# First Merchants Corporation: AI strategy

Source: https://www.bankingnewsai.com/banks/first-merchants
Last updated: Oct 13, 2026

*Central Indiana's largest bank holding company converted its Louisville-area acquisition in May 2026, describes its edge as 'modern capabilities with people who genuinely understand their communities', has rolled Microsoft Copilot out across the organisation and is applying AI to mortgage intake, and says in its 2025 10-K that it uses and develops AI under governance frameworks; no AI leader or budget is named.*

## How is First Merchants using AI?

First Merchants Corporation, the Muncie, Indiana parent of First Merchants Bank with $21.3 billion of assets, $15.5 billion of loans, $16.8 billion of deposits and 126 banking centres across Indiana, Ohio and Michigan, is a relationship bank whose 2026 technology work has been integration. It agreed in September 2025 to pay $241 million in stock for First Savings Financial Group in Jeffersonville, a $2.4 billion-asset bank 'directly across the river' from Louisville with specialty lending in SBA 7(a), single-tenant and first-lien home equity, and completed the systems conversion in mid-May 2026. Second-quarter 2026 net income to common was $43.5 million, or $0.70 per share, adjusted $46.4 million, or $0.74, with net interest margin up to 3.38%, adjusted pre-tax pre-provision earnings of $84.6 million, an adjusted efficiency ratio of 53.22% and loan and deposit growth near 6% annualised, offset by $29.7 million of reserves on two commercial relationships moved to nonaccrual that CEO Mark Hardwick called disappointing but not representative of the portfolio. The 10-K frames strategy as 'organic relationship growth enhanced by technology and strategic acquisitions', and on receiving Forbes' World's Best Banks recognition said customers 'value a bank that combines modern capabilities with people who genuinely understand their communities'. In November 2025 the bank created a director of small-business banking role to deliver a segmented small-business experience. The earnings releases and call summaries do not mention artificial intelligence, and no AI leader or budget has been named, but at a Louisville Business First roundtable in June 2026 Tony Schoen, president of specialty lending and formerly of First Savings, said: 'We've rolled out Microsoft Copilot through the entire organization, which has reduced the need for administrative duplicity', and that AI is being rolled into mortgage banking as a 'front side sifter when mortgages come in', aiming to lift volume from about $1 billion to $1.4 billion with the same staff; customer-facing content covers text scams. The formal AI disclosure is in the 2025 10-K, filed in February 2026 and the first annual report to mention AI: a new risk factor states that the Corporation and its vendors 'use and develop artificial intelligence technologies, including machine-learning and generative artificial intelligence tools', that it 'has established governance, risk management, and control frameworks intended to oversee the use of artificial intelligence', and that failure to embrace AI 'may result in a competitive disadvantage'. Technology is run by Stephan Fluhler, chief information officer since 2014 and the bank's chief technology officer for a decade before that, who reports on risk to the board's Risk and Credit Policy Committee alongside a chief risk officer, Eva Scurlock, appointed in January 2026. The digital work that is visible is vendor-led: a 2024 digital platform conversion ($2.4 million of non-core cost) and a March 2026 deal with Spiral for round-up savings, gamified goals and a giving centre in digital banking. On 1 October 2026 the board announced that Hardwick retires at the end of 2026 and that President Mike Stewart becomes CEO on 1 January 2027, saying strategy rests on 'smarter use of technology'; the 2024 10-K, the third-quarter 2025 10-Q and the first- and second-quarter 2026 10-Qs contain no AI language, and neither do the Q4 2025, Q1 2026 or Q2 2026 call transcripts. First Merchants Bank is an Indiana state nonmember bank supervised by the FDIC. The AI record is still modest, a firm-wide productivity tool, a mortgage-intake use and a risk factor, for a bank whose stated differentiator is people.

