231,728 259,232 Income tax expense 33,113 30,326 35,446 NET INCOME 226,001 201,402 223,786 Preferred stock dividends 1,875 1,875 1,875 NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 224,126 $ 199,527 $ 221,911 Per Share Data: Basic Net Income Available to Common Stockholders $ 3.90 $ 3.42 $ 3.74 Diluted Net Income Available to Common Stockholders $ 3.88 $ 3.41 $ 3.73 Cash Dividends Paid $ 1.43 $ 1.39 $ 1.34 Average Diluted Common Shares Outstanding (in thousands) 57,726 58,533 59,489 See notes to consolidated financial statements. 56 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in Thousands) December 31, 2025 December 31, 2024 December 31, 2023 Net income $ 226,001 $ 201,402 $ 223,786 Other comprehensive income (loss): Unrealized gain (loss) on securities available for sale: Unrealized holding gain (loss) arising during the period 71,524 ( 39,438 ) 70,084 Reclassification adjustment for losses included in net income 8 20,757 6,930 Tax effect ( 15,022 ) 3,923 ( 16,173 ) Net of tax 56,510 ( 14,758 ) 60,841 Unrealized gain (loss) on cash flow hedges: Unrealized holding loss arising during the period — — ( 179 ) Reclassification adjustment for losses included in net income — — 15 Tax effect — — 34 Net of tax — — ( 130 ) Defined benefit pension plans: Net gain arising during the period 2,552 2,586 3,045 Reclassification adjustment for amortization of prior service cost 30 — 82 Tax effect ( 542 ) ( 543 ) ( 657 ) Net of tax 2,040 2,043 2,470 Total other comprehensive income (loss), net of tax 58,550 ( 12,715 ) 63,181 Comprehensive income $ 284,551 $ 188,687 $ 286,967 See notes to consolidated financial statements. 57 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Cumulative Preferred Stock Non-Cumulative Preferred Stock Common Stock Additional Accumulated Other (Dollars in Thousands, Except Share Data) Shares Amount Shares Amount Shares Amount Paid in Capital Retained Earnings Comprehensive Loss Total Balance, December 31, 2022 125 $ 125 10,000 $ 25,000 59,170,583 $ 7,396 $ 1,228,626 $ 1,012,774 $ ( 239,151 ) $ 2,034,770 Comprehensive income: Net income — — — — — — — 223,786 — 223,786 Other comprehensive income, net of tax — — — — — — — — 63,181 63,181 Cash dividends on preferred stock ($ 187.52 per share) — — — — — — — ( 1,875 ) — ( 1,875 ) Cash dividends on common stock ($ 1.34 per share) — — — — — — — ( 80,061 ) — ( 80,061 ) Share-based compensation — — — — 133,877 17 5,141 — — 5,158 Stock issued under employee benefit plans — — — — 27,902 3 751 — — 754 Stock issued under dividend reinvestment and stock purchase plan — — — — 67,135 8 2,172 — — 2,180 Stock options exercised — — — — 65,025 8 1,102 — — 1,110 Restricted shares withheld for taxes — — — — ( 40,400 ) ( 4 ) ( 1,286 ) — — ( 1,290 ) Balances, December 31, 2023 125 $ 125 10,000 $ 25,000 59,424,122 $ 7,428 $ 1,236,506 $ 1,154,624 $ ( 175,970 ) $ 2,247,713 Comprehensive income: Net income — — — — — — — 201,402 — 201,402 Other comprehensive loss, net of tax — — — — — — — — ( 12,715 ) ( 12,715 ) Cash dividends on preferred stock ($ 187.52 per share) — — — — — — — ( 1,875 ) — ( 1,875 ) Cash dividends on common stock ($ 1.39 per share) — — — — — — — ( 81,623 ) — ( 81,623 ) Repurchases of common stock — — — — ( 1,648,466 ) ( 206 ) ( 55,962 ) — — ( 56,168 ) Excise tax on common stock repurchases — — — — — — ( 517 ) — — ( 517 ) Share-based compensation — — — — 89,886 11 5,807 — — 5,818 Stock issued under employee benefit plans — — — — 21,330 3 653 — — 656 Stock issued under dividend reinvestment and stock purchase plan — — — — 62,825 8 2,253 — — 2,261 Stock options exercised — — — — 49,084 6 894 — — 900 Restricted shares withheld for taxes — — — — ( 24,246 ) ( 3 ) ( 866 ) — — ( 869 ) Balances, December 31, 2024 125 $ 125 10,000 $ 25,000 57,974,535 $ 7,247 $ 1,188,768 $ 1,272,528 $ ( 188,685 ) $ 2,304,983 Comprehensive income: Net income — — — — — — — 226,001 — 226,001 Other comprehensive income, net of tax — — — — — — — — 58,550 58,550 Cash dividends on preferred stock ($ 187.52 per share) — — — — — — — ( 1,875 ) — ( 1,875 ) Cash dividends on common stock ($ 1.43 per share) — — — — — — — ( 82,912 ) — ( 82,912 ) Repurchases of common stock — — — — ( 1,211,224 ) ( 151 ) ( 46,739 ) — — ( 46,890 ) Excise tax on common stock repurchases — — — — — — ( 424 ) — — ( 424 ) Share-based compensation — — — — 129,592 16 7,317 — — 7,333 Stock issued under employee benefit plans — — — — 18,741 2 626 — — 628 Stock issued under dividend reinvestment and stock purchase plan — — — — 59,932 7 2,329 — — 2,336 Stock options exercised — — — — 21,467 3 451 — — 454 Restricted shares withheld for taxes — — — — ( 41,104 ) ( 5 ) ( 1,512 ) — — ( 1,517 ) Balances, December 31, 2025 125 $ 125 10,000 $ 25,000 56,951,939 $ 7,119 $ 1,150,816 $ 1,413,742 $ ( 130,135 ) $ 2,466,667 See notes to consolidated financial statements. 58 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF CASH FLOWS December 31, December 31, December 31, (Dollars in Thousands) 2025 2024 2023 Cash Flow From Operating Activities: Net income $ 226,001 $ 201,402 $ 223,786 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 21,250 35,700 3,500 Depreciation and amortization 29,423 26,849 11,711 Change in deferred taxes 2,219 1,624 6,599 Share-based compensation 7,333 5,818 5,158 Loans originated for sale ( 501,203 ) ( 1,171,131 ) ( 793,125 ) Proceeds from sales of loans held for sale 515,870 1,183,481 791,764 Gains on sales of loans held for sale ( 16,083 ) ( 12,079 ) ( 8,479 ) Gain on branch sale — ( 19,983 ) — Net losses on sales of securities available for sale 8 20,757 6,930 Increase in cash surrender of life insurance ( 6,521 ) ( 5,655 ) ( 5,320 ) Gains on life insurance benefits ( 1,092 ) ( 2,809 ) ( 3,027 ) Change in interest receivable ( 1,545 ) 5,835 ( 12,594 ) Change in interest payable 2,133 ( 2,810 ) 11,382 Operating lease right-of-use abandonment — — 2,083 Other adjustments 5,853 ( 789 ) 18,465 Net cash provided by operating activities 283,646 266,210 258,833 Cash Flows from Investing Activities: Net change in interest-bearing deposits 102,591 137,189 ( 310,019 ) Purchases of: Securities available for sale ( 19,734 ) ( 94,713 ) ( 32,852 ) Securities held to maturity — — ( 5,653 ) Proceeds from sales of securities available for sale — 247,747 388,254 Proceeds from maturities and redemptions of: Securities available for sale 65,575 51,424 56,182 Securities held to maturity 99,286 96,485 104,865 Purchases of Federal Home Loan Bank stock ( 5,644 ) — ( 3,373 ) Redemptions of Federal Home Loan Bank stock 89 79 129 Payment of capital calls to qualified affordable housing investments ( 48,012 ) ( 29,682 ) ( 11,685 ) Net change in loans ( 965,558 ) ( 419,410 ) ( 621,786 ) Net cash and cash equivalents paid in divestiture of branches — ( 243,504 ) — Proceeds from the sale of other real estate owned 7,331 781 1,748 Proceeds from life insurance benefits 4,081 9,859 10,357 Proceeds from mortgage portfolio loan sale — 1,716 — Proceeds from commercial portfolio loan sale — 3,273 113,313 Other adjustments ( 13,828 ) ( 13,668 ) ( 33,905 ) Net cash used by investing activities ( 773,823 ) ( 252,424 ) ( 344,425 ) Cash Flows from Financing Activities: Net change in : Demand and savings deposits 749,439 203,261 ( 623,642 ) Certificates of deposit and other time deposits 23,790 ( 235,640 ) 1,062,350 Borrowings 854,152 639,117 834,031 Repayment of borrowings ( 1,012,403 ) ( 509,708 ) ( 1,119,200 ) Cash dividends on preferred stock ( 1,875 ) ( 1,875 ) ( 1,875 ) Cash dividends on common stock ( 82,912 ) ( 81,623 ) ( 80,061 ) Stock issued under employee benefit plans 628 656 754 Stock issued under dividend reinvestment and stock purchase plans 2,336 2,261 2,180 Stock options exercised 454 900 1,110 Repurchase of common stock ( 46,890 ) ( 56,168 ) — Net cash provided (used) by financing activities 486,719 ( 38,819 ) 75,647 Net Change in Cash and Cash Equivalents ( 3,458 ) ( 25,033 ) ( 9,945 ) Cash and Cash Equivalents, January 1 87,616 112,649 122,594 Cash and Cash Equivalents, December 31 $ 84,158 $ 87,616 $ 112,649 Additional cash flow information: Interest paid $ 386,646 $ 429,702 $ 337,104 Income taxes paid 20,746 7,627 34,838 Loans transferred to other real estate owned 3,055 820 1,224 Fixed assets transferred to other real estate owned 3,330 69 5,020 Non-cash investing activities using trade date accounting 6,745 10,018 3,273 ROU assets obtained in exchange for new operating lease liabilities 783 7,102 2,253 Qualified affordable housing investments obtained in exchange for funding commitments 25,000 65,500 44,200 CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED In conjunction with the divestiture, liabilities were divested as follows: December 31, 2025 December 31, 2024 December 31, 2023 Non-cash assets divested $ — $ 10,664 $ — Cash paid in divestiture — 243,504 — Less: Final settlement receivable — 6,011 — Net gain on divestiture — 19,983 — Liabilities divested $ — $ 268,140 $ — See notes to consolidated financial statements. 59 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Statement Preparation The accounting and reporting policies of the Corporation and the Bank conform to accounting principles generally accepted in the United States of America (“GAAP”) and to prevailing practices within the banking industry. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses. The Corporation is a financial holding company whose principal activity is the ownership and management of the Bank and operates in a single significant business segment. The Bank provides full banking services under an Indiana state-charter. Additionally, the Bank operates as First Merchants Private Wealth Advisors (a division of First Merchants Bank). The Bank generates commercial, mortgage, and consumer loans and receives deposits from customers located primarily in central and northern Indiana, central Ohio and southeast Michigan counties. The Bank’s loans are generally secured by specific items of collateral, including real property, consumer assets and business assets. A brief description of current accounting practices and current valuation methodologies are presented below. Consolidation The consolidation of the Corporation’s financial statements include the accounts of the Corporation and all its subsidiaries, after elimination of all material intercompany transactions. Business Combinations Business combinations are accounted for under the acquisition method of accounting. Under the acquisition method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of acquisition with any excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired recorded as goodwill. Results of operations of the acquired business are included in the income statement from the date of acquisition. Details of the Corporation’s acquisitions are included in NOTE 2. ACQUISITIONS AND DIVESTITURES of these Notes to Consolidated Financial Statements. Cash and Cash Equivalents Cash on hand, cash items in process of collection and noninterest bearing cash held at various banks are included in cash and cash equivalents and have a maturity of less than three months. The Corporation maintains deposits with other financial institutions in amounts that exceed federal deposit insurance coverage. Management regularly evaluates the credit risk associated with the counterparties to these transactions and believes there is not significant credit risk on cash and cash equivalents. Interest-Bearing Deposits Interest-bearing cash held at other banks, the Federal Reserve Bank and federal funds sold are included in interest-bearing deposits and have a maturity of less than three months. The Corporation maintains deposits with other financial institutions in amounts that exceed federal deposit insurance coverage. Management regularly evaluates the credit risk associated with the counterparties to these transactions and believes there is not significant credit risk on interest-bearing deposits. Investment Securities Held to maturity securities are carried at amortized cost when the Corporation has the positive intent and ability to hold them until maturity. Available for sale securities are recorded at fair value on a recurring basis with the unrealized gains and losses, net of applicable income taxes, recorded in other comprehensive income (loss). Realized gains and losses are recorded in earnings and the prior fair value adjustments are reclassified within stockholders’ equity. Gains and losses on sales of securities are determined on the specific-identification method. Amortization of premiums are amortized to their earliest call date and accretion of discounts are amortized to the maturity date. The amortization is recorded as interest income from securities. Details of the Corporation’s investment securities portfolio are included in NOTE 4. INVESTMENT SECURITIES of these Notes to Consolidated Financial Statements. Allowance for Credit Losses on Investment Securities Available for Sale For investment securities available for sale in an unrealized loss position, the Corporation first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. 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 income. 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. In making this assessment, the Corporation considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. 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 the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded, limited by the amount that the fair value is less than the amortized cost basis. Unrealized losses that have not been recorded through an allowance for credit losses are recognized in other comprehensive income (loss). Adjustments to the allowance for credit losses are reported in the income statement as a component of the provision for credit loss. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities available for sale from the estimate of credit losses. 60 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Investment securities available for sale are charged off against the allowance or, in the absence of any allowance, written down through the income statement when deemed uncollectible or when either of the aforementioned criteria regarding intent or requirement to sell is met. 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. Details of the Corporation’s allowance for credit losses on investment securities available for sale are included in NOTE 4. INVESTMENT SECURITIES of these Notes to Consolidated Financial Statements. Allowance for Credit Losses on Investment Securities Held to Maturity (“ACL - Investments”) The ACL - Investments is a contra asset-valuation account that is deducted from the amortized cost basis of investment securities held to maturity to present the net amount expected to be collected. Investment securities held to maturity are charged off against the ACL - Investments when deemed uncollectible. Adjustments to the ACL - Investments are reported in the income statement as a component of the provision for credit loss. The Corporation measures expected credit losses on held to maturity debt securities on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. 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 of these securities are issued by a U.S. Government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities. With regard to securities issued by states and municipalities and other investment securities held to maturity, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. Historical loss rates associated with securities having similar grades as those in the Corporation’s portfolio have generally not been significant. An allowance for credit losses of $ 245,000 was recorded on state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities. Details of the Corporation’s ACL - Investments are included in NOTE 4. INVESTMENT SECURITIES of these Notes to Consolidated Financial Statements. Loans Held for Sale Loans held for sale are carried at the lower of aggregate cost or market value. Loan fees (net of certain direct loan origination costs) on loans held for sale are deferred until the related loans are sold or repaid. Gains or losses on loan sales are recognized at the time of sale and determined using the specific identification method. Loans The Corporation’s loan portfolio is carried at the principal amount outstanding, net of unearned income and principal charge-offs. Loan origination fees, net of direct loan origination costs, and commitment fees are deferred and amortized as an adjustment to yield over the life of the loan, or over the commitment period, as applicable. Interest income is accrued on the principal balances of loans. The accrual of interest is discontinued on a loan when, in management’s opinion, the borrower may be unable to meet payments as they become due. When the interest accrual is discontinued, all unpaid accrued interest is reversed against earnings when considered uncollectible. Interest income accrued in the prior year, if any, is charged to the allowance for credit losses. Interest income is subsequently recognized only to the extent cash payments are received and the loan is returned to accruing status. Details of the Corporation’s loan portfolio are included in NOTE 5. LOANS AND ALLOWANCE FOR CREDIT LOSSES of these Notes to Consolidated Financial Statements. Purchased Credit Deteriorated (“PCD”) Loans The Corporation accounts for its acquisitions under ASC Topic 805, Business Combinations , which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. The fair value of acquired loans at the time of acquisition is based on a variety of factors including discounted expected cash flows, adjusted for estimated prepayments and credit losses. In accordance with ASC 326, Financial Instruments – Credit Losses, the fair value adjustment is recorded as a premium or discount to the unpaid principal balance of each acquired loan. Acquired loans are classified into two categories: loans with more than insignificant credit deterioration (“PCD”) since origination, and loans with insignificant credit deterioration (“non-PCD”) since origination. Factors considered when determining whether a loan has a more-than-insignificant deterioration since origination include, but are not limited to, the materiality of the credit, risk grade, delinquency, nonperforming status, bankruptcies, and other qualitative factors. The net premium or discount on PCD loans is recorded in the Corporation’s allowance for credit losses on loans at the time of acquisition. The remaining net premium or discount is accreted or amortized into interest income over the remaining life of the loan using an effective yield method. The net premium or discount on non-PCD loans, that includes credit and non-credit components, is accreted or amortized into interest income over the remaining life of the loan using an effective yield method. Additionally, non-PCD loans have an allowance for credit loss established on acquisition date, which is recognized in the current period provision for credit loss expense. In the event of prepayment, unamortized discounts or premiums on PCD and non-PCD loans are recognized in interest income. Allowance for Credit Losses - Loans (“ACL - Loans”) The ACL - Loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on loans over the contractual term. Loans are charged off against the allowance when the collectibility of the loan is unlikely. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. Adjustments to the ACL - Loans are reported in the income statement as a component of provision for credit loss. The Corporation has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses. Further information regarding the policies and methodology used to estimate the ACL - Loans is detailed in NOTE 5. LOANS AND ALLOWANCE FOR CREDIT LOSSES of these Notes to Consolidated Financial Statements. 