FIRST MERCHANTS CORP: Key Event Summary

This summary breaks down a significant event for FIRST MERCHANTS CORP, explaining the details in clear, accessible language. Our goal is to provide a straightforward understanding of recent business news, much like a conversation about important financial developments.

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1. What happened? (The Event)

FIRST MERCHANTS CORP, a regional bank, officially completed its acquisition of First Savings Financial Group, Inc. and its banking subsidiary, First Savings Bank. This all-stock transaction was valued at approximately $124 million. Through this acquisition, FIRST MERCHANTS has fully integrated First Savings, meaning all First Savings Bank branches, customers, and employees now operate under the FIRST MERCHANTS umbrella. Imagine a larger company buying a smaller, local business – the smaller entity merges into the larger one, and its customers transition to the new brand.

2. When did it happen?

FIRST MERCHANTS initially announced the agreement to acquire First Savings on September 24, 2025. The deal officially closed and became effective on February 1, 2026, following months of planning and regulatory approvals. The public announcement of this completion occurred on February 2, 2026.

3. Why did it happen? (Context and Background)

Banks often pursue acquisitions to expand their market reach and grow their operations. In this instance, FIRST MERCHANTS aimed to strengthen its presence in Indiana, leveraging First Savings Financial Group's established footprint and 14 branches across several key counties. By acquiring First Savings, FIRST MERCHANTS gains immediate access to First Savings' customer base and branch network in the region, bypassing the need to build new infrastructure from scratch. This strategy offers a faster path to business growth and an expanded customer base for loans, accounts, and other financial services. It's like buying a ready-made customer base and a network of existing stores.

4. Why does this matter? (Impact and Significance)

This acquisition represents a significant development for FIRST MERCHANTS.

• For the Combined Bank: FIRST MERCHANTS emerges as a substantially larger financial institution. On a pro forma basis, the combined company will manage approximately $19.5 billion in assets, $15.8 billion in deposits, and $12.9 billion in loans. It will operate through 129 banking centers across Indiana, Ohio, Michigan, and Illinois. This expanded scale is expected to boost competitiveness and market penetration.
• For the Stock: First Savings common stock shareholders received 0.85 shares of FIRST MERCHANTS common stock for each of their First Savings shares. FIRST MERCHANTS structured this exchange as a tax-free event for First Savings shareholders. To complete the deal, FIRST MERCHANTS issued approximately 6.1 million new shares of its own stock, representing about a 10% increase in shares outstanding. The company anticipates the acquisition will be approximately 10% accretive to FIRST MERCHANTS' earnings per share (EPS) in 2027, excluding one-time merger-related charges, and expects it to generate significant cost savings.

5. Who is affected? (Stakeholder Impact)

• Customers of First Savings Bank: Their bank accounts, loans, and credit cards have now transferred to FIRST MERCHANTS Bank. They will receive new debit cards, checkbooks, and will need to adapt to FIRST MERCHANTS' online banking system.
• Customers of FIRST MERCHANTS: While they may not experience many immediate changes, their bank is now larger and may offer more services or additional branches in new areas, particularly in Indiana.
• Employees of First Savings Financial Group: Some employees will likely retain their positions and become FIRST MERCHANTS employees. For those with restricted stock awards in First Savings, these converted into FIRST MERCHANTS common stock based on the exchange ratio. Stock options were canceled in exchange for a cash payment, calculated based on the difference between FIRST MERCHANTS' stock value and the option's exercise price. As with any merger, some roles may be combined, potentially leading to job changes for some employees.
• Investors (like you!):
  • If you owned First Savings stock: You received 0.85 shares of FIRST MERCHANTS stock for each of your First Savings shares, in a tax-free exchange. You also received cash for any fractional shares.
  • If you own FIRST MERCHANTS stock: Your company is now significantly larger; however, it also issued about 6.1 million new shares to complete this transaction. This dilutes your ownership percentage in the combined company by approximately 10%, but you now own a piece of a larger entity with enhanced growth potential and expected EPS accretion.
• Local Communities in Indiana: A larger bank may translate to increased lending capacity for local businesses or new community programs.

6. What happens next? (Immediate and Future Implications)

With the deal officially closed, the critical work of integrating the two banks now begins.

• Integration is Key: FIRST MERCHANTS focuses on integrating all systems, products, and personnel from First Savings Bank. This complex task will take many months to complete smoothly.
• Financial Synergies: The company anticipates achieving approximately $12.5 million in annual cost synergies, expected to be fully realized by late 2026. However, investors should note estimated one-time merger-related expenses of approximately $15.6 million, which will impact near-term earnings.
• Customer Transition: Customers of First Savings Bank will receive ongoing communications regarding their account transition to FIRST MERCHANTS Bank. These communications will cover new debit cards, online banking access, and service changes.
• Operational Merging: Behind the scenes, the two banks' operations merge. This involves combining IT systems, back-office functions, and ensuring a seamless experience for customers and employees.
• Expect Challenges: Merging two companies is rarely perfectly smooth. Minor challenges may arise during the transition period as systems combine and processes harmonize.

7. What should investors know? (Practical Takeaways)

• Enhanced Scale & Growth Potential: This acquisition significantly expands FIRST MERCHANTS' footprint, particularly in Indiana, positioning it as a larger, more competitive regional bank with approximately $19.5 billion in assets. Successful integration could translate this scale into higher profits and sustained growth.
• Positive Financial Impact: The acquisition projects to be approximately 10% accretive to FIRST MERCHANTS' EPS in 2027 (excluding one-time costs) and expects to generate $12.5 million in annual cost synergies. This positive earnings impact drives the acquisition.
• Dilution & Integration Costs: While the acquisition is accretive, FIRST MERCHANTS issued about 6.1 million new shares (approximately 10% of existing shares) to complete the deal, diluting existing shareholders' percentage ownership. Additionally, the company expects to recognize approximately $15.6 million in one-time merger-related expenses in upcoming quarters.
• Integration Risk is Paramount: Merging two companies is complex. Realizing synergies and EPS accretion depends heavily on smooth integration. Monitor management's updates regarding integration progress, customer retention, and cost savings in future earnings reports.
• Long-Term Strategy: This acquisition represents a strategic move for long-term growth. Investors should evaluate its impact over several quarters, rather than focusing on immediate stock price fluctuations.
• Stay Informed: Monitor FIRST MERCHANTS' earnings calls and SEC filings for updates on financial performance, integration milestones, and any adjustments to synergy or accretion estimates.

In essence, FIRST MERCHANTS has successfully expanded its scale and market reach by acquiring First Savings. The immediate challenge involves ensuring smooth integration to realize projected financial benefits. This significant step for the company means successful integration will be key to its future success.