## At a glance

| Field | Value |
| --- | --- |
| Lead bank | First Merchants Bank |
| Ticker | FRME |
| Headquarters | Muncie, IN |
| Consolidated assets | $21,320 million |
| Federal Reserve rank | 90 |
| Charter | Indiana state nonmember bank (FDIC) |

## What AI partnerships and patents does First Merchants have?

First Merchants publicly names one AI product, Microsoft Copilot, which specialty-lending president Tony Schoen said in June 2026 is rolled out across the organisation. Its 2025 10-K says the Corporation and its third-party vendors use and develop AI tools, without naming vendors. Its other named technology vendors, SS&C for trust accounting and Spiral for savings, are not AI products. No AI lab, cloud, GPU or data-vendor agreement is public, and no granted patents or published applications assigned to First Merchants were found in Google Patents searches. ([Louisville Business First](https://www.bizjournals.com/louisville/news/2026/06/05/executive-insights-experts-crypto-ai-business-bank.html), [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000022/frme-20251231.htm))

| Item | What it is | Status | Date | Sources |
| --- | --- | --- | --- | --- |
| Microsoft Copilot | Generative-AI assistant rolled out through the entire organisation; also being applied at mortgage intake | In production | 2026-06-05 | [Louisville Business First](https://www.bizjournals.com/louisville/news/2026/06/05/executive-insights-experts-crypto-ai-business-bank.html) |

## Key points

- Microsoft Copilot rolled out through the entire organisation, and AI being applied at mortgage intake to grow volume with the same staff (specialty-lending president Tony Schoen, June 2026); no AI leader or budget disclosed, and AI is absent from earnings releases.
- 2025 10-K (first to mention AI): the Corporation and its vendors use and develop machine-learning and generative AI tools, governance and control frameworks oversee AI use, and failing to embrace AI could be a competitive disadvantage.
- Technology leadership: Stephan Fluhler, chief information officer since May 2014 (CTO 2004–2014); Eva Scurlock chief risk officer since January 2026.
- Digital vendors: 2024 digital platform conversion ($2.4 million non-core cost); Spiral round-up savings and giving centre selected March 2026.
- First Savings Financial Group ($241 million in stock, Louisville-area entry with specialty lending verticals) acquired and converted by mid-May 2026.
- Q2 2026 net income to common $43.5 million ($0.70), adjusted $46.4 million ($0.74); NIM 3.38%; adjusted efficiency ratio 53.22%.
- Two commercial relationships ($41.8 million) placed on nonaccrual with $29.7 million of reserves.
- Strategy: 'organic relationship growth enhanced by technology and strategic acquisitions'; new director of small-business banking role.
- Recognised on Forbes' World's Best Banks 2026 and TIME's America's Best Companies 2026.
- AI disclosure is a single risk factor: 'artificial intelligence' appears 13 times in the 2025 10-K, all inside that factor, and zero times in the 2024 10-K, the Q3 2025 10-Q and the Q1 and Q2 2026 10-Qs. The factor lists regulatory scrutiny, litigation, biased algorithms or datasets, higher frequency and severity of cyberattacks, and loss of control over third-party models' training data and updates, and names no use case, vendor or budget.
- No call transcript uses the word AI. The Q4 2025 call (27 January 2026) framed strategy as 'growing organically through deeper relationships and smarter use of technology for enhanced client relationship and internal efficiencies'; the Q1 and Q2 2026 calls list 'technology' or 'technology investments' among four focus areas, and the CFO kept the quarterly expense run-rate at $111 million to $114 million including added hiring and technology spending.
- CEO succession announced 1 October 2026: Mark Hardwick retires effective 1 January 2027 and President Mike Stewart becomes President and CEO; Stewart's stated strategy is 'more and deeper relationships, smarter use of technology, and customer-centric products'. No AI role changes accompany it.
- Technology cost lines are modest and rising: equipment expense $28.6 million in 2025 (2024 $26.8 million, 2023 $24.1 million) and outside data processing fees $27.5 million (2024 $27.1 million, 2023 $25.2 million); in Q2 2026 equipment was $8.6 million against $6.9 million a year earlier and data processing $8.0 million against $7.1 million, after the First Savings acquisition.
- Cybersecurity is run by an unnamed chief information security officer with 19 years at the bank, under a board-approved information security programme built on the NIST Cybersecurity Framework with FS-ISAC participation; the 10-K names no AI-specific owner. Vendor technology disclosed is not AI: SS&C Trust Suite for Private Wealth Advisors (December 2024) and Spiral (March 2026).