61 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Pension The Corporation has defined-benefit pension plans, including non-qualified plans for certain employees, former employees and former non-employee directors. In 2005, the Board of Directors of the Corporation approved the curtailment of the accumulation of defined benefits for future services provided by certain participants in the First Merchants Corporation Retirement Plan. No additional pension benefits have been earned by any employees who had not met certain requirements as of March 1, 2005. The benefits are based primarily on years of service and employees’ pay near retirement. The Corporation’s accounting policies related to pensions and other post retirement benefits reflect the guidance in ASC 715, Compensation – Retirement Benefits. The Corporation does not consolidate the assets and liabilities associated with the pension plan. Instead, the Corporation recognizes the funded status of the plan in the Consolidated Balance Sheets. The measurement of the funded status and the annual pension expense involves actuarial and economic assumptions. Various statistical and other factors, which attempt to anticipate future events, are used in calculating the expense and liabilities related to the plans. Key factors include assumptions on the expected rates of return on plan assets, discount rates and health care costs and trends. The Corporation considers market conditions, including changes in investment returns and interest rates in making these assumptions. The primary assumptions used in determining the Corporation’s pension and post retirement benefit obligations and related expenses are presented in NOTE 18. PENSION AND OTHER POST RETIREMENT BENEFIT PLANS of these Notes to Consolidated Financial Statements. Premises and Equipment Premises and equipment is carried at cost net of accumulated depreciation. Depreciation is computed using the straight-line and declining balance methods based on the estimated useful lives of the assets ranging from three to forty years . Maintenance and repairs are expensed as incurred, while major additions and improvements, which extend the useful life, are capitalized. Gains and losses on dispositions are included in current operations. Details of the Corporation’s premises and equipment are included in NOTE 6. PREMISES AND EQUIPMENT of these Notes to Consolidated Financial Statements. Leases The Corporation leases certain land and premises from third parties and all are classified as operating leases. Operating leases are included in Other Assets and Other Liabilities on the Corporation’s Consolidated Balance Sheets and lease expense for lease payments is recognized on a straight-line basis over the lease term. Right of Use (“ROU”) assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the term. An ROU asset represents the right to use the underlying asset for the lease term and also includes any direct costs and payments made prior to lease commencement and excludes lease incentives. When an implicit rate is not available, an incremental borrowing rate based on the information available at commencement date is used in determining the present value of the lease payments. A lease term may include an option to extend or terminate the lease when it is reasonably certain the option will be exercised. Short-term leases of twelve months or less are excluded from accounting guidance; as a result, the lease payments are recognized on a straight-line basis over the lease term and the leases are not reflected on the Corporation’s Consolidated Balance Sheets. Renewal and termination options are considered when determining short-term leases. Leases are accounted for at the individual level. Details of the Corporation’s leases are included in NOTE 8. LEASES of these Notes to Consolidated Financial Statements. Qualified Affordable Housing Investments Qualified affordable housing investments are investments related to low-income housing tax credits. The purpose of the Corporation’s investment in LIHTC partnerships is to assist in achieving the goals of the Community Reinvestment Act and to earn an adequate return on capital via the federal income tax credit. LIHTC partnerships are managed by unrelated general partners that have the power to direct the activities which most significantly affect the performance of the partnerships and, therefore, the Corporation is not the primary beneficiary of these partnerships. Accordingly, the Corporation does not consolidate these variable interest entities into its consolidated financial statements. Investments in LIHTCs are included in other assets on the Consolidated Balance Sheets and the unfunded commitments to provide additional capital for LIHTC investments are included in other liabilities on the Consolidated Balance Sheets. Additionally, the Corporation amortizes the cost of the qualifying investments in proportion to the tax credit and other tax benefits received over the life of the investment. The amortization and income tax credits are included as a component of income tax expense in the Consolidated Statements of Income. Details of the Corporation’s LIHTC investments are included in NOTE 9. QUALIFIED AFFORDABLE HOUSING INVESTMENTS of these Notes to Consolidated Financial Statements. Federal Home Loan Bank Stock (“FHLB”) FHLB stock is a required investment for institutions that are members of the FHLB. The Bank is a member of the FHLB of Indianapolis. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost and is classified as a restricted security. Both cash and stock dividends are reported as income. Intangible Assets Intangible assets are acquired assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset or liability. Intangible assets with definite useful lives are subject to amortization and relate to core deposits, customer relationships and non-compete agreements. These intangible assets are being amortized on both the straight-line and accelerated basis over two to ten years . Intangible assets are periodically evaluated as to the recoverability of their carrying value. Details of the Corporation’s other intangible assets are included in NOTE 7. GOODWILL AND OTHER INTANGIBLES of these Notes to Consolidated Financial Statements. 62 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Goodwill Goodwill is maintained by applying the provisions of ASC 350, Intangibles – Goodwill and Other . For acquisitions, assets acquired, including identified intangible assets, and the liabilities assumed are required to be recorded at their fair value. These often involve estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analysis or other valuation techniques that may include estimates of attrition, inflation, asset growth rates, or other relevant factors. In addition, the determination of the useful lives over which the intangible asset will be amortized is subjective. Under ASC 350, 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, indicating that the carrying value may not be recoverable. The Corporation completed its most recent annual goodwill impairment test during the fourth quarter of 2025 and concluded, based on current events and circumstances goodwill is not impaired. Details of the Corporation’s goodwill are included in NOTE 7. GOODWILL AND OTHER INTANGIBLES of these Notes to Consolidated Financial Statements. Bank Owned Life Insurance (“BOLI”) BOLI policies have been purchased, as well as obtained through acquisitions, on certain current and former employees and directors of the Corporation to offset a portion of the employee benefit costs. The Corporation records the life insurance at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or amounts due that are probable at settlement. Changes in cash surrender values and death benefits received in excess of cash surrender values are reported in noninterest income. A corporate policy is in place with defined thresholds that limit the amount of credit, interest rate and liquidity risk inherent in a BOLI portfolio. The Corporation actively monitors the overall portfolio performance along with the credit quality of the insurance carriers and the credit quality and yield of the underlying investments. Other Real Estate Owned (“OREO”) OREO consists of assets acquired through, or in lieu of, loan foreclosure and are held for sale. They are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation are included in other real estate owned and foreclosure expenses. Derivative Financial Instruments Derivative instruments, which are recorded as assets or liabilities in the Consolidated Balance Sheets, are carried at fair value and reflects the estimated amounts that would have been received or paid to terminate these contracts at the reporting date based upon pricing or valuation models applied to current market information. As part of the asset/liability management program, the Corporation will utilize, from time to time, interest rate floors, caps or swaps to reduce its sensitivity to interest rate fluctuations. Changes in the fair values of derivative instruments are reported in the consolidated statements of operations or AOCI depending on the use of the derivative and whether the instrument qualifies for hedge accounting. The key criterion for hedge accounting is that the hedged relationship must be highly effective in achieving offsetting changes in those cash flows that are attributable to the hedged risk, both at inception of the hedge and on an ongoing basis. Derivatives that qualify for hedge accounting treatment are designated as either: (1) a hedge of the fair value of the recognized asset or liability, or of an unrecognized firm commitment (a fair value hedge); or (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (a cash flow hedge). For cash flow hedges, changes in the fair values of the derivative instruments are reported in AOCI to the extent the hedge is effective. The gains and losses on derivative instruments that are reported in AOCI are reflected in the Consolidated Statements of Income in the periods in which the results of operations are impacted by the variability of the cash flows of the hedged item. Generally, net interest income is increased or decreased by amounts receivable or payable with respect to the derivatives, which qualify for hedge accounting. At inception of the hedge, the Corporation establishes the method it uses for assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. The ineffective portion of the hedge, if any, is recognized in the Consolidated Statements of Income. The Corporation excludes the time value expiration of the hedge when measuring ineffectiveness. The Corporation offers interest rate derivative products (e.g. interest rate swaps) to certain of its high-quality commercial borrowers. This product allows customers to enter into an agreement with the Corporation to swap their variable rate loan to a fixed rate. These derivative products are designed to reduce, eliminate or modify the risk of changes in the borrower’s interest rate or market price risk. The extension of credit incurred through the execution of these derivative products is subject to the same approvals and rigorous underwriting standards as the related traditional credit product. The Corporation limits its risk exposure to these products by entering into a mirror-image, offsetting swap agreement with a separate, well-capitalized and rated counterparty previously approved by the Credit and Asset Liability Committee. By using these interest rate swap arrangements, the Corporation is also better insulated from the interest rate risk associated with underwriting fixed-rate loans. These derivative contracts are not designated against specific assets or liabilities under ASC 815, Derivatives and Hedging , and, therefore, do not qualify for hedge accounting. The derivatives are recorded on the balance sheet at fair value and changes in fair value of both the customer and the offsetting swap agreements are recorded (and essentially offset) in noninterest income. The fair value of the derivative instruments incorporates a consideration of credit risk (in accordance with ASC 820, Fair Value Measurements and Disclosures ), resulting in some volatility in earnings each period. 63 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. It is the Corporation’s practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated in hedge relationships. Fair values were estimated based on changes in mortgage interest rates from the date of the commitments. Changes in the fair value of these mortgage banking derivatives are included in net gains and fees on sales of loans. In the normal course of business, the Corporation may decide to settle a forward contract rather than fulfill the contract. Cash received or paid in this settlement manner is included in “Net gains and fees on sales of loans” in the Consolidated Statements of Income and is considered a cost of executing a forward contract. Details of the Corporation’s derivative instruments are included in NOTE 12. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Financial Statements. Securities Sold Under Repurchase Agreements Securities sold under repurchase agreements represent securities the Corporation routinely sells to certain treasury management customers and then repurchases these securities the next day. Securities sold under repurchase agreements are reflected as secured borrowings in the Corporation’s Consolidated Balance Sheets at the amount of cash received in connection with each transaction. Details of the Corporation’s repurchase agreements are included in NOTE 11. BORROWINGS of these Notes to Consolidated Financial Statements. Allowance for Credit Losses - Off-Balance Sheet Credit Exposures The allowance for credit losses on off-balance sheet credit exposures is a liability account representing expected credit losses over the contractual period for which the Corporation is exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recognized if the Corporation has the unconditional right to cancel the obligation. Off-balance sheet credit exposures primarily consist of amounts available under outstanding lines of credit and letters of credit. For the period of exposure, the estimate of expected credit losses considers both the likelihood that funding will occur and the amount expected to be funded over the estimated remaining life of the commitment or other off-balance sheet exposure. The likelihood and expected amount of funding are based on historical utilization rates. The amount of the allowance represents management’s best estimate of expected credit losses on commitments expected to be funded over the contractual life of the commitment. The allowance for off-balance sheet credit exposures is adjusted through the income statement as a component of provision for credit loss. Further information regarding the policies and methodology used to estimate the allowance for credit losses on off-balance sheet credit exposures is detailed in NOTE 5. LOANS AND ALLOWANCE FOR CREDIT LOSSES of these Notes to Consolidated Financial Statements. Revenue Recognition Revenue recognition guidance establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. The majority of the Corporation’s revenue-generating transactions are not subject to ASU 2014-09, including revenue generated from financial instruments, such as loans, letters of credit, derivatives and investment securities, as well as revenue related to mortgage servicing activities, as these activities are subject to other GAAP discussed elsewhere within the disclosures. The Corporation has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary. Descriptions of revenue-generating activities that are within the scope of ASU 2014-09, which are presented in our income statements are as follows: Service charges on deposit accounts : The Corporation earns fees from its deposit customers for transaction-based, account maintenance and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering and ACH fees, are recognized at the time the transaction is executed, which is the point in time the Corporation fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned monthly, representing the period which the Corporation satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance. Fiduciary activities : This represents monthly fees due from wealth management customers as consideration for managing the customers’ assets. Wealth management and trust services include custody of assets, investment management, fees for trust services and similar fiduciary activities. These fees are primarily earned over time as the Corporation provides the contracted monthly or quarterly services and are generally assessed based on the market value of assets under management at month-end. Fees that are transaction-based are recognized at the point in time that the transaction is executed. Investment Brokerage Fees : The Corporation earns fees from investment brokerage services provided to its customers by a third-party service provider. The Corporation receives commissions from the third-party provider on a monthly basis based upon customer activity for the month. The fees are paid to us by the third party on a monthly basis and are recognized when received. Interchange income : The Corporation earns interchange fees from debit and credit cardholder transactions conducted through the Visa and MasterCard payment networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized concurrent with the transaction processing services provided to the cardholder. 64 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Gains (Losses) on Sales of OREO : The Corporation records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Corporation finances the sale of OREO to the buyer, the Corporation assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Corporation adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. Transfers of Financial Assets Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered, or in the case of a loan participation, a portion of the asset has been surrendered and meets the definition of a “participating interest.” Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Corporation and put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. Share-Based Compensation Stock option and restricted stock award plans are maintained by the Corporation. The compensation costs are recognized for stock options and restricted stock awards issued to employees and directors based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options. The market price of the Corporation’s common stock at the date of grant is used for restricted stock awards. Compensation expense is recognized over the appropriate service period, which is generally three years . Details of the Corporation’s share-based compensation are included in NOTE 17. SHARE-BASED COMPENSATION of these Notes to Consolidated Financial Statements. Income Taxes Income tax expense in the Consolidated Statements of Income is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts from the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. The Corporation files consolidated income tax returns with its subsidiaries. The Corporation is generally no longer subject to U.S. federal, state and local income tax examinations by tax authorities for tax years before 2022. The Corporation accounts for income taxes under the provisions of ASC 740, Income Taxes , which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Per the guidance in ASC 740, the Corporation has not identified any uncertain tax positions that it believes should be recognized in the financial statements. The Corporation reviews income tax expense and the carrying value of deferred tax assets and liabilities quarterly; as new information becomes available, the balances are adjusted, if applicable. The Corporation’s policy is to recognize interest and penalties related to unrecognized tax benefits, if any, as a component of income tax expense. Details of the Corporation’s income taxes are included in NOTE 19. INCOME TAXES of these Notes to Consolidated Financial Statements. Net Income Per Common Share Basic net income per common share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding. Diluted net income per common share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding, plus the dilutive effect of outstanding stock options and non-vested restricted stock awards. Potentially dilutive common shares are excluded from the computation of diluted earnings per share in the periods where the effect would be antidilutive. Details of the Corporation’s net income per share are included in NOTE 20. NET INCOME PER COMMON SHARE of these Notes to Consolidated Financial Statements. RECENT ACCOUNTING CHANGES ADOPTED IN 2025 FASB Accounting Standards Update No. 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures Summary - In the fourth quarter of 2025, the Corporation adopted ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . This ASU enhances existing income tax disclosure requirements by requiring more detailed information about the effective tax rate reconciliation and income taxes paid. The amendments require enhanced disclosure of significant reconciling items in the effective tax rate reconciliation, including disclosure of specific categories within the rate reconciliation when quantitative thresholds are met. In addition, entities are required to disclose income taxes paid (net of refunds received), disaggregated by federal, state, and foreign jurisdictions, as well as by individual jurisdictions that are significant to the entity. The amendments are effective for annual periods beginning after December 15, 2024. The Corporation adopted the amendments for the year ended December 31, 2025. The guidance may be applied on a prospective basis; retrospective application is also permitted. The adoption did not have a material effect on the Corporation’s financial statements or related disclosures. See NOTE 19. INCOME TAXES of the Notes to Consolidated Financial Statements for additional information. NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED The Corporation continually monitors potential accounting pronouncements and the following pronouncements have been deemed to have the most applicability to the Corporation's financial statements: 65 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) FASB Accounting Standards Update No. 2024-03 - Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures Summary - The FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures in the fourth quarter of 2024. This ASU requires public business entities to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods. The objective of the disclosure requirements is to provide disaggregated information about a public business entity's expenses to help investors (a) better understand the entity's performance, (b) better assess the entity's prospects for future cash flows, and (c) compare an entity's performance over time and with that of other entities. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Corporation is assessing the terms of this guidance, but adoption of the standard is not expected to have a significant impact on the Corporation’s financial statements or disclosures. FASB Accounting Standards Update No. 2025-08 - Financial Instruments - Credit Losses (Topic 326): Purchased Loans Summary - The FASB issued ASU No. 2025-08, Financial Instruments - Credit Losses (Topic 326): Purchased Loans in the fourth quarter of 2025. This ASU requires that purchased seasoned loans be accounted for using the gross-up approach, which will enhance comparability and consistency in the accounting for acquired financial assets. The amendments in this Update expand the population of acquired financial assets accounted for under the gross‑up approach by requiring that purchased seasoned loans—defined as loans (excluding credit cards) acquired without credit deterioration and deemed ‘seasoned’—be recognized using the gross‑up methodology at acquisition. Entities must first determine that a loan is a non‑PCD asset and then assess whether it meets the definition of a purchased seasoned loan to apply the gross‑up approach. The amendments are effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, and are to be applied prospectively to loans acquired on or after the adoption date. Early adoption is permitted for any interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. The Corporation plans to early adopt this guidance in connection with the acquisition of First Savings Financial Group, Inc. (“First Savings”) in the first quarter of 2026, at which time the gross-up approach will be applied to loans acquired in the transaction, along with required quantitative disclosures of activity in the allowance for credit losses for purchased seasoned loans. FASB Accounting Standards Update No. 2025-09 - Derivatives and Hedging (Topic 815): Hedge Accounting Improvements Summary - The FASB issued ASU No. 2025-09, Derivatives and Hedging (Topic 815): hedge Accounting Improvements in the fourth quarter 2025. The amendments in this Update clarify certain aspects of the guidance on hedge accounting and to address several incremental hedge accounting issues from the global reference rate reform initiative. The objective is to more closely align hedge accounting with the economics of an entity’s risk management activities. The five issues addressed in this Update are intended to better reflect those strategies in financial reporting by enabling entities to achieve and maintain hedge accounting for highly effective economic hedges of forecasted transactions. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those fiscal years. Early adoption is permitted. The Corporation is assessing the terms of this guidance, but adoption of the standard is not expected to have a significant impact on the Corporation’s financial statements or disclosures. FASB Accounting Standards Update No. 2025-10 - Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities Summary - The FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities in the fourth quarter 2025. This Update establishes authoritative U.S. GAAP guidance for accounting for government grants received by business entities, including recognition, measurement, and presentation. It provides specific guidance for grants related to assets and grants related to income. The amendments exclude income taxes, below-market interest rate loans, and government guarantees. The amendments are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those fiscal years. Early adoption is permitted for any interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. The Corporation is assessing the terms of this guidance, but adoption of the standard is not expected to have a significant impact on the Corporation’s financial statements or disclosures. 66 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) NOTE 2 ACQUISITIONS AND DIVESTITURES First Savings Financial Group, Inc. Acquisition On February 1, 2026 (the "Effective Time"), the Corporation completed the acquisition of First Savings Financial Group, Inc., an Indiana corporation (“First Savings”), pursuant to the Agreement and Plan of Merger, dated as of September 24, 2025, by and between the Corporation and First Savings (the “Merger Agreement”). As of such Effective Time, each share of outstanding First Savings common stock was converted into the right to receive 0.85 of a share (the "Exchange Ratio") of First Merchants common stock, in a tax-free exchange, plus cash-in-lieu of any fractional share created by the Exchange Ratio. Immediately prior to the Effective Time, each outstanding First Savings restricted stock award held by certain directors, executive officers and employees of First Savings, whether unvested or vested, was exchanged for shares of First Merchants common stock based on the Exchange Ratio according to their respective award agreement terms. In addition, on the day immediately preceding the Effective Time, each outstanding option to acquire a share of First Savings common stock was cancelled in exchange for the right to receive a cash payment, which was paid by First Savings, equal to (i) $ 32.59 per share, which is equal to the Exchange Ratio multiplied by the volume-weighted average price of First Merchants common stock over the ten ( 10 ) consecutive trading days ending on January 27, 2026, less (ii) the option exercise price per share, and less (iii) any applicable withholding taxes. The Corporation issued 6.1 million shares of its common stock, in exchange for all of the issued and outstanding shares of First Savings common stock. Immediately following the Merger, First Savings Bank, a wholly-owned subsidiary of First Savings, merged with and into the Bank, with the Bank surviving the merger and continuing its corporate existence. First Savings was headquartered in Jeffersonville, Indiana and had 16 banking centers serving the southern Indiana market and had total assets of $ 2.4 billion (unaudited), total loans of $ 1.9 billion (unaudited), and total deposits of $ 1.7 billion (unaudited) as of December 31, 2025. The Corporation engaged in this transaction with the objective that the transaction would be accretive to earnings and add to the existing market area in Indiana that has a demographic profile consistent with many of the current Midwest markets served by the Bank. For the year ended December 31, 2025, the Corporation recorded merger-related expenses of $ 0.8 million related to the First Savings acquisition. The accompanying disclosures do not include the amount of assets acquired and liabilities assumed or any supplemental pro-forma information at the acquisition date, which was completed on February 1, 2026. Due to the close proximity of the acquisition date to the planned filing of this Annual Report on Form 10-K for the year ended December 31, 2025, the initial accounting for the business combination is incomplete. Accordingly, the Corporation is unable to estimate the financial effects of the acquisition on the consolidated financial statements as of December 31, 2025. The Corporation will provide relevant disclosures as required by ASC 805 in its Quarterly Report on Form 10-Q for the quarter ending March 31, 2026. Old Second National Bank Branch Sale On December 6, 2024, the Bank completed its sale of five branches in the suburban Chicago market to Old Second National Bank (“Old Second”). Pursuant to the terms of the branch sale agreement, Old Second assumed certain deposit liabilities and acquired certain loans, as well as cash and premises and equipment. The Bank recognized a gain on sale of $ 20.0 million related to the branch sale for the year ended December 31, 2024 . The following table summarizes the assets and liabilities related to the branch sale: December 6, 2024 Assets Cash and due from banks $ 419 Loans 7,410 Premises and equipment 3,233 Interest receivable and other assets 21 Total Assets $ 11,083 Liabilities Deposits $ 267,448 Interest payable and other liabilities 692 Total Liabilities 268,140 67 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) NOTE 3 CASH AND CASH EQUIVALENTS AND INTEREST-BEARING DEPOSITS At December 31, 2025, the Corporation’s noninterest bearing deposits, included in cash and cash equivalents, and interest-bearing deposits held at other institutions exceeded the $250,000 federally insured limits by approximately $ 34.0 million . Each correspondent bank’s financial performance and market rating are reviewed on a quarterly basis to ensure the Corporation has deposits only at institutions providing minimal risk for those exceeding the federally insured limits. Additionally, the Corporation had approximately $ 182.7 million at the Federal Home Loan Bank and Federal Reserve Bank, which are government-sponsored entities not insured by the FDIC. The Corporation has historically been required to maintain reserve funds in cash and/or on deposit with the Federal Reserve Bank. However, the Federal Reserve announced on March 15, 2020 that in order to support the flow of credit to households and businesses during the COVID-19 pandemic, reserve requirement ratios would move to zero effective March 26, 2020. The reserve requirement ratios remained at zero as of December 31, 2025. NOTE 4 INVESTMENT SECURITIES The following tables summarize the amortized cost, gross unrealized gains and losses and approximate fair value of investment securities available for sale as of December 31, 2025 and December 31, 2024. Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale at December 31, 2025 U.S. Government-sponsored agency securities $ 87,936 $ — $ ( 11,837 ) $ 76,099 State and municipal 993,911 225 ( 91,842 ) 902,294 U.S. Government-sponsored mortgage-backed securities 482,702 1,600 ( 64,792 ) 419,510 Foreign investment 1,500 — — 1,500 Corporate obligations 7,974 1 ( 276 ) 7,699 Total available for sale $ 1,574,023 $ 1,826 $ ( 168,747 ) $ 1,407,102 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale at December 31, 2024 U.S. Government-sponsored agency securities $ 95,462 $ — $ ( 16,081 ) $ 79,381 State and municipal 996,541 19 ( 133,386 ) 863,174 U.S. Government-sponsored mortgage-backed securities 519,943 403 ( 88,724 ) 431,622 Corporate obligations 12,960 — ( 662 ) 12,298 Total available for sale $ 1,624,906 $ 422 $ ( 238,853 ) $ 1,386,475 The following tables summarize the amortized cost, gross unrealized gains and losses, approximate fair value and allowance for credit losses on investment securities held to maturity as of December 31, 2025 and December 31, 2024. Amortized Cost Allowance for Credit Losses Net Carrying Amount Gross Unrealized Gains Gross Unrealized Losses Fair Value Held to maturity at December 31, 2025 U.S. Government-sponsored agency securities $ 324,643 $ — $ 324,643 $ — $ ( 46,693 ) $ 277,950 State and municipal 1,069,653 ( 245 ) 1,069,408 868 ( 137,706 ) 932,815 U.S. Government-sponsored mortgage-backed securities 577,488 — 577,488 — ( 69,966 ) 507,522 Total held to maturity $ 1,971,784 $ ( 245 ) $ 1,971,539 $ 868 $ ( 254,365 ) $ 1,718,287 Amortized Cost Allowance for Credit Losses Net Carrying Amount Gross Unrealized Gains Gross Unrealized Losses Fair Value Held to maturity at December 31, 2024 U.S. Government-sponsored agency securities $ 345,531 $ — $ 345,531 $ — $ ( 63,112 ) $ 282,419 State and municipal 1,085,921 ( 245 ) 1,085,676 299 ( 185,784 ) 900,436 U.S. Government-sponsored mortgage-backed securities 641,513 — 641,513 — ( 102,343 ) 539,170 Foreign investment 1,500 — 1,500 — ( 5 ) 1,495 Total held to maturity $ 2,074,465 $ ( 245 ) $ 2,074,220 $ 299 $ ( 351,244 ) $ 1,723,520 Accrued interest on investment securities available for sale and held to maturity at December 31, 2025 and December 31, 2024 of $ 21.9 million and $ 22.5 million, respectively, is included in the “Interest Receivable” line on the Corporation’s Consolidated Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of available for sale and held to maturity securities presented above. 68 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) In determining the allowance for credit losses on investment securities available for sale that are in an unrealized loss position, the Corporation first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. 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. In making this assessment, the Corporation considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. 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 the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. 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. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities available for sale from the estimate of credit losses. Investment securities available for sale are charged off against the allowance or, in the absence of any allowance, written down through the income statement when deemed uncollectible or when either of the aforementioned criteria regarding intent or requirement to sell is met. 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. The allowance for credit losses on investment securities held to maturity is a contra asset-valuation account that is deducted from the amortized cost basis of investment securities held to maturity to present the net amount expected to be collected. Investment securities held to maturity are charged off against the allowance when deemed uncollectible. Adjustments to the allowance are reported in the income statement as a component of the provision for credit losses. The Corporation measures expected credit losses on investment securities held to maturity on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. 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. Government-sponsored mortgage-backed securities, all these securities are issued by a U.S. Government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities. With regard to securities issued by states and municipalities and other investment securities held to maturity, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the 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 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 applying the long-term historical credit rate, as published by Moody’s, for similar rated securities. On a quarterly basis, the Corporation monitors the credit quality of investment securities held to maturity through the use of credit ratings. The following tables summarize the amortized cost of investment securities held to maturity at December 31, 2025 and 2024, aggregated by credit quality indicator. December 31, 2025 U.S. Government-sponsored agency securities (1) State and municipal U.S. Government-sponsored mortgage-backed securities (1) Total Credit Rating: Aaa $ 324,643 $ 75,598 $ 577,488 $ 977,729 Aa1 — 200,189 — 200,189 Aa2 — 172,127 — 172,127 Aa3 — 192,682 — 192,682 A1 — 59,631 — 59,631 A2 — 13,664 — 13,664 A3 — 6,670 — 6,670 Non-rated — 349,092 — 349,092 Total $ 324,643 $ 1,069,653 $ 577,488 $ 1,971,784 69 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) December 31, 2024 U.S. Government-sponsored agency securities (1) State and municipal U.S. Government-sponsored mortgage-backed securities (1) Foreign investment Total Credit Rating: Aaa $ 345,531 $ 120,801 $ 641,513 $ — $ 1,107,845 Aa1 — 148,923 — — 148,923 Aa2 — 184,341 — — 184,341 Aa3 — 185,166 — — 185,166 A1 — 65,665 — — 65,665 A2 — 20,317 — — 20,317 Non-rated — 360,708 — 1,500 362,208 Total $ 345,531 $ 1,085,921 $ 641,513 $ 1,500 $ 2,074,465 (1) U.S. Government-sponsored agency securities and U.S. Government-sponsored mortgage-backed securities are included within the Aaa credit rating category due to their explicit or implicit government guarantees, which provide a high level of assurance regarding the timely collection of principal and interest payments. The following tables summarize, as of December 31, 2025 and December 31, 2024, investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and length of time in a continuous unrealized loss position. Less than 12 Months 12 Months or Longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Investment securities available for sale at December 31, 2025 U.S. Government-sponsored agency securities $ — $ — $ 76,099 $ ( 11,837 ) $ 76,099 $ ( 11,837 ) State and municipal 5,468 ( 11 ) 861,410 ( 91,830 ) 866,878 ( 91,841 ) U.S. Government-sponsored mortgage-backed securities 4,885 ( 10 ) 313,353 ( 64,783 ) 318,238 ( 64,793 ) Corporate obligations — — 6,676 ( 276 ) 6,676 ( 276 ) Total investment securities available for sale $ 10,353 $ ( 21 ) $ 1,257,538 $ ( 168,726 ) $ 1,267,891 $ ( 168,747 ) Less than 12 Months 12 Months or Longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Investment securities available for sale at December 31, 2024 U.S. Government-sponsored agency securities $ — $ — $ 79,381 $ ( 16,081 ) $ 79,381 $ ( 16,081 ) State and municipal 40,398 ( 2,115 ) 820,663 ( 131,271 ) 861,061 ( 133,386 ) U.S. Government-sponsored mortgage-backed securities 82,724 ( 1,660 ) 318,310 ( 87,064 ) 401,034 ( 88,724 ) Corporate obligations — — 12,268 ( 662 ) 12,268 ( 662 ) Total investment securities available for sale $ 123,122 $ ( 3,775 ) $ 1,230,622 $ ( 235,078 ) $ 1,353,744 $ ( 238,853 ) The following tables summarize investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and the number of securities in the portfolio as of the dates indicated. Gross Unrealized Losses Number of Securities Investment securities available for sale at December 31, 2025 U.S. Government-sponsored agency securities $ ( 11,837 ) 12 State and municipal ( 91,841 ) 587 U.S. Government-sponsored mortgage-backed securities ( 64,793 ) 89 Corporate obligations ( 276 ) 5 Total investment securities available for sale $ ( 168,747 ) 693 Gross Unrealized Losses Number of Securities Investment securities available for sale at December 31, 2024 U.S. Government-sponsored agency securities $ ( 16,081 ) 12 State and municipal ( 133,386 ) 611 U.S. Government-sponsored mortgage-backed securities ( 88,724 ) 127 Corporate obligations ( 662 ) 10 Total investment securities available for sale $ ( 238,853 ) 760 70 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) The unrealized losses in the Corporation’s investment portfolio were the result of changes in interest rates and not credit quality. As a result, the Corporation expects to recover the amortized cost basis over the term of the securities. The Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. Certain investment securities available for sale are reported in the financial statements at an amount less than their historical cost as indicated in the table below. December 31, 2025 December 31, 2024 Investments available for sale reported at less than historical cost: Historical cost $ 1,436,638 $ 1,592,597 Fair value 1,267,891 1,353,744 Gross unrealized losses $ ( 168,747 ) $ ( 238,853 ) Percent of the Corporation's investments available for sale in an unrealized loss position 90.1 % 97.6 % In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level 1 and Level 2 in the fair value hierarchy. 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 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. 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. The amortized cost and fair value of investment securities available for sale and held to maturity at December 31, 2025 and December 31, 2024, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately. Available for Sale Held to Maturity Amortized Cost Fair Value Amortized Cost Fair Value Maturity Distribution at December 31, 2025 Due in one year or less $ — $ — $ 7,014 $ 7,024 Due after one through five years 16,877 16,577 118,912 115,973 Due after five through ten years 241,803 227,493 228,224 210,125 Due after ten years 832,641 743,522 1,040,146 877,643 1,091,321 987,592 1,394,296 1,210,765 U.S. Government-sponsored mortgage-backed securities 482,702 419,510 577,488 507,522 Total Investment Securities $ 1,574,023 $ 1,407,102 $ 1,971,784 $ 1,718,287 Available for Sale Held to Maturity Amortized Cost Fair Value Amortized Cost Fair Value Maturity Distribution at December 31, 2024 Due in one year or less $ 1,800 $ 1,795 $ 5,268 $ 5,254 Due after one through five years 12,189 11,857 124,004 117,999 Due after five through ten years 168,338 151,467 174,533 154,533 Due after ten years 922,636 789,734 1,129,147 906,564 1,104,963 954,853 1,432,952 1,184,350 U.S. Government-sponsored mortgage-backed securities 519,943 431,622 641,513 539,170 Total Investment Securities $ 1,624,906 $ 1,386,475 $ 2,074,465 $ 1,723,520 Securities with a carrying value of approximately $ 3.3 billion were pledged at December 31, 2025 and 2024, respectively, to secure certain deposits and securities sold under repurchase agreements, and for other purposes as permitted or required by law. The book value of securities pledged and available under agreements to repurchase amounted to $ 119.8 million at December 31, 2025 and $ 173.0 million at December 31, 2024. Gross gains and losses on the sales of investment securities available for sale for the years indicated are shown below. 2025 2024 2023 Sales and redemptions of investment securities available for sale: Gross gains $ — $ 8 $ 759 Gross losses ( 8 ) ( 20,765 ) ( 7,689 ) Net losses on sales and redemptions of investment securities available for sale $ ( 8 ) $ ( 20,757 ) $ ( 6,930 ) 71 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) NOTE 5 LOANS AND ALLOWANCE FOR CREDIT LOSSES The Corporation’s primary lending focus is small business and middle market commercial, commercial real estate, public finance and residential real estate, which results in portfolio diversification. The following tables show the composition of the loan portfolio and credit quality characteristics by collateral classification, excluding loans held for sale. Loans held for sale at December 31, 2025 and December 31, 2024, were $ 20.1 million and $ 18.7 million, respectively. The following table illustrates the composition of the Corporation’s loan portfolio by loan class as of the dates indicated: December 31, 2025 December 31, 2024 Commercial and industrial loans $ 4,478,282 $ 4,114,292 Agricultural land, production and other loans to farmers 283,125 256,312 Real estate loans: Construction 804,775 792,144 Commercial real estate, non-owner occupied 2,338,666 2,274,016 Commercial real estate, owner occupied 1,237,100 1,157,944 Residential 2,420,310 2,374,729 Home equity 710,980 659,811 Individuals' loans for household and other personal expenditures 155,436 166,028 Public finance and other commercial loans 1,363,033 1,059,083 Loans $ 13,791,707 $ 12,854,359 Credit Quality As part of the ongoing monitoring of the credit quality of the Corporation’s loan portfolio, management tracks certain credit quality indicators including trends related to: (i) the level of criticized commercial loans, (ii) net charge-offs, (iii) nonperforming loans, (iv) covenant failures and (v) the general national and local economic conditions. The Corporation utilizes a risk grading of Pass, Special Mention, Substandard, Doubtful and Loss to assess the overall credit quality of large commercial loans. All large commercial credit grades are reviewed at a minimum of once a year for pass grade loans. Loans with grades below pass are reviewed more frequently depending on the grade. A description of the general characteristics of these grades is as follows: • Pass - Loans that are considered to be of acceptable credit quality. • Special Mention - Loans which possess some credit deficiency or potential weakness, which deserves close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Corporation’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Corporation to sufficient risk to warrant adverse classification. • Substandard - Loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have a well-defined weakness that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. • Doubtful - Loans that have all of the weaknesses of those classified as Substandard. However, based on currently existing facts, conditions and values, these weaknesses make full collection of principal highly questionable and improbable. • Loss – Loans that are considered uncollectible and of such little value that continuing to carry them as an asset is not warranted. Loans will be classified as Loss when it is neither practical or desirable to defer charging-off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future. 