[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) This section details First Mid Bancshares, Inc.'s Form 10-Q filing information, including its large accelerated filer status and common shares outstanding as of August 8, 2025 - First Mid Bancshares, Inc. filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025, indicating its status as a **large accelerated filer**[2](index=2&type=chunk)[3](index=3&type=chunk) FORM 10-Q Filing Details | Indicator | Value | | :--- | :--- | | Commission file number | 001-36434 | | Trading Symbol | FMBH | | Exchange | NASDAQ Global Market | | Filer Status | Large accelerated filer | | Common shares outstanding (as of Aug 8, 2025) | 23,997,367 | | Par value per share | $4.00 | [PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I) [ITEM 1. FINANCIAL STATEMENTS](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents First Mid Bancshares, Inc.'s unaudited condensed consolidated financial statements for the quarter ended June 30, 2025, including balance sheets, income statements, and cash flow statements, along with accompanying notes [Condensed Consolidated Balance Sheets](index=2&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (In thousands) | Item | June 30, 2025 | December 31, 2024 | Change (vs. Dec 31, 2024) | | :--- | :--- | :--- | :--- | | Total assets | $7,680,475 | $7,519,734 | +$160,741 | | Cash and cash equivalents | $190,017 | $121,216 | +$68,801 | | Net loans | $5,688,480 | $5,595,666 | +$92,814 | | Total deposits | $6,190,199 | $6,057,096 | +$133,103 | | Total liabilities | $6,786,335 | $6,673,343 | +$112,992 | | Total stockholders' equity | $894,140 | $846,391 | +$47,749 | - The company's total assets increased by **$160.7 million**, driven primarily by increases in cash and cash equivalents and net loans. Total deposits also saw a significant increase of **$133.1 million**[5](index=5&type=chunk) [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section presents the Company's financial performance over specific periods, detailing revenues, expenses, and net income for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Income Highlights (In thousands, except per share data) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total interest income | $93,401 | $88,683 | $180,960 | $176,355 | | Total interest expense | $29,538 | $31,918 | $57,688 | $64,120 | | Net interest income | $63,863 | $56,765 | $123,272 | $112,235 | | Provision for credit losses | $2,567 | $1,083 | $4,219 | $726 | | Total other income | $23,593 | $22,422 | $48,457 | $46,900 | | Total other expense | $54,762 | $51,391 | $109,234 | $104,753 | | Net income | $23,438 | $19,745 | $45,609 | $40,248 | | Basic net income per common share | $0.98 | $0.83 | $1.91 | $1.69 | | Diluted net income per common share | $0.98 | $0.82 | $1.90 | $1.68 | - Net income increased by **$3.69 million** (18.7%) for the three months ended June 30, 2025, and by **$5.36 million** (13.3%) for the six months ended June 30, 2025, compared to the same periods in 2024. This was primarily driven by an increase in net interest income and other income, partially offset by higher provision for credit losses and other expenses[6](index=6&type=chunk)[139](index=139&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the Company's comprehensive income, including net income and other comprehensive income (loss), for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income Highlights (In thousands) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $23,438 | $19,745 | $45,609 | $40,248 | | Other comprehensive income (loss), net of taxes | $4,640 | $669 | $11,673 | $(10,571) | | Comprehensive income | $28,078 | $20,414 | $57,282 | $29,677 | - Comprehensive income significantly increased for both the three and six months ended June 30, 2025, largely due to positive unrealized gains on available-for-sale securities, net of tax, compared to a loss in the prior year period for the six months[7](index=7&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section outlines the changes in the Company's stockholders' equity, including net income, dividends, and other comprehensive income, for the six months ended June 30, 2025 Changes in Stockholders' Equity (Six months ended June 30, 2025, in thousands) | Item | Amount | | :--- | :--- | | Beginning balance (Dec 31, 2024) | $846,391 | | Net income | $45,609 | | Other comprehensive income, net tax | $11,673 | | Cash dividends on common stock | $(11,456) | | Issuance of restricted shares (net of forfeitures) | $2,863 | | Issuance of common shares (2017 SI Plan) | $218 | | Issuance of common shares (ESPP) | $426 | | Deferred compensation | $(3,232) | | Grant of restricted units | $2,070 | | Release of restricted units | $(1,634) | | Vested restricted shares/units compensation expense | $1,212 | | Ending balance (June 30, 2025) | $894,140 | - Total stockholders' equity increased by **$47.7 million** from December 31, 2024, to June 30, 2025, primarily driven by net income and other comprehensive income, partially offset by cash dividends[10](index=10&type=chunk)[205](index=205&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the Company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows Highlights (Six months ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $55,631 | $53,020 | | Net cash provided by (used in) investing activities | $(93,124) | $69,264 | | Net cash provided by (used in) financing activities | $106,294 | $(29,868) | | Increase in cash and cash equivalents | $68,801 | $92,416 | | Cash and cash equivalents at end of period | $190,017 | $235,480 | - For the six months ended June 30, 2025, the company experienced a net increase in cash and cash equivalents of **$68.8 million**, primarily due to strong cash generation from financing activities and operating activities, despite significant cash usage in investing activities[13](index=13&type=chunk)[213](index=213&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes supporting the condensed consolidated financial statements, offering additional context and disclosures on various financial items [Note 1 - Basis of Accounting and Consolidation](index=11&type=section&id=Note%201%20--%20Basis%20of%20Accounting%20and%20Consolidation) This note outlines the basis for preparing the unaudited condensed consolidated financial statements, confirming the inclusion of all wholly-owned subsidiaries and the elimination of intercompany transactions. It also details the acquisition of Mid Rivers Insurance Group, Inc. and affirms the Company's single segment reporting structure - The Company acquired Mid Rivers Insurance Group, Inc. for **$10.1 million** during the quarter ended September 30, 2024, merging it into First Mid Insurance Group[18](index=18&type=chunk) - The Company operates as a **single segment** for financial reporting, with the Chief Financial and Risk Officer serving as the chief operating decision maker (CODM) who assesses performance based on consolidated results[21](index=21&type=chunk) [Note 2 - Earnings Per Share](index=13&type=section&id=Note%202%20--%20Earnings%20Per%20Share) This note provides the calculation of basic and diluted net income per common share for the three and six months ended June 30, 2025 and 2024, detailing the components used in the computation Earnings Per Share (Six months ended June 30) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Net income available to common stockholders (in thousands) | $45,609 | $40,248 | | Weighted average common shares outstanding | 23,863,229 | 23,884,472 | | Basic earnings per common share | $1.91 | $1.69 | | Diluted weighted average common shares outstanding | 23,974,183 | 23,979,244 | | Diluted earnings per common share | $1.90 | $1.68 | [Note 3 - Investment Securities](index=14&type=section&id=Note%203%20--%20Investment%20Securities) This note details the composition, fair values, and unrealized gains/losses of the Company's available-for-sale (AFS) and held-to-maturity (HTM) investment securities, also addressing credit losses and the aging of unrealized losses Investment Securities (Available-for-sale, in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Amortized Cost | $1,255,703 | $1,257,436 | | Gross Unrealized Gains | $1,479 | $690 | | Gross Unrealized Losses | $(180,341) | $(194,834) | | Fair Value | $1,076,841 | $1,063,292 | - The Company's available-for-sale securities portfolio saw a decrease in gross unrealized losses from **$194.8 million** at December 31, 2024, to **$180.3 million** at June 30, 2025, primarily due to changes in interest rates and market conditions[35](index=35&type=chunk)[41](index=41&type=chunk) - As of June 30, 2025, there were **543 available-for-sale securities** with a fair value of **$960.1 million** in a continuous unrealized loss position for twelve months or more, but the Company does not consider these to be experiencing credit losses[39](index=39&type=chunk)[41](index=41&type=chunk) [Note 4 - Loans and Allowance for Credit Losses](index=17&type=section&id=Note%204%20%E2%80%93%20Loans%20and%20Allowance%20for%20Credit%20Losses) This note provides a detailed breakdown of the loan portfolio by type, geographic concentration, and credit quality, explaining the methodology for calculating the allowance for credit losses and presenting activity in the allowance Loan Portfolio Composition (in thousands) | Loan Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Loans secured by real estate | $3,958,442 | $3,906,596 | | Agricultural loans | $305,640 | $239,138 | | Commercial and industrial loans | $1,328,315 | $1,340,865 | | Consumer loans | $41,919 | $54,481 | | All other loans | $164,008 | $169,232 | | Total gross loans | $5,798,324 | $5,710,312 | | Allowance for credit losses | $(71,160) | $(70,182) | | Net loans | $5,688,480 | $5,595,666 | - Total loans to borrowers whose businesses are directly related to agriculture increased by **$57.2 million** to **$687.8 million** at June 30, 2025, from **$630.6 million** at December 31, 2024, primarily due to increased direct merchant financing[45](index=45&type=chunk) Allowance for Credit Losses Activity (Six months ended June 30, 2025, in thousands) | Item | Amount | | :--- | :--- | | Beginning balance | $70,182 | | Provision for credit loss expense | $4,219 | | Loans charged off | $(4,344) | | Recoveries collected | $1,103 | | Ending balance | $71,160 | - Nonaccrual loans decreased from **$28.78 million** at December 31, 2024, to **$20.35 million** at June 30, 2025, primarily due to loans becoming current or paid off and charge-offs[89](index=89&type=chunk)[175](index=175&type=chunk) [Note 5 - Goodwill and Intangible Assets](index=33&type=section&id=Note%205%20--%20Goodwill%20and%20Intangible%20Assets) This note provides a summary of the Company's goodwill and intangible assets, including their gross carrying value, accumulated amortization, and the impact of the Mid Rivers Insurance Group acquisition Goodwill and Intangible Assets (in thousands) | Item | June 30, 2025 Gross Carrying Value | June 30, 2025 Accumulated Amortization | December 31, 2024 Gross Carrying Value | December 31, 2024 