## Timeline

- Oct 1, 2026 — **CEO succession: Stewart to replace Hardwick on 1 January 2027** Hardwick, with 29 years at the bank and 18 acquisitions, retires; Stewart, 18-plus years at the bank and its president, says strategy is 'more and deeper relationships, smarter use of technology, and customer-centric products'. ([First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000067/frme-20261001.htm), [First Merchants Bank](https://firstmerchants.com/why-us/news/2026/10/01/first-merchants-bank-ceo-mark-hardwick-to-retire-at-the-end-of-2026-and-president-mike-stewart-to-become-president-and-ceo))
- Aug 11, 2026 — **Customer warning on bank-impersonation scams** A bank article describes a text-then-call scam posing as the fraud department and tells customers the bank will not ask for a username, password or security access code; no AI detection is described. ([First Merchants Bank](https://firstmerchants.com/why-us/news/news-detail/2026/08/11/it-could-happen-to-you--bank-impersonation-scams))
- Jul 31, 2026 — **Q2 2026 10-Q: no AI language; nonaccrual loans $118.2 million** The filing, like the Q1 10-Q, has no AI reference; equipment expense was $8.6 million and outside data processing fees $8.0 million for the quarter, and nonaccrual loans rose $46.4 million in six months, mainly two commercial relationships totalling $41.8 million. ([First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000059/frme-20260630.htm), [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000035/frme-20260331.htm))
- Jul 23, 2026 — **Q2 2026 call: technology investments and hiring in the expense run-rate** Hardwick closes with a focus on 'people, clients, products, and technology investments'; CFO Michele Kawiecki holds quarterly expenses at $111 million to $114 million with some added hiring and technology spending, and integration expense savings are complete. AI is not mentioned. ([Investing.com](https://ca.investing.com/news/transcripts/earnings-call-transcript-first-merchants-misses-q2-2026-estimates-as-shares-fall-93CH-4749656))
- Jul 22, 2026 — **Second-quarter 2026 results; First Savings conversion complete** Net income to common $43.5 million; two nonaccrual relationships reserved. ([First Merchants Corporation (GlobeNewswire via Yahoo Finance)](https://finance.yahoo.com/markets/stocks/articles/first-merchants-corporation-announces-second-200500052.html), [MarketBeat (Yahoo Finance)](https://finance.yahoo.com/markets/stocks/articles/first-merchants-q2-earnings-call-140658548.html))
- Jul 9, 2026 — **TIME America's Best Companies 2026** Culture recognition. ([First Merchants Bank](https://firstmerchants.com/why-us/news/2026/07/09/first-merchants-recognized-by-time-magazine-as-one-of--america-s-best-companies-2026))
- Jun 5, 2026 — **Copilot rolled out firm-wide; AI at mortgage intake** At a Louisville Business First roundtable, specialty-lending president Tony Schoen says Microsoft Copilot has been rolled out through the entire organisation and AI is being used to sift incoming mortgages, targeting $1.4 billion of volume with the same staff. ([Louisville Business First](https://www.bizjournals.com/louisville/news/2026/06/05/executive-insights-experts-crypto-ai-business-bank.html))
- Jun 4, 2026 — **Forbes World's Best Banks 2026** CEO on 'modern capabilities' with community understanding. ([First Merchants Bank](https://firstmerchants.com/why-us/news/2026/06/04/first-merchants-bank-recognized-on-forbes--world-s-best-banks-2026))
- May 18, 2026 — **First Savings systems conversion lands** After conversion work on 14 and 15 May, First Savings Bank became First Merchants on Monday 18 May, with customers moving to First Merchants online banking, the app, debit cards and Zelle. ([First Merchants Bank](https://firstmerchants.com/docs/default-source/integrations/first-savings-bank/fmb-fsb-important-information.pdf))
- Apr 23, 2026 — **Q1 2026 call: technology listed among four focus areas** Hardwick says the rest of 2026 is about 'our people, our clients, our products, and technology', with the First Savings integration set for 15 May; the bank repositioned $357 million of mortgage loans at a $29.8 million charge. The call does not mention AI. ([earnings call transcript (The Motley Fool)](https://fool.com/earnings/call-transcripts/2026/04/23/first-merchants-frme-q1-2026-earnings-transcript))
