First Mid(FMBH) - 2019 Q4 - Annual Report

Revenue and Loan Performance - The community banking line contributes approximately 83% of the Company's total revenues[15] - Approximately 63% of the Company's total revenues were derived from lending activities in the fiscal year ended December 31, 2019[19] - Total commercial real estate loans increased from $409 million at December 31, 2015, to $996 million at December 31, 2019[19] - Net interest income rose to $125.7 million in 2019, up from $111.7 million in 2018 and $93.1 million in 2017, primarily due to growth in earnings assets[151] - Net loans increased to $2.67 billion at December 31, 2019, from $2.62 billion in 2018 and $1.92 billion in 2017, driven by growth in commercial real estate and construction[148] - Total deposits decreased to $2.92 billion at December 31, 2019, from $2.99 billion in 2018, but increased from $2.27 billion in 2017[149] Financial Ratios and Capital Adequacy - The Company's net interest margin on a tax-effected basis decreased to 3.64% in 2019 from 3.79% in 2018[27] - The Company's Tier 1 capital ratio increased to 14.79% in 2019 from 12.76% in 2018, reflecting a strong capital position[156] - As of December 31, 2019, the Company had a total risk-based capital ratio of 15.74%, a Tier 1 risk-based ratio of 14.79%, a common equity Tier 1 capital ratio of 14.12%, and a leverage ratio of 11.20%, all exceeding the Federal Reserve Board's minimum requirements[71] - The Company is subject to minimum capital standards established by banking regulators, including a total capital to total risk-based capital ratio of not less than 10.50%[83] Nonperforming Loans and Credit Quality - Nonperforming loans were $27.8 million (1.03% of total loans) at December 31, 2019[26] - Year-end total nonperforming loans decreased to $27.8 million in 2019 from $29.7 million in 2018, indicating improved credit quality[155] - The allowance for loan losses as a percentage of total loans was 1.00% in 2019, compared to 0.99% in 2018[148] - Provision for loan losses decreased to $6.4 million in 2019 from $8.7 million in 2018, reflecting a decrease in nonperforming loans[188] Mergers and Acquisitions - The First Bank Merger closed on May 1, 2018, with the Company issuing an aggregate total of 1,643,900 shares of common stock and paying approximately $10.275 million[34] - The SCB Merger was completed on November 15, 2018, resulting in the issuance of 1,330,571 shares of common stock and approximately $19,046,000 paid to SCB stockholders[37] - Non-interest income increased to $56.0 million in 2019, up 58.5% from $35.4 million in 2018, driven by a 186.6% increase in insurance commissions due to the acquisition of SCB[152] Employee and Operational Expenses - The Company employs 827 people on a full-time equivalent basis as of December 31, 2019[14] - Salaries and employee benefits increased by $15.8 million or 33.7% to $62.6 million in 2019, driven by additional employees from acquisitions and merit increases[199] - Non-interest expenses rose by $22.0 million to $112.0 million in 2019, primarily due to the acquisitions of First Bank and SCB[154] Regulatory Environment - The Company is subject to extensive regulation under federal and state law, which can impact growth and earnings performance[42] - The Dodd-Frank Act requires publicly-traded bank holding companies with assets of $10 billion or more to establish a risk committee for enterprise-wide risk management practices[57] - The Company is required to maintain adequate capital levels to avoid restrictions on dividend payments and other financial activities[89] Market and Economic Risks - The company faces various risks including interest rate risk, liquidity risk, and credit risk, which could materially impact its financial condition and results of operations[109] - Changes in market interest rates may adversely affect the company's financial condition or results of operations[113] - A large percentage of the company's loans are to individuals and businesses in Illinois, making it vulnerable to economic conditions in that region[111] Shareholder and Stock Information - The Company raised approximately $34.0 million in net proceeds from an underwritten public offering of 947,368 shares at a public offering price of $38.00 per share[38] - As of December 31, 2019, the Company's common stock was held by approximately 995 shareholders and is traded on NASDAQ under the symbol "FMBH"[138] - The Company repurchased a total of 40,026 shares at an average price of $32.29 per share during 2019[141] Financial Performance - Net income for 2019 was $47.9 million, an increase from $36.6 million in 2018 and $26.7 million in 2017, with diluted earnings per share at $2.87 for 2019[148] - Total assets at December 31, 2019, were $3.84 billion, unchanged from 2018, and up from $2.84 billion in 2017[148] - Total interest income increased by $25.3 million in 2019, with loans contributing $21.1 million to this increase[181]