Accumulated Amortization | | :--- | :--- | :--- | :--- | :--- | | Goodwill not subject to amortization | $207,151 | $3,760 | $207,151 | $3,760 | | Core deposit intangibles | $79,945 | $49,185 | $79,945 | $44,736 | | Other intangibles | $30,857 | $14,542 | $30,857 | $13,180 | | Total | $320,968 | $70,502 | $320,968 | $64,691 | - Goodwill of **$6.9 million** was recorded during the quarter ended September 30, 2024, due to the acquisition of Mid Rivers Insurance Group, Inc[96](index=96&type=chunk) Total Amortization Expense (in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three months ended June 30 | $3,121 | $3,340 | | Six months ended June 30 | $6,352 | $6,837 | [Note 6 - Repurchase Agreements and Other Borrowings](index=34&type=section&id=Note%206%20--%20Repurchase%20Agreements%20and%20Other%20Borrowings) This note details the Company's repurchase agreements and other borrowings, including FHLB advances and subordinated debentures, outlining their balances, terms, and collateral Repurchase Agreements and FHLB Borrowings (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Securities sold under agreements to repurchase | $193,941 | $204,122 | | FHLB borrowings | $245,000 | $242,520 | - Securities sold under agreements to repurchase decreased by **$10.2 million** from December 31, 2024, to June 30, 2025, with all transactions having overnight maturities at a weighted average rate of **2.41%**[97](index=97&type=chunk) - The Company repurchased and cancelled **$3.0 million** of Blackhawk Subordinated Debt I Notes and **$7.0 million** of Blackhawk Subordinated Debt II Notes on February 5, 2025[193](index=193&type=chunk)[194](index=194&type=chunk) [Note 7 - Fair Value of Assets and Liabilities](index=36&type=section&id=Note%207%20--%20Fair%20Value%20of%20Assets%20and%20Liabilities) This note describes the Company's fair value measurements for assets and liabilities, categorizing them into a three-level hierarchy based on the observability of inputs, and provides detailed tables for recurring and nonrecurring measurements - Fair value measurements are categorized into **Level 1** (active exchange markets), **Level 2** (less active dealer/broker markets with observable inputs), and **Level 3** (unobservable inputs)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) Fair Value Measurements of Assets (June 30, 2025, in thousands) | Asset Type | Fair Value | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Total available-for-sale securities | $1,076,841 | $0 | $1,067,053 | $9,788 | | Equity securities | $4,543 | $4,543 | $0 | $0 | | Loans held for sale | $7,359 | $0 | $7,359 | $0 | | Derivative assets: interest rate swaps | $2,065 | $0 | $2,065 | $0 | | Total assets | $1,090,808 | $4,543 | $1,076,477 | $9,788 | - The fair value of assets measured using significant unobservable inputs (Level 3) increased from **$5.76 million** at December 31, 2024, to **$9.79 million** at June 30, 2025, primarily due to purchases of **$7.03 million** and maturities of **$3.00 million**[108](index=108&type=chunk) [Note 8 - Leases](index=40&type=section&id=Note%208%20--%20Leases) This note provides information on the Company's operating leases, including right-of-use assets, lease liabilities, weighted-average remaining lease term, and discount rate, also detailing the maturity of lease liabilities and components of lease expense Operating Lease Information (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Operating lease right-of-use assets | $13,152 | $13,861 | | Operating lease liabilities | $13,590 | $14,190 | | Weighted-average remaining lease term (years) | 4.6 | 4.7 | | Weighted-average discount rate | 3.48% | 3.22% | Total Lease Cost (Six months ended June 30, in thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Operating lease cost | $1,667 | $1,668 | | Short-term lease cost | $61 | $66 | | Variable lease cost | $598 | $356 | | Total lease cost | $2,326 | $2,090 | | Net lease cost | $2,155 | $1,883 | [Note 9 - Derivatives](index=42&type=section&id=Note%209%20%E2%80%93%20Derivatives) This note describes the Company's use of interest rate swaps as fair value hedges to mitigate interest rate risk on fixed-rate commercial real estate loans, providing details on notional balances, fair values, and income statement impact - The Company uses interest rate swaps designated as **fair value hedges** to manage interest rate risk on fixed-rate commercial real estate loans[122](index=122&type=chunk) Derivatives Designated as Hedging Instruments (in thousands) | Item | June 30, 2025 Notional Amount | June 30, 2025 Estimated Value | December 31, 2024 Notional Amount | December 31, 2024 Estimated Value | | :--- | :--- | :--- | :--- | :--- | | Interest rate swap agreements | $12,226 | $(1,488) | $12,486 | $(2,006) | [Note 10 - Regulatory Capital](index=43&type=section&id=Note%2010%20%E2%80%93%20Regulatory%20Capital) This note presents the Company's and First Mid Bank's regulatory capital ratios, demonstrating compliance with all capital adequacy requirements and well-capitalized standards under Basel III capital rules Regulatory Capital Ratios (June 30, 2025, in thousands) | Ratio | Company Actual Amount | Company Actual Ratio | Required Minimum Ratio | | :--- | :--- | :--- | :--- | | Total capital (to risk-weighted assets) | $968,670 | 15.76% | >10.50% | | Tier 1 capital (to risk-weighted assets) | $818,499 | 13.31% | >8.50% | | Common equity tier 1 capital (to risk-weighted assets) | $794,115 | 12.92% | >7.00% | | Tier 1 capital (to average assets) | $818,499 | 10.73% | >4.00% | - Both the Company and First Mid Bank met all capital adequacy requirements and qualified as **'well-capitalized'** as of June 30, 2025, with ratios exceeding regulatory minimums[126](index=126&type=chunk)[127](index=127&type=chunk) [Note 11 - Commitments](index=46&type=section&id=Note%2011%20%E2%80%93%20Commitments) This note details the Company's off-balance sheet commitments, including unused lines of credit, other commitments to extend credit, and standby letters of credit, highlighting the associated credit risk Off-Balance Sheet Commitments (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total unused commitments and lines of credit | $1,430,143 | $1,411,041 | | Standby letters of credit | $19,091 | $16,909 | - The total outstanding commitments increased to **$1.43 billion** at June 30, 2025, from **$1.41 billion** at December 31, 2024, representing potential future cash requirements[128](index=128&type=chunk)[144](index=144&type=chunk) [Note 12 - Subsequent Events](index=46&type=section&id=Note%2012%20%E2%80%93%20Subsequent%20Events) This note discloses a significant subsequent event: the Board of Directors approved a new stock repurchase program effective July 1, 2025, allowing for the repurchase of up to 1,200,000 shares - On June 24, 2025, the Board of Directors approved a new stock repurchase program, effective July 1, 2025, authorizing the repurchase of up to **1,200,000 shares** (approximately **5% of outstanding common stock**)[130](index=130&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=46&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the Company's financial condition and results of operations for the three and six months ended June 30, 2025 and 2024, discussing key financial trends, performance metrics, and significant changes [Forward-Looking Statements](index=46&type=section&id=Forward-Looking%20Statements) This subsection includes a standard disclaimer regarding forward-looking statements, emphasizing that actual results may differ materially due to various risks and uncertainties inherent in the financial industry - The document contains forward-looking statements, which are subject to risks and uncertainties such as changes in interest rates, economic conditions, regulatory changes, and credit quality, that could cause actual results to differ materially[132](index=132&type=chunk) [Overview](index=48&type=section&id=Overview) This overview highlights key financial performance for the six months ended June 30, 2025, including net income, EPS, asset growth, net interest margin expansion, and changes in non-interest income and expense, while also noting strong capital and liquidity positions Key Performance Ratios (Annualized, Six months ended June 30) | Ratio | 2025 | 2024 | | :--- | :--- | :--- | | Return on average assets | 1.20% | 1.06% | | Return on average common equity | 10.52% | 10.14% | | Average equity to average assets | 11.44% | 10.44% | - Net interest margin, on a tax equivalent basis, increased to **3.66%** for the six months ended June 30, 2025, up from **3.30%** in the prior year, driven by higher earning asset yields and lower interest-bearing deposit/borrowing rates[136](index=136&type=chunk) - Total nonperforming loans decreased to **$21.9 million** at June 30, 2025, from **$29.8 million** at December 31, 2024, indicating an improvement in credit quality[139](index=139&type=chunk)[140](index=140&type=chunk) [Critical Accounting Policies and Use of Significant Estimates](index=50&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Significant%20Estimates) This section refers readers to the Company's 2024 Annual Report on Form 10-K for a comprehensive description of its significant accounting policies and the use of estimates - The Company's critical accounting policies and significant estimates are detailed in the footnotes to the consolidated financial statements in its **2024 Annual Report on Form 10-K**[146](index=146&type=chunk) [Results of Consolidated Operations](index=50&type=section&id=Results%20of%20Consolidated%20Operations) This section analyzes the Company's consolidated operational results, focusing on net interest income, provision for credit losses, other income, other expenses, and income taxes, highlighting key drivers and changes for the periods presented [Net Interest Income](index=50&type=section&id=Net%20Interest%20Income) Net interest income, the Company's primary revenue source, increased significantly due to higher earning asset yields and lower interest-bearing liability rates, despite a slight decrease in average interest-bearing liabilities - Tax equivalent net interest income increased by **$11.3 million** (10.0%) to **$124.8 million** for the six months ended June 30, 2025, compared to **$113.4 million** in the prior year[153](index=153&type=chunk) - The net interest margin increased to **3.66%** for the first six months of 2025 from **3.30%** for the same period in 2024, primarily due to increased earning asset yields and decreased rates on interest-bearing deposits and borrowings[136](index=136&type=chunk)[157](index=157&type=chunk) Changes in Net Interest Income (Six months ended June 30, 2025 vs. 2024, in thousands) | Component | Volume Impact | Rate Impact | Total Change | | :--- | :--- | :--- | :--- | | Total interest income | $1,883 | $3,035 | $4,918 | | Total interest expense | $1,027 | $(7,458) | $(6,431) | | Net interest income | $856 | $10,493 | $11,349 | [Provision for Credit Losses](index=54&type=section&id=Provision%20for%20Credit%20Losses) The provision for credit losses increased for the