72 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) The following tables summarize the risk grading of the Corporation’s loan portfolio and gross charge-offs by loan class and by year of origination for the years indicated. Consumer loans are not risk graded. For the purposes of this disclosure, consumer loans are classified in the following manner: 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. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. December 31, 2025 Term Loans (amortized cost basis by origination year) 2025 2024 2023 2022 2021 Prior Revolving loans amortized cost basis Revolving loans converted to term Total Commercial and industrial loans Pass $ 1,518,095 $ 710,695 $ 236,596 $ 115,775 $ 69,834 $ 65,800 $ 1,540,939 $ — $ 4,257,734 Special Mention 9,552 34,613 7,683 3,246 4,041 479 40,986 — 100,600 Substandard 1,587 17,140 2,671 2,980 11,710 19,116 62,556 — 117,760 Doubtful 401 582 — — — — 1,205 — 2,188 Total Commercial and industrial loans 1,529,635 763,030 246,950 122,001 85,585 85,395 1,645,686 — 4,478,282 Current period gross charge-offs 7,981 1,348 2,434 264 3,685 1,964 — — 17,676 Agricultural land, production and other loans to farmers Pass 62,959 18,469 20,924 24,465 22,246 42,529 80,039 — 271,631 Special Mention 590 1,636 22 499 — 1,478 1,182 — 5,407 Substandard 600 2,165 16 — — 2,085 1,221 — 6,087 Total Agricultural land, production and other loans to farmers 64,149 22,270 20,962 24,964 22,246 46,092 82,442 — 283,125 Real estate loans: Construction Pass 231,041 313,838 100,587 17,515 921 9,954 15,261 — 689,117 Special Mention 41,580 6,104 — — 8,683 — — — 56,367 Substandard 34,176 12,889 641 11,585 — — — — 59,291 Total Construction 306,797 332,831 101,228 29,100 9,604 9,954 15,261 — 804,775 Current period gross charge-offs — 63 — — 1 — — — 64 Commercial real estate, non-owner occupied Pass 482,587 259,106 292,161 258,662 367,482 458,340 31,841 — 2,150,179 Special Mention 59,566 36,106 340 3,633 2,308 4,715 100 — 106,768 Substandard 57,489 10,496 5,119 5,171 2,701 662 81 — 81,719 Total Commercial real estate, non-owner occupied 599,642 305,708 297,620 267,466 372,491 463,717 32,022 — 2,338,666 Current period gross charge-offs — — — 451 — 16 — — 467 Commercial real estate, owner occupied Pass 332,121 136,005 129,030 141,679 180,180 219,914 33,983 — 1,172,912 Special Mention 883 16,592 1,426 4,922 4,838 1,075 443 — 30,179 Substandard — 13,510 5,328 5,732 1,061 7,826 260 — 33,717 Doubtful — 292 — — — — — — 292 Total Commercial real estate, owner occupied 333,004 166,399 135,784 152,333 186,079 228,815 34,686 — 1,237,100 Current period gross charge-offs — 243 152 — — 4 — — 399 Residential Pass 310,019 167,128 389,574 613,787 352,662 528,875 7,188 46 2,369,279 Special Mention 345 1,312 6,116 9,565 5,993 4,926 346 — 28,603 Substandard 328 1,411 4,517 7,145 4,840 3,919 268 — 22,428 Total Residential 310,692 169,851 400,207 630,497 363,495 537,720 7,802 46 2,420,310 Current period gross charge-offs — 114 814 737 102 163 — — 1,930 Home equity Pass 10,173 3,020 3,431 21,442 42,749 10,194 608,020 1,470 700,499 Special Mention — 674 — 297 447 59 5,097 329 6,903 Substandard 60 — — 90 304 377 2,637 110 3,578 Total Home equity 10,233 3,694 3,431 21,829 43,500 10,630 615,754 1,909 710,980 Current period gross charge-offs — 92 8 653 563 204 — — 1,520 Individuals' loans for household and other personal expenditures Pass 40,478 16,525 12,010 19,038 5,067 3,961 55,751 1,649 154,479 Special Mention 108 139 174 113 152 16 115 140 957 Total Individuals' loans for household and other personal expenditures 40,586 16,664 12,184 19,151 5,219 3,977 55,866 1,789 155,436 Current period gross charge-offs 307 618 612 396 149 83 — — 2,165 Public finance and other commercial loans Pass 134,004 144,742 52,795 198,964 185,906 407,974 238,648 — 1,363,033 Total Public finance and other commercial loans 134,004 144,742 52,795 198,964 185,906 407,974 238,648 — 1,363,033 Loans $ 3,328,742 $ 1,925,189 $ 1,271,161 $ 1,466,305 $ 1,274,125 $ 1,794,274 $ 2,728,167 $ 3,744 $ 13,791,707 Total current period gross charge-offs $ 8,288 $ 2,478 $ 4,020 $ 2,501 $ 4,500 $ 2,434 $ — $ — $ 24,221 73 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) December 31, 2024 Term Loans (amortized cost basis by origination year) 2024 2023 2022 2021 2020 Prior Revolving loans amortized cost basis Revolving loans converted to term Total Commercial and industrial loans Pass $ 1,314,174 $ 493,138 $ 196,877 $ 158,215 $ 55,639 $ 49,554 $ 1,576,409 $ 130 $ 3,844,136 Special Mention 14,982 13,282 20,837 1,097 2,222 348 41,187 — 93,955 Substandard 29,238 32,285 26,973 7,249 1,081 1,134 75,649 513 174,122 Doubtful 1,473 606 — — — — — — 2,079 Total Commercial and industrial loans 1,359,867 539,311 244,687 166,561 58,942 51,036 1,693,245 643 4,114,292 Current period gross charge-offs 1,242 39,087 341 8,605 500 424 — — 50,199 Agricultural land, production and other loans to farmers Pass 28,600 23,070 30,518 26,442 27,105 29,930 84,502 — 250,167 Special Mention 169 — 245 — 446 422 528 — 1,810 Substandard 2,554 48 800 682 34 81 136 — 4,335 Total Agricultural land, production and other loans to farmers 31,323 23,118 31,563 27,124 27,585 30,433 85,166 — 256,312 Real estate loans: Construction Pass 241,622 203,829 114,794 31,864 6,398 8,549 12,836 — 619,892 Special Mention 74,879 21,853 19,019 15,214 — 40 — — 131,005 Substandard 22,305 — 18,292 — — — — — 40,597 Doubtful — — — 650 — — — — 650 Total Construction 338,806 225,682 152,105 47,728 6,398 8,589 12,836 — 792,144 Commercial real estate, non-owner occupied Pass 383,279 275,907 342,442 406,289 327,372 278,362 19,863 — 2,033,514 Special Mention 79,440 9,051 35,230 12,975 5,287 28,200 — — 170,183 Substandard 34,215 2,506 6,737 6,656 18,607 1,598 — — 70,319 Total Commercial real estate, non-owner occupied 496,934 287,464 384,409 425,920 351,266 308,160 19,863 — 2,274,016 Current period gross charge-offs — 339 3 — — 1 — — 343 Commercial real estate, owner occupied Pass 194,703 141,964 164,725 217,319 198,314 127,431 31,573 — 1,076,029 Special Mention 1,887 11,013 7,555 9,910 8,603 1,951 460 — 41,379 Substandard 13,310 7,669 3,189 11,294 1,522 3,552 — — 40,536 Total Commercial real estate, owner occupied 209,900 160,646 175,469 238,523 208,439 132,934 32,033 — 1,157,944 Current period gross charge-offs — — — — 9 — — — 9 Residential Pass 221,016 413,552 672,713 397,192 326,154 293,785 8,887 13 2,333,312 Special Mention 1,528 1,953 6,228 4,102 2,891 3,152 150 — 20,004 Substandard 1,306 1,912 8,849 3,989 1,216 3,794 347 — 21,413 Total Residential 223,850 417,417 687,790 405,283 330,261 300,731 9,384 13 2,374,729 Current period gross charge-offs — 173 779 136 20 288 — — 1,396 Home equity Pass 6,788 4,354 24,810 51,313 10,486 3,976 535,132 12,124 648,983 Special Mention 38 — 375 285 297 69 4,568 442 6,074 Substandard 61 — 572 815 — 96 2,244 966 4,754 Total Home equity 6,887 4,354 25,757 52,413 10,783 4,141 541,944 13,532 659,811 Current period gross charge-offs — 10 35 22 — 267 — — 334 Individuals' loans for household and other personal expenditures Pass 40,819 21,867 31,356 10,520 2,276 4,693 53,180 180 164,891 Special Mention 153 234 347 175 59 40 128 — 1,136 Substandard — — — — — — — 1 1 Total Individuals' loans for household and other personal expenditures 40,972 22,101 31,703 10,695 2,335 4,733 53,308 181 166,028 Current period gross charge-offs 208 920 523 184 47 80 — — 1,962 Public finance and other commercial loans Pass 161,072 53,750 203,884 195,066 146,377 298,802 132 — 1,059,083 Total Public finance and other commercial loans 161,072 53,750 203,884 195,066 146,377 298,802 132 — 1,059,083 Loans $ 2,869,611 $ 1,733,843 $ 1,937,367 $ 1,569,313 $ 1,142,386 $ 1,139,559 $ 2,447,911 $ 14,369 $ 12,854,359 Total current period gross charge-offs $ 1,450 $ 40,529 $ 1,681 $ 8,947 $ 576 $ 1,060 $ — $ — $ 54,243 74 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Total past due loans equaled $ 130.9 million as of December 31, 2025, a $ 14.7 million increase from the total of $ 116.2 million for December 31, 2024. At December 31, 2025, 30-59 days past due loans totaled $ 53.7 million, an increase of $ 17.9 million from December 31, 2024 as commercial real estate, non-owner occupied, and residential loan classes increased $ 16.7 million and $ 4.9 million, respectively, which was partially offset by a decrease of $ 4.3 million in the construction loan class. At December 31, 2025, 60-89 days past due loans totaled $ 15.6 million, a $ 17.0 million decrease from December 31, 2024, primarily due to a $ 22.0 million decline in construction loans, partially offset by $ 2.9 million increases in both the residential and commercial real estate, owner occupied loan classes. At December 31, 2025, 90 days or more past due loans totaled $ 61.6 million, an increase of $ 13.8 million from December 31, 2024. The primary increases were $ 19.8 million, $ 2.2 million, and $ 2.1 million, in the construction, commercial real estate, owner occupied and residential loan classes, respectively, which was partially offset by a decrease of $ 9.8 million in the commercial real estate, non-owner occupied loan class. The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, as of the dates indicated. December 31, 2025 Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Loans > 90 Days or More Past Due And Accruing Commercial and industrial loans $ 4,459,842 $ 7,194 $ 1,160 $ 10,086 $ 4,478,282 $ 313 Agricultural land, production and other loans to farmers 282,411 480 — 234 283,125 — Real estate loans: Construction 780,999 — — 23,776 804,775 1,295 Commercial real estate, non-owner occupied 2,318,624 19,125 345 572 2,338,666 — Commercial real estate, owner occupied 1,227,448 4,295 2,880 2,477 1,237,100 — Residential 2,372,637 17,182 9,536 20,955 2,420,310 434 Home equity 701,360 4,717 1,427 3,476 710,980 — Individuals' loans for household and other personal expenditures 154,479 738 219 — 155,436 — Public finance and other commercial loans 1,363,033 — — — 1,363,033 — Loans $ 13,660,833 $ 53,731 $ 15,567 $ 61,576 $ 13,791,707 $ 2,042 December 31, 2024 Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Loans > 90 Days or More Past Due And Accruing Commercial and industrial loans $ 4,096,605 $ 7,428 $ 473 $ 9,786 $ 4,114,292 $ 2,010 Agricultural land, production and other loans to farmers 256,148 164 — — 256,312 — Real estate loans: Construction 761,819 4,332 22,005 3,988 792,144 3,683 Commercial real estate, non-owner occupied 2,259,549 2,407 1,718 10,342 2,274,016 — Commercial real estate, owner occupied 1,153,861 3,783 — 300 1,157,944 — Residential 2,337,002 12,302 6,606 18,819 2,374,729 208 Home equity 649,238 4,431 1,569 4,573 659,811 — Individuals' loans for household and other personal expenditures 164,891 926 210 1 166,028 1 Public finance and other commercial loans 1,059,083 — — — 1,059,083 — Loans $ 12,738,196 $ 35,773 $ 32,581 $ 47,809 $ 12,854,359 $ 5,902 Loans are reclassified to a nonaccruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. At the time the accrual is discontinued, all unpaid accrued interest is reversed against earnings. Interest income accrued in the prior year, if any, is charged to the allowance for credit losses. Payments subsequently received on nonaccrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance. The following table summarizes the Corporation’s nonaccrual loans by loan class as of the dates indicated: December 31, 2025 December 31, 2024 Nonaccrual Loans Nonaccrual Loans with no Allowance for Credit Losses Nonaccrual Loans Nonaccrual Loans with no Allowance for Credit Losses Commercial and industrial loans $ 10,548 $ 2,174 $ 8,090 $ 4,937 Agricultural land, production and other loans to farmers 250 — 75 — Real estate loans: Construction 22,481 22,482 24,629 22,650 Commercial real estate, non-owner occupied 837 — 12,118 10,153 Commercial real estate, owner occupied 3,705 3,188 2,440 1,904 Residential 29,774 — 21,491 — Home equity 4,158 — 4,924 — Individuals' loans for household and other personal expenditures 20 — 6 — Loans $ 71,773 $ 27,844 $ 73,773 $ 39,644 75 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Interest income on nonaccrual loans is recognized only to the extent that cash payments are received in excess of principal due. There was no interest income recognized on nonaccrual loans for the twelve months ended December 31, 2025 and 2024. Determining fair value for collateral dependent loans requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions. The following tables present the amortized cost basis of collateral dependent loans by loan class and their respective collateral type, which are individually evaluated to determine expected credit losses, for December 31, 2025 and 2024. The total collateral dependent loans for December 31, 2025 decreased $ 2.4 million from December 31, 2024. The primary changes were related to decreases of $ 12.4 million and $ 4.2 million, respectively, in the commercial real estate, non-owner occupied and commercial real estate, owner occupied loan classes, which was offset by an increase of $ 14.6 million in the commercial and industrial loan class. The total related allowance for December 31, 2025 increased $ 5.0 million from December 31, 2024. The increase is primarily related to an increase of $ 5.4 million in the commercial and industrial loan class. December 31, 2025 Commercial Real Estate Residential Real Estate Other Total Allowance on Collateral Dependent Loans Commercial and industrial loans $ — $ — $ 38,063 $ 38,063 $ 13,157 Real estate loans: Construction — 22,482 — 22,482 — Commercial real estate, non-owner occupied 15,161 — — 15,161 3,938 Commercial real estate, owner occupied 5,511 — — 5,511 — Residential — 1,023 — 1,023 166 Home equity — 145 — 145 19 Loans $ 20,672 $ 23,650 $ 38,063 $ 82,385 $ 17,280 December 31, 2024 Commercial Real Estate Residential Real Estate Other Total Allowance on Collateral Dependent Loans Commercial and industrial loans $ — $ — $ 23,455 $ 23,455 $ 7,803 Real estate loans: Construction — 22,652 — 22,652 — Commercial real estate, non-owner occupied 27,583 — — 27,583 4,295 Commercial real estate, owner occupied 9,748 — — 9,748 — Residential — 1,174 — 1,174 189 Home equity — 201 — 201 25 Loans $ 37,331 $ 24,027 $ 23,455 $ 84,813 $ 12,312 76 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) In certain situations, the Corporation may modify the terms of a loan to a debtor experiencing financial difficulty. The modifications may include principal forgiveness, interest rate reductions, payment delays, term extensions or combinations of these modifications. The following tables present the amortized cost basis of loans at December 31, 2025 and 2024 that were both experiencing financial difficulty and modified during the years ended December 31, 2025 and 2024, by class and by type of modification. For the year ended December 31, 2025, the table below excludes loan modifications considered insignificant. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below. Year Ended December 31, 2025 Loan Modifications Made to Borrowers Experiencing Financial Difficulty Payment Delay Term Extension Interest Rate Reduction Combination Payment Delay & Term Extension Combination Interest Rate Reduction & Term Extension Combination Interest Rate Reduction, Term Extension, & Payment Delay % of Total Class of Financing Receivable Commercial and industrial loans $ — $ 14,936 $ — $ 540 $ — $ — 0.35 % Real estate loans: Construction — 34,176 — — — — 4.25 % Commercial real estate, non-owner occupied — 15,134 37,665 — 6,425 — 2.53 % Residential 1,470 — — — — 1,748 0.13 % Total $ 1,470 $ 64,246 $ 37,665 $ 540 $ 6,425 $ 1,748 Year Ended December 31, 2024 Loan Modifications Made to Borrowers Experiencing Financial Difficulty Payment Delay Term Extension Interest Rate Reduction Combination Payment Delay & Term Extension Combination Interest Rate Reduction & Term Extension Combination Interest Rate Reduction, Term Extension, & Payment Delay % of Total Class of Financing Receivable Commercial and industrial loans $ 11,073 $ 19,152 $ 246 $ — $ 68 $ — 0.74 % Agricultural land, production and other loans to farmers 2,230 — — — — — 0.87 % Real estate loans: Construction — 2,393 — 22,000 — — 3.08 % Commercial real estate, non-owner occupied — 18,933 — — — — 0.83 % Commercial real estate, owner occupied — 6,133 — — — — 0.53 % Residential 2,509 340 — 683 43 532 0.17 % Home equity — 61 — 161 — — 0.03 % Total $ 15,812 $ 47,012 $ 246 $ 22,844 $ 111 $ 532 77 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the years ended December 31, 2025 and 2024. Year Ended December 31, 2025 Financial Effect of Loan Modifications Payment Delay Term Extension Interest Rate Reduction Combination Payment Delay & Term Extension Combination Interest Rate Reduction & Term Extension Combination Interest Rate Reduction, Term Extension, & Payment Delay Commercial and industrial loans Extended loans by a weighted average of 6 months. Provided payment deferrals with weighted average delayed amounts of $ 12 . Extended loans by a weighted average of 3 months. Real estate loans: Construction Extended loans by a weighted average of 6 months. Commercial real estate, non-owner occupied Extended loans by a weighted average of 5 months. Reduced the weighted average contractual interest rate from 7.58 % to 6.93 %. Reduced the weighted average contractual interest rate from 12.21 % to 7.18 %. Extended loans by a weighted average of 5 months. Residential Provided payment deferrals with weighted average delayed amounts of $ 27 . Reduced the weighted average contractual interest rate from 4.52 % to 2.53 %. Extended loans by a weighted average of 125 months. Provided payment deferrals with weighted average delayed amounts of $ 14 . 78 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Year Ended December 31, 2024 Financial Effect of Loan Modifications Payment Delay Term Extension Interest Rate Reduction Combination Payment Delay & Term Extension Combination Interest Rate Reduction & Term Extension Combination Interest Rate Reduction, Term Extension, & Payment Delay Commercial and industrial loans Provided payment deferrals with weighted average delayed amounts of $ 180 . Extended loans by a weighted average of 8 months. Reduced the weighted average contractual interest rate from 9.00 % to 8.00 %. Reduced the weighted average contractual interest rate from 10.24 % to 7.90 %. Extended loans by a weighted average of 67 months. Agricultural land, production and other loans to farmers Provided payment deferrals with weighted average delayed amounts of $ 17 . Real estate loans: Construction Extended loans by a weighted average of 6 months. Provided payment deferrals with weighted average delayed amounts of $ 475 . Extended loans by a weighted average of 2 months. Commercial real estate, non-owner occupied Extended loans by a weighted average of 16 months. Commercial real estate, owner occupied Extended loans by a weighted average of 12 months. Residential Provided payment deferrals with weighted average delayed amounts of $ 23 . Extended loans by a weighted average of 11 months. Provided payment deferrals with weighted average delayed amounts of $ 8 . Extended loans by a weighted average of 152 months. Reduced the weighted average contractual interest rate from 8.00 % to 6.00 %. Extended loans by a weighted average of 120 months. Reduced the weighted average contractual interest rate from 5.74 % to 4.02 %. Extended loans by a weighted average of 90 months. Provided payment deferrals with weighted average delayed amounts of $ 13 . Home equity Extended loans by a weighted average of 5 months. Provided payment deferrals with weighted average delayed amounts of $ 8 . Extended loans by a weighted average of 60 months. 79 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) The Corporation closely monitors the performance of financial difficulty modifications to understand the effectiveness of its efforts. The following tables present the performance of financial difficulty modifications in the twelve months following modification. Year Ended December 31, 2025 Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due Total Commercial and industrial loans $ 12,449 $ — $ — $ 3,027 $ 15,476 Real estate loans: Construction 34,176 — — — 34,176 Commercial real estate, non-owner occupied 47,376 11,848 — — 59,224 Commercial real estate, owner occupied — — — — — Residential 2,282 — 452 484 3,218 Total $ 96,283 $ 11,848 $ 452 $ 3,511 $ 112,094 Year Ended December 31, 2024 Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due Total Commercial and industrial loans $ 26,208 $ 2,858 $ — $ 1,473 $ 30,539 Agricultural land, production and other loans to farmers 2,230 — — — 2,230 Real estate loans: Construction 2,393 — 22,000 — 24,393 Commercial real estate, non-owner occupied 10,253 — — 8,680 18,933 Commercial real estate, owner occupied 2,560 3,573 — — 6,133 Residential 2,046 237 365 1,459 4,107 Home equity 222 — — — 222 Total $ 45,912 $ 6,668 $ 22,365 $ 11,612 $ 86,557 Allowance for Credit Losses on Loans The ACL - Loans is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on loans over the contractual term. The ACL - Loans is adjusted by the provision for credit losses, which is reported in earnings, and reduced by charge-offs for loans, net of recoveries. Provision for credit losses on loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans. Loans are charged off against the allowance when the collectibility of the loan is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The allowance represents the Corporation’s best estimate of current expected credit losses on loans using relevant available information from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The CECL calculation is performed and evaluated quarterly and losses are estimated over the expected life of the loan. The level of the ACL - Loans is believed to be adequate to absorb all expected future losses inherent in the loan portfolio at the measurement date. In calculating the ACL - Loans, the loan portfolio was pooled into ten loan segments with similar risk characteristics. Common characteristics include the type or purpose of the loan, underlying collateral and historical/expected credit loss patterns. In developing the loan segments, the Corporation analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors. The expected credit losses are measured over the life of each loan segment utilizing the Probability of Default / Loss Given Default methodology combined with economic forecast models to estimate the current expected credit loss inherent in the loan portfolio. This approach is also leveraged to estimate the expected credit losses associated with unfunded loan commitments incorporating expected utilization rates. The Corporation sub-segmented certain commercial portfolios by risk level and certain consumer portfolios by delinquency status where appropriate. The Corporation utilized a four-quarter reasonable and supportable economic forecast period followed by a six-quarter, straight-line reversion period to the historical macroeconomic mean for the remaining life of the loans. Econometric modeling was performed using historical default rates and a selection of economic forecast scenarios published by Moody’s to develop a range of estimated credit losses for which to determine the best credit loss estimate within. Macroeconomic factors utilized in the modeling process include the national unemployment rate, BBB US corporate index, commercial real estate price index and the home price index. 