First Mid(FMBH) - 2025 Q1 - Quarterly Results

Executive Summary & Highlights CEO Commentary 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] - Delivered growth in both loans and deposits during a seasonally pressured quarter[3] - Significantly expanded net interest margin through increased earning asset yields and decreased average cost of funds[3] - Successfully completed a retail online system conversion, enhancing customer product and relationship growth platform[3] Key Financial Highlights 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 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] - The YoY increase was largely due to a $4.1 million decrease in interest expense compared to Q1 2024[5] Net Interest Margin 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] - 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] Noninterest Income 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] - Wealth management and insurance revenues were key drivers for the YoY increase, with a combined growth of 8.2%[14] - Debit card fee income decreased due to lower consumer spending[13][14] Noninterest Expenses 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] - YoY increase was driven by annual compensation increases and a $0.9 million credit in Q1 2024 from a debit card fee settlement[16] 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 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] - Largest declines QoQ were in commercial real estate and commercial and industrial loans[8] - YoY growth was strongest in construction and development, agriculture operating lines, and commercial and industrial loans[10] 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] - Increased time deposits were due to retaining maturing CDs, new customer promotions, and $52.0 million in brokered deposits[12] - Strong liquidity enabled a combined $55.5 million reduction in FHLB borrowings and subordinated debt, lowering funding costs[12] Asset Quality 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] - Special mention loans increased by $16.2 million to $74.0 million[11] Capital Levels and Dividend 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] Company Information About First Mid 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] - A $7.6 billion community-focused organization offering banking, wealth management, brokerage, Ag services, and insurance[20] - Operates through a network of locations throughout Illinois, Missouri, Texas, and Wisconsin, and a loan production office in the greater Indianapolis area[20] Non-GAAP Measures 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] - 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] - Non-GAAP measures should be reviewed in conjunction with GAAP results and considered supplemental, not a substitute[21] Forward-Looking Statements 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] - 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] - The company does not undertake any obligation to update or review any forward-looking information, except as required by law[22] Investor Contact 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][24] - Investor Contact: Matt Smith, Chief Financial Officer (217-258-1528, msmith@firstmid.com)[24] Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets 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 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 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 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] - The new calculation is the annualized net interest income on a tax equivalent basis divided by average interest earning assets[33] Net Interest Margin Details 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] Reconciliation of Non-GAAP Financial Measures 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% |