six months ended June 30, 2025, reflecting higher net charge-offs and an increase in total loans past due Provision for Credit Losses (Six months ended June 30, in thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Provision for credit losses | $4,219 | $726 | | Net charge-offs | $3,241 | $1,089 | - Total loans past due 30 days or more increased to **0.57%** of loans at June 30, 2025, compared to **0.42%** at June 30, 2024[141](index=141&type=chunk) [Other Income](index=54&type=section&id=Other%20Income) Total non-interest income increased, primarily driven by higher insurance commissions due to an acquisition and a gain from bank-owned life insurance, partially offset by a decrease in other miscellaneous income Total Other Income (Six months ended June 30, in thousands) | Item | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Wealth management revenues | $11,205 | $10,727 | $478 | 4.5% | | Insurance commissions | $17,765 | $15,744 | $2,021 | 12.8% | | Bank owned life insurance | $2,893 | $2,313 | $580 | 25.1% | | Other | $816 | $2,009 | $(1,193) | -59.4% | | Total other income | $48,457 | $46,900 | $1,557 | 3.3% | - Insurance commissions increased primarily due to the acquisition of **Mid Rivers Insurance Group** during the third quarter of 2024[158](index=158&type=chunk) - Bank owned life insurance income increased by **$580,000** due to a gain recognized on a death claim filed in 2025[158](index=158&type=chunk) [Other Expense](index=55&type=section&id=Other%20Expense) Total non-interest expense increased, mainly due to higher salaries and employee benefits, and nonrecurring technology project expenses, partially offset by reduced integration expenses from a prior acquisition Total Other Expense (Six months ended June 30, in thousands) | Item | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $65,371 | $60,612 | $4,759 | 7.9% | | Net occupancy and equipment expense | $16,348 | $15,067 | $1,281 | 8.5% | | Legal and professional | $5,833 | $4,985 | $848 | 17.0% | | Other operating expenses | $8,030 | $10,508 | $(2,478) | -23.6% | | Total other expense | $109,234 | $104,753 | $4,481 | 4.3% | - The increase in salaries and employee benefits was primarily due to annual raises, higher incentive compensation accruals, and the acquisition of **Mid Rivers Insurance Group**[162](index=162&type=chunk) - Nonrecurring technology project expenses contributed to increases in occupancy and equipment and legal and professional fees[162](index=162&type=chunk) [Income Taxes](index=55&type=section&id=Income%20Taxes) Income tax expense decreased for the six months ended June 30, 2025, primarily due to a lower effective tax rate resulting from decreased interest expense disallowance and a state law change Income Tax Expense (Six months ended June 30, in thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Income taxes | $12,667 | $13,408 | | Effective tax rate | 21.7% | 25.0% | - The decrease in the effective tax rate was mainly due to a reduction in interest expense disallowance and a one-time revaluation of deferred taxes following an **Illinois state law change**[160](index=160&type=chunk) [Analysis of Consolidated Balance Sheets](index=56&type=section&id=Analysis%20of%20Consolidated%20Balance%20Sheets) This section provides a detailed analysis of the Company's balance sheet components, including securities, loans, nonperforming assets, deposits, borrowings, interest rate sensitivity, capital resources, stock plans, liquidity, and off-balance sheet arrangements [Securities](index=56&type=section&id=Securities) The Company's investment portfolio slightly decreased, with a focus on managing credit risk, liquidity, and capital, primarily composed of U.S. Treasury, state/political subdivision obligations, and mortgage-backed securities, with strong credit ratings Total Securities (Amortized Cost, in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | U.S. Treasury securities and obligations of U.S. government corporations and agencies | $199,299 | $212,513 | | Obligations of states and political subdivisions | $325,609 | $324,046 | | Mortgage-backed securities: GSE residential | $685,640 | $653,760 | | Other securities | $47,442 | $69,396 | | Total securities | $1,257,990 | $1,259,715 | - The investment portfolio decreased by **$1.7 million** from December 31, 2024, to June 30, 2025, due to sales, paydowns, calls, and maturities, partially offset by new purchases[163](index=163&type=chunk) - The majority of the investment securities are highly rated, with significant portions in **AAA** and **AA +/- categories**[163](index=163&type=chunk) [Loans](index=57&type=section&id=Loans) The loan portfolio, the Company's largest earning asset, increased by $94.5 million, driven by growth in construction and land development and multifamily residential properties, as well as seasonal agricultural demand, with concentrations in agriculture and real estate Loan Portfolio Composition (Amortized Cost, in thousands) | Loan Type | June 30, 2025 | % Outstanding Loans | December 31, 2024 | % Outstanding Loans | | :--- | :--- | :--- | :--- | :--- | | Loans secured by real estate | $3,930,360 | 68.2% | $3,873,679 | 68.4% | | Agricultural loans | $306,374 | 5.3% | $239,671 | 4.2% | | Commercial and industrial loans | $1,324,653 | 23.0% | $1,335,920 | 23.6% | | Total loans | $5,766,999 | 100.0% | $5,672,462 | 100.0% | - Loan balances increased by **$94.5 million** (1.7%), primarily in construction and land development and multifamily residential properties, and seasonal agricultural operating loans[165](index=165&type=chunk) Industry Loan Concentrations (June 30, 2025, in thousands) | Industry | Principal Balance | % Outstanding Loans | | :--- | :--- | :--- | | Other grain farming | $584,470 | 10.13% | | Lessors of non-residential buildings | $1,046,682 | 18.15% | | Lessors of residential buildings and dwellings | $616,200 | 10.68% | | Hotels and motels | $221,541 | 3.84% | [Nonperforming Loans and Nonperforming Other Assets](index=58&type=section&id=Nonperforming%20Loans%20and%20Nonperforming%20Other%20Assets) Nonperforming loans and repossessed assets decreased significantly, reflecting improved credit quality, with the Company's policy to discontinue interest accrual on loans 90 days past due or when collection is doubtful Nonperforming Loans and Repossessed Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Nonaccrual loans | $20,354 | $28,775 | | Modified loans (performing) | $1,541 | $1,060 | | Total nonperforming loans | $21,895 | $29,835 | | Repossessed assets | $1,677 | $2,195 | | Total nonperforming loans and repossessed assets | $23,572 | $32,030 | - Nonaccrual loans decreased by **$8.4 million** during the first six months of 2025, primarily due to loans becoming current or paid-off and charge-offs[175](index=175&type=chunk) - Repossessed assets decreased by **$1.0 million** during the first six months of 2025, mainly due to sales of repossessed assets[176](index=176&type=chunk) [Loan Quality and Allowance for Credit Losses](index=59&type=section&id=Loan%20Quality%20and%20Allowance%20for%20Credit%20Losses) Management's estimate for the allowance for credit losses considers historical net loan losses, nonaccrual/past due loans, economic conditions, and specific risk factors like agriculture and hotels, with the allowance to nonperforming loans ratio remaining consistent - The allowance for credit losses is management's best estimate for probable losses, considering factors like historical net loan losses, nonaccrual loans, economic conditions, and industry-specific risks[177](index=177&type=chunk)[178](index=178&type=chunk) - The Company's loan portfolio has concentrations in agriculture (**$687.8 million**) and motels/hotels (**$221.5 million**), which are subject to specific economic and market risks[179](index=179&type=chunk) Loan Quality Ratios (Six months ended June 30) | Ratio | 2025 | 2024 | | :--- | :--- | :--- | | Ratio of annualized net charge-offs to average loans | 0.11% | 0.04% | | Ratio of allowance for credit losses to loans outstanding | 1.23% | 1.23% | | Ratio of allowance for credit losses to nonperforming loans | 325% | 358% | [Deposits](index=61&type=section&id=Deposits) Deposits, primarily from consumer, commercial, and public funds, are the main funding source, with average deposit balances increasing and a shift from non-interest-bearing and savings to interest-bearing and time deposits Average Deposits and Weighted Average Rates (Six months ended June 30, in thousands) | Deposit Type | 2025 Average Balance | 2025 Weighted Average Rate | 2024 Average Balance | 2024 Weighted Average Rate | | :--- | :--- | :--- | :--- | :--- | | Non-interest-bearing demand deposits | $1,386,330 | —% | $1,403,606 | —% | | Interest-bearing demand deposits | $3,079,773 | 2.00% | $3,029,068 | 2.25% | | Savings | $639,424 | 0.10% | $697,953 | 0.10% | | Time deposits | $1,050,342 | 3.43% | $1,002,655 | 3.64% | | Total average deposits | $6,155,869 | 1.59% | $6,133,282 | 1.72% | - Average deposit balances increased by **$12.7 million** during the first six months of 2025, with non-interest-bearing deposits decreasing and interest-bearing and time deposits increasing[186](index=186&type=chunk) - Approximately **99%** of the Company's deposit accounts are less than **$250,000**, with an average account balance of **$23,000**[186](index=186&type=chunk) [Repurchase Agreements and Other Borrowings](index=63&type=section&id=Repurchase%20Agreements%20and%20Other%20Borrowings) This section details the Company's funding sources from repurchase agreements and other borrowings, including FHLB advances and various subordinated debentures, also discussing the impact of the Volcker Rule on trust preferred securities Repurchase Agreements and Other Borrowings (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Securities sold under agreements to repurchase | $193,941 | $204,122 | | Federal Home Loan Bank advances | $245,000 | $242,520 | | Subordinated debt | $79,590 | $87,472 | | Junior subordinated debentures | $24,384 | $24,280 | | Total | $542,915 | $558,394 | - The Company repurchased and cancelled **$4.0 million**, **$15.0 million**, and **$1.0 million** of its 3.95% Fixed-to-Floating Rate Subordinated Notes due 2030 during 2024, leaving **$76 million** outstanding as of June 30, 2025[191](index=191&type=chunk) - The **Volcker Rule** is not anticipated to have a material effect on the Company's operations, as its existing trust preferred securities are grandfathered due to its asset size[202](index=202&type=chunk) [Interest Rate Sensitivity](index=67&type=section&id=Interest%20Rate%20Sensitivity) The Company actively manages its interest rate risk through its asset liability management committee (ALCO), utilizing static GAP analysis and other financial models to project net interest income under various rate scenarios, and was asset sensitive as of June 30, 2025 - The Company aims to maximize net interest margin while maintaining an acceptable level of interest rate risk, which is overseen by its **ALCO**[203](index=203&type=chunk) - As of June 30, 2025, the Company was **asset sensitive** on a cumulative basis through the twelve-month time horizon, indicating that future decreases in interest rates could adversely affect net interest income[204](index=204&type=chunk) [Capital Resources](index=69&type=section&id=Capital%20Resources) The Company's stockholders' equity increased, and it continues to maintain strong regulatory capital ratios, exceeding all 'well-capitalized' standards - Stockholders' equity increased by **$47.7 million** (5.6%) to **$894.1 million** at June 30, 2025, from **$846.4 million** at December 31, 2024, driven by net income and other comprehensive income[205](index=205&type=chunk) - The Company and First Mid Bank consistently maintained regulatory capital ratios above the **'well-capitalized' standards** as of June 30, 2025, and December 31, 2024[206](index=206&type=chunk) [Stock Plans](index=69&type=section&id=Stock%20Plans) The Company operates a Stock Incentive Plan (SI Plan) and an Employee Stock Purchase Plan (ESPP) to align employee and director interests with stockholders, and a new stock repurchase program was approved, replacing the previous one - Under the **2017 Stock Incentive Plan**, **79,635 restricted stock awards** and **53,130 stock unit awards** were granted during the first six months of 2025[208](index=208&type=chunk) - The **Employee Stock Purchase Plan (ESPP)** allows eligible employees to purchase common stock at a **15% discount**; **13,970 shares** were issued under the ESPP during the first six months of 2025[209](index=209&type=chunk) - A new stock repurchase program, effective July 1, 2025, authorizes the repurchase of up to **1,200,000 shares**, replacing the previously authorized plan[130](index=130&type=chunk)[211](index=211&type=chunk) [Liquidity](index=69&type=section&id=Liquidity) The Company maintains sufficient liquidity through various sources, including federal fund lines, FHLB advances, Federal Reserve Bank borrowing, and a revolving credit agreement, to meet its financial obligations and fund operations - The Company's liquidity sources include **$130 million** in overnight federal fund lines, approximately **$1.6 billion** in additional FHLB advances supported by excess collateral, and access to the Federal Reserve Bank's Discount Window with **$401 million** in contingent liquidity[214](index=214&type=chunk) - Net cash provided by operating activities was **$55.6 million**, cash used in investing activities was **$93.1 million**, and cash provided by financing activities was **$106.3 million** for the six months ended June 30, 2025[213](index=213&type=chunk) Significant Contractual Obligations (June 30, 2025, in thousands) | Obligation Type | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Time deposits | $1,081,944 | $944,092 | $117,679 | $19,520 | $653 | | Debt | $103,974 | $4,124 | $0 | $0 | $99,850 | | Other borrowing | $438,941 | $268,941 | $75,000 | $70,000 | $25,000 | | Operating leases | $15,234 | $3,139 | $5,575 | $3,541 | $2,979 | | Supplemental retirement | $1,980 | $50 | $250 | $300 | $1,380 | [Off-Balance Sheet Arrangements](index=72&type=section&id=Off-Balance%20Sheet%20Arrangements) The Company engages in off-balance sheet arrangements, such as lines of credit and letters of credit, to meet customer financing needs, applying the same credit policies as for on-balance sheet loans - Off-balance sheet arrangements include lines of credit, letters of credit, and other commitments to extend credit, which involve credit, interest rate, and liquidity risks[215](index=215&type=chunk) - The Company uses consistent credit policies and collateral requirements for off-balance sheet instruments as it does for loans, and does not anticipate losses from these instruments[215](index=215&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=72&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section states that there have been no material changes in the Company's market risk profile since December 31, 2024, and refers to the Annual Report on Form 10-K for detailed information - There has been no material change in the market risk faced by the Company since **December 31, 2024**[216](index=216&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=72&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were evaluated and deemed **effective** as of **June 30, 2025**[217](index=217&type=chunk) - No material changes occurred in the Company's internal control over financial reporting during the last fiscal quarter[217](index=217&type=chunk) [PART II - OTHER INFORMATION](index=72&type=section&id=PART%20II) [ITEM 1. LEGAL PROCEEDINGS](index=72&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The Company is involved in routine litigation common to its industry, but management believes none of the existing claims will have a material adverse effect on its financial position - The Company is subject to claims and lawsuits arising in the ordinary course of business, but management does not expect them to have a **material adverse effect** on its financial position, results of operations, or cash flows[20](index=20&type=chunk)[219](index=219&type=chunk) [ITEM 1A. RISK FACTORS](index=72&type=section&id=ITEM%201A.%20RISK%20FACTORS) The Company is exposed to various risks, including interest rate, liquidity, credit, operational, and economic risks, with no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - The Company is exposed to various risks common to financial institutions, such as **interest rate, liquidity, credit, operational, and economic risks**[220](index=220&type=chunk) - There have been no material changes to the risk factors described in the Company's **Annual Report on Form 10-K** for the year ended December 31, 2024[220](index=220&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=72&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The Company did not repurchase any equity securities during the second quarter of 2025, and approximately $2.9 million remained available under its existing stock repurchase program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | :--- | | April 1, 2025-April 30, 2025 | — | $— | — | $2,941,000 | | May 1, 2025-May 31, 2025 | — | $— | — | $2,941,000 | | June 1, 2025-June 30, 2025 | — | $— | — | $2,941,000 | | Total | — | $— | — | $2,941,000 | - The Company did not repurchase any shares during the second quarter of 2025, with **$2.9 million** remaining capacity under its stock repurchase program[210](index=210&type=chunk)[221](index=221&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=74&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[222](index=222&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=74&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section indicates that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[223](index=223&type=chunk) [ITEM 5. OTHER INFORMATION](index=74&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section confirms that no directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No directors or officers adopted, modified, or terminated a **Rule 10b5-1 trading arrangement** or a non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[224](index=224&type=chunk) [ITEM 6. EXHIBITS](index=75&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits required by Item 601 of Regulation S-K and filed with the Quarterly Report on Form 10-Q - The report includes an Exhibit Index listing all required exhibits, such as amendments to the Certificate of Incorporation, credit agreements, stock incentive plans, employment agreements, and certifications[226](index=226&type=chunk)[227](index=227&type=chunk) [SIGNATURES](index=76&type=section&id=SIGNATURES) This section contains the official signatures of the Company's Chief Executive Officer and Chief Financial and Risk Officer, certifying the accuracy of the report - The report is duly signed on behalf of First Mid Bancshares, Inc. by **Joseph R. Dively**, Chief Executive Officer, and **Jordan D. Read**, Chief Financial and Risk Officer, on **August 8, 2025**[229](index=229&type=chunk)

Group 1: Earnings Performance - First Mid Bancshares reported quarterly earnings of $0.99 per share, exceeding the Zacks Consensus Estimate of $0.91 per share, and up from $0.84 per share a year ago, representing an earnings surprise of +8.79% [1] - The company posted revenues of $87.46 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.32%, compared to $79.19 million in the same quarter last year [2] - Over the last four quarters, First Mid Bancshares has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Group 2: Stock Performance and Outlook - First Mid Bancshares shares have increased by approximately 5.6% since the beginning of the year, while the S&P 500 has gained 8.1% [3] - The company's current consensus EPS estimate for the upcoming quarter is $0.89 on revenues of $85.65 million, and for the current fiscal year, it is $3.73 on revenues of $341.75 million [7] - The estimate revisions trend for First Mid Bancshares was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Group 3: Industry Context - The Zacks Industry Rank for Banks - Northeast, to which First Mid Bancshares belongs, is currently in the top 23% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) First Mid Bancshares achieved record quarterly net income and diluted EPS, driven by growth in net interest income, loans, and deposits, alongside an expanded net interest margin [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) First Mid Bancshares reported record quarterly net income of $23.4 million and $0.98 diluted EPS, with growth in net interest income, loans, and deposits, and an expanded net interest margin Q2 2025 Key Performance Indicators | Metric | Value | Change | | :--- | :--- | :--- | | **Net Income** | $23.4 million | Record high | | **Diluted EPS** | $0.98 | +$0.05 (Quarterly) | | **Adjusted Net Income** | $23.7 million | - | | **Adjusted Diluted EPS** | $0.99 | - | | **Net Interest Margin (TE)** | 3.72% | +12 bps (Quarterly) | | **Total Loans** | $5.77 billion | +1.20% (Quarterly) | | **Total Deposits** | $6.19 billion | +0.98% (Quarterly) | | **Tangible Book Value/Share** | - | +4.3% (Quarterly) | | **Quarterly Dividend** | $0.25 per share | +$0.01 | [Management Commentary](index=1&type=section&id=Management%20Commentary) The Chairman and CEO highlighted strong first-half results, attributing record quarterly net income to expanded net interest income and a strategic focus on higher return on assets - The company achieved **record quarterly net income** driven by strategic initiatives to increase return on assets and expand net interest income[3](index=3&type=chunk) - Management emphasized continued focus on maintaining a disciplined credit culture and making investments in technology platforms to support future growth, despite a fluctuating macroeconomic environment[3](index=3&type=chunk) [Detailed Financial Analysis](index=1&type=section&id=Detailed%20Financial%20Analysis) This section provides an in-depth analysis of net interest income, loan portfolio, asset quality, deposits, noninterest income, and noninterest expenses [Net