First Mid(FMBH) - 2020 Q4 - Annual Report

Financial Performance - Approximately 65% of the Company's total revenues were derived from lending activities in the fiscal year ended December 31, 2020 [19]. - The Company's net interest margin on a tax-effected basis decreased to 3.27% in 2020 from 3.64% in 2019, primarily due to lower interest rates [26]. - Net income for 2020 was $45.3 million, down from $47.9 million in 2019, with diluted earnings per share at $2.70 compared to $2.87 in the previous year [146]. - Total assets increased to $4.73 billion in 2020 from $3.84 billion in 2019, reflecting growth in the company's financial position [146]. - Total deposits grew to $3.69 billion in 2020 from $2.92 billion in 2019, indicating strong customer retention and growth [146]. - The company's total capital to risk-weighted assets ratio improved to 18.82% in 2020 from 15.74% in 2019, demonstrating enhanced capital strength [146]. - Non-interest income rose to $59.5 million in 2020, up from $56.0 million in 2019, mainly due to increases in wealth management revenues and mortgage banking income [156]. - Non-interest expenses decreased to $111.1 million in 2020 from $112.0 million in 2019, attributed to declines in occupancy and equipment costs [157]. Loan and Credit Risk - Total commercial real estate loans increased from $630 million at December 31, 2016, to $1,174 million at December 31, 2020, with significant contributions from acquisitions [19]. - Nonperforming loans were $28.1 million (0.90% of total loans) at December 31, 2020, which compares favorably with peer financial institutions [25]. - Provision for loan losses rose significantly to $16.1 million in 2020 from $6.4 million in 2019, indicating increased risk due to economic conditions [146]. - The allowance for credit losses as a percentage of total loans increased to 1.34% in 2020 from 1.00% in 2019, reflecting a more cautious approach to potential loan defaults [146]. - The ongoing COVID-19 pandemic has adversely impacted the company's operations and financial condition, with potential credit losses particularly in the hospitality, energy, retail, and restaurant industries [126]. Employee and Operational Metrics - The annual voluntary turnover for full-time employees was 14% in 2020 [14]. - The Company employs 824 people on a full-time equivalent basis, with approximately 75% female and 5.3% minority [14]. - The number of full-time equivalent employees was 824 at December 31, 2020, a slight decrease from 827 in 2019 [202]. Regulatory and Compliance - The Company is subject to extensive regulation under federal and state laws, which can impact its growth and earnings performance [40]. - The Dodd-Frank Act established new requirements for executive compensation and corporate governance, affecting publicly-traded bank holding companies [50]. - The Company must maintain a common equity Tier 1 capital ratio of at least 7.00%, a Tier 1 risk-based ratio of at least 8.50%, and a total capital ratio of at least 10.50% [68]. - The Company has established policies for compliance with the USA PATRIOT Act and related regulations to combat money laundering [47]. - The Gramm-Leach-Bliley Act allows the Company to engage in a full range of financial activities, including banking, insurance, and securities [43]. Mergers and Acquisitions - The Company completed an acquisition of loans totaling $183 million in the St. Louis metro market on April 21, 2020 [33]. - The total consideration paid for the merger with LINCO Bancshares, Inc. was $103.5 million in cash and 1,262,246 shares of common stock [35]. - The Company anticipates merging Providence Bank with First Mid Bank in the second quarter of 2021 [36]. - The Company has completed acquisitions of banks, bank branches, and other businesses in recent years, and may continue to pursue such acquisitions [129]. Market and Economic Conditions - Economic conditions in Illinois significantly affect the company's profitability, as a large percentage of its loans are to individuals and businesses in this region [123]. - The company faces liquidity risks that could affect its ability to meet financial obligations, influenced by factors such as economic conditions and market disruptions [114]. - Changes in interest rates may negatively affect the company's earnings and ability to attract deposits, impacting the net interest margin [112]. - Any change in applicable laws or regulations may materially affect the Company's business and operations [42]. Shareholder and Stock Information - The Company's common stock was held by approximately 953 shareholders of record as of December 31, 2020 [141]. - The Company has a share repurchase program approved for approximately $76.7 million of its common stock since August 5, 1998 [143]. - The Company conducted share repurchases totaling 6,288 shares at an average price of $33.92 during December 2020 [143]. - The ability of the Company to pay dividends is dependent on receiving dividends from First Mid Bank, which is subject to regulatory restrictions [142].