80 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) The Corporation qualitatively adjusts model results for risk factors that are not inherently considered in the quantitative modeling process, but are nonetheless relevant in assessing the expected credit losses within the loan portfolio. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that may be considered in making qualitative adjustments include, among other factors, the impact of (i) changes in the nature and volume of the loan portfolio, (ii) changes in the existence, growth and effect of any concentrations in credit, (iii) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (iv) changes in the quality of the credit review function, (v) changes in the experience, ability and depth of lending, investment, collection and other relevant management staff, (vi) changes in the volume and severity of past due financial assets, the volume of the nonaccrual assets, and the volume and severity of adversely classified or graded assets, (vii) the value of underlying collateral for loans that are not collateral dependent, and (viii) other environmental factors of a borrower such as regulatory, legal and technological considerations, as well as competition and changes in the economic and business conditions that affect the collectability of financial assets. In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within the loan segments. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific reserve allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other factors. A loan is considered to be collateral dependent when, based upon management’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The fair value of collateral supporting collateral dependent loans is evaluated on a quarterly basis. The risk characteristics of the Corporation’s portfolio segments are as follows: Commercial Commercial lending is primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the tangible assets being financed such as equipment or real estate or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. Other loans may be unsecured, secured but under-collateralized or otherwise made on the basis of the enterprise value of an organization. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. Commercial real estate Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. The Corporation monitors commercial real estate loans based on collateral and risk grade criteria, as well as the levels of owner-occupied versus non-owner occupied loans. Construction Construction loans are underwritten utilizing a combination of tools and techniques including feasibility and market studies, independent appraisals and appraisal reviews, absorption and interest rate sensitivity analysis as well as the financial analysis of the developer and all guarantors. Construction loans are monitored by either in house or third party inspectors limiting advances to a percentage of costs or stabilized project value. These loans frequently involve the disbursement of significant funds with the repayment dependent upon the successful completion and, where necessary, the future stabilization of the project. The predominant inherent risk of this portfolio is associated with the borrower’s ability to successfully complete a project on time, within budget and stabilize the project as originally projected. Consumer and Residential With respect to residential loans that are secured by 1-4 family residences, which are typically owner occupied, the Corporation generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans, such as small installment loans and certain lines of credit, are unsecured. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers and can also be impacted by changes in property values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers. The ACL - Loans increased $ 2.8 million during the year ended December 31, 2025. The Corporation had $ 18.4 million of net charge-offs during the year ended December 31, 2025. In 2025, the Corporation recorded $ 21.3 million in provision for credit losses - loans. 81 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) The following tables summarize changes in the ACL - Loans by loan segment for the years ended December 31, 2025, 2024 and 2023: Year Ended December 31, 2025 Commercial Commercial Real Estate Construction Consumer & Residential Total Allowance for credit losses - loans Balances, December 31, 2024 $ 94,757 $ 51,099 $ 9,784 $ 37,117 $ 192,757 Provision for credit losses - loans 23,149 ( 4,916 ) ( 4,251 ) 7,268 21,250 Recoveries on loans 4,205 224 1 1,381 5,811 Loans charged off ( 17,676 ) ( 866 ) ( 64 ) ( 5,615 ) ( 24,221 ) Balances. December 31, 2025 $ 104,435 $ 45,541 $ 5,470 $ 40,151 $ 195,597 Year Ended December 31, 2024 Commercial Commercial Real Estate Construction Consumer & Residential Total Allowance for credit losses - loans Balances, December 31, 2023 $ 97,348 $ 44,048 $ 24,823 $ 38,715 $ 204,934 Provision for credit losses - loans 44,455 7,167 ( 15,039 ) 617 37,200 Recoveries on loans 3,153 236 — 1,477 4,866 Loans charged off ( 50,199 ) ( 352 ) — ( 3,692 ) ( 54,243 ) Balances. December 31, 2024 $ 94,757 $ 51,099 $ 9,784 $ 37,117 $ 192,757 Year Ended December 31, 2023 Commercial Commercial Real Estate Construction Consumer & Residential Total Allowance for credit losses - loans Balances, December 31, 2022 $ 102,216 $ 46,839 $ 28,955 $ 45,267 $ 223,277 Provision for credit losses - loans 17,401 ( 2,735 ) ( 4,132 ) ( 3,234 ) 7,300 Recoveries on loans 995 60 — 1,341 2,396 Loans charged off ( 23,264 ) ( 116 ) — ( 4,659 ) ( 28,039 ) Balances. December 31, 2023 $ 97,348 $ 44,048 $ 24,823 $ 38,715 $ 204,934 Off-Balance Sheet Arrangements, Commitments And Contingencies In the normal course of business, the Corporation has entered into off-balance sheet financial instruments which include commitments to extend credit and standby letters of credit. Commitments to extend credit are usually the result of lines of credit granted to existing borrowers under agreements that the total outstanding indebtedness will not exceed a specific amount during the term of the indebtedness. Typical borrowers are commercial customers that use lines of credit to supplement their treasury management functions, and thus their total outstanding indebtedness may fluctuate during any time period based on the seasonality of their business and the resultant timing for their cash flows. Other typical lines of credit are related to home equity loans granted to customers. Commitments to extend credit generally have fixed expiration dates or other termination clauses that may require a fee. Standby letters of credit are generally issued on behalf of an applicant (the Corporation’s customer) to a specifically named beneficiary and are the result of a particular business arrangement that exists between the applicant and the beneficiary. Standby letters of credit have fixed expiration dates and are usually for terms of two years or less unless terminated beforehand due to criteria specified in the standby letter of credit. The standby letter of credit would permit the beneficiary to obtain payment from the Corporation under certain prescribed circumstances. Subsequently, the Corporation would seek reimbursement from the applicant pursuant to the terms of the standby letter of credit. The Corporation typically follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments. Each customer’s creditworthiness is typically evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management’s credit evaluation of the customer. Collateral held varies but may include cash, real estate, marketable securities, accounts receivable, inventory, equipment and personal property. The contractual amounts of these commitments are not reflected in the consolidated financial statements and only amounts drawn upon would be reflected in the future. Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements. However, should the commitments be drawn upon and should the Corporation’s customers default on their resulting obligation to the Corporation, the maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those commitments. Financial instruments with off-balance sheet risk were as follows: December 31, 2025 December 31, 2024 Amounts of commitments: Loan commitments to extend credit $ 5,586,510 $ 5,006,085 Standby letters of credit $ 73,997 $ 71,271 82 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) The Corporation maintains an accrual for credit losses on off-balance sheet commitments using the CECL methodology. Reserves for unfunded commitments were $ 18.0 million at December 31, 2025 and 2024. There was no provision for credit losses on unfunded commitments during the year ended December 31, 2025 and $ 1.5 million of provision for credit losses on unfunded commitments during the year ended 2024. This reserve level remains appropriate and is reported in Other liabilities as of December 31, 2025 and 2024, in the Consolidated Balance Sheets. The following table details activity in the allowance for credit losses for off-balance sheet commitments: 2025 2024 Balance, January 1 $ 18,000 $ 19,500 Provision for credit losses - unfunded commitments — ( 1,500 ) Balance, December 31 $ 18,000 $ 18,000 NOTE 6 PREMISES AND EQUIPMENT The following table summarizes the Corporation’s premises and equipment as of December 31, 2025 and 2024: 2025 2024 Cost at December 31: Land $ 23,601 $ 24,785 Buildings and leasehold improvements 183,406 185,741 Equipment 140,487 153,011 Total cost 347,494 363,537 Accumulated depreciation and amortization ( 226,436 ) ( 233,794 ) Total premises and equipment, net $ 121,058 $ 129,743 During 2025, the Corporation disposed of certain fixed assets that were no longer in use. The disposals primarily related to equipment and did not have a material impact on the Corporation’s total premises and equipment, net, as the assets were largely fully depreciated. Changes in premises and equipment during the period were otherwise attributable to normal depreciation. The Corporation is committed under various non-cancelable lease contracts for certain subsidiary office facilities and equipment. Details regarding the lease contracts are discussed in NOTE 8. LEASES of these Notes to Consolidated Financial Statements. NOTE 7 GOODWILL AND OTHER INTANGIBLES The Corporation’s goodwill was $ 712.0 million for the years ended December 31, 2025 and 2024. During the fourth quarter of 2025 and 2024, the Corporation performed its annual goodwill impairment testing and the fair value exceeded the Corporation’s carrying value. Based on the analysis performed, the Corporation concluded goodwill was not impaired as of December 31, 2025 and 2024. For additional details related to impairment testing, see the “GOODWILL” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K. The carrying basis and accumulated amortization of recognized core deposit and other intangibles are noted below. 2025 2024 Gross carrying amount $ 123,285 $ 123,285 Accumulated amortization ( 109,485 ) ( 103,457 ) Total core deposit and other intangibles $ 13,800 $ 19,828 The core deposit intangibles and other intangibles are being amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of two to ten years . Amortization expense for the years ended December 31, 2025, 2024 and 2023, was $ 6.0 million, $ 7.3 million and $ 8.7 million, respectively. 83 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Estimated future amortization expense is summarized as follows: Amortization Expense 2026 $ 4,910 2027 3,603 2028 2,852 2029 1,137 2030 806 After 2030 492 $ 13,800 NOTE 8 LEASES The Corporation enters into leases for certain retail branches, office space, land and equipment. Operating leases are included in other assets and the lease liability is included in other liabilities in the Consolidated Balance Sheets. The Corporation does not have any finance leases. Right-of-use (“ROU”) assets represent the Corporation’s right to use an underlying asset for the lease term and lease liabilities represent the Corporation’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Corporation uses its incremental borrowing rate at commencement date in determining the present value of lease payments when the rate implicit in a lease is not known. The Corporation’s incremental borrowing rate is based on the FHLB amortizing advance rate, adjusted for the lease term and other factors. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Corporation’s leases are generally for periods of five to twenty years with various renewal options. The exercise of such lease renewal options is not included in the present value of lease obligations unless it is reasonably certain that the option will be exercised. The Corporation has lease agreements which contain both lease and non-lease components such as common area maintenance charges, real estate taxes, and insurance. Non-lease components are not included in the measurement of the lease liability and are recognized in expense when incurred. The Corporation has elected not to recognize short-term leases, with original lease terms of twelve months or less, on the Corporation’s balance sheet. Certain of the Corporation’s lease agreements include rental payments adjusted periodically for inflation. The Corporation’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Supplemental balance sheet information related to leases is presented in the table below as of December 31, 2025 and 2024: 2025 2024 Operating lease assets $ 17,420 $ 21,085 Total lease assets $ 17,420 $ 21,085 Operating lease liabilities $ 19,123 $ 23,873 Total lease liabilities $ 19,123 $ 23,873 Weighted average remaining lease term (years) Operating leases 5.9 6.5 Weighted average discount rate Operating leases 3.8 % 3.8 % The table below presents the components of total lease cost for the years ended December 31, 2025, 2024, and 2023: 2025 2024 2023 Lease Cost: Operating lease cost $ 5,273 $ 5,514 $ 7,696 Short-term lease cost 618 566 478 Variable lease cost 1,350 1,298 1,534 Less: Sublease income — ( 5 ) ( 16 ) Total lease cost, net $ 7,241 $ 7,373 $ 9,692 The Corporation performs impairment assessments for ROU assets when events or changes in circumstances indicate their carrying values may not be recoverable. The year ended December 31, 2023 operating lease cost includes $ 2.1 million related to the abandonment of a leased office building. The recognized loss was recorded in net occupancy expense in the Consolidated Statements of Income. 84 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Supplemental cash flow information related to leases is presented in the tables below. Maturity of lease liabilities Operating Leases 2026 $ 4,940 2027 4,121 2028 3,658 2029 2,594 2030 1,946 After 2030 4,717 Total lease payments $ 21,976 Less: Present value discount 2,853 Present value of lease liabilities $ 19,123 Other Information Twelve Months Ended December 31, 2025 Twelve Months Ended December 31, 2024 Twelve Months Ended December 31, 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 5,178 $ 5,073 $ 5,742 ROU assets obtained in exchange for new operating lease liabilities $ 783 $ 7,102 $ 2,253 NOTE 9 QUALIFIED AFFORDABLE HOUSING INVESTMENTS The Corporation has investments in various limited partnerships that sponsor affordable housing projects. The purpose of these investments is to earn an adequate return of capital through the receipt of low income housing tax credits and to assist the Corporation in achieving goals associated with the CRA. These investments are included in other assets on the Consolidated Balance Sheets, with any unfunded commitments included in other liabilities. The investments are amortized as a component of income tax expense . Details of the accounting treatment of the Corporation’s LIHTC investments are included in NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES of these Notes to Consolidated Financial Statements. The following table summarizes the Corporation’s affordable housing investments as of December 31, 2025 and 2024: 2025 2024 Investment Type Investment Unfunded Commitment Investment Unfunded Commitment LIHTC $ 178,380 $ 109,214 $ 167,685 $ 132,226 The following table summarizes the amortization expense and tax credits recognized for the Corporation’s affordable housing investments for the years ended December 31, 2025, 2024 and 2023: 2025 2024 2023 Amortization expense $ 14,304 $ 12,040 $ 6,324 Tax credits recognized 17,966 11,782 5,327 NOTE 10 DEPOSITS The composition of the deposit portfolio is included in the table below as of the dates indicated: December 31, 2025 December 31, 2024 Demand deposits $ 7,770,473 $ 7,980,061 Savings deposits 5,481,785 4,522,758 Certificates and other time deposits of $100,000 or less 603,690 692,068 Certificates and other time deposits of $100,000 or more 915,293 1,043,068 Brokered certificates of deposits 523,614 283,671 Total deposits $ 15,294,855 $ 14,521,626 Deposits increased $ 773.2 million from December 31, 2024. The majority of the organic deposit growth was due to increases in non-maturity deposits of $ 749.4 million. Lower interest rates have resulted in customers migrating funds from maturity time deposit products into non-maturity products. At December 31, 2025 and 2024, deposits exceeding the FDIC’s Standard Maximum Deposit Insurance Amount of $250,000 were $ 9.2 billion and $ 8.7 billion, respectively. 85 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) At December 31, 2025, the contractual maturities of time deposits are summarized as follows: Certificates and Other Time Deposits 2026 $ 1,747,870 2027 182,424 2028 106,987 2029 3,239 2030 1,983 After 2030 94 $ 2,042,597 NOTE 11 BORROWINGS The following table summarizes the Corporation’s borrowings as of December 31, 2025 and 2024: December 31, 2025 December 31, 2024 Federal funds purchased $ 40,000 $ 99,226 Securities sold under repurchase agreements 103,755 142,876 Federal Home Loan Bank advances 798,549 822,554 Subordinated debentures and other borrowings 57,630 93,529 Total borrowings $ 999,934 $ 1,158,185 Securities sold under repurchase agreements consist of obligations of the Bank to other parties and are secured by U.S. Government-Sponsored Enterprise obligations. The maximum amount of outstanding agreements at any month-end during 2025 and 2024 totaled $ 169.1 million and $ 194.2 million, respectively, and the average of such agreements totaled $ 127.9 million and $ 136.0 million during 2025 and 2024, respectively. Transfers Accounted For As Secured Borrowings The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of December 31, 2025 and 2024 were: December 31, 2025 Remaining Contractual Maturity of the Agreements Overnight and Continuous Up to 30 Days 30-90 Days Greater Than 90 Days Total U.S. Government-sponsored mortgage-backed securities $ 103,755 $ — $ — $ — $ 103,755 December 31, 2024 Remaining Contractual Maturity of the Agreements Overnight and Continuous Up to 30 Days 30-90 Days Greater Than 90 Days Total U.S. Government-sponsored mortgage-backed securities $ 142,876 $ — $ — $ — $ 142,876 Contractual maturities of borrowings as of December 31, 2025, are as follows: Maturities in Years Ending December 31: Federal Funds Purchased Securities Sold Under Repurchase Agreements Federal Home Loan Bank Advances Subordinated Debentures and Term Loans 2026 $ 40,000 $ 103,755 $ 75,000 $ 1,095 2027 — — 320,000 — 2028 — — 290,000 — 2029 — — 50,000 — 2030 — — — — 2031 and after — — 63,549 60,375 ASC 805 fair value adjustments at acquisition — — — ( 3,840 ) $ 40,000 $ 103,755 $ 798,549 $ 57,630 86 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) At December 31, 2025, the outstanding FHLB advances had interest rates from 0.00 to 4.56 percent and are subject to restrictions or penalties in the event of prepayment. The total available remaining borrowing capacity from the FHLB at December 31, 2025, was $ 819.9 million. As of December 31, 2025, the Corporation had $ 280.0 million of putable advances with the FHLB. Subordinated Debentures and Term Loans. As of December 31, 2025 and 2024, subordinated debentures and term loans totaled $ 57.6 million and $ 93.5 million, respectively. • First Merchants Capital Trust II (“FMC Trust II”). At December 31, 2025 and 2024, the Corporation had $ 41.7 million of subordinated debentures issued to FMC Trust II, a wholly-owned statutory business trust. FMC Trust II was formed in July 2007 for purposes of issuing trust preferred securities to investors. At that time, it simultaneously issued and sold its common securities to the Corporation, which constituted all of the issued and outstanding common securities of FMC Trust II. The subordinated debentures, which were purchased with the proceeds of the sale of the trust’s capital securities, are the sole assets of FMC Trust II