Interest Income and Margin](index=1&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income increased to $63.9 million, driven by higher yields on earning assets and stable funding costs, expanding the tax-equivalent net interest margin to 3.72% Net Interest Income Performance | Period | Net Interest Income | Change | | :--- | :--- | :--- | | **Q2 2025 vs Q1 2025** | $63.9 million | +$4.5 million (+7.5%) | | **Q2 2025 vs Q2 2024** | $63.9 million | +$7.1 million (+12.5%) | - The tax-equivalent net interest margin increased to **3.72%**, up 12 basis points from the prior quarter, driven by higher earning asset yields and stable funding costs, with a 9 basis point increase excluding accretion income[6](index=6&type=chunk) [Loan Portfolio and Asset Quality](index=1&type=section&id=Loan%20Portfolio%20and%20Asset%20Quality) Total loans grew to $5.77 billion with diversified growth, while asset quality remained solid with an ACL to total loans ratio of 1.23% and a decline in non-performing loans - Total loans increased by **$68.1 million (1.2%)** from the prior quarter, reaching **$5.77 billion**, and grew by **$206.4 million (3.7%)** year-over-year[7](index=7&type=chunk)[8](index=8&type=chunk) Key Asset Quality Metrics (Q2 2025) | Metric | Value | | :--- | :--- | | **Allowance for Credit Losses (ACL)** | $71.2 million | | **ACL to Total Loans Ratio** | 1.23% | | **Non-performing Loans to Total Loans** | 0.38% | | **ACL to Non-performing Loans** | 325% | | **Nonperforming Assets to Total Assets** | 0.31% | - Nonperforming loans decreased by **$4.7 million** to **$21.9 million** in Q2 2025, though special mention loans increased by $7.8 million and substandard loans increased by $5.1 million[10](index=10&type=chunk) [Deposits](index=2&type=section&id=Deposits) Total deposits increased by $59.8 million, or 0.98%, to $6.19 billion, primarily driven by growth in interest-bearing demand, money market, and time deposits - Total deposits ended Q2 2025 at **$6.19 billion**, a quarterly increase of **$59.8 million (0.98%)**[11](index=11&type=chunk) [Noninterest Income](index=2&type=section&id=Noninterest%20Income) Noninterest income was $23.6 million, a quarterly decrease due to seasonality but a 5.2% year-over-year increase driven by higher insurance commissions and a debit card fee incentive Noninterest Income Comparison | Period | Noninterest Income | Change | | :--- | :--- | :--- | | **Q2 2025 vs Q1 2025** | $23.6 million | -$1.3 million | | **Q2 2025 vs Q2 2024** | $23.6 million | +$1.2 million (+5.2%) | - Key components of noninterest income in Q2 2025 included **$5.4 million** from wealth management, **$7.8 million** from insurance revenues, and a **$1.0 million** annual incentive from a service provider for debit card fees[12](index=12&type=chunk) [Noninterest Expenses](index=2&type=section&id=Noninterest%20Expenses) Noninterest expenses totaled $54.8 million, primarily due to annual salary increases and higher incentive compensation, while the adjusted efficiency ratio improved to 58.09% - Noninterest expense increased to **$54.8 million**, primarily driven by higher salaries and employee benefits from annual increases and incentive compensation[14](index=14&type=chunk)[15](index=15&type=chunk) - The adjusted efficiency ratio improved to **58.09%** in Q2 2025, compared to 58.88% in Q1 2025 and 59.61% in Q2 2024[15](index=15&type=chunk) [Capital Management and Shareholder Returns](index=2&type=section&id=Capital%20Management%20and%20Shareholder%20Returns) The company maintained strong capital levels well above regulatory requirements and demonstrated commitment to shareholder returns through increased dividends and tangible book value growth [Capital Levels](index=2&type=section&id=Capital%20Levels) The company maintained strong capital levels, with the Total capital to risk-weighted assets ratio at 15.76%, significantly exceeding regulatory "well capitalized" requirements Capital Ratios (Q2 2025) | Ratio | Value | | :--- | :--- | | **Total capital to risk-weighted assets** | 15.76% | | **Tier 1 capital to risk-weighted assets** | 13.31% | | **Common equity tier 1 capital to risk-weighted assets** | 12.92% | | **Leverage ratio** | 10.73% | [Shareholder Returns](index=2&type=section&id=Shareholder%20Returns) The company increased its quarterly dividend to $0.25 per share and saw a 4.3% increase in tangible book value per share, primarily driven by earnings growth - The Board of Directors increased the quarterly dividend to **$0.25 per share**[17](index=17&type=chunk) - Tangible book value per share increased by **4.3% ($1.09)** during Q2 2025, with **$0.90** of the increase attributed to earnings growth[16](index=16&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) This section provides the unaudited condensed consolidated balance sheets and statements of income, offering a comprehensive view of the company's financial position and performance [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the unaudited condensed consolidated balance sheets as of June 30, 2025, December 31, 2024, and June 30, 2024, detailing assets, liabilities, and stockholders' equity Key Balance Sheet Items (as of June 30, 2025) | Item | Amount (in thousands) | | :--- | :--- | | **Total Assets** | $7,680,475 | | **Net Loans** | $5,695,839 | | **Total Deposits** | $6,190,199 | | **Total Liabilities** | $6,786,335 | | **Total Stockholders' Equity** | $894,140 | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section presents the unaudited condensed consolidated statements of income for the three and six months ended June 30, 2025 and 2024, and a trailing five-quarter view, detailing revenues, expenses, and net income Income Statement Highlights (Three Months Ended June 30, 2025) | Item | Amount (in thousands) | | :--- | :--- | | **Net Interest Income** | $63,863 | | **Provision for Credit Losses** | $2,567 | | **Total Non-interest Income** | $23,593 | | **Total Non-interest Expense** | $54,762 | | **Net Income** | $23,438 | | **Diluted EPS** | $0.98 | [Key Financial Ratios and Non-GAAP Reconciliations](index=7&type=section&id=Key%20Financial%20Ratios%20and%20Non-GAAP%20Reconciliations) This section provides a detailed breakdown of financial ratios, loan and deposit portfolios, asset quality metrics, and reconciliations of non-GAAP financial measures [Consolidated Financial Highlights and Ratios](index=7&type=section&id=Consolidated%20Financial%20Highlights%20and%20Ratios) This section offers a comprehensive view of the company's financial health and performance trends over the last five quarters, detailing loan and deposit portfolios, asset quality, and key performance ratios Key Performance Ratios (Q2 2025) | Ratio | Value | | :--- | :--- | | **Net Interest Margin (tax equivalent)** | 3.72% | | **Return on Average Assets** | 1.20% | | **Adjusted Return on Average Assets** | 1.23% | | **Return on Average Common Equity** | 10.52% | | **Adjusted Return on Average Common Equity** | 10.80% | | **Efficiency Ratio (tax equivalent)** | 58.09% | - Tangible book value per common share increased to **$26.62** at the end of Q2 2025, up from $25.53 in the prior quarter and $23.28 in the prior year[32](index=32&type=chunk) [Net Interest Margin Analysis](index=8&type=section&id=Net%20Interest%20Margin%20Analysis) This section details the components of the net interest margin calculation for Q2 2025, breaking down average balances, interest income/expense, and average rates for assets and liabilities, resulting in a 3.72% tax-equivalent net interest margin Net Interest Margin Breakdown (Q2 2025) | Component | Average Balance (in thousands) | Average Rate | | :--- | :--- | :--- | | **Total Interest Earning Assets** | $6,975,783 | 5.41% | | **Total Interest Bearing Liabilities** | $5,357,937 | 2.21% | | **Net Interest Spread** | - | 3.20% | | **Tax Equivalent Net Interest Margin** | - | 3.72% | - The company changed its methodology for calculating net interest margin in Q1 2025 to be more consistent with peer banks, now defined as annualized tax-equivalent net interest income divided by average interest-earning assets[33](index=33&type=chunk) [Reconciliation of Non-GAAP Financial Measures](index=10&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section provides reconciliations of non-GAAP financial measures to their GAAP counterparts, detailing adjustments for nonrecurring technology project and acquisition costs to derive adjusted earnings and EPS Reconciliation of Net Income to Adjusted Earnings (Q2 2025) | Item | Amount (in thousands) | | :--- | :--- | | **Net Income - GAAP** | $23,438 | | **Adjustments (post-tax):** | | | Nonrecurring technology project expenses | $246 | | Integration and acquisition expenses | $3 | | **Adjusted Earnings - non-GAAP** | $23,687 | - For Q2 2025, adjusted diluted EPS was **$0.99**, compared to the GAAP diluted EPS of **$0.98**[27](index=27&type=chunk)[40](index=40&type=chunk)

Core Viewpoint - First Mid Bancshares, Inc. reported strong financial results for the second quarter of 2025, achieving record high quarterly net income and growth in net interest income, loans, and deposits, while maintaining a disciplined credit culture and investing in technology for future growth [3][10]. Financial Performance - Net interest income for Q2 2025 was $63.9 million, up $4.5 million or 7.5% from Q1 2025, driven by higher yields on earning assets [4][10]. - Compared to Q2 2024, net interest income increased by $7.1 million or 12.5%, with interest income rising by $4.7 million [5]. - The net interest margin was 3.72% for Q2 2025, an increase of 12 basis points from the previous quarter [6][10]. Loan Portfolio - Total loans reached $5.77 billion, an increase of $68.1 million or 1.2% from the prior quarter, with significant growth in construction, land development, and commercial loans [7][10]. - Year-over-year, loan balances increased by $206.4 million or 3.7%, with notable increases in construction and agricultural operating lines [8]. Asset Quality - The allowance for credit losses (ACL) was $71.2 million, with an ACL to total loans ratio of 1.23% and a non-performing loans ratio of 0.38% [9][10]. - Non-performing loans decreased by $4.7 million to $21.9 million, while special mention loans and substandard loans increased [11]. Deposits - Total deposits were $6.19 billion, up $59.8 million or 0.98% from the previous quarter, primarily driven by interest-bearing demand deposits and money market accounts [12][10]. Noninterest Income and Expenses - Noninterest income for Q2 2025 was $23.6 million, a decline from Q1 2025 due to seasonality in wealth management and insurance [13][10]. - Noninterest expenses totaled $54.8 million, slightly up from the previous quarter, primarily due to increased salaries and employee benefits [15][16]. Capital Levels and Dividend - The company's capital levels remained strong, with total capital to risk-weighted assets at 15.76% and a tangible book value per share increase of 4.3% during the quarter [17][10]. - The Board of Directors declared a quarterly dividend increase to $0.25 per share, payable on August 29, 2025 [18][10].