- Apr 22, 2026 — **First-quarter 2026 results** Net income to common $27.7 million; $0.45 per diluted share. ([First Merchants Corporation (GlobeNewswire via Yahoo Finance)](https://finance.yahoo.com/markets/stocks/articles/first-merchants-corporation-announces-second-200500052.html), [earnings call transcript (The Motley Fool)](https://fool.com/earnings/call-transcripts/2026/04/23/first-merchants-frme-q1-2026-earnings-transcript))
- Apr 3, 2026 — **2026 proxy: new chief risk officer; CIO reports risk to the board** Eva Scurlock chief risk officer from January 2026; the chief information officer provides risk-assessment input to the Risk and Credit Policy Committee. ([First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000025/frme-20260402.htm))
- Mar 31, 2026 — **Spiral selected for digital savings and giving** Automatic and round-up savings, gamified goals and a giving centre inside digital banking, aimed at growing low-cost deposits. ([Spiral (Business Wire)](https://www.businesswire.com/news/home/20260331563167/en/First-Merchants-Bank-Selects-Spiral-to-Power-Personalized-Savings-and-Community-Giving-Through-Everyday-Banking))
- Feb 25, 2026 — **2025 10-K adds an AI risk factor** First annual report to mention AI: the Corporation and its vendors use and develop machine-learning and generative AI tools; governance, risk-management and control frameworks oversee AI use; failing to embrace AI or achieve its expected productivity could be a competitive disadvantage. ([First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000022/frme-20251231.htm))
- Feb 1, 2026 — **First Savings merger takes effect** The merger became effective at 12:01 a.m. on 1 February 2026 at an exchange ratio of 0.85 First Merchants share per First Savings share; the 8-K was filed on 2 February. ([First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000013/frme-20260202.htm))
- Jan 27, 2026 — **Q4 2025 call: 'smarter use of technology'** President Mike Stewart says each line of business updated its strategy around growing organically 'through deeper relationships and smarter use of technology for enhanced client relationship and internal efficiencies'; CEO Mark Hardwick reports record 2025 net income of $224.1 million, diluted EPS of $3.88 and a 54.5% efficiency ratio. No AI is mentioned. ([earnings call transcript (The Motley Fool)](https://fool.com/earnings/call-transcripts/2026/04/21/first-merchants-frme-q4-2025-earnings-transcript))
- Nov 17, 2025 — **Director of small-business banking appointed** Segmented small-business experience. ([First Merchants Bank](https://firstmerchants.com/why-us/news/news-detail/2025/11/17/kevin-knipp-joins-first-merchants-bank-to-revolutionize-the-small-business-banking-experience))
- Oct 23, 2025 — **Third-quarter 2025 call: record earnings, no AI** Management reported $0.98 earnings per share, ROA of 1.22% and a core efficiency ratio of 54.56%; the call and the Q3 10-Q do not mention AI. ([earnings call transcript (The Motley Fool)](https://fool.com/earnings/call-transcripts/2026/01/26/first-merchants-frme-q3-2025-earnings-transcript), [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253425000197/frme-20250930.htm))
- Sep 25, 2025 — **First Savings Financial Group acquisition announced** $241 million in stock; Louisville-area entry. ([American Banker](https://americanbanker.com/news/first-merchants-deal-secures-a-louisville-beachhead))
- Feb 24, 2025 — **2024 10-K has no AI language** The annual report filed in February 2025 does not mention artificial intelligence; it records $2.4 million of non-core costs from a digital platform conversion in 2024. ([First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253425000058/frme-20241231.htm))
- Dec 10, 2024 — **Private Wealth Advisors adopts SS&C Trust Suite** After a six-month RFP, First Merchants Private Wealth Advisors, which manages over $4 billion and advises on over $8 billion, moved trust accounting, CRM and investment reporting to SS&C's cloud-delivered Trust Suite; no AI is claimed. ([SS&C (PR Newswire)](https://prnewswire.com/news-releases/first-merchants-private-wealth-advisors-adopts-ssc-trust-suite-302327346.html))