and are fully and unconditionally guaranteed by the Corporation. As of December 31, 2025 and 2024, the subordinated debentures and trust preferred securities bear interest at a variable rate equal to the three-month CME Term Secured Overnight Financing Rate published by the Chicago Mercantile Exchange Group (“CME Term SOFR”), plus the 0.26161 percent spread adjustment. The interest rate at December 31, 2025 and 2024, was 5.54 percent and 6.18 percent, respectively. The trust preferred securities are currently redeemable at par and without penalty, subject to the Corporation having first redeemed the related subordinated debentures, with the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies. The trust preferred securities and the subordinated debentures of FMC Trust II will mature on September 15, 2037. The Corporation continues to hold all outstanding common securities of FMC Trust II. • Ameriana Capital Trust I. At December 31, 2025 and 2024, the Corporation had $ 10.3 million of subordinated debentures issued to Ameriana Capital Trust I. On December 31, 2015, the Corporation acquired Ameriana Capital Trust I in conjunction with its acquisition of Ameriana Bancorp, Inc. With a trust preferred structure substantially similar to that described above for FMC Trust II, the subordinated debentures held by Ameriana Capital Trust I were purchased with the proceeds of the sale of the trust’s capital securities. As of December 31, 2025 and 2024, the subordinated debentures and trust preferred securities bear interest at a variable rate equal to the three-month CME Term SOFR, plus the 0.26161 percent spread adjustment. The interest rate at December 31, 2025 and 2024 was 5.48 percent and 6.12 percent, respectively. The trust preferred securities of Ameriana Capital Trust I are currently redeemable at par and without penalty, subject to the Corporation having first redeemed the related subordinated debentures, with the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies. The trust preferred securities and the subordinated debentures of Ameriana Capital Trust I will mature in March 2036. The Corporation continues to hold all of the outstanding common securities of Ameriana Capital Trust I. • First Merchants Senior Notes and Subordinated Notes. On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $ 70 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 (the “Senior Debt”) and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due 2028 in the aggregate principal amount of $ 65 million (the “Subordinated Debt”). The interest rate on the Senior Debt and Subordinated Debt remained fixed for the first ten ( 10 ) years and converted to floating on October 30, 2023 at which time the optional redemption provisions of both instruments became effective. During the year ended December 31, 2024, the Corporation exercised its option to redeem $ 65 million in principal, fully repaying the Subordinated Debt on the scheduled interest payment dates. As of December 31, 2024, the Senior Debt had an annual floating rate equal to three-month CME Term SOFR, plus the 0.26161 percent spread adjustment, plus 2.345 percent, resulting in an interest rate of 7.18 percent. The Senior Debt agreement contained certain customary representations and warranties and financial and negative covenants. As of December 31, 2024 the Corporation was in compliance with these covenants. During the third quarter of 2025, the Corporation exercised its rights to redeem the $ 5.0 million in principal and paid the Senior Debt on the scheduled interest payment date. No principal amount remains outstanding related to the Senior Debt as of December 31, 2025. • Level One Subordinated Notes. On April 1, 2022, the Corporation assumed certain subordinated notes in conjunction with its acquisition of Level One. The $ 30.0 million of subordinated notes issued on December 18, 2019 bear a fixed interest rate of 4.75 percent per annum, payable semiannually through December 18, 2024. The notes had a floating interest rate equal to the three-month CME Term SOFR plus 3.11 percent, payable quarterly, after December 18, 2024 through maturity. The Corporation had the option to redeem any or all of the subordinated notes without premium or penalty any time after December 18, 2024 or upon the occurrence of a tier 2 capital event or tax event. During the first quarter of 2025, the Corporation exercised its rights to redeem $ 30.0 million in principal and paid the debt in full on the scheduled interest payment date. The redemption was permitted under the optional redemptions provisions of the subordinated notes. No principal amount remains outstanding related to the subordinated notes as of December 31, 2025. • Other Borrowings. On April 1, 2022, the Corporation acquired a secured borrowing in conjunction with its acquisition of Level One. The secured borrowing related to a certain loan participation sold by Level One that did not qualify for sales treatment. The secured borrowing bears a fixed rate of 1.00 percent and had a balance of $ 1.1 million as of December 31, 2025 and 2024. During the third quarter of 2023, the Corporation acquired a secured borrowing in conjunction with the purchase of the Indianapolis regional headquarters building. The secured borrowing bears a fixed interest rate of 3.41 percent, has a maturity date of March 2035, and had a balance of $ 7.0 million and $ 7.1 million as of December 31, 2025 and 2024, respectively. 87 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Line of Credit. As of December 31, 2025 and 2024, there was no outstanding balance on the line of credit. • U.S. Bank, N.A. On September 30, 2024, the Corporation entered into a Credit Agreement with U.S. Bank, N.A. Under the terms of the Credit Agreement, U.S. Bank, N.A. has provided the Corporation with a revolving line of credit (“Credit Facility”) of up to $ 75.0 million. The outstanding principal balance under the Credit Facility bears interest at a variable rate equal to the one-month CME Term SOFR rate plus 2.25 percent. Interest on the outstanding balance is payable quarterly. Additionally, the Corporation is subject to a non-refundable facility fee equal to 0.40 percent per annum on the average daily unused amount of the Credit Facility, payable quarterly. The Credit Agreement contains customary representations, warranties and covenants. During the third quarter of 2025, the Corporation amended the Credit Facility to extend the termination date from September 30, 2025 to September 29, 2026. As of December 31, 2025 and 2024, the Corporation's outstanding principal balance under the Credit Facility was zero and the Corporation was in compliance with all covenants. NOTE 12 DERIVATIVE FINANCIAL INSTRUMENTS Risk Management Objective of Using Derivatives The Corporation is exposed to certain risks arising from both its business operations and economic conditions. The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments. Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash payments principally related to certain variable-rate liabilities. The Corporation also has derivatives that are a result of a service the Corporation provides to certain qualifying customers, and, therefore, are not used to manage interest rate risk in the Corporation’s assets or liabilities. The Corporation manages a matched book with respect to its derivative instruments offered as a part of this service to its customers in order to minimize its net risk exposure resulting from such transactions. Derivatives Designated as Hedges The Corporation’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Corporation primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the payment of fixed amounts to a counterparty in exchange for the Corporation receiving variable payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. As of December 31, 2025 and 2024 the Corporation had no interest rate swaps or caps designated as hedges. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss). The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the twelve months ended December 31, 2025 and 2024, the Corporation did not recognize any ineffectiveness. Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Corporation's variable-rate liabilities. During the next twelve months, the Corporation doesn't expect to reclassify income (loss) associated with derivatives from accumulated other comprehensive loss to interest expense. There was no gain recognized in other comprehensive income (loss) for the years ended December 31, 2025 and 2024. The amount of loss reclassified from other comprehensive income (loss) into income related to cash flow hedging relationships is included in the table below for the years ended December 31, 2025, 2024 and 2023. Derivatives Designated as Hedging Instruments under FASB ASC 815-10 Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) (Effective Portion) Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss) into Income (Effective Portion) 2025 2024 2023 Interest rate contracts Interest expense $ — $ — $ ( 15 ) Non-designated Hedges Derivatives not designated as hedges are not used for speculative purposes. Instead, they arise from services provided to commercial banking customers as part of their risk management strategies. The Corporation executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Corporation executes with a third party, such that the Corporation minimizes its net risk exposure resulting from such transactions. As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. 88 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Interest rate lock commitments related to mortgage loans and forward sale commitments to third-party investors are also considered derivatives. It is the Corporation's practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated in hedge relationships. Fair values were estimated using observable market inputs, primarily changes in mortgage interest rates, from the date of commitment to the reporting date. Changes in the fair value of these mortgage banking derivatives are included in net gains and fees on sales of loans. The table below presents the fair value of the Corporation’s non-designated hedges, as well as their classification on the Consolidated Balance Sheets, as of December 31, 2025 and 2024. December 31, 2025 December 31, 2024 Notional Amount Fair Value Notional Amount Fair Value Included in other assets: Interest rate swaps $ 1,529,421 $ 47,850 $ 1,386,757 $ 76,528 Forward contracts related to mortgage loans to be delivered for sale 15,217 422 39,142 465 Interest rate lock commitments 26,595 196 15,000 140 Included in other assets $ 1,571,233 $ 48,468 $ 1,440,899 $ 77,133 Included in other liabilities: Interest rate swaps $ 1,668,136 $ 47,879 $ 1,486,764 $ 76,450 Forward contracts related to mortgage loans to be delivered for sale 25,000 99 13,020 18 Interest rate lock commitments 2,246 2 14,457 100 Included in other liabilities $ 1,695,382 $ 47,980 $ 1,514,241 $ 76,568 In the normal course of business, the Corporation may decide to settle a forward contract rather than fulfill the contract. Cash received or paid in this settlement manner is included in "Net gains and fees on sales of loans" in the Consolidated Statements of Income and is considered a cost of executing a forward contract. The amount of gain (loss) recognized into income related to non-designated hedging instruments is included in the table below for the periods indicated. Derivatives Not Designated as Hedging Instruments under FASB ASC 815-10 Location of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized into Income on Derivatives 2025 2024 2023 Forward contracts related to mortgage loans to be delivered for sale Net gains and fees on sales of loans $ ( 1,147 ) $ 832 $ 1,138 Interest rate lock commitments Net gains and fees on sales of loans 154 ( 121 ) 185 Total net gain (loss) recognized in income $ ( 993 ) $ 711 $ 1,323 The Corporation’s exposure to credit risk occurs because of nonperformance by its counterparties. The counterparties approved by the Corporation are usually financial institutions, which are well capitalized and have credit ratings through Moody’s and/or Standard & Poor’s at or above investment grade. The Corporation’s mitigation of such risk is through quarterly financial reviews, comparing mark-to-market values with policy limitations, credit ratings and collateral pledging. Credit-risk-related Contingent Features The Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation fails to maintain its status as a well or adequately capitalized institution, then the Corporation could be required to terminate or fully collateralize all outstanding derivative contracts. Additionally, the Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations. As of December 31, 2025, the termination value of derivatives in a net liability position related to these agreements was $ 10.0 million, which resulted in $ 1.8 million of collateral pledged to counterparties as of December 31, 2025. While the Corporation did not breach any of these provisions as of December 31, 2025, if it had, the Corporation could have been required to settle its obligations under the agreements at their termination value. NOTE 13 FAIR VALUES OF FINANCIAL INSTRUMENTS The Corporation uses fair value measurements to adjust certain assets and liabilities and to provide fair value disclosures. Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a framework for measuring it and expands related disclosure requirements. It applies only when other accounting guidance requires or permits fair value measurement and does not expand its use to new circumstances. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It represents an exit price at the measurement date. Market participants are buyers and sellers, who are independent, knowledgeable, and willing and able to transact in the principal (or most advantageous) market for the asset or liability being measured. The Corporation values its assets and liabilities in the principal market where it sells the asset or transfers the liability with the greatest volume and level of activity. If no principal 89 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) market exists, valuation is based on the most advantageous market — one that maximizes the asset’s sale price or minimizes the liability’s transfer cost. Valuation inputs reflect assumptions that market participants would use to price an asset or liability. These inputs are categorized as either observable or unobservable. Observable inputs are based on market data from independent sources and reflect assumptions market participants would use. Unobservable inputs are derived from the Corporation’s own estimates, reflecting assumptions market participants might use when market data is not available. These rely on the best available information at the measurement date. Inputs are ranked within a three-level fair value hierarchy. Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are based on one or more of the following: quoted prices for similar assets, observable inputs such as interest rates or yield curves, or inputs corroborated by market data. Level 3 inputs are unobservable and reflect minimal market activity. An input is considered to be significant if it contributes 10 percent or more to the total fair value of the asset or liability. RECURRING AND NONRECURRING FAIR VALUE MEASUREMENTS Assets and liabilities are considered to be measured at fair value on a recurring basis if fair value is measured regularly — such as daily, weekly, monthly, or quarterly. Recurring valuation occurs at least on the measurement date. Assets and liabilities are considered to be measured at fair value on a nonrecurring basis if the fair value measurement is not performed regularly and does not necessarily result in a change to the recorded balance sheet amount. Generally, nonrecurring valuation is the result of the application of other accounting pronouncements which require assets or liabilities to be assessed for impairment and recorded at the lower of cost or fair value. The fair value of assets or liabilities transferred in or out of Level 3 is measured on the transfer date, with any additional changes in fair value subsequent to the transfer considered to be realized or unrealized gains or losses. Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy. Investment Securities Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. The Corporation did not have any Level 1 securities as of December 31, 2025. Where significant observable inputs, other than Level 1 quoted prices, are available, securities are classified within Level 2 of the valuation hierarchy. Level 2 securities include U.S. Government-sponsored agency and mortgage-backed securities, state and municipal securities, foreign investment and corporate obligations. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include state and municipal securities and corporate obligations. Fair values for Level 3 securities were determined using discounted cash flow models that incorporated market estimates of interest rates and volatility in markets that have not been active. Third party vendors compile prices from various sources and may apply such techniques as matrix pricing to determine the value of identical or similar investment securities (Level 2). Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities. Any investment security not valued based upon the methods above are considered Level 3. Derivative Financial Agreements See information regarding the Corporation’s derivative financial agreements in NOTE 12. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Financial Statements. 90 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets on a recurring basis, along with their classification within the fair value hierarchy as of December 31, 2025 and 2024. Fair Value Measurements Using: Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs December 31, 2025 Fair Value (Level 1) (Level 2) (Level 3) Available for sale securities: U.S. Government-sponsored agency securities $ 76,099 $ — $ 76,099 $ — State and municipal 902,294 — 900,339 1,955 U.S. Government-sponsored mortgage-backed securities 419,510 — 419,510 — Foreign investment 1,500 — 1,500 — Corporate obligations 7,699 — 7,668 31 Derivative assets 48,468 — 48,468 — Derivative liabilities 47,980 — 47,980 — Fair Value Measurements Using: Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs December 31, 2024 Fair Value (Level 1) (Level 2) (Level 3) Available for sale securities: U.S. Government-sponsored agency securities $ 79,381 $ — $ 79,381 $ — State and municipal 863,174 — 860,793 2,381 U.S. Government-sponsored mortgage-backed securities 431,622 — 431,618 4 Corporate obligations 12,298 — 12,267 31 Derivative assets 77,133 — 77,133 — Derivative liabilities 76,568 — 76,568 — LEVEL 3 RECONCILIATION The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheets using significant unobservable Level 3 inputs for year ended December 31, 2025 and 2024. Available for Sale Securities For The Year Ended December 31, 2025 December 31, 2024 Beginning Balance $ 2,416 $ 3,310 Included in other comprehensive income (loss) 33 ( 908 ) Principal payments ( 463 ) 14 Ending balance $ 1,986 $ 2,416 There were no gains or losses included in earnings that were attributable to the changes in unrealized gains or losses related to assets or liabilities held at December 31, 2025 or 2024. TRANSFERS BETWEEN LEVELS There were no transfers in or out of Level 3 during 2025 or 2024. 91 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) NONRECURRING MEASUREMENTS Following is a description of valuation methodologies used for instruments measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy at December 31, 2025 and 2024. Fair Value Measurements Using December 31, 2025 Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Collateral dependent loans $ 65,302 — — $ 65,302 Fair Value Measurements Using December 31, 2024 Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Collateral dependent loans $ 46,810 — — $ 46,810 Collateral Dependent Loans Determining fair value for collateral dependent loans requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions. UNOBSERVABLE (LEVEL 3) INPUTS The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at December 31, 2025 and 2024. December 31, 2025 Fair Value Valuation Technique Unobservable Inputs Range (Weighted-Average) State and municipal securities $ 1,955 Discounted cash flow Maturity/Call date 1 month to 5 years US Muni BQ curve BBB Discount rate 3.6 % - 5.7 % Weighted-average coupon 3.6 % Corporate obligations and U.S. Government-sponsored mortgage-backed securities $ 31 Discounted cash flow Risk free rate 3 month CME Term SOFR plus 26 bps plus premium for illiquidity (basis points) plus 200 bps Weighted-average coupon 0 % Collateral dependent loans $ 65,302 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 1 % - 16 % Weighted-average discount by loan balance 1.5 % 92 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) December 31, 2024 Fair Value Valuation Technique Unobservable Inputs Range (Weighted-Average) State and municipal securities $ 2,381 Discounted cash flow Maturity/Call date 1 month to 6 years US Muni BQ curve BBB Discount rate 3.6 % - 4.7 % Weighted-average coupon 3.6 % Corporate obligations and U.S. Government-sponsored mortgage-backed securities $ 35 Discounted cash flow Risk free rate 3 month CME Term SOFR plus 26 bps plus premium for illiquidity (basis points) plus 200 bps Weighted-average coupon 0 % Collateral dependent loans $ 46,810 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 0 % - 16 % Weighted-average discount by loan balance 12.6 % The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement and how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement. State and Municipal Securities and Corporate Obligations The significant unobservable inputs used in the fair value measurement of the Corporation’s state and municipal securities and corporate obligations are premiums for unrated securities and marketability discounts. Significant increases or decreases in either of those inputs in isolation would result in a significantly lower or higher fair value measurement. Generally, changes in either of those inputs will not affect the other input. FAIR VALUE OF FINANCIAL INSTRUMENTS The following tables present estimated fair values of the Corporation’s financial instruments not carried at fair value and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2025 and 2024. 