Core Insights - First Mid Bank & Trust, with nearly $8 billion in assets, is modernizing its technology infrastructure through a partnership with Jack Henry to enhance operational efficiency and support growth [1][2][4] - The bank has expanded from a rural institution to a full-service financial entity with over 80 branches across multiple states, focusing on both retail and commercial customers [2][6] - Jack Henry's technology will provide a scalable and flexible foundation, reducing manual tasks and streamlining workflows, while offering access to over 950 API-integrated third-party fintechs [3][4] Company Overview - First Mid Bank & Trust has a diversified portfolio that includes a full-service insurance agency and a wealth management division, reflecting its aggressive growth strategy over the past decade [2][6] - Jack Henry is an S&P 500 financial technology company that has been providing technology solutions for nearly 50 years, focusing on innovation and collaboration with financial institutions [5] Strategic Importance - The modernization of First Mid's technology stack is crucial for maintaining competitiveness in a rapidly changing environment, allowing the bank to innovate and better serve its customers [4][6] - Jack Henry's commitment to providing a future-ready platform aligns with First Mid's growth strategy, enabling the bank to continue expanding organically and through acquisitions [4][5]

Company Overview - First Mid Bancshares (FMBH) is a bank holding company headquartered in Mattoon, operating in the Finance sector [3] - The stock has experienced a price change of -1.9% since the beginning of the year [3] Dividend Information - FMBH currently pays a dividend of $0.24 per share, resulting in a dividend yield of 2.66% [3] - The company's annualized dividend of $0.96 has increased by 2.1% from the previous year [4] - Over the past five years, FMBH has raised its dividend four times, averaging an annual increase of 3.91% [4] - The current payout ratio for FMBH is 27%, indicating that it pays out 27% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for FMBH's earnings in 2025 is projected at $3.69 per share, reflecting a year-over-year growth rate of 6.03% [5] Investment Considerations - FMBH is considered a compelling investment opportunity due to its strong dividend profile and current Zacks Rank of 3 (Hold) [7] - The company is positioned as a solid dividend option compared to high-growth firms or tech start-ups that typically do not offer dividends [6][7]

Part I - Financial Information [Item 1. Financial Statements](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Presents First Mid Bancshares, Inc.'s unaudited condensed consolidated financial statements for Q1 2025 and 2024, with detailed notes on accounting and specific financial items [Condensed Consolidated Balance Sheets](index=2&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $7.57 billion at March 31, 2025, from $7.52 billion at December 31, 2024, driven by cash and net loan growth, with stockholders' equity rising to $870.9 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$7,572,688** | **$7,519,734** | | Cash and cash equivalents | $201,470 | $121,216 | | Net loans | $5,625,163 | $5,595,666 | | Total deposits | $6,130,380 | $6,057,096 | | **Total Liabilities** | **$6,701,739** | **$6,673,343** | | **Total Stockholders' Equity** | **$870,949** | **$846,391** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended March 31, 2025, net income rose to $22.2 million from $20.5 million in the prior-year period, driven by a 7.1% increase in net interest income despite higher credit loss provisions Income Statement Summary (in thousands, except per share data) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net Interest Income | $59,409 | $55,470 | | Provision for credit losses | $1,652 | ($357) | | Total Other Income | $24,864 | $24,478 | | Total Other Expense | $54,472 | $53,362 | | **Net Income** | **$22,171** | **$20,503** | | **Diluted EPS** | **$0.93** | **$0.86** | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income significantly increased to $29.2 million in Q1 2025 from $9.3 million in Q1 2024, primarily due to unrealized gains on available-for-sale securities Comprehensive Income (in thousands) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net Income | $22,171 | $20,503 | | Other comprehensive income (loss), net of taxes | $7,033 | ($11,240) | | **Comprehensive Income** | **$29,204** | **$9,263** | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity grew from $846.4 million at year-end 2024 to $870.9 million by March 31, 2025, driven by net income and other comprehensive income - Key drivers for the change in stockholders' equity in Q1 2025 included net income of **$22.2 million** and other comprehensive income of **$7.0 million**[9](index=9&type=chunk) - The company paid cash dividends of **$0.24 per share**, totaling **$5.7 million**, during the first quarter of 2025[9](index=9&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased by $80.3 million to $201.5 million in Q1 2025, supported by operating, investing, and financing activities, including a net increase in deposits Cash Flow Summary (in thousands) | Metric | Three months ended March 31, 2025 | | :--- | :--- | | Net cash provided by operating activities | $47,884 | | Net cash provided by investing activities | $4,545 | | Net cash provided by financing activities | $27,825 | | **Increase in cash and cash equivalents** | **$80,254** | | Cash and cash equivalents at end of period | $201,470 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures for the financial statements, covering accounting basis, EPS, investment securities, loan portfolio, goodwill, borrowings, fair value, leases, derivatives, regulatory capital, and off-balance sheet commitments [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=47&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q1 2025 financial condition and operations, highlighting a net income of $22.2 million, a 3.60% net interest margin, and strong capital ratios, alongside balance sheet, credit quality, capital, and liquidity analysis Q1 2025 Performance Highlights | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $22.2 million | $20.5 million | | Diluted EPS | $0.93 | $0.86 | | Return on average assets | 1.19% | 1.07% | | Net interest margin (tax equivalent) | 3.60% | 3.25% | - Total assets grew to **$7.6 billion** at March 31, 2025, from **$7.5 billion** at year-end 2024, with net loans increasing by **$29.5 million**[130](index=130&type=chunk) - Credit quality remains a focus, with nonperforming loans at **$26.6 million** (**0.47%** of total loans) at the end of Q1 2025, down from **$29.8 million** at year-end 2024[133](index=133&type=chunk)[166](index=166&type=chunk) [Results of Consolidated Operations](index=51&type=section&id=Results%20of%20Consolidated%20Operations) Q1 2025 operations showed a 7.3% increase in tax-equivalent net interest income to $60.2 million, slight non-interest income growth, and a 2.1% rise in non-interest expense, with a $1.7 million provision for credit losses - Tax equivalent net interest income increased by **$4.1 million** year-over-year, primarily due to a favorable impact from rate changes[145](index=145&type=chunk) - Non-interest income was boosted by higher insurance commissions and wealth management revenues, partially offset by a decrease in ATM/debit card revenue and other income[149](index=149&type=chunk) - Non-interest expense increased mainly due to annual salary raises and nonrecurring technology project expenses[154](index=154&type=chunk) [Analysis of Consolidated Balance Sheets](index=56&type=section&id=Analysis%20of%20Consolidated%20Balance%20Sheets) The balance sheet analysis shows a slight decrease in investment securities to $1.23 billion and a 0.5% increase in loans to $5.70 billion, with nonperforming loans decreasing to 0.47% of total loans - The investment portfolio decreased by **$32.4 million** from year-end 2024, mainly due to sales, paydowns, and maturities[155](index=155&type=chunk) - Total loans increased by **$26.4 million** (**0.5%**) from year-end 2024, driven by construction, multifamily, and seasonal agricultural loans[157](index=157&type=chunk) - Nonperforming loans decreased to **$26.6 million** at March 31, 2025, from **$29.8 million** at December 31, 2024[166](index=166&type=chunk) - The allowance for credit losses stood at **1.23%** of total loans outstanding at the end of Q1 2025[175](index=175&type=chunk) [Interest Rate Sensitivity](index=70&type=section&id=Interest%20Rate%20Sensitivity) A static GAP analysis at March 31, 2025, indicates the company was liability sensitive within the one-year horizon, suggesting potential adverse effects from rising interest rates on net interest income - The static GAP analysis at March 31, 2025, indicates a liability-sensitive position within the one-year horizon, with a cumulative GAP of **$432.4 million**[195](index=195&type=chunk) [Capital Resources](index=72&type=section&id=Capital%20Resources) The company's capital position strengthened in Q1 2025, with stockholders' equity increasing by $24.6 million to $870.9 million, and all regulatory capital ratios remaining well above 'well-capitalized' standards - Stockholders' equity increased by **2.9%** during Q1 2025, driven by net income and favorable changes in the market value of available-for-sale securities[196](index=196&type=chunk) Regulatory Capital Ratios (Company) | Ratio | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Tier 1 capital to risk weighted assets | 13.13% | 12.82% | | Total capital to risk weighted assets | 15.59% | 15.37% | - The company has approximately **$2.9 million** remaining under its stock repurchase program as of March 31, 2025, with no shares repurchased during the quarter[201](index=201&type=chunk) [Liquidity](index=72&type=section&id=Liquidity) The company maintains a strong liquidity position through cash flows, federal fund lines, FHLB borrowing capacity, and a revolving credit agreement, with cash and cash equivalents increasing by $80.3 million - The company has multiple sources of liquidity, including **$130 million** in federal fund lines and approximately **$1.6 billion** in additional borrowing capacity from the FHLB[206](index=206&type=chunk) - Total contractual obligations and other commitments as of March 31, 2025, amounted to approximately **$1.6 billion**, with **$1.15 billion** due in less than one year[203](index=203&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes in market risk have occurred since December 31, 2024, with further details available in the company's 2024 Annual Report on Form 10-K - There has been no material change in the market risk faced by the Company since December 31, 2024[205](index=205&type=chunk) [Item 4. Controls and Procedures](index=75&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The Company's disclosure controls and procedures are deemed effective as of the end of the reporting period[207](index=207&type=chunk) - No material changes occurred in the Company's internal control over financial reporting during the last fiscal quarter[207](index=207&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=75&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in routine litigation, but management believes existing claims will not materially adversely affect its financial condition or results of operations - The Company is subject to claims and lawsuits in the ordinary course of business, but management does not expect them to have a material adverse effect[209](index=209&type=chunk) [Item 1A. Risk Factors](index=75&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes have occurred to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to the risk factors described in the Company's 2024 Annual Report on Form 10-K have occurred[210](index=210&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company did not repurchase any equity securities in Q1 2025, with approximately $2.9 million remaining available under its stock repurchase program Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased | | :--- | :--- | :--- | :--- | | Jan 2025 | 0 | $0 | $2,941,000 | | Feb 2025 | 0 | $0 | $2,941,000 | | Mar 2025 | 0 | $0 | $2,941,000 | | **Total** | **0** | **$0** | **$2,941,000** | [Item 5. Other Information](index=75&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended March 31, 2025[215](index=215&type=chunk) [Item 6. Exhibits](index=77&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - Exhibits filed with this report include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and XBRL data files[217](index=217&type=chunk)

