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First Mid Bancshares
FMBH
#5754
Rank
C$1.89 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
C$71.32
Share price
-1.41%
Change (1 day)
40.34%
Change (1 year)
๐Ÿฆ Banks๐Ÿ’ณ Financial services
Categories
  1. First Mid Bancshares
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2025 Q2

First Mid Bancshares - 10-Q quarterly report FY2025 Q2


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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

Or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________to _______________.

Commission file number 001-36434

FIRST MID BANCSHARES, INC.

(Exact name of Registrant as specified in its charter)

 

Delaware

37-1103704

(State or other jurisdiction of incorporation or organization)

(I.R.S. employer identification no.)

 

1421 Charleston Avenue

 

Mattoon, Illinois

61938

(Address of principal executive offices)

(Zip code)

 

(217) 234-7454

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

FMBH

NASDAQ Global Market

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ☒

 

Accelerated filer ☐

Non-accelerated filer ☐

 

Smaller reporting company ☐

 

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of August 8, 2025, 23,997,367 common shares, $4.00 par value, were outstanding.

 

PART I

ITEM 1. FINANCIAL STATEMENTS

First Mid Bancshares, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(In thousands, except share data)

 

June 30, 2025

 

 

December 31, 2024

 

Assets

 

 

 

 

 

 

Cash and due from banks:

 

 

 

 

 

 

Non-interest-bearing

 

$

117,783

 

 

$

92,112

 

interest-bearing

 

 

72,158

 

 

 

29,029

 

Federal funds sold

 

 

76

 

 

 

75

 

Cash and cash equivalents

 

 

190,017

 

 

 

121,216

 

Certificates of deposit

 

 

2,030

 

 

 

3,500

 

Investment securities:

 

 

 

 

 

 

Available-for-sale, at fair value (amortized cost of $1,255,703 and $1,257,436 at June 30, 2025 and December 31, 2024, respectively)

 

 

1,076,841

 

 

 

1,063,292

 

Held-to-maturity, at amortized cost (estimated fair value of $2,287 and $2,279 at June 30, 2025 and December 31, 2024, respectively)

 

 

2,287

 

 

 

2,279

 

Equity securities, at fair value

 

 

4,543

 

 

 

4,439

 

Loans held for sale

 

 

7,359

 

 

 

6,614

 

Loans

 

 

5,759,640

 

 

 

5,665,848

 

Less allowance for credit losses

 

 

(71,160

)

 

 

(70,182

)

Net loans

 

 

5,688,480

 

 

 

5,595,666

 

Interest receivable

 

 

38,001

 

 

 

38,639

 

Other real estate owned

 

 

1,670

 

 

 

2,179

 

Premises and equipment, net

 

 

97,740

 

 

 

100,234

 

Goodwill, net

 

 

203,391

 

 

 

203,391

 

Intangible assets, net

 

 

52,156

 

 

 

58,515

 

Bank owned life insurance

 

 

172,333

 

 

 

170,854

 

Right of use lease assets

 

 

13,152

 

 

 

13,861

 

Tax assets

 

 

58,700

 

 

 

66,858

 

Other assets

 

 

71,775

 

 

 

68,197

 

Total assets

 

$

7,680,475

 

 

$

7,519,734

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Non-interest-bearing

 

$

1,321,446

 

 

$

1,329,155

 

interest-bearing

 

 

4,868,753

 

 

 

4,727,941

 

Total deposits

 

 

6,190,199

 

 

 

6,057,096

 

Securities sold under agreements to repurchase

 

 

193,941

 

 

 

204,122

 

Interest payable

 

 

6,724

 

 

 

5,280

 

FHLB borrowings

 

 

245,000

 

 

 

242,520

 

Junior subordinated debentures, net

 

 

24,384

 

 

 

24,280

 

Subordinated debt, net

 

 

79,590

 

 

 

87,472

 

Lease liabilities

 

 

13,590

 

 

 

14,190

 

Other liabilities

 

 

32,907

 

 

 

38,383

 

Total liabilities

 

 

6,786,335

 

 

 

6,673,343

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock ($4 par value; authorized 45,000,000 shares; issued 24,657,394 and 24,564,356 shares in 2025 and 2024, respectively; outstanding 23,988,845 and 23,895,807 shares in 2025 and 2024, respectively)

 

 

100,630

 

 

 

100,258

 

Additional paid-in capital

 

 

516,495

 

 

 

512,810

 

Retained earnings

 

 

429,342

 

 

 

395,189

 

Deferred compensation

 

 

1,028

 

 

 

2,756

 

Accumulated other comprehensive loss

 

 

(130,710

)

 

 

(142,383

)

Treasury stock, at cost (668,549 shares in 2025 and 2024)

 

 

(22,645

)

 

 

(22,239

)

Total stockholders’ equity

 

 

894,140

 

 

 

846,391

 

Total liabilities and stockholders’ equity

 

$

7,680,475

 

 

$

7,519,734

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

2

 

 

First Mid Bancshares, Inc.

Condensed Consolidated Statements of Income (unaudited)

(In thousands, except per share data)

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands, except per share data)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

84,784

 

 

$

79,560

 

 

$

164,702

 

 

$

157,383

 

Interest on investment securities

 

 

6,895

 

 

 

7,405

 

 

 

13,672

 

 

 

14,810

 

Interest on certificates of deposit

 

 

28

 

 

 

43

 

 

 

64

 

 

 

63

 

Interest on federal funds sold

 

 

—

 

 

 

8

 

 

 

1

 

 

 

25

 

Interest on deposits with other financial institutions

 

 

1,694

 

 

 

1,667

 

 

 

2,521

 

 

 

4,074

 

Total interest income

 

 

93,401

 

 

 

88,683

 

 

 

180,960

 

 

 

176,355

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

24,964

 

 

 

26,338

 

 

 

48,686

 

 

 

52,434

 

Interest on securities sold under agreements to repurchase

 

 

1,218

 

 

 

1,615

 

 

 

2,398

 

 

 

3,671

 

Interest on FHLB borrowings

 

 

2,043

 

 

 

2,248

 

 

 

3,850

 

 

 

4,562

 

Interest on other borrowings

 

 

—

 

 

 

—

 

 

 

24

 

 

 

—

 

Interest on junior subordinated debentures

 

 

464

 

 

 

537

 

 

 

932

 

 

 

1,079

 

Interest on subordinated debentures

 

 

849

 

 

 

1,180

 

 

 

1,798

 

 

 

2,374

 

Total interest expense

 

 

29,538

 

 

 

31,918

 

 

 

57,688

 

 

 

64,120

 

Net interest income

 

 

63,863

 

 

 

56,765

 

 

 

123,272

 

 

 

112,235

 

Provision for credit losses

 

 

2,567

 

 

 

1,083

 

 

 

4,219

 

 

 

726

 

Net interest income after provision for credit losses

 

 

61,296

 

 

 

55,682

 

 

 

119,053

 

 

 

111,509

 

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

Wealth management revenues

 

 

5,394

 

 

 

5,405

 

 

 

11,205

 

 

 

10,727

 

Insurance commissions

 

 

7,840

 

 

 

6,531

 

 

 

17,765

 

 

 

15,744

 

Service charges

 

 

2,995

 

 

 

3,227

 

 

 

5,896

 

 

 

6,183

 

Securities losses, net

 

 

—

 

 

 

(156

)

 

 

(181

)

 

 

(156

)

Mortgage banking revenue, net

 

 

1,070

 

 

 

1,038

 

 

 

1,781

 

 

 

1,744

 

ATM/debit card revenue

 

 

4,636

 

 

 

4,281

 

 

 

8,282

 

 

 

8,336

 

Bank owned life insurance

 

 

1,206

 

 

 

1,192

 

 

 

2,893

 

 

 

2,313

 

Other

 

 

452

 

 

 

904

 

 

 

816

 

 

 

2,009

 

Total other income

 

 

23,593

 

 

 

22,422

 

 

 

48,457

 

 

 

46,900

 

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

33,623

 

 

 

30,164

 

 

 

65,371

 

 

 

60,612

 

Net occupancy and equipment expense

 

 

7,869

 

 

 

7,507

 

 

 

16,348

 

 

 

15,067

 

Net other real estate owned expense

 

 

75

 

 

 

85

 

 

 

176

 

 

 

64

 

FDIC insurance

 

 

873

 

 

 

902

 

 

 

1,722

 

 

 

1,771

 

Amortization of intangible assets

 

 

3,121

 

 

 

3,340

 

 

 

6,352

 

 

 

6,837

 

Stationery and supplies

 

 

367

 

 

 

370

 

 

 

798

 

 

 

761

 

Legal and professional

 

 

2,757

 

 

 

2,536

 

 

 

5,833

 

 

 

4,985

 

ATM/debit card

 

 

1,144

 

 

 

1,281

 

 

 

2,975

 

 

 

2,472

 

Marketing and donations

 

 

777

 

 

 

814

 

 

 

1,629

 

 

 

1,676

 

Other

 

 

4,156

 

 

 

4,392

 

 

 

8,030

 

 

 

10,508

 

Total other expense

 

 

54,762

 

 

 

51,391

 

 

 

109,234

 

 

 

104,753

 

Income before income taxes

 

 

30,127

 

 

 

26,713

 

 

 

58,276

 

 

 

53,656

 

Income taxes

 

 

6,689

 

 

 

6,968

 

 

 

12,667

 

 

 

13,408

 

Net income

 

$

23,438

 

 

$

19,745

 

 

$

45,609

 

 

$

40,248

 

Per share data:

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

$

0.98

 

 

$

0.83

 

 

$

1.91

 

 

$

1.69

 

Diluted net income per common share

 

 

0.98

 

 

 

0.82

 

 

 

1.90

 

 

 

1.68

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

3

 

 

First Mid Bancshares, Inc.

Condensed Consolidated Statements of Comprehensive Income (unaudited)

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Net income

 

$

23,438

 

 

$

19,745

 

 

$

45,609

 

 

$

40,248

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on available-for-sale securities, net of tax benefit (expense) of ($1,744) and ($208) for three months ended June 30, 2025 and 2024, respectively and ($4,338) and $4,017 for the six months ended June 30, 2025 and 2024, respectively

 

 

4,640

 

 

 

556

 

 

 

11,542

 

 

 

(10,684

)

Less: reclassification adjustment for realized losses included in net income, net of tax benefit of $0 and $43 for three months ended June 30, 2025 and 2024, respectively and $50 and $43 for the six months ended June 30, 2025 and 2024, respectively

 

 

—

 

 

 

(113

)

 

 

(131

)

 

 

(113

)

Other comprehensive income (loss), net of taxes

 

 

4,640

 

 

 

669

 

 

 

11,673

 

 

 

(10,571

)

Comprehensive income

 

$

28,078

 

 

$

20,414

 

 

$

57,282

 

 

$

29,677

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4

 

 

First Mid Bancshares, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

For the three months ended June 30, 2025 and 2024

 

(In thousands)

 

Common
Stock

 

 

Additional
Paid-In-
Capital

 

 

Retained
Earnings

 

 

Deferred
Compensation

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Treasury
Stock

 

 

Total

 

March 31, 2025

 

$

100,602

 

 

$

515,975

 

 

$

411,633

 

 

$

509

 

 

$

(135,350

)

 

$

(22,420

)

 

$

870,949

 

Net income

 

 

—

 

 

 

—

 

 

 

23,438

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23,438

 

Other comprehensive income, net tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,640

 

 

 

—

 

 

 

4,640

 

Cash dividends on common stock (.24/share)

 

 

—

 

 

 

—

 

 

 

(5,729

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,729

)

Forfeiture of 150 restricted shares pursuant to the 2017 stock incentive plan

 

 

—

 

 

 

(6

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(6

)

Issuance of 7,079 common shares pursuant to the employee stock purchase plan

 

 

28

 

 

 

182

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

210

 

Grant of restricted units pursuant to 2017 stock incentive plan

 

 

—

 

 

 

279

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

279

 

Deferred compensation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(47

)

 

 

—

 

 

 

(225

)

 

 

(272

)

Vested restricted shares/units compensation expense

 

 

—

 

 

 

65

 

 

 

—

 

 

 

566

 

 

 

—

 

 

 

—

 

 

 

631

 

June 30, 2025

 

$

100,630

 

 

$

516,495

 

 

$

429,342

 

 

$

1,028

 

 

$

(130,710

)

 

$

(22,645

)

 

$

894,140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2024

 

$

100,166

 

 

$

511,785

 

 

$

353,694

 

 

$

832

 

 

$

(147,667

)

 

$

(20,858

)

 

$

797,952

 

Net income

 

 

—

 

 

 

—

 

 

 

19,745

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

19,745

 

Other comprehensive income, net tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

669

 

 

 

—

 

 

 

669

 

Cash dividends on common stock (.23/share)

 

 

—

 

 

 

—

 

 

 

(5,472

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,472

)

Forfeiture of 384 restricted shares pursuant to the 2017 stock incentive plan

 

 

(2

)

 

 

(11

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(13

)

Issuance of 7,323 common shares pursuant to the employee stock purchase plan

 

 

30

 

 

 

174

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

204

 

Grant of restricted units pursuant to 2017 stock incentive plan

 

 

—

 

 

 

174

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

174

 

Deferred compensation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

62

 

 

 

—

 

 

 

(223

)

 

 

(161

)

Vested restricted shares/units compensation expense

 

 

—

 

 

 

59

 

 

 

—

 

 

 

488

 

 

 

—

 

 

 

—

 

 

 

547

 

June 30, 2024

 

$

100,194

 

 

$

512,181

 

 

$

367,967

 

 

$

1,382

 

 

$

(146,998

)

 

$

(21,081

)

 

$

813,645

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

First Mid Bancshares, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

For the six months ended June 30, 2025

 

(In thousands)

 

Common
Stock

 

 

Additional
Paid-In-
Capital

 