## Where AI runs

| Use case | What | Status | Detail | Sources |
| --- | --- | --- | --- | --- |
| [Third-party & vendor AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#third-party-vendors) | First Savings systems conversion | In production | Completed mid-May 2026; 126 banking centres after integration. | [First Merchants Corporation (GlobeNewswire via Yahoo Finance)](https://finance.yahoo.com/markets/stocks/articles/first-merchants-corporation-announces-second-200500052.html), [MarketBeat (Yahoo Finance)](https://finance.yahoo.com/markets/stocks/articles/first-merchants-q2-earnings-call-140658548.html) |
| [Fraud detection](https://www.bankingnewsai.com/ai-regulation/by-use-case#fraud) | Customer education on text scams | In production | Recognising smishing and impersonation. | [First Merchants Bank](https://firstmerchants.com/locations/bank-orchard-lake-farmington-hills-mi/2026/07/29/current-text-scams-know-how-to-identify-one) |
| [Generative & agentic AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#generative-agentic-ai) | Microsoft Copilot across the organisation | In production | Rolled out through the entire organisation; the specialty-lending president says it has reduced administrative duplication and made work easier. | [Louisville Business First](https://www.bizjournals.com/louisville/news/2026/06/05/executive-insights-experts-crypto-ai-business-bank.html) |
| [Credit scoring & underwriting](https://www.bankingnewsai.com/ai-regulation/by-use-case#credit-underwriting) | AI at mortgage intake | Rolling out | AI used as a 'front side sifter' for incoming mortgage applications, with the aim of growing volume from about $1 billion to $1.4 billion with the same staff. | [Louisville Business First](https://www.bizjournals.com/louisville/news/2026/06/05/executive-insights-experts-crypto-ai-business-bank.html) |
| [Model risk management](https://www.bankingnewsai.com/ai-regulation/by-use-case#model-risk) | AI risk factor and AI governance frameworks | In production | The 2025 10-K names regulatory scrutiny, biased algorithms or datasets, output errors, weak control over third-party models' training data and updates, and data leakage as AI risks, and says governance, risk-management and control frameworks oversee AI use. | [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000022/frme-20251231.htm) |
| [Third-party & vendor AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#third-party-vendors) | Spiral personalised savings and giving | Announced | Vendor platform for automatic and round-up savings, goal tracking and charitable giving in digital banking; no AI claimed. | [Spiral (Business Wire)](https://www.businesswire.com/news/home/20260331563167/en/First-Merchants-Bank-Selects-Spiral-to-Power-Personalized-Savings-and-Community-Giving-Through-Everyday-Banking) |
| [Third-party & vendor AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#third-party-vendors) | SS&C Trust Suite for private wealth | In production | Cloud-delivered trust accounting, CRM and reporting (Black Diamond, InnoTrust, Salentica Elements) with managed back-office services, chosen in December 2024 after a six-month RFP; no AI claimed. | [SS&C (PR Newswire)](https://prnewswire.com/news-releases/first-merchants-private-wealth-advisors-adopts-ssc-trust-suite-302327346.html) |
| [Cybersecurity](https://www.bankingnewsai.com/ai-regulation/by-use-case#cybersecurity) | Board-approved information security programme | In production | Built on the NIST Cybersecurity Framework with FS-ISAC participation, annual risk assessments, an incident response plan, ongoing tabletop exercises and a CISO who has been at the bank 19 years; the AI risk factor adds higher frequency and severity of cyberattacks as an AI-related risk. | [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000022/frme-20251231.htm) |
| [Third-party & vendor AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#third-party-vendors) | Third-party risk management programme | In production | Due diligence and risk assessment before contract execution and oversight at a frequency set by the vendor's risk profile; the 10-K says the bank may not control how third-party AI tools' training data and model updates are managed. | [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000022/frme-20251231.htm) |
| [Fraud detection](https://www.bankingnewsai.com/ai-regulation/by-use-case#fraud) | Positive Pay for business clients | In production | Check Positive Pay matches account number, check number and amount against issued-check files; ACH Positive Pay adds pre-approved authorisations and transaction-monitoring rules; clients decide exceptions by 3:00 p.m. Eastern. Rules-based, with no AI claimed. | [First Merchants Bank](https://firstmerchants.com/docs/default-source/q2/commercial-user-guides/positive-pay-user-guide.pdf), [First Merchants Bank](https://firstmerchants.com/docs/default-source/integrations/first-savings-bank/fmb-fsb-important-information.pdf) |
| [AI governance (general)](https://www.bankingnewsai.com/ai-regulation/by-use-case#governance-general) | Board risk reporting that includes the CIO | In production | The president, chief risk officer, chief audit executive, CIO, chief credit officer and head of Private Wealth Advisors give the Risk and Credit Policy Committee periodic risk assessments, and the committee receives an Enterprise Risk Management dashboard quarterly; no AI-specific committee or owner is named. | [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000025/frme-20260402.htm) |