Core Insights - First Mid Bancshares (FMBH) reported revenue of $84.27 million for the quarter ended March 2025, reflecting a year-over-year increase of 5.4% [1] - The earnings per share (EPS) for the quarter was $0.96, up from $0.93 in the same quarter last year, with an EPS surprise of +2.13% compared to the consensus estimate of $0.94 [1] Financial Performance Metrics - The efficiency ratio was reported at 58.9%, better than the average estimate of 61.2% from three analysts [4] - The net interest margin stood at 3.6%, exceeding the average estimate of 3.4% from three analysts [4] - Average earning assets were $6.77 billion, slightly below the estimated $6.86 billion from two analysts [4] - Non-interest income was $24.86 million, lower than the average estimate of $26.94 million from three analysts [4] - Wealth management revenues matched the average estimate at $5.80 million [4] - Insurance commissions were reported at $9.93 million, below the average estimate of $10.18 million from two analysts [4] - Service charges totaled $2.90 million, compared to the average estimate of $3.04 million from two analysts [4] - Net interest income (FTE) was $60.16 million, surpassing the average estimate of $57.90 million from two analysts [4] - ATM/debit card revenue was $3.65 million, lower than the estimated $4.07 million from two analysts [4] - Other income was reported at $2.06 million, below the average estimate of $3 million from two analysts [4] - Net interest income was $59.41 million, exceeding the average estimate of $57.82 million from two analysts [4] - Mortgage banking revenues were $0.71 million, below the average estimate of $0.89 million from two analysts [4] Stock Performance - Shares of First Mid Bancshares have returned -2.1% over the past month, compared to a -0.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1 - First Mid Bancshares (FMBH) reported quarterly earnings of $0.96 per share, exceeding the Zacks Consensus Estimate of $0.94 per share, and showing an increase from $0.93 per share a year ago, representing an earnings surprise of 2.13% [1] - The company posted revenues of $84.27 million for the quarter ended March 2025, which was a 5.8% increase from $79.95 million year-over-year, but missed the Zacks Consensus Estimate by 0.50% [2] - Over the last four quarters, First Mid Bancshares has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Group 2 - The stock has underperformed the market, losing about 7.6% since the beginning of the year compared to the S&P 500's decline of 5.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.89 on revenues of $83.7 million, and for the current fiscal year, it is $3.61 on revenues of $339.35 million [7] - The Zacks Industry Rank for Banks - Northeast is currently in the top 25% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Executive Summary & Highlights [CEO Commentary](index=1&type=section&id=CEO%20Commentary) First Mid achieved record Q1 2025 net income, driven by strategic focus on return on assets, loan/deposit growth, and net interest margin expansion - Achieved **record high quarterly net income in Q1 2025**, reflecting a strategic focus on driving a higher return on assets[3](index=3&type=chunk) - Delivered **growth in both loans and deposits** during a seasonally pressured quarter[3](index=3&type=chunk) - Significantly **expanded net interest margin** through increased earning asset yields and decreased average cost of funds[3](index=3&type=chunk) - Successfully completed a **retail online system conversion**, enhancing customer product and relationship growth platform[3](index=3&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) First Mid reported record Q1 2025 net income of $22.2 million ($0.93 diluted EPS), with net interest margin expanding to 3.60% Q1 2025 Key Financial Highlights | Metric | Value | Change (QoQ) | | :--------------------------------- | :------------------- | :------------------- | | Quarterly Net Income | $22.2 million | +$0.13 diluted EPS | | Adjusted Net Income (non-GAAP) | $23.1 million | +$0.09 diluted EPS | | Net Interest Margin (tax equivalent, non-GAAP) | 3.60% | Expanded | | Tangible Book Value per Share (non-GAAP) | - | +4.4% | | Regular Quarterly Dividend | $0.24 per share | - | Financial Performance Analysis [Net Interest Income](index=1&type=section&id=Net%20Interest%20Income) Net interest income for Q1 2025 increased QoQ by $0.5 million (0.8%) and YoY by $3.9 million (7.1%), primarily due to interest expense reduction Net Interest Income Trends | Period | Net Interest Income | Change QoQ | Change YoY | | :-------------------- | :------------------ | :--------- | :--------- | | Q1 2025 vs Q4 2024 | +$0.5 million | +0.8% | - | | Q1 2025 vs Q1 2024 | +$3.9 million | - | +7.1% | - The QoQ increase was primarily due to interest expense declining at a faster pace than interest income[4](index=4&type=chunk) - The YoY increase was largely due to a **$4.1 million decrease in interest expense** compared to Q1 2024[5](index=5&type=chunk) [Net Interest Margin](index=1&type=section&id=Net%20Interest%20Margin) Q1 2025 tax-equivalent net interest margin (non-GAAP) expanded to 3.60%, up 19 bps QoQ and 35 bps YoY, driven by higher earning asset yields and lower funding costs Net Interest Margin (Tax Equivalent, Non-GAAP) | Period | Net Interest Margin | Change QoQ | Change YoY | | :-------------------- | :------------------ | :--------- | :--------- | | Q1 2025 | 3.60% | +19 bps | +35 bps | | Q1 2025 (excluding accretion income decline) | - | +23 bps | - | - Expansion driven by both an **increase in earning asset yields** and a **decrease in funding costs**[6](index=6&type=chunk) - Company changed its net interest margin calculation methodology in Q1 2025 to be consistent with peer banks, which added **five basis points** to the Q1 2025 margin[6](index=6&type=chunk) [Noninterest Income](index=2&type=section&id=Noninterest%20Income) Q1 2025 noninterest income was $24.9 million, decreasing QoQ due to a prior property sale gain, but increasing YoY by $0.4 million (1.6%) driven by wealth management and insurance Noninterest Income Trends | Period | Noninterest Income | Change QoQ | Change YoY | | :-------------------- | :------------------ | :--------- | :--------- | | Q1 2025 | $24.9 million | -$1.5 million | +$0.4 million | | Q4 2024 | $26.4 million | - | - | | Q1 2024 | $24.4 million | - | - | - QoQ decline primarily driven by a **$1.3 million gain on the sale of property in Q4 2024** and **$0.2 million in securities sales losses in Q1 2025**[13](index=13&type=chunk) - Wealth management and insurance revenues were key drivers for the YoY increase, with a combined **growth of 8.2%**[14](index=14&type=chunk) - Debit card fee income decreased due to lower consumer spending[13](index=13&type=chunk)[14](index=14&type=chunk) [Noninterest Expenses](index=2&type=section&id=Noninterest%20Expenses) Q1 2025 noninterest expenses totaled $54.5 million, down QoQ due to lower nonrecurring expenses, but up YoY by $1.1 million primarily from annual compensation increases Noninterest Expenses Trends | Period | Noninterest Expense | Nonrecurring Expenses | Change QoQ (adjusted) | Change YoY | | :-------------------- | :------------------ | :-------------------- | :-------------------- | :--------- | | Q1 2025 | $54.5 million | $1.0 million | -$0.6 million | +$1.1 million | | Q4 2024 | $56.3 million | $2.2 million | - | - | - QoQ decrease in noninterest expenses was primarily due to **lower nonrecurring technology initiative expenses**[15](index=15&type=chunk) - YoY increase was driven by **annual compensation increases** and a **$0.9 million credit in Q1 2024** from a debit card fee settlement[16](index=16&type=chunk) Efficiency Ratio (Non-GAAP) | Period | Efficiency Ratio | | :-------------------- | :--------------- | | Q1 2025 | 58.9% | | Q4 2024 | 58.8% | | Q1 2024 | 59.1% | Balance Sheet & Asset Quality [Loan Portfolio](index=1&type=section&id=Loan%20Portfolio) Total loans reached $5.70 billion in Q1 2025, increasing $26.4 million (0.5%) QoQ and $199.6 million (3.6%) YoY, driven by construction, multifamily, and agriculture loans Total Loans | Period | Total Loans | Change QoQ | Change YoY | | :-------------------- | :------------------ | :--------- | :--------- | | Q1 2025 | $5.70 billion | +$26.4 million (+0.5%) | +$199.6 million (+3.6%) | - QoQ growth primarily in **construction and land development, multifamily residential properties, and agriculture operating loans**[8](index=8&type=chunk) - Largest declines QoQ were in **commercial real estate and commercial and industrial loans**[8](index=8&type=chunk) - YoY growth was strongest in **construction and development, agriculture operating lines, and commercial and industrial loans**[10](index=10&type=chunk) [Deposits](index=2&type=section&id=Deposits) Total deposits increased by $73.3 million (1.2%) QoQ to $6.13 billion, driven by noninterest bearing and time deposits, enabling reduction in FHLB borrowings and subordinated debt Total Deposits | Period | Total Deposits | Change QoQ | | :-------------------- | :------------------ | :--------- | | Q1 2025 | $6.13 billion | +$73.3 million (+1.2%) | - Primary drivers of deposit increase were **noninterest bearing and time deposits**, growing by **$65.4 million and $75.4 million** respectively[12](index=12&type=chunk) - Increased time deposits were due to retaining maturing CDs, new customer promotions, and **$52.0 million in brokered deposits**[12](index=12&type=chunk) - Strong liquidity enabled a combined **$55.5 million reduction in FHLB borrowings and subordinated debt**, lowering funding costs[12](index=12&type=chunk) [Asset Quality](index=2&type=section&id=Asset%20Quality) First Mid maintained solid asset quality in Q1 2025, with ACL at $70.1 million (1.23% of loans) and NPL decreasing to $26.6 million (0.47% of loans), though special mention loans increased Key Asset Quality Metrics (Q1 2025) | Metric | Value | | :--------------------------------- | :------------------- | | Allowance for Credit Losses (ACL) | $70.1 million | | ACL to Total Loans Ratio | 1.23% | | Provision Expense | $1.7 million | | Net Charge-offs | $1.8 million | | Non-performing Loans (NPL) | $26.6 million | | NPL to Total Loans Ratio | 0.47% | | ACL to Non-performing Loans Ratio | 263.4% | | Nonperforming Assets to Total Assets Ratio | 0.38% | | Special Mention Loans | $74.0 million | | Substandard Loans | $33.9 million | - Non-performing loans declined by **$3.2 million to $26.6 million** at quarter end[11](index=11&type=chunk) - Special mention loans increased by **$16.2 million to $74.0 million**[11](index=11&type=chunk) [Capital Levels and Dividend](index=2&type=section&id=Capital%20Levels%20and%20Dividend) The company maintained strong capital levels, exceeding 'well