Business Context and Reporting Period
Company: First Mid Bancshares, Inc. (FMBH)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: A financial holding company operating primarily through its subsidiary, First Mid Bank & Trust, N.A. The Company offers banking, insurance, wealth management, and captive insurance services. It operates branches across Illinois, Missouri, Wisconsin, Texas, and Indiana.
Recent Acquisitions: Completed the acquisition of Blackhawk Bancorp, Inc. in 2023. In 2025, acquired customer lists from Ray Farm Management Services and AAdvantage Insurance Group. A pending merger with Two Rivers Financial Group, Inc. was announced in October 2025, expected to close in February 2026.
Key Financial Metrics (Year Ended Dec 31, 2025)
| Metric | 2025 | 2024 | 2023 |
|---|---|---|---|
| Net Income | $91.7 million | $78.9 million | $68.9 million |
| Diluted EPS | $3.83 | $3.30 | $3.15 |
| Total Assets | $7.97 billion | $7.52 billion | $7.59 billion |
| Net Loans | $5.94 billion | $5.60 billion | $5.51 billion |
| Total Deposits | $6.40 billion | $6.06 billion | $6.12 billion |
| Net Interest Income | $256.2 million | $228.7 million | $193.5 million |
| Net Interest Margin (Tax-Effected) | 3.70% | 3.34% | 3.05% |
| Return on Average Assets | 1.20% | 1.04% | 0.97% |
| Return on Average Common Equity | 10.24% | 9.67% | 10.10% |
| Provision for Credit Losses | $9.9 million | $5.6 million | $6.1 million |
| Nonperforming Loans | $31.9 million (0.53% of loans) | $29.8 million (0.53% of loans) | $20.1 million (0.36% of loans) |
| Allowance for Credit Losses | $74.9 million (1.25% of loans) | $70.2 million (1.24% of loans) | $68.7 million (1.23% of loans) |
| Stockholders' Equity | $958.7 million | $846.4 million | $793.2 million |
Material Changes vs. Prior Period
- Profitability Growth: Net income increased 16.3% to $91.7 million, driven by a 12.0% increase in net interest income and improved net interest margin.
- Net Interest Margin Expansion: The tax-effected net interest margin expanded to 3.70% from 3.34% in 2024, attributed to improved loan yields, investment portfolio performance, and reduced funding costs.
- Expense Management: Non-interest expenses rose 3.4% to $222.2 million, primarily due to increased incentive compensation for exceeding budgeted metrics and merit raises, partially offset by gains on the sale of buildings.
- Asset Quality: Nonperforming loans increased to $31.9 million, and the provision for credit losses rose to $9.9 million as the industry returns to a normal credit cycle. Net charge-offs were $5.2 million.
- Balance Sheet Growth: Total assets grew 6.0% to $7.97 billion, with net loans increasing $338.9 million and deposits increasing $338.2 million, driven by organic growth and increased time deposits.
Guidance, Outlook, and Risks
Management Commentary: Management maintains a strong capital position, with all regulatory ratios exceeding "well-capitalized" standards. The Company continues to focus on organic growth, strategic acquisitions, and maintaining a strong balance sheet. A new stock repurchase program authorizing up to 1.2 million shares was approved in June 2025, though no shares were repurchased in 2025.
Risks and Contingencies:
- Credit Risk: Significant exposure to commercial real estate ($2.6 billion) and agriculture ($681.4 million). A decline in real estate values or agricultural commodity prices could increase credit losses.
- Interest Rate Risk: The Company is liability-sensitive within the 12-month horizon; rising rates could compress net interest income. Economic Value of Equity (EVE) analysis shows potential decreases in equity value under rate shock scenarios.
- Operational/Cyber Risk: Reliance on technology exposes the Company to cyber-attacks and operational failures. The Company maintains cyber insurance and robust security protocols.
- Acquisition Integration: Risks associated with the pending Two Rivers Financial Group merger and integrating recent acquisitions.
Investor Verification Checklist
- Capital Ratios: Verify the Company's Tier 1 Leverage Ratio (11.07%) and Total Risk-Based Capital Ratio (15.67%) remain well above regulatory minimums.
- Loan Concentrations: Review the exposure to "Other grain farming" ($577.9 million) and "Lessors of non-residential buildings" ($1.1 billion) for potential sector-specific downturns.
- Nonperforming Assets: Monitor the trend of nonperforming loans, which rose to $31.9 million, and the adequacy of the allowance for credit losses (1.25% of total loans).
- Two Rivers Merger: Confirm the closing of the pending Two Rivers Financial Group merger and any associated integration costs or goodwill impacts.
- Subordinated Debt: Note the repayment of $20 million in subordinated notes in October 2025 and the remaining balance of $56 million.