 

Retained
Earnings

 

 

Deferred
Compensation

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Treasury
Stock

 

 

Total

 

December 31, 2024

 

$

100,258

 

 

$

512,810

 

 

$

395,189

 

 

$

2,756

 

 

$

(142,383

)

 

$

(22,239

)

 

$

846,391

 

Net income

 

 

—

 

 

 

—

 

 

 

45,609

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

45,609

 

Other comprehensive income, net tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

11,673

 

 

 

—

 

 

 

11,673

 

Cash dividends on common stock (0.48/share)

 

 

—

 

 

 

—

 

 

 

(11,456

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(11,456

)

Issuance of 73,468 restricted shares pursuant to 2017 stock incentive plan, net of forfeitures

 

 

294

 

 

 

2,569

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,863

 

Issuance of 5,600 common shares pursuant to 2017 stock incentive plan

 

 

22

 

 

 

196

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

218

 

Issuance of 13,970 common shares pursuant to the employee stock purchase plan

 

 

56

 

 

 

370

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

426

 

Deferred compensation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,826

)

 

 

—

 

 

 

(406

)

 

 

(3,232

)

Grant of restricted units pursuant to 2017 stock incentive plan

 

 

—

 

 

 

2,070

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,070

 

Release of restricted units pursuant to 2017 stock incentive plan

 

 

—

 

 

 

(1,634

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,634

)

Vested restricted shares/units compensation expense

 

 

—

 

 

 

114

 

 

 

—

 

 

 

1,098

 

 

 

—

 

 

 

—

 

 

 

1,212

 

June 30, 2025

 

$

100,630

 

 

$

516,495

 

 

$

429,342

 

 

$

1,028

 

 

$

(130,710

)

 

$

(22,645

)

 

$

894,140

 

 

6

 

 

First Mid Bancshares, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

For the six months ended June 30, 2024

 

(In thousands)

 

Common
Stock

 

 

Additional
Paid-In-
Capital

 

 

Retained
Earnings

 

 

Deferred
Compensation

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Treasury
Stock

 

 

Total

 

December 31, 2023

 

$

99,919

 

 

$

509,314

 

 

$

338,662

 

 

$

2,629

 

 

$

(136,427

)

 

$

(20,893

)

 

$

793,204

 

Net income

 

 

—

 

 

 

—

 

 

 

40,248

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

40,248

 

Other comprehensive loss, net tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(10,571

)

 

 

—

 

 

 

(10,571

)

Cash dividends on common stock (0.46/share)

 

 

—

 

 

 

—

 

 

 

(10,943

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(10,943

)

Issuance of 47,196 restricted shares pursuant to 2017 stock incentive plan, net of forfeitures

 

 

189

 

 

 

1,390

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,579

 

Issuance of 5,600 common shares pursuant to 2017 stock incentive plan

 

 

22

 

 

 

166

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

188

 

Issuance of 15,935 common shares pursuant to the employee stock purchase plan

 

 

64

 

 

 

334

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

398

 

Deferred compensation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,226

)

 

 

—

 

 

 

(188

)

 

 

(2,414

)

Grant of restricted units pursuant to 2017 stock incentive plan

 

 

—

 

 

 

1,485

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,485

 

Release of restricted units pursuant to 2017 stock incentive plan

 

 

—

 

 

 

(617

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(617

)

Vested restricted shares/units compensation expense

 

 

—

 

 

 

109

 

 

 

—

 

 

 

979

 

 

 

—

 

 

 

—

 

 

 

1,088

 

June 30, 2024

 

$

100,194

 

 

$

512,181

 

 

$

367,967

 

 

$

1,382

 

 

$

(146,998

)

 

$

(21,081

)

 

$

813,645

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

7

 

 

First Mid Bancshares, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

 

 

 

Six months ended June 30,

 

(In thousands)

 

2025

 

 

2024

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

45,609

 

 

$

40,248

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Provision for credit losses

 

 

4,219

 

 

 

726

 

Depreciation, amortization and accretion, net

 

 

9,864

 

 

 

10,348

 

Change in cash surrender value of bank owned life insurance

 

 

(2,406

)

 

 

(2,313

)

Gain on death benefit paid from bank owned life insurance

 

 

(487

)

 

 

—

 

Stock-based compensation expense

 

 

1,359

 

 

 

1,185

 

Operating lease payments

 

 

(1,639

)

 

 

(1,672

)

Loss on investment securities, net

 

 

181

 

 

 

156

 

Loss (gain) on sales and write-downs of other real estate owned, net

 

 

88

 

 

 

(86

)

Loss on sale of premises and equipment

 

 

79

 

 

 

—

 

Gain on sale of loans held for sale, net

 

 

(1,676

)

 

 

(1,179

)

Loss (gain) on repayment of subordinated debentures

 

 

289

 

 

 

(100

)

Gain on repayment of FHLB advances

 

 

(85

)

 

 

—

 

Decrease (increase) in accrued interest receivable

 

 

638

 

 

 

(2,244

)

Increase in accrued interest payable

 

 

1,635

 

 

 

62

 

Origination of loans held for sale

 

 

(74,148

)

 

 

(45,536

)

Proceeds from sale of loans held for sale

 

 

75,079

 

 

 

42,699

 

Decrease in other assets

 

 

2,232

 

 

 

18,037

 

Decrease in other liabilities

 

 

(5,200

)

 

 

(7,311

)

Net cash provided by operating activities

 

 

55,631

 

 

 

53,020

 

Cash flows from investing activities:

 

 

 

 

 

 

Proceeds from maturities of certificates of deposit

 

 

1,470

 

 

 

—

 

Purchases of certificates of deposit

 

 

—

 

 

 

(2,275

)

Proceeds from sales of securities available-for-sale

 

 

8,291

 

 

 

15,875

 

Proceeds from maturities of securities available-for-sale

 

 

60,018

 

 

 

44,651

 

Purchases of securities available-for-sale

 

 

(67,737

)

 

 

(8,972

)

Purchase of securities held-to-maturity

 

 

(38

)

 

 

(21

)

Net decrease (increase) in loans

 

 

(97,005

)

 

 

22,419

 

Purchases of premises and equipment

 

 

(3,713

)

 

 

(2,595

)

Proceeds from sale of premises and equipment

 

 

3,718

 

 

 

—

 

Proceeds from sales of other real property owned

 

 

458

 

 

 

182

 

Proceeds from bank owned life insurance death benefit

 

 

1,414

 

 

 

—

 

Net cash provided by (used in) investing activities

 

 

(93,124

)

 

 

69,264

 

Cash flows from financing activities:

 

 

 

 

 

 

Net increase (decrease) in deposits

 

 

133,103

 

 

 

(7,880

)

Decrease in repurchase agreements

 

 

(10,181

)

 

 

(7,766

)

Proceeds from FHLB advances

 

 

125,000

 

 

 

75,000

 

Repayment of FHLB advances

 

 

(122,435

)

 

 

(75,000

)

Proceeds from short-term debt

 

 

4,000

 

 

 

—

 

Repayment of short-term debt

 

 

(4,000

)

 

 

—

 

Repayment of subordinated debenture

 

 

(8,381

)

 

 

(3,865

)

Proceeds from issuance of common stock

 

 

644

 

 

 

586

 

Dividends paid on common stock

 

 

(11,456

)

 

 

(10,943

)

Net cash provided by (used in) financing activities

 

 

106,294

 

 

 

(29,868

)

Increase in cash and cash equivalents

 

 

68,801

 

 

 

92,416

 

Cash and cash equivalents at beginning of period

 

 

121,216

 

 

 

143,064

 

Cash and cash equivalents at end of period

 

$

190,017

 

 

$

235,480

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

8

 

 

First Mid Bancshares, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

 

 

 

Six months ended June 30,

 

(In thousands)

 

2025

 

 

2024

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

$

56,244

 

 

$

64,142

 

Income taxes, net of refunds

 

 

8,133

 

 

 

(657

)

Supplemental disclosures of noncash investing and financing activities

 

 

 

 

 

 

Loans transferred to other real estate

 

$

28

 

 

$

456

 

Initial recognition of right-of-use assets

 

 

713

 

 

 

2,109

 

Initial recognition of lease liabilities

 

 

713

 

 

 

2,109

 

 

 

 

9

 

 

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1 -- Basis of Accounting and Consolidation

The unaudited condensed consolidated financial statements include the accounts of First Mid Bancshares, Inc. (“Company”) and its wholly owned subsidiaries: First Mid Bank & Trust, N.A. (“First Mid Bank”), First Mid Wealth Management Company, First Mid Insurance Group, Inc. (“First Mid Insurance”), and First Mid Captive, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. The financial information reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the results of the interim periods ended June 30, 2025 and 2024, and all such adjustments are of a normal recurring nature. Certain amounts in the prior year’s consolidated financial statements may have been reclassified to conform to the June 30, 2025 presentation and there was no impact on net income or stockholders’ equity. The results of the interim period ended June 30, 2025 are not necessarily indicative of the results expected for the year ending December 31, 2025. The 2024 year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all the information required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and related footnote disclosures although the Company believes that the disclosures made are adequate to make the information not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2024 Annual Report on Form 10-K.

Mid Rivers Insurance Group, Inc.

During the quarter ended September 30, 2024, Mid Rivers Insurance Group, Inc. was acquired by the Company for a purchase price of $10.1 million and immediately merged into First Mid Insurance Group.

Website

The Company maintains a website at www.firstmid.com. All periodic and current reports of the Company and amendments to these reports filed with the Securities and Exchange Commission (“SEC”) can be accessed, free of charge, through this website as soon as reasonably practicable after these materials are filed with the SEC.

General Litigation

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.

Segment Reporting

The Company operates as a single segment entity for financial reporting purposes and has adopted ASU 2023-07 during the year ended December 31, 2024. The Chief Financial and Risk Officer, Jordan D. Read (CFO), serves as the Company’s chief operating decision maker (CODM). The CODM allocates resources and assesses performance of the Company based on the consolidated performance, excluding all significant intercompany balances and transactions, of the Company and its wholly owned subsidiaries and does not significantly utilize disaggregated segment financial information for decision making and resource allocation. Management has reviewed the requirements of ASU 2023-07 and has determined that no additional segment disclosures are required. Specifically,

•
the Company does not use the tracked performance on the disaggregated segment level for decision-making or resource allocation purposes,
•
no significant segment-specific expenses or performance metrics are used internally for decision-making or resource allocation purposes, and
•
the level of financial consolidation presented in these financial statements aligns with the CODM’s internal reporting and decision-making process.

Based on this assessment the Company’s financial statement disclosures fully comply with ASC 2023-07, and no additional qualitative segment disclosures are necessary.

10

 

 

Stock Plans

At the Annual Meeting of Stockholders held April 26, 2017, the stockholders approved the First Mid-Illinois Bancshares, Inc. 2017 Stock Incentive Plan (“SI Plan”). The SI Plan was implemented to succeed the Company’s 2007 Stock Incentive Plan, which had a ten-year term. The SI Plan is intended to provide a means whereby directors, employees, consultants and advisors of the Company and its subsidiaries may sustain a sense of proprietorship and personal involvement in the continued development and financial success of the Company and its subsidiaries, thereby advancing the interests of the Company and its stockholders. Accordingly, directors and selected employees, consultants and advisors may be provided the opportunity to acquire shares of common stock of the Company on the terms and conditions established in the SI Plan.

Following the stockholders’ approval at the 2025 annual meeting of the Company, a maximum of 1,000,000 shares of common stock may be issued under the SI Plan. There have been no stock options awarded under any Company plan since 2008. The Company has awarded 79,635 and 53,766 shares of restricted stock during the six months ended June 30, 2025 and 2024, respectively, and 53,130 and 39,150 restricted stock units during the six months ended June 30, 2025 and 2024, respectively.

Employee Stock Purchase Plan

At the Annual Meeting of Stockholders held April 25, 2018, the stockholders approved the First Mid-Illinois Bancshares, Inc. Employee Stock Purchase Plan (“ESPP”). The ESPP is intended to promote the interests of the Company by providing eligible employees with the opportunity to purchase shares of common stock of the Company at a 15% discount through payroll deductions. The ESPP is also intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code.

A maximum of 600,000 shares of common stock may be issued under the ESPP. During the six months ended June 30, 2025 and 2024, 13,970 shares and 15,935 shares, respectively, were issued pursuant to the ESPP.

Captive Insurance Company

First Mid Captive, Inc. (the “Captive"), a wholly owned subsidiary of the Company which was formed and began operations in December 2019, is a Nevada-based captive insurance company. The Captive insures against certain risks unique to operations of the Company and its subsidiaries for which insurance may not be currently available or economically feasible in today's insurance marketplace. The Captive pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. The Captive is subject to regulations of the State of Nevada and undergoes periodic examinations by the Nevada Division of Insurance. It has elected to be taxed under Section 831(b) of the Internal Revenue Code. Pursuant to Section 831(b), if gross premiums do not exceed $2.85 million, then the Captive is taxable solely on its investment income. The Captive is included in the Company's consolidated financial statements and its federal income return.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss included in stockholders’ equity as of June 30, 2025 and December 31, 2024 are as follows (in thousands):

 

 

Unrealized Losses on Securities

 

June 30, 2025

 

 

 

Net unrealized losses on securities available-for-sale

 

$

(178,862

)

Tax benefit

 

 

48,152

 

Balance at June 30, 2025

 

$

(130,710

)

 

 

 

December 31, 2024

 

 

 

Net unrealized losses on securities available-for-sale

 

$

(194,144

)

Tax benefit

 

 

51,761

 

Balance at December 31, 2024

 

$

(142,383

)

 

11

 

 

 

Amounts reclassified from accumulated other comprehensive loss and the affected line items in the statements of income during the three and six months ended June 30, 2025 and 2024, were as follows (in thousands):

 

 

Amounts Reclassified from
Other Comprehensive Loss

 

 

 

 

 

Three months ended

 

 

Six months ended

 

 

 

 

 

June 30,

 

 

June 30,

 

 

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

Affected Line Item in the Statements of Income

Realized loss on available-for-sale securities, net

 

$

—

 

 

$

(156

)

 

$

(181

)

 

$

(156

)

 

Securities losses, net

Tax effect

 

 

—

 

 

 

43

 

 

 

50

 

 

 

43

 

 

Income taxes

Total reclassifications out of accumulated other comprehensive loss

 

$

—

 

 

$

(113

)

 

$

(131

)

 

$

(113

)

 

Net reclassified amount

 

See “Note 3 – Investment Securities” for more detailed information regarding unrealized losses on available-for-sale securities.

New Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board issued ASU No. 2023-09, Income Tax (Topic 740): Improvements to Income Tax Disclosures. The amendments expand the disclosure requirements of income taxes, primarily related to the income tax rate reconciliation and income taxes paid with the intention to enhance transparency and decision usefulness of income tax disclosures. The amendments are effective for the fiscal years beginning after December 15, 2024 10-K filings. Early adoption was permitted but not applied. The adoption of this accounting pronouncement will have no impact on the Financial Statements aside from additional disclosures presented in the Notes to Consolidated Financial Statements in the year ending December 31, 2025 10-K filing.

Note 2 -- Earnings Per Share

Basic net income per common share available to common stockholders is calculated as net income less preferred stock dividends divided by the weighted average number of common shares outstanding. Diluted net income per common share available to common stockholders is computed using the weighted average number of common shares outstanding, increased by the Company’s stock options, unless anti-dilutive.

The components of basic and diluted net income per common share available to common stockholders for the three and six months ended June 30, 2025 and 2024 were as follows:

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Basic net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

Available to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

23,438,000

 

 

$

19,745,000

 

 

$

45,609,000

 

 

$

40,248,000

 

Weighted average common shares outstanding

 

 

23,867,592

 

 

 

23,896,210

 

 

 

23,863,229

 

 

 

23,884,472

 

Basic earnings per common share

 

$

0.98

 

 

$

0.83

 

 

$

1.91

 

 

$

1.69

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

Available to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to diluted earnings per share

 

$

23,438,000

 

 

$

19,745,000

 

 

$

45,609,000

 

 

$

40,248,000

 

Weighted average common shares outstanding

 

 

23,867,592

 

 

 

23,896,210

 

 

 

23,863,229

 

 

 

23,884,472

 

Dilutive potential common shares: restricted stock awarded

 

 

121,382

 

 

 

101,942

 

 

 

110,954

 

 

 

94,772

 

Diluted weighted average common shares outstanding

 

 

23,988,974

 

 

 

23,998,152

 

 

 

23,974,183

 

 

 

23,979,244

 

Diluted earnings per common share

 

$

0.98

 

 

$

0.82

 

 

$

1.90

 

 

$

1.68

 

 

12

 

 

 

There were no shares excluded when computing diluted earnings per share for the three and six months ended June 30, 2025 and 2024 because they were anti-dilutive.

Note 3 -- Investment Securities

The amortized cost, gross unrealized gains and losses and estimated fair values for available-for-sale and held-to-maturity securities by major security type at June 30, 2025 and December 31, 2024 were as follows (in thousands):

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
(Losses)

 

 

Fair Value

 

June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of U.S. government corporations and agencies

 

$

199,299

 

 

$

—

 

 

$

(15,683

)

 

$

183,616

 

Obligations of states and political subdivisions

 

 

325,609

 

 

 

202

 

 

 

(64,487

)

 

 

261,324

 

Mortgage-backed securities: GSE residential

 

 

685,640

 

 

 

1,277

 

 

 

(98,206

)

 

 

588,711

 

Other securities

 

 

45,155

 

 

 

—

 

 

 

(1,965

)

 

 

43,190

 

Total available-for-sale

 

$

1,255,703

 

 

$

1,479

 

 

$

(180,341

)

 

$

1,076,841

 

Held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

Other investments

 

$

2,287

 

 

$

—

 

 

$

—

 

 

$

2,287

 

Total held-to-maturity

 

$

2,287

 

 

$

—

 

 

$

—

 

 

$

2,287

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of U.S. government corporations and agencies

 

$

212,513

 

 

$

3

 

 

$

(21,158

)

 

$

191,358

 

Obligations of states and political subdivisions

 

 

324,046

 

 

 

135

 

 

 

(56,441

)

 

 

267,740

 

Mortgage-backed securities: GSE residential

 

 

653,760

 

 

 

552

 

 

 

(114,570

)

 

 

539,742

 

Other securities

 

 

67,117

 

 

 

—

 

 

 

(2,665

)

 

 

64,452

 

Total available-for-sale

 

$

1,257,436

 

 

$

690

 

 

$

(194,834

)

 

$

1,063,292

 

Held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

Other investments

 

$

2,279

 

 

$

—

 

 

$

—

 

 

$

2,279

 

Total held-to-maturity

 

$

2,279

 

 

$

—

 

 

$

—

 

 

$

2,279

 

 

The Company also had $4.5 million and $4.4 million of equity securities, at fair value, as of June 30, 2025 and December 31, 2024, respectively. The Company's held-to-maturity securities are annuities for which the risk of loss is minimal. As such, as of June 30, 2025, the Company did not record an allowance for credit losses on its held-to-maturity securities.

Realized gains and losses resulting from sales of securities were as follows during the three and six months ended June 30, 2025 and 2024 (in thousands):

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Gross gains

 

$

—

 

 

$

35

 

 

$

—

 

 

$

(35

)

Gross losses

 

 

—

 

 

 

(191

)

 

 

(181

)

 

 

(191

)

 

13

 

 

The following table indicates the expected maturities of investment securities classified as available-for-sale presented at fair value, and held-to-maturity presented at amortized cost, at June 30, 2025 and the weighted average yield for each range of maturities (dollars in thousands):

 

 

 

One year
or less

 

 

After 1
through
5 years

 

 

After 5
through
10 years

 

 

After
ten years

 

 

Total

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of U.S. government corporations and agencies

 

$

173,774

 

 

$

9,842

 

 

$

—

 

 

$

—

 

 

$

183,616

 

Obligations of state and political subdivisions

 

 

35,798

 

 

 

134,711

 

 

 

88,303

 

 

 

2,512

 

 

 

261,324

 

Mortgage-backed securities: GSE residential

 

 

28

 

 

 

7,914

 

 

 

34,567

 

 

 

546,202

 

 

 

588,711

 

Other securities

 

 

35,238

 

 

 

7,118

 

 

 

834

 

 

 

—

 

 

 

43,190

 

Total available-for-sale investments

 

$

244,838

 

 

$

159,585

 

 

$

123,704

 

 

$

548,714

 

 

$

1,076,841

 

Weighted average yield

 

 

2.02

%

 

 

2.25

%

 

 

2.28

%

 

 

2.13

%

 

 

2.14

%

Full tax-equivalent yield

 

 

2.14

%

 

 

2.77

%

 

 

2.69

%

 

 

2.14

%

 

 

2.31

%

Held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other investments

 

$

—

 

 

$

—

 

 

$

—

 

 

$

2,287

 

 

$

2,287

 

Total held-to-maturity

 

$

—

 

 

$

—

 

 

$

—

 

 

$

2,287

 

 

$

2,287

 

Weighted average yield

 

 

—

%

 

 

—

%

 

 

—

%

 

 

—

%

 

 

—

%

Full tax-equivalent yield

 

 

—

%

 

 

—

%

 

 

—

%

 

 

—

%

 

 

—

%

 

The weighted average yields are calculated based on the amortized cost and effective yields weighted for the scheduled maturity of each security. Tax-equivalent yields have been calculated using a 21% tax rate. With the exception of obligations of the U.S. Treasury and other U.S. government agencies and corporations, there were no investment securities of any single issuer, which the book value exceeded 10% of stockholders' equity at June 30, 2025.

Investment securities carried at approximately $492.6 million and $632.9 million at June 30, 2025 and December 31, 2024, respectively, were pledged to secure public deposits and repurchase agreements and for other purposes as permitted or required by law.

The following table presents the aging of gross unrealized losses and fair value by investment category as of June 30, 2025 and December 31, 2024 (in thousands):

 

 

 

Less than 12 months

 

 

12 months or more

 

 

Total

 

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of U.S. government corporations and agencies

 

$

1,583

 

 

$

(2

)

 

$

182,033

 

 

$

(15,681

)

 

$

183,616

 

 

$

(15,683

)

Obligations of states and political subdivisions

 

 

8,584

 

 

 

(323

)

 

 

242,507

 

 

 

(64,164

)

 

 

251,091

 

 

 

(64,487

)

Mortgage-backed securities: GSE residential

 

 

12,212

 

 

 

(155

)

 

 

495,160

 

 

 

(98,051

)

 

 

507,372

 

 

 

(98,206

)

Other securities

 

 

—

 

 

 

—

 

 

 

40,439

 

 

 

(1,965

)

 

 

40,439

 

 

 

(1,965

)

Total

 

$

22,379

 

 

$

(480

)

 

$

960,139

 

 

$

(179,861

)

 

$

982,518

 

 

$

(180,341

)

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of U.S. government corporations and agencies

 

$

1,340

 

 

$

—

 

 

$

189,327

 

 

$

(21,158

)

 

$

190,667

 

 

$

(21,158

)

Obligations of states and political subdivisions

 

 

20,349

 

 

 

(1,248

)

 

 

241,502

 

 

 

(55,193

)

 

 

261,851

 

 

 

(56,441

)

Mortgage-backed securities: GSE residential

 

 

1,135

 

 

 

(18

)

 

 

511,746

 

 

 

(114,552

)

 

 

512,881

 

 

 

(114,570

)

Other securities

 

 

—

 

 

 

—

 

 

 

58,702

 

 

 

(2,665

)

 

 

58,702

 

 

 

(2,665

)

Total

 

$

22,824

 

 

$

(1,266

)

 

$

1,001,277

 

 

$

(193,568

)

 

$

1,024,101

 

 

$

(194,834

)

 

14

 

 

At June 30, 2025, there were five hundred forty-three available-for-sale securities with a fair value of $960.1 million and unrealized losses of $179.9 million in a continuous unrealized loss position for twelve months or more. At December 31, 2024, there were five hundred fifty-seven available-for-sale securities with a fair value of $1.0 billion and unrealized losses of $193.6 million in a continuous unrealized loss position for twelve months or more.

At June 30, 2025 and December 31, 2024, there were no held-to-maturity securities in a continuous unrealized loss position for twelve months or more.

The Company does not consider available-for-sale securities with unrealized losses at June 30, 2025, to be experiencing credit losses and recognized no resulting allowance for credit losses. The Company does not intend to sell a significant amount of these investments, and it is more likely than not that the Company will not be required to sell these investments before recovery of the amortized cost basis, which may be the maturity dates of the securities. The unrealized losses occurred as a result of changes in interest rates, market spreads and market conditions subsequent to purchase.

Note 4 – Loans and Allowance for Credit Losses

Loans are stated at amortized cost net of an allowance for credit losses. Amortized cost is the unpaid principal net of unearned premiums and discounts, and net deferred origination fees and costs. Deferred loan origination fees are reduced by loan origination costs and are amortized to interest income over the life of the related loan using methods that approximated the effective interest rate method. Interest on substantially all loans is credited to income based on the principal amount outstanding.

A summary of loans at June 30, 2025 and December 31, 2024 follows (in thousands):

 

 

 

June 30, 2025

 

 

December 31, 2024

 

Construction and land development

 

$

298,953

 

 

$

236,258

 

Agricultural real estate

 

 

382,120

 

 

 

391,436

 

1-4 family residential properties

 

 

500,771

 

 

 

502,243

 

Multifamily residential properties

 

 

361,605

 

 

 

334,032

 

Commercial real estate

 

 

2,414,993

 

 

 

2,442,627

 

Loans secured by real estate

 

 

3,958,442

 

 

 

3,906,596

 

Agricultural loans

 

 

305,640

 

 

 

239,138

 

Commercial and industrial loans

 

 

1,328,315

 

 

 

1,340,865

 

Consumer loans

 

 

41,919

 

 

 

54,481

 

All other loans

 

 

164,008

 

 

 

169,232

 

Total gross loans

 

 

5,798,324

 

 

 

5,710,312

 

Less: loans held for sale

 

 

7,359

 

 

 

6,614

 

 

 

5,790,965

 

 

 

5,703,698

 

Less:

 

 

 

 

 

 

Net deferred loan fees, premiums and discounts

 

 

31,325

 

 

 

37,850

 

Allowance for credit losses

 

 

71,160

 

 

 

70,182

 

Net loans

 

$

5,688,480

 

 

$

5,595,666

 

 

Loans expected to be sold are classified as held for sale in the consolidated financial statements and are recorded at fair value, taking into consideration future commitments to sell the loans. These loans are primarily for 1-4 family residential properties.

Accrued interest on loans, which is excluded from the amortized cost of the balances above, totaled $33.0 million and $33.7 million at June 30, 2025 and December 31, 2024, respectively.

Most of the Company’s business activities are with customers located near the Company's branch locations in Illinois, Missouri, Texas, and Wisconsin. At June 30, 2025, the Company’s loan portfolio included $687.8 million of loans to borrowers whose businesses are directly related to agriculture. Of this amount, $584.5 million was concentrated in corn and other grain farming. Total loans to borrowers whose businesses are directly related to agriculture increased $57.2 million from $630.6 million at December 31, 2024 due to an increase in the Company's direct merchant financing portfolio through the utilization of additional vendors. Loans concentrated in corn and other grain farming increased $76.9 million from $507.6 million at December 31, 2024. The Company's underwriting practices include collateralization of loans. Any extended period of low commodity prices, drought conditions, significantly reduced yields on crops and/or reduced levels of government assistance to the agricultural industry could result in an increase in the level of problem agriculture loans and potentially result in loan losses within the agricultural portfolio.