## Disclosed numbers

| Measure | Value | As of | Sources |
| --- | --- | --- | --- |
| Q2 2026 net income to common / adjusted | $43.5 million ($0.70) / $46.4 million ($0.74) | Jul 22, 2026 | [First Merchants Corporation (GlobeNewswire via Yahoo Finance)](https://finance.yahoo.com/markets/stocks/articles/first-merchants-corporation-announces-second-200500052.html) |
| Net interest margin / adjusted efficiency ratio, Q2 2026 | 3.38% / 53.22% | Jul 22, 2026 | [First Merchants Corporation (GlobeNewswire via Yahoo Finance)](https://finance.yahoo.com/markets/stocks/articles/first-merchants-corporation-announces-second-200500052.html) |
| Total assets / loans / deposits | $21.3 billion / $15.5 billion / $16.8 billion | Jun 30, 2026 | [MarketBeat (Yahoo Finance)](https://finance.yahoo.com/markets/stocks/articles/first-merchants-q2-earnings-call-140658548.html) |
| Digital platform conversion cost (non-core, 2024) | $2.4 million | Dec 31, 2024 | [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000022/frme-20251231.htm) |
| First Savings acquisition | $241 million in stock; $2.4 billion assets | Sep 25, 2025 | [American Banker](https://americanbanker.com/news/first-merchants-deal-secures-a-louisville-beachhead) |
| Mentions of 'artificial intelligence' in 2025 10-K | 13, all in one risk factor; zero in the 2024 10-K and the 2026 10-Qs | Feb 25, 2026 | [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000022/frme-20251231.htm), [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253425000058/frme-20241231.htm), [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000035/frme-20260331.htm), [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000059/frme-20260630.htm) |
| Equipment expense, 2025 (2024; 2023) | $28.6 million ($26.8 million; $24.1 million) | Dec 31, 2025 | [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000022/frme-20251231.htm) |
| Outside data processing fees, 2025 (2024; 2023) | $27.5 million ($27.1 million; $25.2 million) | Dec 31, 2025 | [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000022/frme-20251231.htm) |
| Equipment / outside data processing, Q2 2026 (Q2 2025) | $8.6 million / $8.0 million ($6.9 million / $7.1 million) | Jun 30, 2026 | [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000059/frme-20260630.htm) |
| Full-time-equivalent employees | 2,086 | Dec 31, 2025 | [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000022/frme-20251231.htm) |
| 2025 net income to common / diluted EPS / efficiency ratio | $224.1 million / $3.88 / 54.5% | Dec 31, 2025 | [earnings call transcript (The Motley Fool)](https://fool.com/earnings/call-transcripts/2026/04/21/first-merchants-frme-q4-2025-earnings-transcript), [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000022/frme-20251231.htm) |
| Nonaccrual loans | $118.2 million, up $46.4 million since December 2025 | Jun 30, 2026 | [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000059/frme-20260630.htm) |

## Quotes

> "We've rolled out Microsoft Copilot through the entire organization, which has reduced the need for administrative duplicity." — Tony Schoen, President of Specialty Lending, First Merchants Bank, Jun 5, 2026 ([Louisville Business First](https://www.bizjournals.com/louisville/news/2026/06/05/executive-insights-experts-crypto-ai-business-bank.html))

> "They value a bank that combines modern capabilities with people who genuinely understand their communities." — Mark K. Hardwick, President and CEO, Jun 4, 2026 ([First Merchants Bank](https://firstmerchants.com/why-us/news/2026/06/04/first-merchants-bank-recognized-on-forbes--world-s-best-banks-2026))

> "It's really about doing more with the existing staff, increasing efficiency, not eliminating jobs." — Tony Schoen, President of Specialty Lending, First Merchants Bank, Jun 5, 2026 ([Louisville Business First](https://www.bizjournals.com/louisville/news/2026/06/05/executive-insights-experts-crypto-ai-business-bank.html))

> "There's still a human element to banking that just don't ever believe can be replaced with AI." — Tony Schoen, President of Specialty Lending, First Merchants Bank, Jun 5, 2026 ([Louisville Business First](https://www.bizjournals.com/louisville/news/2026/06/05/executive-insights-experts-crypto-ai-business-bank.html))

> "Our strategy is to build on our Midwestern strength, growing through more and deeper relationships, smarter use of technology, and customer-centric products that expand our reach." — Mike Stewart, President, First Merchants Corporation (CEO from 1 January 2027), Oct 1, 2026 ([First Merchants Bank](https://firstmerchants.com/why-us/news/2026/10/01/first-merchants-bank-ceo-mark-hardwick-to-retire-at-the-end-of-2026-and-president-mike-stewart-to-become-president-and-ceo))