2025 Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value Assets at December 31: Cash and due from banks $ 84,158 $ 84,158 $ — $ — $ 84,158 Interest-bearing deposits 196,300 196,300 — — 196,300 Investment securities held to maturity, net of allowance for credit losses 1,971,539 — 1,713,872 4,415 1,718,287 Loans held for sale 20,079 — 20,079 — 20,079 Net loans 13,596,110 — — 13,498,304 13,498,304 Federal Home Loan Bank stock 47,245 — 47,245 — 47,245 Interest receivable 93,374 — 93,374 — 93,374 Liabilities at December 31: Deposits $ 15,294,855 $ 13,252,258 $ 2,042,782 $ — $ 15,295,040 Borrowings: Federal funds purchased 40,000 — 40,000 — 40,000 Securities sold under repurchase agreements 103,755 — 103,747 — 103,747 Federal Home Loan Bank advances 798,549 — 803,396 — 803,396 Subordinated debentures and other borrowings 57,630 — 53,982 — 53,982 Interest payable 18,235 — 18,235 — 18,235 93 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) 2024 Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value Assets at December 31: Cash and due from banks $ 87,616 $ 87,616 $ — $ — $ 87,616 Interest-bearing deposits 298,891 298,891 — — 298,891 Investment securities held to maturity, net of allowance for credit losses 2,074,220 — 1,716,647 6,873 1,723,520 Loans held for sale 18,663 — 18,663 — 18,663 Net loans 12,661,602 — — 12,437,523 12,437,523 Federal Home Loan Bank stock 41,690 — 41,690 — 41,690 Interest receivable 91,829 — 91,829 — 91,829 Liabilities at December 31: Deposits $ 14,521,626 $ 12,502,819 $ 2,010,348 $ — $ 14,513,167 Borrowings: Securities sold under repurchase agreements 142,876 — 142,865 — 142,865 Federal Home Loan Bank advances 822,554 — 816,786 — 816,786 Subordinated debentures and other borrowings 93,529 — 84,108 — 84,108 Interest payable 16,102 — 16,102 — 16,102 NOTE 14 ACCUMULATED OTHER COMPREHENSIVE LOSS The following table summarizes the changes in the balances of each component of accumulated other comprehensive loss, net of tax, as of December 31, 2025 and 2024: Accumulated Other Comprehensive Loss Unrealized Gains (Losses) on Securities Available for Sale Unrealized Gains (Losses) on Defined Benefit Plans Total Balance at December 31, 2024 $ ( 188,412 ) $ ( 273 ) $ ( 188,685 ) Other comprehensive income before reclassifications 56,504 2,016 58,520 Amounts reclassified from accumulated other comprehensive loss 6 24 30 Period change 56,510 2,040 58,550 Balance at December 31, 2025 $ ( 131,902 ) $ 1,767 $ ( 130,135 ) Balance at December 31, 2023 $ ( 173,654 ) $ ( 2,316 ) $ ( 175,970 ) Other comprehensive loss before reclassifications ( 31,156 ) 2,043 ( 29,113 ) Amounts reclassified from accumulated other comprehensive loss 16,398 — 16,398 Period change ( 14,758 ) 2,043 ( 12,715 ) Balance at December 31, 2024 $ ( 188,412 ) $ ( 273 ) $ ( 188,685 ) 94 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) The following table presents the reclassification adjustments out of accumulated other comprehensive loss that were included in net income in the Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023: Amount Reclassified from Accumulated Other Comprehensive Loss For the Year Ended December 31, Details about Accumulated Other Comprehensive Loss Components 2025 2024 2023 Affected Line Item in the Statements of Income Unrealized gains (losses) on available for sale securities (1) Realized securities losses reclassified into income $ ( 8 ) $ ( 20,757 ) $ ( 6,930 ) Noninterest income - net realized losses on sales of available for sale securities Related income tax benefit 2 4,359 1,455 Income tax expense $ ( 6 ) $ ( 16,398 ) $ ( 5,475 ) Unrealized gains (losses) on cash flow hedges (2) Interest rate contracts $ — $ — $ ( 15 ) Interest expense - subordinated debentures and other borrowings Related income tax benefit — — 3 Income tax expense $ — $ — $ ( 12 ) Unrealized gains (losses) on defined benefit plans Amortization of net loss and prior service costs $ ( 30 ) $ — $ ( 82 ) Noninterest expense - salaries and employee benefits Related income tax benefit 6 — 17 Income tax expense $ ( 24 ) $ — $ ( 65 ) Total reclassifications for the period, net of tax $ ( 30 ) $ ( 16,398 ) $ ( 5,552 ) (1) For additional detail related to unrealized gains (losses) on available for sale securities and related amounts reclassified from accumulated other comprehensive loss see NOTE 4. INVESTMENT SECURITIES of these Notes to Consolidated Financial Statements. (2) For additional detail related to unrealized gains (losses) on cash flow hedges and related amounts reclassified from accumulated other comprehensive loss see NOTE 12. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Financial Statements. NOTE 15 REGULATORY CAPITAL AND DIVIDENDS Regulatory Capital Capital adequacy is an important indicator of financial stability and performance. 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. The ratios are intended to measure capital relative to assets and credit risk associated with those assets and off-balance sheet exposures of the entity. The capital category assigned to an entity can also be affected by qualitative judgments made by regulatory agencies about the risk inherent in the entity’s activities that are not part of the calculated ratios. There are five capital categories defined in the regulations, ranging from well capitalized to critically undercapitalized. Classification of a bank in any of the undercapitalized categories can result in actions by regulators that could have a material effect on a bank’s operations. 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, or leverage ratio, all of which are calculated as defined in the regulations. 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 are required to monitor closely their capital levels and to notify their appropriate regulatory agency of any basis for a change in capital category. Under the fully phased-in Basel III capital rules, the Corporation and the Bank maintain the minimum capital and leverage ratios, including a 2.5 percent capital conservation buffer, as illustrated in the table below. In order to avoid limitations on capital distributions, including dividends, the Corporation must maintain capital levels above these minimum requirements. 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. 95 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) 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. The Corporation exercised its right to redeem $ 65.0 million of the subordinated debt on the scheduled interest payment date during the first half of 2024 and the Corporation exercised its right to redeem the $ 5.0 million of the Senior Debt on the scheduled interest payment date of July 30, 2025. On April 1, 2022, the Corporation assumed $ 30.0 million of 4.75 percent Fixed-to-Floating subordinated notes due December 18, 2029 in conjunction with its acquisition of Level One. On February 14, 2025, the Corporation, through its trustee, distributed notice of redemption of all $ 30.0 million in principal amount of such. The Corporation exercised its rights to redeem $ 30.0 million of the subordinated debt on the scheduled interest payment date of March 18, 2025. The Corporation’s and Bank’s actual and required capital ratios as of December 31, 2025 and 2024 were as follows: Prompt Corrective Action Thresholds Actual Basel III Minimum Capital Required Well Capitalized December 31, 2025 Amount Ratio Amount Ratio Amount Ratio Total risk-based capital to risk-weighted assets First Merchants Corporation $ 2,121,288 13.41 % $ 1,660,386 10.50 % N/A N/A First Merchants Bank 2,074,790 13.11 1,661,540 10.50 $ 1,582,419 10.00 % Tier 1 capital to risk-weighted assets First Merchants Corporation $ 1,875,892 11.86 % $ 1,344,122 8.50 % N/A N/A First Merchants Bank 1,876,817 11.86 1,345,056 8.50 $ 1,265,935 8.00 % Common equity tier 1 capital to risk-weighted assets First Merchants Corporation $ 1,850,892 11.70 % $ 1,106,924 7.00 % N/A N/A First Merchants Bank 1,876,817 11.86 1,107,693 7.00 $ 1,028,572 6.50 % Tier 1 capital to average assets First Merchants Corporation $ 1,875,892 10.24 % $ 732,768 4.00 % N/A N/A First Merchants Bank 1,876,817 10.18 737,699 4.00 $ 922,124 5.00 % 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 % 96 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) A reconciliation of certain non-GAAP amounts used in the determination of the above regulatory measures is detailed within the “Capital” 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. Management believes the disclosed capital ratios are meaningful measurements for evaluating the safety and soundness of the Corporation. Traditionally, the banking regulators have assessed bank and bank holding company capital adequacy based on both the amount and the composition of capital, the calculation of which is prescribed in federal banking regulations. The Federal Reserve focuses its assessment of capital adequacy on a component of tier 1 capital known as CET1. Because the Federal Reserve has long indicated that voting common stockholders’ equity (essentially tier 1 risk-based capital less preferred stock and non-controlling interest in subsidiaries) generally should be the dominant element in tier 1 risk-based capital, this focus on CET1 is consistent with existing capital adequacy categories. 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. Dividends 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. 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. 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. Additionally, the Corporation has a Dividend Reinvestment and Stock Purchase Plan, enabling stockholders to elect to have their cash dividends on all shares automatically reinvested in additional shares of the Corporation’s common stock. In addition, stockholders may elect to make optional cash payments up to an aggregate of $ 5,000 per quarter for the purchase of additional shares of common stock. The stock is credited to participant accounts at fair market value. Dividends are reinvested on a quarterly basis. Preferred Stock As part of the Level One acquisition, the Corporation issued 10,000 shares of a newly created 7.5 percent non-cumulative perpetual preferred stock with a liquidation preference of $ 2,500 per share, in exchange for the outstanding Level One Series B preferred stock, and as part of that exchange, each outstanding Level One depositary share representing a 1/100th interest in a share of the Level One preferred stock was converted into a depositary share of the Corporation representing a 1/100th interest in a share of its newly issued preferred stock. 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), equal to $ 1.9 million. The Series A preferred stock qualifies as tier 1 capital for purposes of the regulatory capital calculations. 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. On a share basis, the amount of common stock subject to the repurchase program represents approximately 6 percent of the Corporation’s outstanding shares at the time the program became effective. The Corporation repurchased 1.6 million shares of its common stock pursuant to the repurchase program during 2024. As of December 31, 2024, the Corporation had approximately 1.0 million shares at a maximum aggregate value of $ 18.4 million available to repurchase under the program. The stock repurchase program approved in 2021 was discontinued as of March 18, 2025. 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. On a share basis, the amount of common stock subject to the repurchase program represented approximately 5 percent of the Corporation’s outstanding shares at the time the program became effective. The Corporation repurchased 1.2 million shares of its common stock pursuant to the repurchase program during 2025, for total consideration of $ 46.9 million. The average purchase price was $ 38.71 per share. As of December 31, 2025, approximately 1.7 million shares remained available for repurchase under the program, with an aggregate remaining authorization of $ 53.1 million. In August 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted. Among other things, the IRA imposes a 1 percent excise tax on the fair market value of stock repurchased after December 31, 2022 by publicly traded U.S. corporations (like the Corporation). With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements. 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 the Stockholders’ Equity as a component of additional paid-in capital. 97 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) NOTE 16 LOAN SERVICING Mortgage loans serviced for others are not included in the accompanying Consolidated Balance Sheets. The unpaid balances are as follows for December 31, 2025 and 2024. 2025 2024 Mortgage loan portfolios serviced for: Federal Home Loan Mortgage Corporation $ 874,981 $ 835,432 Fannie Mae 731,856 758,477 Equity Bank 30,791 36,408 Federal Home Loan Bank 567,545 386,022 Total $ 2,205,173 $ 2,016,339 For certain loans, the originated loans are sold to third parties on a non-recourse basis with servicing rights retained. The retained servicing rights are recorded as a servicing asset and are reported under the line item "Other assets" in the Consolidated Balance Sheets. The associated amortization expense is included in “Other expenses” in the Consolidated Statements of Income. Mortgage servicing rights are initially recorded at fair value and then carried at the lower of amortized cost or fair value. The following table presents changes in the servicing asset during the years ended December 31, 2025 and 2024: Year Ended December 31, 2025 2024 Balance, beginning of period $ 9,399 $ 8,157 Servicing rights capitalized 4,383 4,444 Amortization of servicing rights ( 3,590 ) ( 3,202 ) Balance, end of period $ 10,192 $ 9,399 The fair value of servicing rights was $ 14.7 million and $ 12.9 million for the years ended December 31, 2025 and 2024, respectively. Fair value at December 31, 2025 was determined using weighted average discount rates ranging from 2.50 percent to 9.13 percent, Public Securities Association (“PSA”) Prepayment Model speed ranging from 100 percent to 224 percent and cost to service of $ 6 per loan. Fair value at December 31, 2024 was determined using weighted average discount rates ranging from 2.55 percent to 8.22 percent, PSA ranging from 0 percent to 274 percent, and cost to service of $ 6 per loan. NOTE 17 SHARE-BASED COMPENSATION Stock options and Restricted Stock Awards (“RSAs”) have been issued to directors, officers and other management employees under the Corporation’s 2024 Long-term Equity Incentive Plan, the 2019 Long-term Equity Incentive Plan, the Level One Bancorp, Inc. 2007 Stock Option Plan and the Equity Compensation Plan for Non-Employee Directors. The stock options, which have a ten-year life, become 100 percent vested based on time ranging from one year to two years and are fully exercisable when vested. Option exercise prices equal the Corporation’s common stock closing price on Nasdaq on the date of grant. The RSAs issued to employees and non-employee directors provide for the issuance of shares of the Corporation’s common stock at no cost to the holder and generally vest after three years . The RSAs vest only if the employee is actively employed by the Corporation on the vesting date. For non-employee directors, the RSAs vest only if the non-employee director remains as an active board member on the vesting date. The RSAs for employees and non-employee directors are either immediately vested at retirement, disability or death, or continue to vest after retirement, disability or death, depending on the plan under which the shares were granted. The Corporation’s 2024 Employee Stock Purchase Plan (“ESPP”) provides eligible employees of the Corporation and its subsidiaries an opportunity to purchase shares of common stock of the Corporation through quarterly offerings financed by payroll deductions. The price of the stock to be paid by the employees shall be equal to 85 percent of the average of the closing price of the Corporation’s common stock on each trading day during the offering period. However, in no event shall such purchase price be less than the lesser of an amount equal to 85 percent of the market price of the Corporation’s stock on the offering date or an amount equal to 85 percent of the market value on the date of purchase. Common stock purchases are made quarterly and are paid through advance payroll deductions up to a calendar year maximum of $ 25,000 . The 2019 Employee Stock Purchase Plan expired on June 30, 2024. Compensation expense related to unvested share-based awards is recorded by recognizing the unamortized grant date fair value of these awards over the remaining service periods of those awards, with no change in historical reported fair values and earnings. Awards are valued at fair value in accordance with provisions of share-based compensation guidance and are recognized on a straight-line basis over the service periods of each award. To complete the exercise of vested stock options, RSAs and ESPP options, the Corporation generally issues new shares from its authorized but unissued share pool. Share-based compensation for the years ended December 31, 2025, 2024, and 2023 was $ 7.3 million, $ 5.8 million, and $ 5.2 million, respectively, and has been recognized as a component of salaries and employee benefits expense in the accompanying Consolidated Statements of Income. 98 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) The following table summarizes the components of the Corporation’s share-based compensation awards recorded as an expense and the income tax benefit of such awards. For the years ended December 31, 2025 and 2024, the Corporation had RSAs vest primarily at a stock price that was lower than the grant date stock price, which resulted in the recognition of income tax expense at vesting of $ 94,000 and $ 130,000 , respectively. For the year ended December 31, 2023, the Corporation had RSAs vest primarily at a stock price that was higher than the grant date stock price, which resulted in the recognition of income tax benefit at vesting of $ 126,000 . Years Ended December 31, 2025 2024 2023 Stock and ESPP Options Pre-tax compensation expense $ 102 $ 164 $ 103 Income tax benefit ( 17 ) ( 40 ) ( 62 ) Stock and ESPP option expense, net of income taxes $ 85 $ 124 $ 41 Restricted Stock Awards Pre-tax compensation expense $ 7,231 $ 5,654 $ 5,055 Income tax benefit ( 1,424 ) ( 1,058 ) ( 1,188 ) Restricted stock awards expense, net of income taxes $ 5,807 $ 4,596 $ 3,867 Total Share-Based Compensation Pre-tax compensation expense $ 7,333 $ 5,818 $ 5,158 Income tax benefit ( 1,441 ) ( 1,098 ) ( 1,250 ) Total share-based compensation expense, net of income taxes $ 5,892 $ 4,720 $ 3,908 The grant date fair value of ESPP options was estimated to be approximately $ 20,000 at the beginning of the October 1, 2025 quarterly offering period. The ESPP options vested during the three months ending December 31, 2025, leaving no unrecognized compensation expense related to unvested ESPP options at December 31, 2025. Stock option activity under the Corporation’s stock option plans, as of December 31, 2025, and changes during the year ended December 31, 2025 were as follows: Number of Shares Weighted-Average Exercise Price Weighted Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value Outstanding at January 1, 2025 40,991 $ 22.44 Exercised ( 21,467 ) $ 21.15 Outstanding December 31, 2025 19,524 $ 23.86 1.10 $ 266 Vested and Expected to Vest at December 31, 2025 19,524 $ 23.86 1.10 $ 266 Exercisable at December 31, 2025 19,524 $ 23.86 1.10 $ 266 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Corporation’s closing stock price on the last trading day of 2025 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their stock options on December 31, 2025. The amount of aggregate intrinsic value will change based on the fair value of the Corporation’s common stock. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2025 and 2024 was $ 374,000 and $ 707,000 , respectively. Cash receipts of stock options exercised during 2025 and 2024 were $ 454,000 and $ 900,000 , respectively. The following table summarizes information on unvested RSAs outstanding as of December 31, 2025: Number of Shares Weighted-Average Grant Date Fair Value Unvested RSAs at January 1, 2025 554,436 $ 36.47 Granted 222,098 $ 37.75 Vested ( 129,592 ) $ 40.63 Forfeited ( 5,825 ) $ 35.62 Unvested RSAs at December 31, 2025 641,117 $ 36.08 As of December 31, 2025, unrecognized compensation expense related to RSAs was $ 11.5 million and is expected to be recognized over a weighted-average period of 1.59 years. The Corporation did no t have any unrecognized compensation expense related to stock options as of December 31, 2025. 99 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) NOTE 18 PENSION AND OTHER POST RETIREMENT BENEFIT PLANS The Corporation’s defined-benefit pension plans, including non-qualified plans for certain employees, former employees and former non-employee directors, cover approximat e ly 9 percent of the Corporation’s employees. In 2005, the Board of Directors of the Corporation approved the curtailment of the accumulation of defined benefits for future services provided by certain participants in the First Merchants Corporation Retirement Plan. No additional pension benefits have been earned by any employees who had not attained both the age of 55 and accrued at least 10 years of vesting service as of March 1, 2005. The benefits are based primarily on years of service and employees’ pay near retirement. Contributions are intended to provide not only for benefits attributed to service-to-date, but also for those expected to be earned in the future. The table below sets forth the plans’ funded status and amounts recognized in the Consolidated Balance Sheets, using measurement dates of December 31, 2025 and 2024. 