15

 

 

In addition, the Company has $221.5 million of loans to motels and hotels. The performance of these loans is dependent on borrower specific circumstances as well as the general level of business and personal travel within the region. While the Company adheres to sound underwriting standards, a prolonged period of reduced business or personal travel could result in an increase in nonperforming loans to this business segment and potentially in loan losses. The Company also has $1.0 billion of loans to lessors of non-residential buildings, and $616.2 million of loans to lessors of residential buildings and dwellings.

The structure of the Company’s loan approval process is based on progressively larger lending authorities granted to individual loan officers, loan committees, and ultimately the board of directors. Outstanding balances to one borrower or affiliated borrowers are limited by federal regulation and all borrowers are below regulatory thresholds. The Company can occasionally have outstanding balances to one borrower up to but not exceeding the regulatory threshold should underwriting guidelines warrant. Most of the Company’s loans are to businesses located in the geographic market areas served by the Company’s branch bank system. Additionally, a significant portion of the collateral securing the loans in the portfolio is located within the Company’s primary geographic footprint. In general, the Company adheres to loan underwriting standards consistent with industry guidelines for all loan segments.

The Company’s lending can be summarized into the following primary areas:

Commercial Real Estate Loans. Commercial real estate loans are generally comprised of loans to small business entities to purchase or expand structures in which the business operations are housed, loans to owners of real estate who lease space to non-related commercial entities, loans for construction and land development, loans to hotel and motel operators, and loans to owners of multi-family residential structures, such as apartment buildings. Commercial real estate loans are underwritten based on historical and projected cash flows of the borrower and secondarily on the underlying real estate pledged as collateral on the debt. For the various types of commercial real estate loans, minimum criteria have been established within the Company’s loan policy regarding debt service coverage while maximum limits on loan-to-value and amortization periods have been defined. Maximum loan-to-value ratios range from 65% to 85% depending upon the type of real estate collateral, while the desired minimum debt coverage ratio is 1.20x to 1.35x. Amortization periods for commercial real estate loans are generally limited to twenty to thirty years, depending on the collateral type and loan-to-value. The Company’s commercial real estate portfolio is below the thresholds that would designate a concentration in commercial real estate lending, as established by the federal banking regulators.

The following table represents the gross commercial real estate loans by property type as of June 30, 2025 (in thousands):

 

 

 

June 30, 2025

 

 

December 31, 2024

 

Commercial real estate

 

 

 

 

 

 

Owner occupied

 

$

763,222

 

 

$

782,231

 

Non-owner occupied

 

 

 

 

 

 

Shopping centers and malls

 

 

231,879

 

 

 

244,000

 

Industrial and warehouse

 

 

227,174

 

 

 

218,175

 

Hotels and motels

 

 

206,317

 

 

 

206,425

 

Skilled nursing facility

 

 

160,103

 

 

 

172,834

 

Office

 

 

154,472

 

 

 

145,006

 

Assisted living facility

 

 

124,781

 

 

 

119,416

 

Retail

 

 

112,169

 

 

 

110,850

 

RV parks and campgrounds

 

 

101,807

 

 

 

84,346

 

Medical office

 

 

79,898

 

 

 

88,532

 

Other property types

 

 

253,171

 

 

 

270,812

 

Total commercial real estate

 

$

2,414,993

 

 

$

2,442,627

 

Commercial and Industrial Loans. Commercial and industrial loans are primarily comprised of working capital loans used to purchase inventory and fund accounts receivable that are secured by business assets other than real estate. These loans are generally written for one year or less. Also, equipment financing is provided to businesses with these loans generally limited to 80% of the value of the collateral and amortization periods limited to seven years. Commercial loans are often accompanied by a personal guaranty of the principal owners of a business. Like commercial real estate loans, the underlying cash flow of the business is the primary consideration in the underwriting process. The financial condition of commercial borrowers is monitored at least annually with the type of financial information required determined by the size of the relationship. Measures employed by the Company for businesses with higher risk profiles include the use of government- assisted lending programs through the Small Business Administration and U.S. Department of Agriculture.

Agricultural and Agricultural Real Estate Loans. Agricultural loans are generally comprised of seasonal operating lines to grain farmers to plant and harvest corn and soybeans and term loans to fund the purchase of equipment. Agricultural real estate loans are

16

 

 

primarily comprised of loans for the purchase of farmland. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop. Loan-to-value ratios on loans secured by farmland generally do not exceed 80% and have amortization periods ranging from twenty-five to thirty years depending on the loan-to-value. Federal government-assistance lending programs through the Farm Service Agency are used to mitigate the level of credit risk when deemed appropriate.

Residential Real Estate Loans. Residential real estate loans generally include loans for the purchase or refinance of residential real estate properties consisting of one-to-four units and home equity loans and lines of credit. The Company sells most of its long-term fixed rate residential real estate loans to secondary market investors. The Company also releases the servicing of these loans upon sale. Residential real estate loans are typically underwritten to conform to industry standards including criteria for maximum debt-to-income and loan-to-value ratios as well as minimum credit scores. Loans secured by first liens on residential real estate held in the portfolio typically do not exceed 80% of the value of the collateral and have amortization periods of twenty-five years or less. The Company does not originate subprime mortgage loans.

Consumer Loans. Consumer loans are primarily comprised of loans to individuals for personal and household purposes such as the purchase of an automobile or other living expenses. Minimum underwriting criteria have been established that consider credit score, debt-to-income ratio, employment history, and collateral coverage. Typically, consumer loans are set up on monthly payments with amortization periods based on the type and age of the collateral.

Construction and land development loans. Construction and land development loans are generally comprised of loans of all sizes, across many different industries, and can include properties for commercial businesses or land development or for residential use such as multi-family properties. Commercial and land development loans are underwritten based on historical and projected cash flows of the borrower and secondarily on the underlying real estate pledged as collateral on the debt. Construction and land development loans include unique risks that require enhanced diligence by lending personnel. For these loans, documentation requirements have been established within policy and a specific checklist is followed. Additionally, based on the type of construction loan, the policy is also followed to designate the construction and land development loans as high-volatility commercial real estate if the loan meets the criteria. To ensure consistent construction loan monitoring, loans greater than $2,000,000 must be monitored by the Bank’s construction monitoring staff.

The policy also establishes maximum loan-to-value/amortizations, terms, construction periods, cash investments, pre-sale/lease and other requirements and are specific to the type of property including non-farm, non-residential secured loans as well as multi-family, 1-4 family non-owner occupied, land acquisition/development/vacant lot acquisition, and raw land. Maximum loan-to-value ratios range from 65% to 80% depending upon the type of real estate collateral. Amortization periods for construction and land development loans are generally limited to twenty to thirty years, depending on the collateral type and loan-to-value. The Company’s construction and land development portfolio is below the thresholds that would designate a concentration in construction and land development lending, as established by the federal banking regulators.

Other Loans. Other loans consist primarily of loans to municipalities to support community projects such as infrastructure improvements or equipment purchases. Underwriting guidelines for these loans are consistent with those established for commercial loans with the additional repayment source of the taxing authority of the municipality.

Allowance for Credit Losses

The allowance for credit losses represents the Company’s best estimate of the reserve necessary to adequately account for probable losses expected over the remaining contractual life of the assets. The provision for credit losses is the charge against current earnings that is determined by the Company as the amount needed to maintain an adequate allowance for credit losses. In determining the adequacy of the allowance for credit losses, and therefore the provision to be charged to current earnings, the Company relies predominantly on a disciplined credit review and approval process that extends to the full range of the Company’s credit exposure. The review process is directed by the overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. Factors considered by the Company in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. The Company estimates the appropriate level of allowance for credit losses by evaluating large, individually evaluated loans separately from non-individually evaluated loans.

Individually Evaluated Loans

The Company individually evaluates certain loans for impairment. In general, these loans have been internally identified via the Company’s loan grading system as credits requiring management’s attention due to underlying problems in the borrower’s business

17

 

 

or collateral concerns and the loan or loans identified do not share risk characteristics with other loans. This evaluation considers expected future cash flows, the value of collateral and other factors that may impact the borrower’s ability to make payments when due. For loans greater than $250,000, allowance for credit loss is individually measured each quarter using one of three alternatives: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price, if available; or (3) the fair value of the collateral less costs to sell for collateral dependent loans and loans for which foreclosure is deemed to be probable. A specific allowance is assigned when expected cash flows or collateral are less than the carrying amount of the loan. The carrying value of the loan reflects reductions from prior charge-offs.

Non-Individually Evaluated Loans

Non-individually evaluated loans comprise the vast majority of the Company’s total loan portfolio and include loans in accrual status and those credits not identified as modified loans. A small portion of these loans are considered “criticized” due to the risk rating assigned reflecting elevated credit risk due to characteristics, such as a strained cash flow position, associated with the individual borrowers. Criticized loans are those assigned risk ratings of Special Mention, Substandard, or Doubtful.

 

To determine the allowance, the loan portfolio is segmented based on similar risk characteristics. The allowance for credit losses is estimated using a discounted cash flow (DCF) methodology. The DCF projects future cash flows over the life of the loan portfolio. Probability of default (PD) and loss given default (LGD) are key components in calculating expected losses in this model. The PD is forecasted using a regression model that determines the likelihood of default with a forward-looking forecast of unemployment rates. The LGD is the percentage of defaulted loans that is ultimately charged off. The allowance is calculated as the net present value of the expected cash flows less the amortized cost basis of the loans. Adjustments to expected losses are made using qualitative factors relevant to each loan segment including merger and acquisition activity, economic conditions, changes in policies, procedures and underwriting, and concentrations. In addition, a forecast, using reasonable and supportable future conditions, is prepared that is used to estimate expected changes to existing and historical conditions in the current period.

The Company also considers specific current economic events occurring globally, in the U.S. and in its local markets. Events considered include the status of global trade agreements, scheduled increases in minimum wage and changes to the minimum salary threshold for overtime provisions, current and projected unemployment rates, current and projected grain and oil prices and economies of local markets where customers work and operate.

Within each pool, risk elements are evaluated that have specific impacts to the borrowers within the pool. These, along with the general risks and events, and the specific lending policies and procedures by loan type described above, are analyzed to estimate the qualitative factors used to adjust the historical loss rates.

During the current period, the following assumptions and factors were considered when determining the historical loss rate and any potential adjustments by loan pool.

18

 

 

Construction and Land Development Loans. Historical losses in this segment remain very low. While inflationary pressures have caused some risk in this segment, most projects are associated with financially strong borrowers. The qualitative factors for this segment reduced for the quarter due to the segment's outstanding balances compared to management's updated policy concentration thresholds.

Agricultural Real Estate Loans. Historical losses in the segment remain very low. Farmland values have increased over an extended period of time and remained stable over the last year. There was no change to the qualitative factor for this segment.

Residential Real Estate Non-Owner Occupied Loans. The loan segment has remained stable throughout the last several years. Both adversely classified and past dues have been consistent. The qualitative factors for this segment did not materially change for the period.

Residential Real Estate Owner Occupied Loans. At the end of the period, there were a lower percentage of past due loans. The qualitative factors for this segment did not materially change for the period.

HELOC Loans. These loans are a small segment to overall loan balances. In the period, there were no changes to the qualitative factors for this segment.

Commercial Real Estate Owner Occupied Loans. This segment has remained stable, despite macro segment concerns over commercial real estate. The Company has previously increased qualitative factors for those conditions and there were no changes to the qualitative factors for this segment the quarter.

Commercial Real Estate Non-Owner Occupied Loans. This segment includes the Company's largest balances. Qualitative factors for this segment increased for the quarter due to an increase in past due loans for the segment.

Agricultural Loans. Losses in this segment are very low. Commodity prices have remained depressed for an extended period but yields have experienced increases from previous concerns from the weather. The qualitative factors of this segment were reduced in the quarter due to a reduction in past due loans for the segment.

Commercial and Industrial Loans. The qualitative factors for this segment were increased over time due to the repricing of higher rates. Given time has passed, and the outlook is for stable to declining rates, this issue has subsided. Considering this, the qualitative factor was reduced in the period.

Consumer Loans. This segment is a small portion of the Company's loan portfolio. This segment will likely be impacted in the event of a recession that may occur. There were no changes to the qualitative factors for this segment during the quarter.