> "growing organically through deeper relationships and smarter use of technology for enhanced client relationship and internal efficiencies." — Michael Stewart, President, First Merchants Corporation, Jan 27, 2026 ([earnings call transcript (The Motley Fool)](https://fool.com/earnings/call-transcripts/2026/04/21/first-merchants-frme-q4-2025-earnings-transcript))

> "We look forward to building on our Midwestern strength throughout the rest of 2026 by focusing on our people, clients, products, and technology investments, or simply running the core bank." — Mark K. Hardwick, President and CEO, Jul 23, 2026 ([Investing.com](https://ca.investing.com/news/transcripts/earnings-call-transcript-first-merchants-misses-q2-2026-estimates-as-shares-fall-93CH-4749656))

## Who runs AI

- **Mark K. Hardwick** — President and CEO (retiring effective 1 January 2027) ([LinkedIn](https://www.linkedin.com/in/mark-hardwick-16505819)) ([First Merchants Corporation (GlobeNewswire via Yahoo Finance)](https://finance.yahoo.com/markets/stocks/articles/first-merchants-corporation-announces-second-200500052.html), [First Merchants Bank](https://firstmerchants.com/why-us/news/2026/06/04/first-merchants-bank-recognized-on-forbes--world-s-best-banks-2026), [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000067/frme-20261001.htm))
- **Mike Stewart** — President, First Merchants Corporation (President and CEO from 1 January 2027) ([LinkedIn](https://www.linkedin.com/in/mikestewartbanker)) ([MarketBeat (Yahoo Finance)](https://finance.yahoo.com/markets/stocks/articles/first-merchants-q2-earnings-call-140658548.html), [First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000067/frme-20261001.htm), [First Merchants Bank](https://firstmerchants.com/why-us/news/2026/10/01/first-merchants-bank-ceo-mark-hardwick-to-retire-at-the-end-of-2026-and-president-mike-stewart-to-become-president-and-ceo))
- **Michele Kawiecki** — Chief Financial Officer ([LinkedIn](https://www.linkedin.com/in/michele-kawiecki-26a63a28)) ([MarketBeat (Yahoo Finance)](https://finance.yahoo.com/markets/stocks/articles/first-merchants-q2-earnings-call-140658548.html))
- **Stephan H. Fluhler** — Senior Vice President and Chief Information Officer (since May 2014; Chief Technology Officer 2004–2014) ([First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000025/frme-20260402.htm))
- **Eva D. Scurlock** — Senior Vice President and Chief Risk Officer (since January 2026) ([LinkedIn](https://www.linkedin.com/in/evascurlock)) ([First Merchants Corporation (SEC filings)](https://www.sec.gov/Archives/edgar/data/712534/000071253426000025/frme-20260402.htm))
- **Tony Schoen** — President of Specialty Lending (SBA, NNN Finance and first-lien HELOC) ([Louisville Business First](https://www.bizjournals.com/louisville/news/2026/06/05/executive-insights-experts-crypto-ai-business-bank.html))
- **Kevin Knipp** — Director of Small Business Banking ([LinkedIn](https://www.linkedin.com/in/kevin-knipp-b08548b)) ([First Merchants Bank](https://firstmerchants.com/why-us/news/news-detail/2025/11/17/kevin-knipp-joins-first-merchants-bank-to-revolutionize-the-small-business-banking-experience))

## Which AI vendors and fintechs does First Merchants work with?

| Company | What First Merchants uses it for | Status | Category |
| --- | --- | --- | --- |
| [Microsoft 365 Copilot](https://www.bankingnewsai.com/vendors/microsoft-copilot) | Microsoft Copilot rolled out through the entire organisation, per the specialty-lending president. | In production | [Enterprise AI assistants](https://www.bankingnewsai.com/ai-tools/enterprise-ai-assistants) |

Each vendor and fintech page cites the source for the relationship. [AI tools for banks](https://www.bankingnewsai.com/ai-tools) · [fintech and neobank AI dossiers](https://www.bankingnewsai.com/fintech).

