First Mid(FMBH) - 2025 Q2 - Quarterly Results

Financial Performance Overview 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 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 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] - 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] Detailed Financial Analysis 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 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] Loan Portfolio and Asset Quality 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][8] 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] 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] Noninterest Income 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] Noninterest Expenses 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][15] - 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] Capital Management and Shareholder Returns 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 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 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] - 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] Consolidated Financial Statements 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 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 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 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 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] Net Interest Margin Analysis 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] Reconciliation of Non-GAAP Financial Measures 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][40]