The following table presents the activity in the allowance for credit losses based on portfolio segment for the three and six months ended June 30, 2025 (in thousands):

 

 

 

Construction
and Land
Development

 

 

Agricultural
Real Estate

 

 

1-4 Family
Residential
Properties

 

 

Commercial
Real Estate

 

 

Agricultural
Loans

 

 

Commercial
and Industrial

 

 

Consumer
Loans

 

 

Total

 

Three months ended
June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

3,731

 

 

$

1,292

 

 

$

3,544

 

 

$

32,214

 

 

$

1,649

 

 

$

26,028

 

 

$

1,593

 

 

$

70,051

 

Provision (release) for credit loss expense

 

 

335

 

 

 

30

 

 

 

(7

)

 

 

1,111

 

 

 

1,287

 

 

 

(203

)

 

 

14

 

 

 

2,567

 

Loans charged off

 

 

—

 

 

 

—

 

 

 

(55

)

 

 

(70

)

 

 

(1,386

)

 

 

(489

)

 

 

(261

)

 

 

(2,261

)

Recoveries collected

 

 

—

 

 

 

—

 

 

 

134

 

 

 

3

 

 

 

217

 

 

 

282

 

 

 

167

 

 

 

803

 

Ending balance

 

$

4,066

 

 

$

1,322

 

 

$

3,616

 

 

$

33,258

 

 

$

1,767

 

 

$

25,618

 

 

$

1,513

 

 

$

71,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended
June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

3,275

 

 

$

1,361

 

 

$

3,579

 

 

$

32,669

 

 

$

1,957

 

 

$

25,602

 

 

$

1,739

 

 

$

70,182

 

Provision (release) for credit loss expense

 

 

791

 

 

 

(39

)

 

 

(21

)

 

 

986

 

 

 

2,096

 

 

 

356

 

 

 

50

 

 

 

4,219

 

Loans charged off

 

 

—

 

 

 

—

 

 

 

(94

)

 

 

(408

)

 

 

(2,503

)

 

 

(712

)

 

 

(627

)

 

 

(4,344

)

Recoveries collected

 

 

—

 

 

 

—

 

 

 

152

 

 

 

11

 

 

 

217

 

 

 

372

 

 

 

351

 

 

 

1,103

 

Ending balance

 

$

4,066

 

 

$

1,322

 

 

$

3,616

 

 

$

33,258

 

 

$

1,767

 

 

$

25,618

 

 

$

1,513

 

 

$

71,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

The following tables present the activity in the allowance for credit losses based on portfolio segment for the three and six months ended June 30, 2024 and for the year ended December 31, 2024 (in thousands):

 

 

 

Construction and Land Development

 

 

Agricultural Real Estate

 

 

1-4 Family Residential Properties

 

 

Commercial Real Estate

 

 

Agricultural Loans

 

 

Commercial and Industrial

 

 

Consumer Loans

 

 

Total

 

Three months ended
June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

2,701

 

 

$

1,358

 

 

$

3,778

 

 

$

32,537

 

 

$

778

 

 

$

24,631

 

 

$

2,153

 

 

$

67,936

 

Provision for credit loss expense

 

 

(55

)

 

 

14

 

 

 

(264

)

 

 

376

 

 

 

316

 

 

 

624

 

 

 

72

 

 

 

1,083

 

Loans charged off

 

 

—

 

 

 

—

 

 

 

(34

)

 

 

—

 

 

 

(209

)

 

 

(368

)

 

 

(374

)

 

 

(985

)

Recoveries collected

 

 

—

 

 

 

—

 

 

 

100

 

 

 

5

 

 

 

—

 

 

 

44

 

 

 

129

 

 

 

278

 

Ending balance

 

$

2,646

 

 

$

1,372

 

 

$

3,580

 

 

$

32,918

 

 

$

885

 

 

$

24,931

 

 

$

1,980

 

 

$

68,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended
June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

2,918

 

 

$

1,366

 

 

$

4,220

 

 

$

31,758

 

 

$

705

 

 

$

25,450

 

 

$

2,258

 

 

$

68,675

 

Provision (release) for credit loss expense

 

 

(272

)

 

 

6

 

 

 

(688

)

 

 

994

 

 

 

441

 

 

 

15

 

 

 

230

 

 

 

726

 

Loans charged off

 

 

—

 

 

 

—

 

 

 

(101

)

 

 

—

 

 

 

(261

)

 

 

(642

)

 

 

(800

)

 

 

(1,804

)

Recoveries collected

 

 

—

 

 

 

—

 

 

 

149

 

 

 

166

 

 

 

—

 

 

 

108

 

 

 

292

 

 

 

715

 

Ending balance

 

$

2,646

 

 

$

1,372

 

 

$

3,580

 

 

$

32,918

 

 

$

885

 

 

$

24,931

 

 

$

1,980

 

 

$

68,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve months ended
December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Balance

 

$

2,918

 

 

$

1,366

 

 

$

4,220

 

 

$

31,758

 

 

$

705

 

 

$

25,450

 

 

$

2,258

 

 

$

68,675

 

Provision (release) for credit loss expense

 

 

352

 

 

 

(5

)

 

 

(785

)

 

 

1,178

 

 

 

3,587

 

 

 

510

 

 

 

798

 

 

 

5,635

 

Loans charged off

 

 

—

 

 

 

—

 

 

 

(195

)

 

 

(451

)

 

 

(2,410

)

 

 

(688

)

 

 

(2,004

)

 

 

(5,748

)

Recoveries collected

 

 

5

 

 

 

—

 

 

 

339

 

 

 

184

 

 

 

75

 

 

 

330

 

 

 

687

 

 

 

1,620

 

Ending balance

 

$

3,275

 

 

$

1,361

 

 

$

3,579

 

 

$

32,669

 

 

$

1,957

 

 

$

25,602

 

 

$

1,739

 

 

$

70,182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For individually evaluated loans that are considered solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to time frames established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 180 days past due, charge-off of unsecured open-end loans when the loan is 180 days past due, and charge down to the net realizable value when other secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off.

20

 

 

The following table presents the amortized cost basis of collateral-dependent loans by class of loans that were individually evaluated to determine expected credit losses, and the related allowance for credit losses, as of June 30, 2025 (in thousands):

 

 

 

Collateral

 

 

Allowance

 

 

 

Real Estate

 

 

Business
Assets

 

 

Total

 

 

for Credit
Losses

 

Agricultural real estate

 

$

575

 

 

$

—

 

 

$

575

 

 

$

—

 

1-4 family residential properties

 

 

157

 

 

 

—

 

 

 

157

 

 

 

4

 

Multifamily residential properties

 

 

397

 

 

 

—

 

 

 

397

 

 

 

—

 

Commercial real estate

 

 

4,511

 

 

 

—

 

 

 

4,511

 

 

 

6

 

Loans secured by real estate

 

 

5,640

 

 

 

—

 

 

 

5,640

 

 

 

10

 

Agricultural loans

 

 

—

 

 

 

1,033

 

 

 

1,033

 

 

 

—

 

Commercial and industrial loans

 

 

—

 

 

 

1,183

 

 

 

1,183

 

 

 

291

 

Other loans

 

 

—

 

 

 

2,194

 

 

 

2,194

 

 

 

—

 

Total loans

 

$

5,640

 

 

$

4,410

 

 

$

10,050

 

 

$

301

 

Credit Quality

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, collateral support, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Company uses the following definitions for risk ratings which are commensurate with a loan considered “criticized”:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current credit worthiness and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing factors, conditions and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered pass rated loans.

21

 

 

The following tables present the credit risk profile of the Company’s loan portfolio on amortized cost basis based on risk rating category and year of origination as of June 30, 2025 (in thousands):

 

 

 

Term Loans by Origination Year

 

 

Revolving

 

 

 

 

Risk rating

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Loans

 

 

Total

 

June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction and land development loans

 

Pass

 

$

37,106

 

 

$

105,536

 

 

$

108,091

 

 

$

13,793

 

 

$

14,984

 

 

$

18,923

 

 

$

—

 

 

$

298,433

 

Special mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

366

 

 

 

—

 

 

 

366

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5

 

 

 

—

 

 

 

8

 

 

 

—

 

 

 

13

 

Total

 

$

37,106

 

 

$

105,536

 

 

$

108,091

 

 

$

13,798

 

 

$

14,984

 

 

$

19,297

 

 

$

—

 

 

$

298,812

 

Current period gross write-offs

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Agricultural real estate loans

 

Pass

 

$

23,371

 

 

$

24,379

 

 

$

13,483

 

 

$

134,983

 

 

$

62,151

 

 

$

110,630

 

 

$

—

 

 

$

368,997

 

Special mention

 

 

148

 

 

 

200

 

 

 

1,367

 

 

 

800

 

 

 

979

 

 

 

7,319

 

 

 

—

 

 

 

10,813

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

574

 

 

 

—

 

 

 

1,133

 

 

 

—

 

 

 

1,707

 

Total

 

$

23,519

 

 

$

24,579

 

 

$

14,850

 

 

$

136,357

 

 

$

63,130

 

 

$

119,082

 

 

$

—

 

 

$

381,517

 

Current period gross write-offs

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

1-4 family residential property loans

 

Pass

 

$

34,999

 

 

$

36,049

 

 

$

33,422

 

 

$

67,870

 

 

$

71,720

 

 

$

155,394

 

 

$

83,993

 

 

$

483,447

 

Special mention

 

 

214

 

 

 

174

 

 

 

—

 

 

 

271

 

 

 

312

 

 

 

709

 

 

 

—

 

 

 

1,680

 

Substandard

 

 

113

 

 

 

299

 

 

 

651

 

 

 

954

 

 

 

765

 

 

 

7,056

 

 

 

822

 

 

 

10,660

 

Total

 

$

35,326

 

 

$

36,522

 

 

$

34,073

 

 

$

69,095

 

 

$

72,797

 

 

$

163,159

 

 

$

84,815

 

 

$

495,787

 

Current period gross write-offs

 

$

—

 

 

$

—

 

 

$

9

 

 

$

—

 

 

$

—

 

 

$

85

 

 

$

—

 

 

$

94

 

Commercial real estate loans

 

Pass

 

$

160,943

 

 

$

215,564

 

 

$

198,315

 

 

$

636,078

 

 

$

509,632

 

 

$

980,943

 

 

$

—

 

 

$

2,701,475

 

Special mention

 

 

—

 

 

 

2,973

 

 

 

13,640

 

 

 

12,635

 

 

 

298

 

 

 

9,683

 

 

 

—

 

 

 

39,229

 

Substandard

 

 

—

 

 

 

1,473

 

 

 

48

 

 

 

4,902

 

 

 

2,507

 

 

 

4,610

 

 

 

—

 

 

 

13,540

 

Total

 

$

160,943

 

 

$

220,010

 

 

$

212,003

 

 

$

653,615

 

 

$

512,437

 

 

$

995,236

 

 

$

—

 

 

$

2,754,244

 

Current period gross write-offs

 

$

—

 

 

$

—

 

 

$

—

 

 

$

338

 

 

$

—

 

 

$

70

 

 

$

—

 

 

$

408

 

Agricultural loans

 

Pass

 

$

158,666

 

 

$

86,034

 

 

$

16,268

 

 

$

20,614

 

 

$

13,784

 

 

$

3,655

 

 

$

—

 

 

$

299,021

 

Special mention

 

 

1,113

 

 

 

1,265

 

 

 

2,459

 

 

 

927

 

 

 

122

 

 

 

—

 

 

 

—

 

 

 

5,886

 

Substandard

 

 

410

 

 

 

185

 

 

 

859

 

 

 

13

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,467

 

Total

 

$

160,189

 

 

$

87,484

 

 

$

19,586

 

 

$

21,554

 

 

$

13,906

 

 

$

3,655

 

 

$

—

 

 

$

306,374

 

Current period gross write-offs

 

$

—

 

 

$

280

 

 

$

1,081

 

 

$

836

 

 

$

306

 

 

$

—

 

 

$

—

 

 

$

2,503

 

Commercial and industrial loans

 

Pass

 

$

252,605

 

 

$

256,036

 

 

$

106,096

 

 

$

231,321

 

 

$

172,600

 

 

$

434,968

 

 

$

—

 

 

$

1,453,626

 

Special mention

 

 

10

 

 

 

6,238

 

 

 

9,731

 

 

 

1,571

 

 

 

4,132

 

 

 

2,108

 

 

 

—

 

 

 

23,790

 

Substandard

 

 

—

 

 

 

248

 

 

 

2,288

 

 

 

1,079

 

 

 

246

 

 

 

7,384

 

 

 

—

 

 

 

11,245

 

Total

 

$

252,615

 

 

$

262,522

 

 

$

118,115

 

 

$

233,971

 

 

$

176,978

 

 

$

444,460

 

 

$

—

 

 

$

1,488,661

 

Current period gross write-offs

 

$

—

 

 

$

—

 

 

$

14

 

 

$

53

 

 

$

—

 

 

$

645

 

 

$

—

 

 

$

712

 

Consumer loans

 

Pass

 

$

3,290

 

 

$

3,530

 

 

$

3,750

 

 

$

18,118

 

 

$

8,361

 

 

$

4,105

 

 

$

—

 

 

$

41,154

 

Special mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

51

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

51

 

Substandard

 

 

—

 

 

 

41

 

 

 

21

 

 

 

127

 

 

 

145

 

 

 

65

 

 

 

—

 

 

 

399

 

Total

 

$

3,290

 

 

$

3,571

 

 

$

3,771

 

 

$

18,296

 

 

$

8,506

 

 

$

4,170

 

 

$

—

 

 

$

41,604

 

Current period gross write-offs

 

$

—

 

 

$

8

 

 

$

23

 

 

$

83

 

 

$

42

 

 

$

471

 

 

$

—

 

 

$

627

 

Total loans

 

Pass

 

$

670,980

 

 

$

727,128

 

 

$

479,425

 

 

$

1,122,777

 

 

$

853,232

 

 

$

1,708,618

 

 

$

83,993

 

 

$

5,646,153

 

Special mention

 

 

1,485

 

 

 

10,850

 

 

 

27,197

 

 

 

16,255

 

 

 

5,843

 

 

 

20,185

 

 

 

—

 

 

 

81,815

 

Substandard

 

 

523

 

 

 

2,246

 

 

 

3,867

 

 

 

7,654

 

 

 

3,663

 

 

 

20,256

 

 

 

822

 

 

 

39,031

 

Total

 

$

672,988

 

 

$

740,224

 

 

$

510,489

 

 

$

1,146,686

 

 

$

862,738

 

 

$

1,749,059

 

 

$

84,815

 

 

$

5,766,999

 

Current period gross write-offs

 

$

—

 

 

$

288

 

 

$

1,127

 

 

$

1,310

 

 

$

348

 

 

$

1,271

 

 

$

—

 

 

$

4,344

 

 

22

 

 

The following tables present the credit risk profile of the Company’s loan portfolio based on risk rating category as of December 31, 2024 (in thousands):

 

 

 

Term Loans by Origination Year

 

 

Revolving

 

 

 

 

Risk rating

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

 

Loans

 

 

Total

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction and land development loans

 

Pass

 

$

82,696

 

 

$

101,715

 

 

$

14,390

 

 