2025 2024 Change in Benefit Obligation: Benefit obligation at beginning of year $ 48,398 $ 55,761 Interest cost 2,538 2,632 Actuarial loss (gain) 1,762 ( 2,678 ) Benefits paid ( 5,393 ) ( 7,317 ) Benefit obligation at end of year $ 47,305 $ 48,398 Change in Plan Assets: Fair value of plan assets at beginning of year $ 79,535 $ 82,258 Actual return on plan assets 8,546 4,006 Employer contributions 654 588 Benefits paid ( 5,393 ) ( 7,317 ) End of year 83,342 79,535 Funded status at end of year $ 36,037 $ 31,137 Assets and Liabilities Recognized in the Balance Sheets: Deferred tax asset $ — $ 505 Assets $ 37,712 $ 33,217 Deferred tax liability $ 152 $ — Liabilities $ 1,675 $ 2,081 As of December 31, 2025, the funded status of the plans increased $ 4.9 million from December 31, 2024. The expected increase in the funded status attributable to interest cost less expected return on assets, actual contributions and direct benefit payments was $ 2.2 million, resulting in a net gain of $ 2.7 million at December 31, 2025. The key contributing factors to the net gain were the discount rate decreased by 40 basis points from 5.60 percent to 5.20 percent, which increased the liability by $ 1.3 million and the assets in the plan earned a return of $ 8.5 million, which was $ 4.5 million higher than the expected return. The accumulated benefit obligation for all defined benefit plans was $ 47.3 million and $ 48.4 million at December 31, 2025 and 2024, respectively. Information for pension plans with an accumulated benefit obligation in excess of plan assets consists solely of the non-qualified plans for certain employees, former employees and former non-employee directors, and is included in the table below. December 31, 2025 December 31, 2024 Projected benefit obligation $ 1,675 $ 2,081 Accumulated benefit obligation $ 1,675 $ 2,081 Fair value of plan assets $ — $ — The Corporation recognized expense under these non-qualified plans of $ 0.1 million, $ 0.1 million and $ 0.2 million for 2025, 2024 and 2023, respectively. The following table shows the components of net periodic pension benefit cost: December 31, 2025 December 31, 2024 December 31, 2023 Interest cost 2,538 2,632 2,876 Expected return on plan assets ( 4,059 ) ( 4,133 ) ( 3,887 ) Amortization of prior service cost 31 49 87 Amortization of net (gain) loss ( 45 ) 1 80 Net periodic pension benefit cost $ ( 1,535 ) $ ( 1,451 ) $ ( 844 ) 100 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Other changes in plan assets and benefit obligations recognized in other comprehensive income: December 31, 2025 December 31, 2024 December 31, 2023 Net periodic pension benefit cost $ ( 1,535 ) $ ( 1,451 ) $ ( 844 ) Net gain 2,726 2,551 3,121 Amortization of net (gain) loss ( 45 ) 49 80 Amortization of prior service cost 31 1 87 Total recognized in other comprehensive income 2,712 2,601 3,288 Total recognized in net periodic pension benefit cost and other comprehensive income $ 4,247 $ 4,052 $ 4,132 Significant assumptions include: December 31, 2025 December 31, 2024 December 31, 2023 Weighted-average Assumptions Used to Determine Benefit Obligation: Discount rate 5.20 % 5.60 % 5.10 % Rate of compensation increase for accruing active participants n/a n/a n/a Weighted-average Assumptions Used to Determine Cost: Discount rate 5.60 % 5.10 % 5.40 % Expected return on plan assets 5.25 % 5.25 % 5.25 % Rate of compensation increase for accruing active participants n/a n/a n/a At December 31, 2025 and 2024, the Corporation based its estimate of the expected long-term rate of return on analysis of the historical returns of the plans and current market information available. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as of December 31, 2025. The minimum contribution required in 2026 will likely be zero , but the Corporation may decide to make a discretionary contribution during the year. 2026 $ 5,198 2027 4,911 2028 4,759 2029 4,572 2030 4,192 After 2030 17,728 $ 41,360 The Savings Plan, a Section 401(k) qualified defined contribution plan, was amended on March 1, 2005 to provide enhanced retirement benefits, including employer and matching contributions, for eligible employees of the Corporation and its subsidiaries. The Corporation matches employees’ contributions at the rate of 100 percent for the first 3 percent of base salary contributed by participants and 50 percent of the next 3 percent of base salary contributed by participants. Beginning in 2005, employees who have completed 1000 hours of service and are an active employee on the last day of the year receive an additional retirement contribution after year-end. Employees hired after January 1, 2010 do not participate in the additional retirement contribution. Effective January 1, 2013, the additional retirement contribution was fixed at 2 percent. Full vesting occurs after five years of service. The Corporation’s expense for the Savings Plan, including the additional retirement contribution, was $ 7.0 million, $ 7.0 million and $ 7.2 million for 2025, 2024 and 2023, respectively. The Corporation also maintains a post retirement benefit plan that provides health insurance benefits for a closed group of participants that came to the Corporation through the 2019 MBT Financial Corp. (“MBT”) acquisition. To be eligible for the post retirement plan, the participants must (1) have been hired by MBT prior to January 1, 2007, (2) be a full-time employee of the Corporation and employed by MBT prior to the acquisition, and (3) be at least 55 years of age with 5 years of full-time service with MBT. The plan allowed retirees to be carried under the Corporation’s health insurance plan, generally from ages 55 to 65 . The retirees’ premiums are determined based on their retiree class (per historical MBT guidelines) and also determined by the plan type for which the retiree is enrolled. As of December 31, 2025 and 2024, the obligation payable under the post retirement plan was $ 1.8 million and $ 0.3 million, respectively. Post retirement plan expense totaled $ 20,000 , $ 32,000 and $ 44,000 for 2025, 2024 and 2023, respectively. 101 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Pension Plan Assets The plans’ investment strategies are to provide for preservation of capital with an emphasis on long-term growth without undue exposure to risk. The assets of the plans are invested in accordance with the plans’ Investment Policy Statement, subject to strict compliance with the Employee Retirement Income Security Act of 1974 and any other applicable statutes. The plans’ risk management practices include semi-annual evaluations of investment managers, including reviews of compliance with investment manager guidelines and restrictions; ability to exceed performance objectives; adherence to the investment philosophy and style; and ability to exceed the performance of other investment managers. The evaluations are reviewed by management with appropriate follow-up and actions taken, as deemed necessary. The Investment Policy Statement generally allows investments in cash and cash equivalents, real estate, fixed income debt securities and equity securities, and specifically prohibits investments in derivatives, options, futures, private placements, short selling, non-marketable securities and purchases of individual non-investment grade bonds. Plan assets are re-balanced quarterly. At December 31, 2025 and 2024, plan assets by category are as follows: December 31, 2025 December 31, 2024 Actual Target Actual Target Cash and cash equivalents 3.3 % 3.0 % 3.3 % 3.0 % Equity securities 24.2 25.0 27.3 20.0 Debt securities 72.5 72.0 69.4 77.0 100.0 % 100.0 % 100.0 % 100.0 % At December 31, 2025, the maturities of the plans’ debt securities ranged from 50 days to 19.6 years, with a weighted average maturity of 9.0 years. At December 31, 2024, the maturities of the plans’ debt securities ranged from 14 days to 20.4 years, with a weighted average maturity of 8.0 years. Following is a description of the valuation methodologies used for pension plan assets measured at fair value on a recurring basis, as well as the general classification of pension plan assets pursuant to the valuation hierarchy. Where quoted market prices are available in an active market, plan assets are classified within Level 1 of the valuation hierarchy. Level 1 plan assets total $ 69.7 million and $ 69.2 million as of December 31, 2025 and 2024, respectively, and include cash and cash equivalents, common stocks, mutual funds and corporate bonds and notes. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of plan assets with similar characteristics or discounted cash flows. Level 2 plan assets total $ 13.7 million and $ 10.3 million as of December 31, 2025 and 2024, respectively, and include governmental agencies, taxable municipal bonds and notes, and certificates of deposit. In certain cases where Level 1 or Level 2 inputs are not available, plan assets are classified within Level 3 of the hierarchy. There are no assets classified within Level 3 of the hierarchy at December 31, 2025 and 2024. Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs December 31, 2025 Fair Value (Level 1) (Level 2) (Level 3) Cash & Cash Equivalents $ 2,768 $ 2,768 $ — $ — Corporate Bonds and Notes 30,932 30,932 — — Government Agency and Municipal Bonds and Notes 13,651 — 13,651 — Party-in-Interest Investments Common Stock 2,268 2,268 — — Mutual Funds and Exchange Traded Funds Taxable Bond 15,872 15,872 — — Large Cap Equity 9,120 9,120 — — Mid Cap Equity 2,892 2,892 — — Small Cap Equity 1,245 1,245 — — International Equity 4,593 4,593 — — $ 83,341 $ 69,690 $ 13,651 $ — 102 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs December 31, 2024 Fair Value (Level 1) (Level 2) (Level 3) Cash & Cash Equivalents $ 2,609 $ 2,609 $ — $ — Corporate Bonds and Notes 29,206 29,206 — — Government Agency and Municipal Bonds and Notes 10,089 — 10,089 — Certificates of Deposit 246 — 246 — Party-in-Interest Investments Common Stock 2,413 2,413 — — Mutual Funds and Exchange Traded Funds Taxable Bond 15,648 15,648 — — Large Cap Equity 11,047 11,047 — — Mid Cap Equity 3,403 3,403 — — Small Cap Equity 1,275 1,275 — — International Equity 3,599 3,599 — — $ 79,535 $ 69,200 $ 10,335 $ — NOTE 19 INCOME TAXES Income tax expense consists of the following components for the years ended December 31, 2025, 2024, and 2023: 2025 2024 2023 Income Tax Expense for the Year Ended December 31: Currently Payable: Federal $ 30,471 $ 27,979 $ 29,351 State 423 723 ( 504 ) Deferred: Federal 1,106 1,548 4,613 State 1,113 76 1,986 Income Tax Expense $ 33,113 $ 30,326 $ 35,446 The reconciliation between income tax expense expected at the U.S. federal statutory tax rate and the reported income tax expense is summarized in the following table for years ended December 31, 2025, 2024 and 2023: 2025 2024 2023 Amount % Amount % Amount % Income Before Income Taxes $ 259,114 $ 231,728 $ 259,232 Federal Statutory Income Tax at 21% $ 54,414 21.0 % $ 48,663 21.0 % $ 54,439 21.0 % State & Local Taxes, Net of Federal Income Tax Effect (1) 1,213 0.5 % 631 0.3 % 1,171 0.4 % Tax-exempt Interest Income ( 18,512 ) ( 7.1 ) % ( 17,509 ) ( 7.5 ) % ( 18,193 ) ( 7.0 ) % Non-deductible FDIC Premiums 600 0.2 % 624 0.3 % 454 0.2 % Earnings on Life Insurance ( 1,599 ) ( 0.6 ) % ( 1,777 ) ( 0.8 ) % ( 1,753 ) ( 0.7 ) % Other Non-taxable/Non-deductible Items 720 0.2 % 521 0.2 % ( 9 ) — % Tax Credits ( 3,662 ) ( 1.4 ) % ( 2,018 ) ( 0.9 ) % ( 331 ) ( 0.1 ) % Other ( 61 ) — % 1,191 0.5 % ( 332 ) ( 0.1 ) % Income Tax Expense & Effective Tax Rate $ 33,113 12.8 % $ 30,326 13.1 % $ 35,446 13.7 % (1) State taxes in Illinois make up the majority (greater than 50 percent) of the State & Local Taxes, Net of Federal Income Tax Effect for periods ended December 31, 2025, 2024 and 2023. The Corporation operates in multiple U.S. states. For the years ended December 31, 2025, 2024, and 2023, the effect of state and local taxes on the effective tax rate is primarily influenced by operations in Indiana and Illinois, which make up greater than 50 percent of the state and local tax effect. Tax-exempt interest income includes interest earned on municipal securities held in the investment portfolio. Tax Credits consist entirely of low-income housing tax credits. Income taxes paid (net of refunds) for the years ended December 31, 2025, 2024 and 2023 are summarized in the following table: 2025 2024 2023 Income Taxes Paid for the Year Ended December 31: Federal $ 19,704 $ 7,000 $ 33,682 State 1,042 627 1,156 Income Taxes Paid $ 20,746 $ 7,627 $ 34,838 103 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) In 2025, there were no individual state or local jurisdictions with taxes paid that equaled or exceeded 5% of total income taxes paid. Significant components of the net deferred tax assets and liabilities resulting from temporary differences were as follows at December 31, 2025 and 2024: 2025 2024 Deferred Tax Asset at December 31: Assets: Differences in Accounting for Credit Losses $ 51,617 $ 51,186 Differences in Accounting for Loan Fees 2,431 2,193 Deferred Compensation 4,258 3,950 Federal & State Income Tax Loss Carryforward and Credits 260 1,166 Net Unrealized Loss on Securities Available for Sale 35,063 50,084 Other 5,816 5,771 Total Assets 99,445 114,350 Liabilities: Differences in Depreciation Methods 7,612 8,801 Differences in Accounting for Loans and Securities 501 920 Differences in Accounting for Mortgage Servicing Rights 2,460 2,280 Difference in Accounting for Pensions and Other Employee Benefits 10,610 8,156 State Income Tax 1,179 1,416 REIT Dividend Deferral 2,818 677 Other 7,022 6,208 Total Liabilities 32,202 28,458 Net Deferred Tax Asset $ 67,243 $ 85,892 As of December 31, 2025, the Corporation has approximately $ 5.3 million of state NOL carryforwards available to offset future state taxable income, which will expire beginning in 2026. These NOL carryforwards along with normal timing differences between book and tax result in total state deferred tax assets of $ 5.6 million. Management believes it is more likely than not that the benefit of these state NOL carryforwards and other state deferred tax assets will be fully realized. The Corporation has additional paid-in capital that is considered restricted resulting from the acquisitions of CFS Bancorp, Inc. (“CFS”) and Ameriana Bancorp, Inc. (“Ameriana”) of approximately $ 13.4 million and $ 11.9 million, respectively. CFS and Ameriana qualified as banks under provisions of the Internal Revenue Code which permitted them to deduct from taxable income an allowance for bad debts which differed from the provision for losses charged to income, for which no deferred federal income tax liability has been recognized. If in the future this portion of additional paid-in capital is distributed, or the Corporation no longer qualifies as a bank for income tax purposes, federal income taxes may be imposed at the then applicable tax rate. The unrecorded deferred tax liability at December 31, 2025, would have been approximately $ 5.3 million. The Corporation or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Corporation is generally no longer subject to U.S. federal, state and local income tax examinations by tax authorities for tax years before 2022. Additional details regarding the Corporation’s policies related to income taxes are discussed in NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES of these Notes to Consolidated Financial Statements. NOTE 20 NET INCOME PER COMMON SHARE Basic net income per common share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the reporting period. Diluted net income per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. It is computed by dividing net income available to common stockholders by the sum of the weighted-average common shares outstanding and the effect of all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include stock options and RSAs granted under the Corporation’s share-based compensation plans. These securities are included in the diluted earnings per share calculation only when their effect is dilutive. Securities that would increase earnings per share are considered anti-dilutive and are therefore excluded from the computation of diluted earnings per share for the applicable periods. 104 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) The following table reconciles basic and diluted net income per common share for the years indicated: 2025 2024 2023 Net Income Available to Common Stockholders Weighted-Average Common Shares Per Share Amount Net Income Available to Common Stockholders Weighted-Average Common Shares Per Share Amount Net Income Available to Common Stockholders Weighted-Average Common Shares Per Share Amount Net income available to common stockholders $ 224,126 57,456,772 $ 3.90 $ 199,527 58,312,575 $ 3.42 $ 221,911 59,304,879 $ 3.74 Effect of potentially dilutive stock options and restricted stock awards 269,437 219,990 183,641 Diluted net income per common share $ 224,126 57,726,209 $ 3.88 $ 199,527 58,532,565 $ 3.41 $ 221,911 59,488,520 $ 3.73 RSAs excluded from the diluted average common share calculation 59,611 92,175 69,421 As of December 31, 2025, 2024 and 2023, there were no stock options with an option price greater than the average market price of the common shares. NOTE 21 CONDENSED FINANCIAL INFORMATION (parent company only) Presented below is condensed financial information as to financial position, results of operations, and cash flows of the Corporation. Condensed Balance Sheets December 31, 2025 December 31, 2024 Assets Cash and due from banks $ 41,703 $ 66,996 Investment in subsidiaries 2,469,036 2,315,701 Other assets 13,775 12,834 Total assets $ 2,524,514 $ 2,395,531 Liabilities Subordinated debentures and other borrowings $ 49,570 $ 85,232 Interest payable 136 329 Other liabilities 8,141 4,987 Total liabilities 57,847 90,548 Stockholders' equity 2,466,667 2,304,983 Total liabilities and stockholders' equity $ 2,524,514 $ 2,395,531 105 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) Condensed Statements of Income and Comprehensive Income December 31, 2025 December 31, 2024 December 31, 2023 Income Dividends from subsidiaries $ 146,000 $ 180,000 $ 131,525 Other income 229 210 16 Total income 146,229 180,210 131,541 Expenses Interest expense 3,540 6,803 10,164 Salaries and employee benefits 5,432 4,536 4,406 Other expenses 3,720 3,640 3,695 Total expenses 12,692 14,979 18,265 Income before income tax benefit and equity in undistributed income of subsidiaries 133,537 165,231 113,276 Income tax benefit ( 2,522 ) ( 3,311 ) ( 4,526 ) Income before equity in undistributed income of subsidiaries 136,059 168,542 117,802 Equity in undistributed income of subsidiaries 89,942 32,860 105,984 Net income 226,001 201,402 223,786 Preferred stock dividends 1,875 1,875 1,875 Net income available to common stockholders $ 224,126 $ 199,527 $ 221,911 Net income $ 226,001 $ 201,402 $ 223,786 Other comprehensive income (loss) 58,550 ( 12,715 ) 63,181 Comprehensive income $ 284,551 $ 188,687 $ 286,967 Condensed Statements of Cash Flows December 31, 2025 December 31, 2024 December 31, 2023 Cash Flow From Operating Activities: Net income $ 226,001 $ 201,402 $ 223,786 Adjustments to reconcile net income to net cash provided by operating activities Share-based compensation 2,500 2,060 1,803 Equity in undistributed income of subsidiaries ( 89,942 ) ( 32,860 ) ( 105,984 ) Other adjustments ( 593 ) ( 3,615 ) ( 2,446 ) Net cash provided by operating activities 137,966 166,987 117,159 Cash Flow From Investing Activities: Proceeds from business divestitures — — 4,852 Net cash provided by investing activities — — 4,852 Cash Flow From Financing Activities: Cash dividends on common stock ( 82,912 ) ( 81,623 ) ( 80,061 ) Cash dividends on preferred stock ( 1,875 ) ( 1,875 ) ( 1,875 ) Repayment of borrowings ( 35,000 ) ( 65,000 ) — Stock issued under employee benefit plans 628 656 754 Stock issued under dividend reinvestment and stock purchase plan 2,336 2,261 2,180 Stock options exercised 454 900 1,110 Repurchases of common stock ( 46,890 ) ( 56,168 ) — Net cash used by financing activities ( 163,259 ) ( 200,849 ) ( 77,892 ) Net change in cash and cash equivalents ( 25,293 ) ( 33,862 ) 44,119 Cash and cash equivalents, beginning of the year 66,996 100,858 56,739 Cash and cash equivalents, end of year $ 41,703 $ 66,996 $ 100,858 106 PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) NOTE 22 SEGMENT INFORMATION The Corporation has one reportable segment, community banking. The Corporation’s reportable segment is determined by the Chief Executive Officer, who is the designated chief operating decision maker (“CODM”), based upon information provided about the Corporation’s products and services offered. The CODM will evaluate the financial performance of the Corporation’s business components by evaluating revenue streams, significant expenses, and budget to actual results in assessing the Corporation’s segment. The Corporation generates revenue primarily by providing banking services to its customers. Interest expense, provisions for credit losses and salaries and employee benefits are the significant expenses in the banking operations. The CODM evaluates performance, allocates resources and makes key operating decisions based on consolidated net income that is reported in the Consolidated Statements of Income. The measure of segment assets is reported on the Consolidated Balance Sheets as total consolidated assets. All operations are domestic. NOTE 23 GENERAL LITIGATION AND REGULATORY EXAMINATIONS The Corporation is subject to claims and lawsuits that arise primarily in the ordinary course of business. Additionally, the Corporation is also subject to periodic examinations by various regulatory agencies. It is the general opinion of management that the disposition or ultimate resolution of any such routine litigation or regulatory examinations will not have a material adverse effect on the consolidated financial position, results of operations and cash flow of the Corporation. 107 PART II: ITEM 9., ITEM 9A. AND ITEM 9B. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE In connection with its audits for the two most recent fiscal years ended December 31, 2025, there have been no disagreements with the Corporation’s independent registered public accounting firm on any matter of accounting principles or practices, financial statement disclosure or audit scope or procedure, nor have there been any changes in accountants.