capitalized' thresholds, with tangible book value per share (non-GAAP) increasing by $1.07 (4.4%) in Q1 2025, and a $0.24 per share quarterly dividend declared Capital Ratios (Q1 2025) | Capital Ratio | Value | | :--------------------------------- | :------------------- | | Total capital to risk-weighted assets | 15.59% | | Tier 1 capital to risk-weighted assets | 13.13% | | Common equity tier 1 capital to risk-weighted assets | 12.73% | Tangible Book Value per Share (Non-GAAP) | Metric | Value (Q1 2025) | Change QoQ | | :--------------------------------- | :------------------- | :--------- | | Tangible book value per share | - | +$1.07 (+4.4%) | | Driven by earnings growth | - | +$0.79 | | Driven by AOCI improvement | - | +$0.28 | - The Board of Directors approved a regular quarterly dividend of **$0.24 per share**, payable on May 30, 2025[19](index=19&type=chunk) Company Information [About First Mid](index=3&type=section&id=About%20First%20Mid) First Mid Bancshares, Inc. is a $7.6 billion community-focused organization offering banking, wealth management, brokerage, Ag services, and insurance across Illinois, Missouri, Texas, and Wisconsin - First Mid Bancshares, Inc. is the parent company of First Mid Bank & Trust, N.A., First Mid Insurance Group, Inc., and First Mid Wealth Management Co[20](index=20&type=chunk) - A **$7.6 billion community-focused organization** offering banking, wealth management, brokerage, Ag services, and insurance[20](index=20&type=chunk) - Operates through a network of locations throughout Illinois, Missouri, Texas, and Wisconsin, and a loan production office in the greater Indianapolis area[20](index=20&type=chunk) [Non-GAAP Measures](index=3&type=section&id=Non-GAAP%20Measures) The release includes various non-GAAP financial measures to aid investor understanding of performance, which should be reviewed with GAAP results and not as a substitute - Non-GAAP financial measures are provided to offer investors useful information for understanding the Company's financial performance[21](index=21&type=chunk) - These measures include Adjusted Net Earnings, Adjusted Diluted EPS, Efficiency Ratio, Net Interest Margin (tax equivalent), Tangible Book Value per Common Share, Adjusted Tangible Book Value per Common Share, Adjusted Return on Assets, and Adjusted Return on Average Common Equity[21](index=21&type=chunk) - Non-GAAP measures should be reviewed in conjunction with GAAP results and considered supplemental, not a substitute[21](index=21&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This document contains forward-looking statements regarding First Mid's future plans and expectations, with actual results potentially differing due to risks like interest rate changes, economic conditions, and regulatory shifts - Forward-looking statements are based on certain assumptions and describe future plans, strategies, and expectations[22](index=22&type=chunk) - Actual results could differ materially due to risks and uncertainties such as changes in interest rates, general economic conditions, legislative/regulatory changes, and portfolio quality[22](index=22&type=chunk) - The company does not undertake any obligation to update or review any forward-looking information, except as required by law[22](index=22&type=chunk) [Investor Contact](index=3&type=section&id=Investor%20Contact) Contact information for investor relations is provided, including Austin Frank, SVP, Shareholder Relations, and Matt Smith, Chief Financial Officer - Investor Contact: Austin Frank, SVP, Shareholder Relations (217-258-5522, afrank@firstmid.com)[23](index=23&type=chunk)[24](index=24&type=chunk) - Investor Contact: Matt Smith, Chief Financial Officer (217-258-1528, msmith@firstmid.com)[24](index=24&type=chunk) Condensed Consolidated Financial Statements [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets present the company's financial position as of March 31, 2025, with total assets of $7.57 billion, total liabilities of $6.70 billion, and total stockholders' equity of $870.9 million Condensed Consolidated Balance Sheets (As of March 31, 2025) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | March 31, 2024 (in thousands) | | :--------------------------------- | :------------------------------ | :------------------------------- | :------------------------------ | | **Assets** | | | | | Cash and cash equivalents | $201,470 | $121,216 | $355,701 | | Investment securities | $1,049,003 | $1,073,510 | $1,149,752 | | Loans (net) | $5,628,807 | $5,602,280 | $5,431,359 | | Total assets | $7,572,688 | $7,519,734 | $7,678,246 | | **Liabilities & Stockholders' Equity** | | | | | Total deposits | $6,130,380 | $6,057,096 | $6,242,936 | | Total liabilities | $6,701,739 | $6,673,343 | $6,880,294 | | Total stockholders' equity | $870,949 | $846,391 | $797,952 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The condensed consolidated statements of income present Q1 2025 financial performance, with net income of $22.17 million (up from $20.50 million in Q1 2024) and diluted EPS of $0.93 (up from $0.86) Condensed Consolidated Statements of Income (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--------------------------------- | :--------------------- | :--------------------- | | Total interest income | $87,559 | $87,672 | | Total interest expense | $28,150 | $32,202 | | Net interest income | $59,409 | $55,470 | | Provision for credit losses | $1,652 | ($357) | | Total non-interest income | $24,864 | $24,478 | | Total non-interest expense | $54,472 | $53,362 | | Net income | $22,171 | $20,503 | | Diluted earnings per common share | $0.93 | $0.86 | Net Income and EPS Quarterly Trend | Period | Net Income (in thousands) | Diluted EPS | | :-------------------- | :------------------------ | :---------- | | March 31, 2025 | $22,171 | $0.93 | | December 31, 2024 | $19,168 | $0.80 | | September 30, 2024 | $19,482 | $0.81 | | June 30, 2024 | $19,745 | $0.82 | | March 31, 2024 | $20,503 | $0.86 | [Consolidated Financial Highlights and Ratios](index=7&type=section&id=Consolidated%20Financial%20Highlights%20and%20Ratios) This section provides detailed quarterly trends for the loan and deposit portfolios, asset quality metrics, common share data, and key performance ratios over the past five quarters Loan Portfolio Composition (March 31, 2025) | Loan Type | Amount (in thousands) | | :--------------------------------- | :-------------------- | | Construction and land development | $269,148 | | Farm real estate loans | $373,413 | | 1-4 Family residential properties | $488,139 | | Multifamily residential properties | $356,858 | | Commercial real estate | $2,397,985 | | Agricultural operating loans | $296,811 | | Commercial and industrial loans | $1,303,712 | | Consumer loans | $47,220 | | All other loans | $165,572 | | **Total loans** | **$5,698,858** | Deposit Portfolio Composition (March 31, 2025) | Deposit Type | Amount (in thousands) | | :--------------------------------- | :-------------------- | | Non-interest bearing demand deposits | $1,394,590 | | Interest bearing demand deposits | $1,814,427 | | Savings deposits | $643,289 | | Money Market | $1,215,420 | | Time deposits | $1,062,654 | | **Total deposits** | **$6,130,380** | Key Performance Ratios (Q1 2025) | Ratio | Value | | :--------------------------------- | :-------------------- | | Net interest margin (tax equivalent) | 3.60% | | Return on average assets | 1.19% | | Adjusted return on average assets | 1.23% | | Return on average common equity | 10.35% | | Adjusted return on average common equity | 10.78% | | Efficiency ratio (tax equivalent) | 58.88% | Supplementary Financial Information [Net Interest Margin Calculation Methodology](index=9&type=section&id=Net%20Interest%20Margin%20Calculation%20Methodology) Effective Q1 2025, First Mid Bancshares, Inc. changed its net interest margin calculation methodology to align with peer banks, using annualized tax-equivalent net interest income divided by average interest earning assets - Beginning Q1 2025, the Company changed its net interest margin calculation methodology to be more consistent with peer banks and research analysts[33](index=33&type=chunk) - The new calculation is the annualized net interest income on a tax equivalent basis divided by average interest earning assets[33](index=33&type=chunk) [Net Interest Margin Details](index=9&type=section&id=Net%20Interest%20Margin%20Details) This section details Q1 2025 average balances, interest income/expense, and rates for interest-earning assets ($6.77 billion at 5.29%) and interest-bearing liabilities ($5.21 billion at 2.19%), resulting in $60.16 million net interest earnings and a 3.10% spread Q1 2025 Interest Earning Assets and Rates | Interest Earning Assets | QTD Average Balance (in thousands) | Interest (in thousands) | Average Rate | | :--------------------------------- | :------------------------------- | :---------------------- | :----------- | | Interest bearing deposits | $70,701 | $827 | 4.74% | | Investment Securities | $1,090,099 | $7,254 | 2.66% | | Loans (net of unearned income) | $5,605,821 | $80,194 | 5.80% | | **Total interest earning assets** | **$6,769,858** | **$88,312** | **5.29%** | Q1 2025 Interest Bearing Liabilities and Rates | Interest Bearing Liabilities | QTD Average Balance (in thousands) | Interest (in thousands) | Average Rate | | :--------------------------------- | :------------------------------- | :---------------------- | :----------- | | Demand deposits | $3,039,621 | $14,900 | 1.99% | | Savings deposits | $640,687 | $164 | 0.10% | | Time deposits | $1,022,200 | $8,658 | 3.44% | | Total interest bearing deposits | $4,702,508 | $23,722 | 2.05% | | Total borrowings | $504,384 | $4,428 | 3.56% | | **Total interest bearing liabilities** | **$5,206,892** | **$28,150** | **2.19%** | - Net Interest Earnings for Q1 2025 were **$60,162 thousand**, with a spread of **3.10%**[35](index=35&type=chunk) [Reconciliation of Non-GAAP Financial Measures](index=10&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations of various non-GAAP financial measures to comparable GAAP measures, including net interest income (tax equivalent), tangible book value per common share, adjusted earnings, and efficiency ratio Net Interest Margin (Tax Equivalent) Reconciliation | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :--------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Net interest income as reported | $59,409 | $58,950 | $57,543 | $56,765 | $55,470 | | Net interest income, (tax equivalent) | $60,162 | $59,717 | $58,627 | $57,361 | $56,086 | | Net interest margin (tax equivalent) | 3.60% | 3.41% | 3.35% | 3.36% | 3.25% | Tangible Book Value per Common Share Reconciliation | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :--------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Common stockholder's equity | $870,949 | $846,391 | $858,497 | $813,645 | $797,952 | | Goodwill and intangibles, net | $258,671 | $261,906 | $265,139 | $257,377 | $260,699 | | Tangible Book Value per common share | $25.53 | $24.46 | $24.82 | $23.28 | $22.49 | | Adjusted tangible book value per common share | $31.21 | $30.42 | $29.70 | $29.43 | $28.67 | Adjusted Earnings and Efficiency Ratio Reconciliation (Q1 2025) | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :--------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Net Income - GAAP | $22,171 | $19,168 | $19,482 | $19,745 | $20,503 | | Total non-recurring adjustments (non-GAAP) | $912 | $1,710 | $356 | $373 | $1,804 | | Adjusted earnings - non GAAP | $23,083 | $20,878 | $19,838 | $20,118 | $22,307 | | Adjusted diluted earnings per share (non-GAAP) | $0.96 | $0.87 | $0.83 | $0.84 | $0.93 | | Efficiency ratio (non-GAAP) | 58.88% | 58.76% | 61.33% | 59.61% | 59.09% |