$

15,817

 

 

$

4,735

 

 

$

16,342

 

 

$

—

 

 

$

235,695

 

Special mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

382

 

 

 

—

 

 

 

382

 

Substandard

 

 

—

 

 

 

—

 

 

 

6

 

 

 

—

 

 

 

—

 

 

 

10

 

 

 

—

 

 

 

16

 

Total

 

$

82,696

 

 

$

101,715

 

 

$

14,396

 

 

$

15,817

 

 

$

4,735

 

 

$

16,734

 

 

$

—

 

 

$

236,093

 

Current period gross write-offs

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Agricultural real estate loans

 

Pass

 

$

25,824

 

 

$

17,292

 

 

$

159,433

 

 

$

55,083

 

 

$

48,700

 

 

$

73,592

 

 

$

—

 

 

$

379,924

 

Special mention

 

 

—

 

 

 

192

 

 

 

107

 

 

 

986

 

 

 

1,755

 

 

 

5,630

 

 

 

—

 

 

 

8,670

 

Substandard

 

 

—

 

 

 

141

 

 

 

966

 

 

 

—

 

 

 

—

 

 

 

1,059

 

 

 

—

 

 

 

2,166

 

Total

 

$

25,824

 

 

$

17,625

 

 

$

160,506

 

 

$

56,069

 

 

$

50,455

 

 

$

80,281

 

 

$

—

 

 

$

390,760

 

Current period gross write-offs

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

1-4 family residential property loans

 

Pass

 

$

46,350

 

 

$

36,454

 

 

$

74,580

 

 

$

75,325

 

 

$

61,936

 

 

$

110,348

 

 

$

79,714

 

 

$

484,707

 

Special mention

 

 

175

 

 

 

—

 

 

 

204

 

 

 

326

 

 

 

—

 

 

 

577

 

 

 

59

 

 

 

1,341

 

Substandard

 

 

174

 

 

 

672

 

 

 

916

 

 

 

737

 

 

 

557

 

 

 

6,875

 

 

 

618

 

 

 

10,549

 

Total

 

$

46,699

 

 

$

37,126

 

 

$

75,700

 

 

$

76,388

 

 

$

62,493

 

 

$

117,800

 

 

$

80,391

 

 

$

496,597

 

Current period gross write-offs

 

$

—

 

 

$

46

 

 

$

13

 

 

$

33

 

 

$

—

 

 

$

103

 

 

$

—

 

 

$

195

 

Commercial real estate loans

 

Pass

 

$

216,297

 

 

$

213,704

 

 

$

680,665

 

 

$

535,056

 

 

$

289,855

 

 

$

774,516

 

 

$

—

 

 

$

2,710,093

 

Special mention

 

 

659

 

 

 

13,732

 

 

 

4,090

 

 

 

2,053

 

 

 

713

 

 

 

10,462

 

 

 

—

 

 

 

31,709

 

Substandard

 

 

—

 

 

 

49

 

 

 

3,844

 

 

 

467

 

 

 

—

 

 

 

4,067

 

 

 

—

 

 

 

8,427

 

Total

 

$

216,956

 

 

$

227,485

 

 

$

688,599

 

 

$

537,576

 

 

$

290,568

 

 

$

789,045

 

 

$

—

 

 

$

2,750,229

 

Current period gross write-offs

 

$

—

 

 

$

—

 

 

$

151

 

 

$

—

 

 

$

—

 

 

$

300

 

 

$

—

 

 

$

451

 

Agricultural loans

 

Pass

 

$

175,402

 

 

$

24,024

 

 

$

13,147

 

 

$

9,162

 

 

$

1,585

 

 

$

2,306

 

 

$

—

 

 

$

225,626

 

Special mention

 

 

617

 

 

 

2,208

 

 

 

976

 

 

 

100

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,901

 

Substandard

 

 

843

 

 

 

7,092

 

 

 

2,209

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

10,144

 

Total

 

$

176,862

 

 

$

33,324

 

 

$

16,332

 

 

$

9,262

 

 

$

1,585

 

 

$

2,306

 

 

$

—

 

 

$

239,671

 

Current period gross write-offs

 

$

—

 

 

$

2,213

 

 

$

100

 

 

$

52

 

 

$

—

 

 

$

45

 

 

$

—

 

 

$

2,410

 

Commercial and industrial loans

 

Pass

 

$

307,785

 

 

$

228,411

 

 

$

278,845

 

 

$

183,042

 

 

$

131,005

 

 

$

360,610

 

 

$

—

 

 

$

1,489,698

 

Special mention

 

 

54

 

 

 

1,149

 

 

 

1,277

 

 

 

748

 

 

 

1,020

 

 

 

7,583

 

 

 

—

 

 

 

11,831

 

Substandard

 

 

65

 

 

 

1,410

 

 

 

789

 

 

 

446

 

 

 

98

 

 

 

815

 

 

 

—

 

 

 

3,623

 

Total

 

$

307,904

 

 

$

230,970

 

 

$

280,911

 

 

$

184,236

 

 

$

132,123

 

 

$

369,008

 

 

$

—

 

 

$

1,505,152

 

Current period gross write-offs

 

$

10

 

 

$

47

 

 

$

207

 

 

$

378

 

 

$

10

 

 

$

36

 

 

$

—

 

 

$

688

 

Consumer loans

 

Pass

 

$

5,098

 

 

$

5,138

 

 

$

24,430

 

 

$

11,810

 

 

$

4,494

 

 

$

2,385

 

 

$

—

 

 

$

53,355

 

Special mention

 

 

—

 

 

 

—

 

 

 

14

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

14

 

Substandard

 

 

12

 

 

 

21

 

 

 

259

 

 

 

216

 

 

 

54

 

 

 

29

 

 

 

—

 

 

 

591

 

Total

 

$

5,110

 

 

$

5,159

 

 

$

24,703

 

 

$

12,026

 

 

$

4,548

 

 

$

2,414

 

 

$

—

 

 

$

53,960

 

Current period gross write-offs

 

$

98

 

 

$

63

 

 

$

154

 

 

$

139

 

 

$

59

 

 

$

1,491

 

 

$

—

 

 

$

2,004

 

Total loans

 

Pass

 

$

859,452

 

 

$

626,738

 

 

$

1,245,490

 

 

$

885,295

 

 

$

542,310

 

 

$

1,340,099

 

 

$

79,714

 

 

$

5,579,098

 

Special mention

 

 

1,505

 

 

 

17,281

 

 

 

6,668

 

 

 

4,213

 

 

 

3,488

 

 

 

24,634

 

 

 

59

 

 

 

57,848

 

Substandard

 

 

1,094

 

 

 

9,385

 

 

 

8,989

 

 

 

1,866

 

 

 

709

 

 

 

12,855

 

 

 

618

 

 

 

35,516

 

Total

 

$

862,051

 

 

$

653,404

 

 

$

1,261,147

 

 

$

891,374

 

 

$

546,507

 

 

$

1,377,588

 

 

$

80,391

 

 

$

5,672,462

 

Current period gross write-offs

 

$

108

 

 

$

2,369

 

 

$

625

 

 

$

602

 

 

$

69

 

 

$

1,975

 

 

$

—

 

 

$

5,748

 

 

23

 

 

The following table presents the Company’s loan portfolio aging analysis at June 30, 2025 and December 31, 2024 (in thousands):

 

 

 

30-59
Days Past
Due

 

 

60-89
Days Past
Due

 

 

90 Days or
More
Past Due

 

 

Total Past
Due

 

 

Current

 

 

Total Loans
Receivable

 

 

Total Loans
> 90 Days and
Accruing

 

June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction and land development

 

$

89

 

 

$

—

 

 

$

—

 

 

$

89

 

 

$

298,723

 

 

$

298,812

 

 

$

—

 

Agricultural real estate

 

 

—

 

 

 

574

 

 

 

841

 

 

 

1,415

 

 

 

380,102

 

 

 

381,517

 

 

 

—

 

1-4 family residential properties

 

 

362

 

 

 

1,511

 

 

 

2,149

 

 

 

4,022

 

 

 

491,765

 

 

 

495,787

 

 

 

—

 

Multifamily residential properties

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

360,604

 

 

 

360,604

 

 

 

—

 

Commercial real estate

 

 

14,185

 

 

 

3,796

 

 

 

2,755

 

 

 

20,736

 

 

 

2,372,904

 

 

 

2,393,640

 

 

 

—

 

Loans secured by real estate

 

 

14,636

 

 

 

5,881

 

 

 

5,745

 

 

 

26,262

 

 

 

3,904,098

 

 

 

3,930,360

 

 

 

—

 

Agricultural loans

 

 

—

 

 

 

262

 

 

 

2,557

 

 

 

2,819

 

 

 

303,555

 

 

 

306,374

 

 

 

—

 

Commercial and industrial loans

 

 

369

 

 

 

177

 

 

 

847

 

 

 

1,393

 

 

 

1,323,260

 

 

 

1,324,653

 

 

 

—

 

Consumer loans

 

 

150

 

 

 

32

 

 

 

31

 

 

 

213

 

 

 

41,391

 

 

 

41,604

 

 

 

—

 

All other loans

 

 

—

 

 

 

2,194

 

 

 

—

 

 

 

2,194

 

 

 

161,814

 

 

 

164,008

 

 

 

—

 

Total loans

 

$

15,155

 

 

$

8,546

 

 

$

9,180

 

 

$

32,881

 

 

$

5,734,118

 

 

$

5,766,999

 

 

$

—

 

Percent of total loans

 

 

 

 

 

 

 

 

 

 

 

0.57

%

 

 

 

 

 

 

 

 

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction and land development

 

$

6

 

 

$

—

 

 

$

—

 

 

$

6

 

 

$

236,087

 

 

$

236,093

 

 

$

—

 

Agricultural real estate

 

 

—

 

 

 

—

 

 

 

533

 

 

 

533

 

 

 

390,227

 

 

 

390,760

 

 

 

—

 

1-4 family residential properties

 

 

2,209

 

 

 

931

 

 

 

2,089

 

 

 

5,229

 

 

 

491,368

 

 

 

496,597

 

 

 

—

 

Multifamily residential properties

 

 

—

 

 

 

—

 

 

 

472

 

 

 

472

 

 

 

332,172

 

 

 

332,644

 

 

 

—

 

Commercial real estate

 

 

595

 

 

 

553

 

 

 

344

 

 

 

1,492

 

 

 

2,416,093

 

 

 

2,417,585

 

 

 

—

 

Loans secured by real estate

 

 

2,810

 

 

 

1,484

 

 

 

3,438

 

 

 

7,732

 

 

 

3,865,947

 

 

 

3,873,679

 

 

 

—

 

Agricultural loans

 

 

550

 

 

 

—

 

 

 

1,289

 

 

 

1,839

 

 

 

237,832

 

 

 

239,671

 

 

 

—

 

Commercial and industrial loans

 

 

337

 

 

 

89

 

 

 

463

 

 

 

889

 

 

 

1,335,031

 

 

 

1,335,920

 

 

 

—

 

Consumer loans

 

 

442

 

 

 

48

 

 

 

111

 

 

 

601

 

 

 

53,359

 

 

 

53,960

 

 

 

—

 

All other loans

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

169,232

 

 

 

169,232

 

 

 

—

 

Total loans

 

$

4,139

 

 

$

1,621

 

 

$

5,301

 

 

$

11,061

 

 

$

5,661,401

 

 

$

5,672,462

 

 

$

—

 

Percent of total loans

 

 

 

 

 

 

 

 

 

 

 

0.19

%

 

 

 

 

 

 

 

 

 

 

Individually Evaluated Loans

Within all loan portfolio segments, loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Impaired loans, excluding certain modified, are placed on nonaccrual status. Impaired loans include nonaccrual loans and loans modified in restructuring where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being modified remain on nonaccrual status until, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. If the restructured loan is on accrual status prior to being modified, the loan is reviewed to determine if the modified loan should remain on accrual status.

The Company’s policy is to discontinue the accrual of interest income on all loans for which principal or interest is ninety days past due. The accrual of interest is discontinued earlier when, in the opinion of management, there is reasonable doubt as to the timely collection of interest or principal. Once interest accruals are discontinued, accrued but uncollected interest is charged against current year income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Interest on loans determined to be modified is recognized on an accrual basis in accordance with the restructured terms if the loan is in compliance with the modified terms. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status.

The amount of interest income recognized by the Company within the periods stated above was due to loans modified in

24

 

 

restructuring that remain on accrual status.

Non-Accrual Loans

The following table presents the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated for which no allowance was recorded as of June 30, 2025 and December 31, 2024 (in thousands). There were no loans past due over eighty-nine days that were still accruing.

 

 

June 30, 2025

 

 

December 31, 2024

 

 

 

Nonaccrual
with no
Allowance for

 

 

Total

 

 

Nonaccrual
with no
Allowance for

 

 

Total

 

 

 

Credit Loss

 

 

Nonaccrual

 

 

Credit Loss

 

 

Nonaccrual

 

Construction and land development

 

$

5

 

 

$

5

 

 

$

6

 

 

$

6

 

Agricultural real estate

 

 

1,856

 

 

 

1,856

 

 

 

2,213

 

 

 

2,213

 

1-4 family residential properties

 

 

4,708

 

 

 

5,586

 

 

 

4,196

 

 

 

4,937

 

Commercial real estate

 

 

6,841

 

 

 

6,959

 

 

 

4,901

 

 

 

7,716

 

Loans secured by real estate

 

 

13,410

 

 

 

14,406

 

 

 

11,316

 

 

 

14,872

 

Agricultural loans

 

 

1,617

 

 

 

1,617

 

 

 

1,371

 

 

 

11,521

 

Commercial and industrial loans

 

 

1,263

 

 

 

1,986

 

 

 

1,320

 

 

 

2,071

 

Consumer loans

 

 

151

 

 

 

151

 

 

 

311

 

 

 

311

 

All other loans

 

 

2,194

 

 

 

2,194

 

 

 

—

 

 

 

—

 

Total loans

 

$

18,635

 

 

$

20,354

 

 

$

14,318

 

 

$

28,775

 

Interest income that would have been recorded under the original terms of such nonaccrual loans totaled $662,000 and $487,000 for the six months ended June 30, 2025 and 2024, respectively.