## Regulators it answers to

- [FDIC](https://www.bankingnewsai.com/ai-regulation/fdic) — First Merchants Bank is a state nonmember bank; FDIC model-risk and third-party guidance would govern any AI adopted in lending or service. See [FDIC FIL-29-2023](https://www.bankingnewsai.com/ai-regulation/documents/fdic-fil-29-2023), [FDIC FIL-15-2026](https://www.bankingnewsai.com/ai-regulation/documents/fdic-fil-15-2026).
- [CFPB](https://www.bankingnewsai.com/ai-regulation/cfpb) — Consumer and small-business lending bring adverse-action and UDAAP duties to any automated decisioning. See [ECOA / Regulation B adverse action (15 U.S.C. 1691(d); 12 CFR 1002.9)](https://www.bankingnewsai.com/ai-regulation/documents/cfpb-ecoa-regulation-b-adverse-action).
- [Federal Reserve](https://www.bankingnewsai.com/ai-regulation/federal-reserve) — Holding-company oversight of acquisition integration. See [SR 23-4](https://www.bankingnewsai.com/ai-regulation/documents/fed-sr-23-4).

## What the record suggests

### Specialty verticals are where analytics pay

SBA 7(a) and single-tenant lending from First Savings are data-rich niches that suit models more than the core community book.

### Credit surprises argue for surveillance tools

Two relationships moving to nonaccrual in one quarter is the kind of event early-warning analytics exist to flag.

### 'Modern capabilities' needs content

The CEO's phrase invites investors to ask which capabilities; the Copilot rollout and mortgage-intake AI are described only at a local roundtable, and an investor-facing AI statement would answer.

### Segmented small business is a natural pilot

A newly created small-business banking role is where digital onboarding and AI-assisted underwriting usually begin.

## FAQ

### Who leads AI at First Merchants?

First Merchants has not named an AI leader, chief AI officer or chief data officer. Technology is run by Stephan Fluhler, senior vice president and chief information officer since May 2014 and chief technology officer from 2004 to 2014; Eva Scurlock became chief risk officer in January 2026, and the CIO gives risk assessments to the board's Risk and Credit Policy Committee. The only AI statement from a named executive is Tony Schoen's, president of specialty lending, who said in June 2026 that Microsoft Copilot is rolled out across the organisation. CEO Mark Hardwick retires on 1 January 2027 and Mike Stewart succeeds him.

### Does First Merchants Bank use AI?

Yes, on a modest scale. Tony Schoen, president of specialty lending, said in June 2026 that the bank has rolled out Microsoft Copilot through the entire organisation and is using AI to sift incoming mortgage applications so the same staff can handle more volume. Its 2025 10-K says the Corporation uses and develops AI, including generative AI tools, under governance and control frameworks. It has not named an AI leader or budget, and its 2026 technology work has centred on converting First Savings Bank onto its systems, completed in May 2026.

### What does First Merchants' 10-K say about AI?

Its 2025 annual report, filed in February 2026 and the first to mention AI, adds a risk factor saying the Corporation and its vendors use and develop machine-learning and generative AI tools, that it has established governance, risk-management and control frameworks to oversee AI use, and that failing to embrace AI or to achieve the expected productivity could leave it at a competitive disadvantage. It names no AI use case, vendor or budget.

### Did First Merchants mention AI on its 2026 earnings calls or in its 10-Qs?

No. The 2024 10-K, the third-quarter 2025 10-Q and the first- and second-quarter 2026 10-Qs contain no reference to artificial intelligence, and the Q4 2025, Q1 2026 and Q2 2026 call transcripts do not use the word either. The only formal disclosure is the risk factor in the 2025 10-K, where the phrase appears 13 times. On calls management speaks of 'smarter use of technology' (January 2026) and 'technology investments' (July 2026), and the CFO holds the quarterly expense run-rate at $111 million to $114 million including added hiring and technology spending.

### Does First Merchants have AI patents or named AI vendors?

Only one AI product is named publicly, Microsoft Copilot, which Tony Schoen said in June 2026 is rolled out across the organisation. No patents or published applications assigned to First Merchants were found in Google Patents searches. Its other named technology vendors are not AI products: SS&C Trust Suite for Private Wealth Advisors (December 2024, after a six-month RFP) and Spiral for round-up savings (March 2026). The 2025 10-K says third-party vendors use AI and that the bank may not control the training data or model updates of third-party AI tools it uses.

### How did First Merchants perform in the second quarter of 2026?

Net income to common was $43.5 million, or $0.70 per share, adjusted $46.4 million, or $0.74, with net interest margin up to 3.38% and loan and deposit growth near 6% annualised, offset by $29.7 million of reserves on two commercial relationships placed on nonaccrual.

## Sources (26)

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