Loan Modifications to Borrowers Experiencing Financial Difficulty

The following table shows the amortized cost of loans at June 30, 2025 and 2024 that were both experiencing financial difficulty and modified segregated by portfolio segment and type of modification. The percentage of the amortized cost of loans that were modified to borrowers in financial distress as compared to outstanding loans is also presented below.

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Payment

 

 

Term

 

 

Interest

 

 

Class of

 

 

 

Delay

 

 

Extension

 

 

Rate

 

 

Financing

 

 

 

Investment

 

 

Modifications

 

 

Reduction

 

 

Receivable

 

June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Agricultural real estate

 

$

296

 

 

$

—

 

 

$

—

 

 

 

0.01

%

1-4 family residential properties

 

 

40

 

 

 

736

 

 

 

—

 

 

 

0.01

%

Commercial real estate

 

 

792

 

 

 

130

 

 

 

505

 

 

 

0.02

%

Loans secured by real estate

 

 

1,128

 

 

 

866

 

 

 

505

 

 

 

0.04

%

Commercial and industrial loans

 

 

831

 

 

 

81

 

 

 

—

 

 

 

0.02

%

Consumer loans

 

 

—

 

 

 

6

 

 

 

—

 

 

 

—

%

Total

 

$

1,959

 

 

$

953

 

 

$

505

 

 

 

0.06

%

June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Agricultural real estate

 

$

317

 

 

$

—

 

 

$

—

 

 

 

0.01

%

1-4 family residential properties

 

 

49

 

 

 

778

 

 

 

—

 

 

 

0.01

%

Commercial real estate

 

 

694

 

 

 

216

 

 

 

502

 

 

 

0.03

%

Loans secured by real estate

 

 

1,060

 

 

 

994

 

 

 

502

 

 

 

0.05

%

Commercial and industrial loans

 

 

168

 

 

 

126

 

 

 

—

 

 

 

0.01

%

Consumer loans

 

 

5

 

 

 

12

 

 

 

—

 

 

 

—

%

Total

 

$

1,233

 

 

$

1,132

 

 

$

502

 

 

 

0.05

%

 

25

 

 

The Company closely monitors the performance of loans that have been modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table shows the performance of such loans that have been modified in the last twelve months ended June 30, 2025 and 2024.

 

 

30-59
Days Past
Due

 

 

60-89
Days Past
Due

 

 

90 Days or
More
Past Due

 

 

Total Past
Due

 

June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Total loans

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

1-4 family residential properties

 

$

25

 

 

$

—

 

 

$

—

 

 

$

25

 

Commercial real estate

 

 

116

 

 

 

—

 

 

 

—

 

 

 

116

 

Loans secured by real estate

 

 

141

 

 

 

—

 

 

 

—

 

 

 

141

 

Commercial and industrial loans

 

 

131

 

 

 

—

 

 

 

—

 

 

 

131

 

Consumer loans

 

 

—

 

 

 

12

 

 

 

—

 

 

 

12

 

Total loans

 

$

272

 

 

$

12

 

 

$

—

 

 

$

284

 

The following table shows the financial effect of loan modifications during the current quarter to borrowers experiencing financial difficulty for the three months ended June 30, 2025 and 2024.

 

 

Weighted Average

 

 

Weighted Average

 

 

 

Interest Rate

 

 

Term Extension

 

 

 

Reduction

 

 

(in months)

 

June 30, 2025

 

 

 

 

 

 

Total

 

 

—

%

 

 

—

 

June 30, 2024

 

 

 

 

 

 

Commercial and industrial loans

 

 

—

%

 

 

7.00

 

A loan is considered to be in payment default once it is 90 days past due under the modified terms. There were no loans modified during the prior twelve months that experienced payment defaults for the three months ended June 30, 2025 and 2024, respectively.

 

Note 5 -- Goodwill and Intangible Assets

The Company has goodwill from business combinations, intangible assets from branch acquisitions, identifiable intangible assets assigned to core deposit relationships and customer lists of First Mid Wealth Management Company and First Mid Insurance. The following table presents gross carrying value and accumulated amortization by major intangible asset class as of June 30, 2025 and December 31, 2024 (in thousands):

 

 

 

June 30, 2025

 

 

December 31, 2024

 

 

 

Gross Carrying
Value

 

 

Accumulated
Amortization

 

 

Gross Carrying
Value

 

 

Accumulated
Amortization

 

Goodwill not subject to amortization

 

$

207,151

 

 

$

3,760

 

 

$

207,151

 

 

$

3,760

 

Intangibles from branch acquisition

 

 

3,015

 

 

 

3,015

 

 

 

3,015

 

 

 

3,015

 

Core deposit intangibles

 

 

79,945

 

 

 

49,185

 

 

 

79,945

 

 

 

44,736

 

Other intangibles

 

 

30,857

 

 

 

14,542

 

 

 

30,857

 

 

 

13,180

 

Total

 

$

320,968

 

 

$

70,502

 

 

$

320,968

 

 

$

64,691

 

Core deposit intangibles are being amortized over a period of 10 years and other intangibles, primarily customer lists, are being amortized over periods ranging from 3 to 12 years.

26

 

 

During the quarter ended September 30, 2024, goodwill of $6.9 million was recorded for the acquisition of the stock of Mid Rivers Insurance Group, Inc. (MRIG) in connection with its insurance business. First Mid Insurance was assigned all this goodwill. The following provides a reconciliation of the purchase price paid for Mid Rivers Insurance Group, Inc. and the amount of goodwill recorded (in thousands):

Unallocated purchase price

 

 

 

$

10,059

 

Less purchase accounting adjustments:

 

 

 

 

 

Insurance Company intangible

$

4,305

 

 

 

 

Other liabilities

 

(1,176

)

 

 

 

 

 

 

 

3,129

 

 

 

 

 

$

6,930

 

The Company has mortgage servicing rights acquired in previous acquisitions. Mortgage servicing rights are accounted for under the amortization method. The following table summarizes the activity pertaining to mortgage servicing rights included in intangible assets as of June 30, 2025, June 30, 2024 and December 31, 2024 (in thousands):

 

 

June 30, 2025

 

 

June 30, 2024

 

 

December 31, 2024

 

Beginning balance

 

$

5,629

 

 

$

6,859

 

 

$

6,859

 

Adjustment to valuation reserve

 

 

1

 

 

 

(13

)

 

 

7

 

Mortgage servicing rights amortized

 

 

(541

)

 

 

(652

)

 

 

(1,226

)

Interest only strip

 

 

(8

)

 

 

(4

)

 

 

(11

)

Ending balance

 

$

5,081

 

 

$

6,190

 

 

$

5,629

 

Fair value of portfolio

 

$

6,310

 

 

$

7,246

 

 

$

6,716

 

Total amortization expense for three and six months ended June 30, 2025 and 2024 was as follows (in thousands):

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Core deposit intangibles

 

$

2,186

 

 

$

2,475

 

 

$

4,449

 

 

$

5,029

 

Other intangibles

 

 

681

 

 

 

577

 

 

 

1,362

 

 

 

1,156

 

Mortgage servicing rights

 

 

254

 

 

 

288

 

 

 

541

 

 

 

652

 

Total

 

$

3,121

 

 

$

3,340

 

 

$

6,352

 

 

$

6,837

 

Aggregate amortization expense for the current year and estimated amortization expense for each of the five succeeding years is shown in the table below (in thousands):

 

Aggregate amortization expense:

 

 

 

For period 01/01/25-06/30/25

 

$

6,352

 

Estimated amortization expense:

 

 

 

For period 07/01/25-12/31/25

 

 

5,957

 

For year ended 12/31/26

 

 

10,594

 

For year ended 12/31/27

 

 

9,330

 

For year ended 12/31/28

 

 

8,116

 

For year ended 12/31/29

 

 

6,764

 

In accordance with GAAP, the Company performed its annual goodwill impairment test as of September 30, 2024 and determined that, as of that date, goodwill was not impaired. The Company believes no test was necessary during the six months ended June 30, 2025 due to the lack of triggering events.

Note 6 -- Repurchase Agreements and Other Borrowings

Securities sold under agreements to repurchase were $193.9 million at June 30, 2025, a decrease of $10.2 million from $204.1 million at December 31, 2024. All the transactions have overnight maturities with a weighted average rate of 2.41%.

The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral pledged by the Company would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., declare bankruptcy), the Company could cancel the repurchase agreement (i.e., cease payment of principal and interest), and attempt collection on the amount of collateral value in excess of the repurchase agreement fair value. The collateral is held by a third-party financial institution in the

27

 

 

counterparty's custodial account. The counterparty has the right to sell or repledge the investment securities. For government entity repurchase agreements, the collateral is held by the Company in a segregated custodial account under a tri-party agreement. The Company is required by the counterparty to maintain adequate collateral levels. In the event the collateral fair value falls below stipulated levels, the Company will pledge additional securities. The Company closely monitors collateral levels to ensure adequate levels are maintained, while mitigating the potential of over-collateralization in the event of counterparty default.

Collateral pledged by class for repurchase agreements are as follows (in thousands):

 

 

 

June 30, 2025

 

 

December 31, 2024

 

US Treasury securities and obligations of U.S. government corporations and agencies

 

$

64,198

 

 

$

70,664

 

Mortgage-backed securities: GSE: residential

 

 

129,743

 

 

 

133,458

 

Total

 

$

193,941

 

 

$

204,122

 

Gross FHLB borrowings, were $245.0 million and $242.4 million at June 30, 2025 and December 31, 2024, respectively. At June 30, 2025 the advances were as follows:

 

Advance

 

 

Term (in years)

 

Interest Rate

 

Maturity Date

 

25,000,000

 

 

overnight

 

4.45%

 

July 1, 2025

 

25,000,000

 

 

1.0

 

4.33%

 

November 17, 2025

 

25,000,000

 

 

3.0

 

4.40%

 

June 15, 2026

 

25,000,000

 

 

3.0

 

4.37%

 

May 10, 2027

 

25,000,000

 

 

3.0

 

4.32%

 

May 17, 2027

 

25,000,000

 

 

5.0

 

3.95%

 

June 29, 2028

 

25,000,000

 

 

5.0

 

3.93%

 

June 27, 2029

 

5,000,000

 

 

10.0

 

1.15%

 

October 3, 2029

 

5,000,000

 

 

10.0

 

1.12%

 

October 3, 2029

 

10,000,000

 

 

10.0

 

1.39%

 

December 31, 2029

 

25,000,000

 

 

5.0

 

3.46%

 

February 7, 2030

 

25,000,000

 

 

10.0

 

2.71%

 

March 5, 2035

 

Note 7 -- Fair Value of Assets and Liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

Level 1 Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or comparable assets or liabilities which use observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in active markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Following is a description of the inputs and valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.

Available-for-Sale Securities. The fair value of available-for-sale securities is determined by various valuation methodologies. Where quoted market prices are available in an active market, securities are classified within Level 1. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independent sources of market parameters, including but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

28

 

 

Fair value determinations for Level 3 measurements of securities are the responsibility of the Treasury function of the Company. The Company contracts with a pricing specialist to generate fair value estimates on a monthly basis. The Treasury function of the Company challenges the reasonableness of the assumptions used and reviews the methodology to ensure the estimated fair value complies with accounting standards generally accepted in the United States, analyzes the changes in fair value and compares these changes to internally developed expectations and monitors these changes for appropriateness.

Loans Held for Sale. The fair value of loans held for sale is based on independent asset pricing services which use observable market data as of the measurement date and are therefore classified in Level 2 of the valuation hierarchy.

Derivatives. The fair value of derivatives is based on models using observable market data as of the measurement date and are therefore classified in Level 2 of the valuation hierarchy.

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of June 30, 2025 and December 31, 2024 (in thousands):

 

 

Fair Value Measurements Using

 

 

 

 

 

 

Quoted Prices in
Active Markets
for Identical
Assets

 

 

Significant
Other
Observable
Inputs

 

 

Significant
Unobservable
Inputs

 

 

 

Fair Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of U.S. government corporations and agencies

 

$

183,615

 

 

$

—

 

 

$

183,615

 

 

$

—

 

Obligations of states and political subdivisions

 

 

261,325

 

 

 

—

 

 

 

261,325

 

 

 

—

 

Mortgage-backed securities

 

 

588,711

 

 

 

—

 

 

 

588,711

 

 

 

—

 

Other securities

 

 

43,190

 

 

 

—

 

 

 

33,402

 

 

 

9,788

 

Total available-for-sale securities

 

 

1,076,841

 

 

 

—

 

 

 

1,067,053

 

 

 

9,788

 

Equity securities

 

 

4,543

 

 

 

4,543

 

 

 

—

 

 

 

—

 

Loans held for sale

 

 

7,359

 

 

 

—

 

 

 

7,359

 

 

 

—

 

Derivative assets: interest rate swaps

 

 

2,065

 

 

 

—

 

 

 

2,065

 

 

 

—

 

Total assets

 

$

1,090,808

 

 

$

4,543

 

 

$

1,076,477

 

 

$

9,788

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities: interest rate swaps

 

$

1,488

 

 

$

—

 

 

$

1,488

 

 

$

—

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of U.S. government corporations and agencies

 

$

191,358

 

 

$

—

 

 

$

191,358

 

 

$

—

 

Obligations of states and political subdivisions

 

 

267,740

 

 

 

—

 

 

 

267,740

 

 

 

—

 

Mortgage-backed securities

 

 

539,742

 

 

 

—

 

 

 

539,742

 

 

 

—

 

Other securities

 

 

64,452

 

 

 

—

 

 

 

58,693

 

 

 

5,759

 

Total available-for-sale securities

 

 

1,063,292

 

 

 

—

 

 

 

1,057,533

 

 

 

5,759

 

Equity securities

 

 

4,439

 

 

 

4,439

 

 

 

—

 

 

 

—

 

Loans held for sale

 

 

6,614

 

 

 

—

 

 

 

6,614

 

 

 

—

 

Derivative assets: interest rate swaps

 

 

2,949

 

 

 

—

 

 

 

2,949

 

 

 

—

 

Total assets

 

$

1,077,294

 

 

$

4,439

 

 

$

1,067,096

 

 

$

5,759

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities: interest swaps

 

$

2,006

 

 

$

—

 

 

$

2,006

 

 

$

—

 

 

29

 

 

The change in fair value of assets measured on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2025 and 2024 is summarized as follows (in thousands):

 

 

Three months ended
June 30, 2025

 

 

Six months ended
June 30, 2025

 

Beginning balance

 

$

5,759

 

 

$

5,759

 

Purchases

 

 

7,029

 

 

 

7,029

 

Maturities

 

 

(3,000

)

 

 

(3,000

)

Ending balance

 

$

9,788

 

 

$

9,788

 

 

 

 

 

 

 

 

 

 

Three months ended
June 30, 2024

 

 

Six months ended
June 30, 2024

 

Beginning balance

 

$

5,965

 

 

$

6,163

 

Transfers into Level 3

 

 

1

 

 

 

2

 

Maturities

 

 

—

 

 

 

(199

)

Ending balance

 

$

5,966

 

 

$

5,966

 

Following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.

Collateral Dependent Loans. Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of impairment and estimating fair value include using the fair value of the collateral for collateral dependent loans.

If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value, which includes selling costs. Individually evaluated loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method.

Management establishes a specific allowance for individually evaluated loans that have an estimated fair value that is below the carrying value. The total carrying amount of loans for which a change in specific allowance has occurred as of June 30, 2025 was $4.6 million and a fair value of $4.2 million resulting in specific loss exposures of $366,000.

When there is little prospect of collecting principal or interest, loans, or portions of loans, may be charged-off to the allowance for credit losses. Losses are recognized in the period an obligation becomes uncollectible. The recognition of a loss does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan even though partial recovery may be affected in the future.

Foreclosed Assets Held For Sale. Other real estate owned acquired through loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. The adjustment at the time of foreclosure is recorded through the allowance for credit losses. Due to the subjective nature of establishing the fair value when the asset is acquired, the actual fair value of the other real estate owned, or foreclosed asset could differ from the original estimate. If it is determined that fair value declines subsequent to foreclosure, a valuation allowance is recorded through noninterest expense. Operating costs associated with the assets after acquisition are also recorded as noninterest expense. Gains and losses on the disposition of other real estate owned and foreclosed assets are netted and posted to other noninterest expense. The total carrying amount of other real estate owned as of June 30, 2025 was $1.7 million. Other real estate owned included in the total carrying amount and measured at fair value on a nonrecurring basis during the period amounted to $578,000.

30

 

 

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2025 and December 31, 2024 (in thousands):

 

 

Fair Value Measurements Using

 

 

 

 

 

 

Quoted Prices in
Active Markets
for Identical
Assets

 

 

Significant
Other
Observable
Inputs

 

 

Significant
Unobservable
Inputs

 

 

 

Fair Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Collateral dependent loans

 

$

4,206

 

 

$

—

 

 

$

—

 

 

$

4,206

 

Foreclosed assets held for sale

 

 

578

 

 

 

—

 

 

 

—

 

 

 

578

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Collateral dependent loans

 

$

16,604

 

 

$

—

 

 

$

—

 

 

$

16,604

 

Foreclosed assets held for sale

 

 

48

 

 

 

—

 

 

 

—

 

 

 

48

 

Sensitivity of Significant Unobservable Inputs

The following table presents quantitative information about unobservable inputs used in Level 3 fair value measurements other than goodwill at June 30, 2025 and December 31, 2024.

 

June 30, 2025

 

Fair Value

 

Valuation
Technique

 

Unobservable Inputs

 

Range

 

Weighted Average

Collateral dependent loans

 

$4,206

 

Third party
valuations

 

Discount to reflect realizable value less estimated selling costs

 

0%-40%

 

20%

Foreclosed assets held for sale

 

578

 

Third party
valuations

 

Discount to reflect realizable value less estimated selling costs

 

0%-40%

 

35%

 

December 31, 2024

 

Fair Value

 

 

Valuation
Technique

 

Unobservable Inputs

 

Range

 

Weighted Average

Collateral dependent loans

 

$

16,604

 

 

Third party
valuations

 

Discount to reflect realizable value

 

0%-40%

 

20%

Foreclosed assets held for sale

 

 

48

 

 

Third party
valuations

 

Discount to reflect realizable value less estimated selling costs

 

0%-40%

 

35%

 

31

 

 

The following tables present estimated fair values of the Company’s financial instruments at June 30, 2025 and December 31, 2024 in accordance with ASC 825 (in thousands):

 

 

 

Carrying
Amount

 

 

Fair
Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

189,941

 

 

$

189,941

 

 

$

189,941

 

 

$

—

 

 

$

—

 

Federal funds sold

 

 

76

 

 

 

76

 

 

 

76

 

 

 

—

 

 

 

—

 

Certificates of deposit

 

 

2,030

 

 

 

2,030

 

 

 

—

 

 

 

2,030

 

 

 

—

 

Available-for-sale securities

 

 

1,076,841

 

 

 

1,076,841

 

 

 

—

 

 

 

1,067,053

 

 

 

9,788

 

Held-to-maturity securities

 

 

2,287

 

 

 

2,287

 

 

 

2,287

 

 

 

—

 

 

 

—

 

Equity securities

 

 

4,543

 

 

 

4,543

 

 

 

4,543

 

 

 

—

 

 

 

—

 

Loans held for sale

 

 

7,359

 

 

 

7,359

 

 

 

—

 

 

 

7,359

 

 

 

—

 

Loans net of allowance for credit losses

 

 

5,688,480

 

 

 

5,442,527

 

 

 

—

 

 

 

—

 

 

 

5,442,527

 

Interest receivable

 

 

38,001

 

 

 

38,001

 

 

 

—

 

 

 

38,001

 

 

 

—

 

Federal Reserve Bank stock

 

 

19,855

 

 

 

19,855

 

 

 

—

 

 

 

19,855

 

 

 

—

 

Federal Home Loan Bank stock

 

 

10,224

 

 

 

10,224

 

 

 

—

 

 

 

10,224

 

 

 

—

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

6,190,199

 

 

$

6,110,980

 

 

$

—

 

 

$

5,108,255

 

 

$

1,002,725

 

Securities sold under agreements to repurchase

 

 

193,941

 

 

 

193,941

 

 

 

—

 

 

 

193,941

 

 

 

—

 

Interest payable

 

 

6,724

 

 

 

6,724

 

 

 

—

 

 

 

6,724

 

 

 

—

 

Federal Home Loan Bank borrowings

 

 

245,000

 

 

 

244,485

 

 

 

—

 

 

 

244,485

 

 

 

—

 

Subordinated debt, net

 

 

79,590

 

 

 

78,223

 

 

 

—

 

 

 

78,223

 

 

 

—

 

Junior subordinated debentures, net

 

 

24,384

 

 

 

20,463

 

 

 

—

 

 

 

20,463

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

121,141

 

 

$

121,141

 

 

$

121,141

 

 

$

—

 

 

$

—

 

Federal funds sold

 

 

75

 

 

 

75

 

 

 

75

 

 

 

—

 

 

 

—

 

Certificates of deposit

 

 

3,500

 

 

 

3,500

 

 

 

—

 

 

 

3,500

 

 

 

—

 

Available-for-sale securities

 

 

1,063,292

 

 

 

1,063,292

 

 

 

—

 

 

 

1,057,533

 

 

 

5,759

 

Held-to-maturity securities

 

 

2,279

 

 

 

2,279

 

 

 

2,279

 

 

 

—

 

 

 

—

 

Equity securities

 

 

4,439

 

 

 

4,439

 

 

 

4,439

 

 

 

—

 

 

 

—

 

Loans held for sale

 

 

6,614

 

 

 

6,614

 

 

 

—

 

 

 

6,614

 

 

 

—

 

Loans net of allowance for credit losses

 

 

5,595,666

 

 

 

5,314,756

 

 

 

—

 

 

 

—

 

 

 

5,314,756

 

Interest receivable

 

 

38,639

 

 

 

38,639

 

 

 

—

 

 

 

38,639

 

 

 

—

 

Federal Reserve Bank stock

 

 

19,855

 

 

 

19,855

 

 

 

—

 

 

 

19,855

 

 

 

—

 

Federal Home Loan Bank stock

 

 

9,501

 

 

 

9,501

 

 

 

—

 

 

 

9,501

 

 

 

—

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

6,057,096

 

 

$

5,977,113

 

 

$

—

 

 

$

5,069,853

 

 

$

907,260

 

Securities sold under agreements to repurchase

 

 

204,122

 

 

 

204,122

 

 

 

—

 

 

 

204,122

 

 

 

—

 

Interest payable

 

 

5,280

 

 

 

5,280

 

 

 

—

 

 

 

5,280

 

 

 

—

 

Federal Home Loan Bank borrowings

 

 

242,520

 

 

 

240,125

 

 

 

—

 

 

 

240,125

 

 

 

—

 

Subordinated debentures

 

 

87,472

 

 

 

86,062

 

 

 

—

 

 

 

86,062

 

 

 

—

 

Junior subordinated debentures

 

 

24,280

 

 

 

21,411

 

 

 

—

 

 

 

21,411

 

 

 

—

 

 

Note 8 -- Leases

As of June 30, 2025, substantially all the Company's leases are operating leases for real estate property for bank branches, ATM locations, and office space.

For leases in effect at January 1, 2019 and for leases commencing thereafter, the Company recognizes a lease liability and a right-of-use asset, based on the present value of lease payments over the lease term. The discount rate used in determining present value was the Company's incremental borrowing rate which is the FHLB fixed advance rate based on the remaining lease term as of January 1, 2019, or the commencement date for leases subsequently entered into. The Company has elected to not include short-term leases (i.e. leases with terms of twelve months or less) on the consolidated balance sheets.

32

 

 

The following table contains supplemental balance sheet information related to leases (dollars in thousands):

 

 

 

June 30, 2025

 

 

June 30, 2024

 

 

December 31, 2024

 

Operating lease right-of-use assets

 

$

13,152

 

 

$

14,981

 

 

$

13,861

 

Operating lease liabilities

 

 

13,590

 

 

 

15,286

 

 

 

14,190

 

Weighted-average remaining lease term (in years)

 

 

4.6

 

 

 

5.0

 

 

4.7

 

Weighted-average discount rate

 

 

3.48

%

 

 

3.20

%

 

 

3.22

%

Certain of the Company's leases contain options to renew the lease; however, not all renewal options are included in the calculation of lease liabilities as they are not reasonably certain to be exercised. The Company's leases do not contain residual value guarantees or material variable lease payments. The Company does not have any other material restrictions or covenants imposed by leases that would impact the Company's ability to pay dividends or cause the Company to incur additional financial obligations.

Maturities of lease liabilities are as follows (in thousands):

Year ending December 31,

 

 

 

2025

 

$

1,576

 

2026

 

 

3,103

 

2027

 

 

2,875

 

2028

 

 

2,219

 

2029

 

 

1,764

 

Thereafter

 

 

3,697

 

Total lease payments

 

 

15,234

 

Less imputed interest

 

 

(1,644

)

Total lease liability

 

$

13,590

 

The components of lease expense for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Operating lease cost

 

$

841

 

 

$

822

 

 

$

1,667

 

 

$

1,668

 

Short-term lease cost

 

 

30

 

 

 

31

 

 

 

61

 

 

 

66

 

Variable lease cost

 

 

255

 

 

 

218

 

 

 

598

 

 

 

356

 

Total lease cost

 

 

1,126

 

 

 

1,071

 

 

 

2,326

 

 

 

2,090

 

Income from subleases

 

 

(91

)

 

 

(103

)

 

 

(171

)

 

 

(207

)

Net lease cost

 

$

1,035

 

 

$

968

 

 

$

2,155

 

 

$

1,883

 

As the Company elected not to separate lease and non-lease components, the variable lease cost primarily represents variable payment such as common area maintenance and copier expense. The Company does not have any material sub-lease agreements. Cash paid for amounts included in the measurement of lease liabilities was (in thousands):

 

 

June 30, 2025

 

 

June 30, 2024

 

Operating cash flows from operating leases

 

$

1,639

 

 

$

1,672

 

Note 9 – Derivatives

The Company utilizes an interest rate swap, designated as a fair value hedge, to mitigate the risk of changing interest rates on the fair value of a fixed rate commercial real estate loan. For derivative instruments that are designed and qualify as a fair value hedge, the gain or loss on the derivative instrument, as well as the offsetting loss or gain in the hedged asset attributable to the hedged risk, is recognized in current earnings.

33

 

 

Derivatives Designated as Hedging Instruments

The following table provides the outstanding notional balances and fair values of outstanding derivatives designated as hedging instruments as of June 30, 2025 and December 31, 2024 (in thousands):

 

 

Balance
Sheet
Location

 

Weighted
Average
Remaining
Maturity
(Years)

 

Notional
Amount

 

 

Estimated
Value

 

June 30, 2025

 

 

 

 

 

 

 

 

 

 

Fair value hedges:

 

 

 

 

 

 

 

 

 

 

Interest rate swap agreements

 

Other liabilities

 

3.8

 

$

12,226

 

 

$

(1,488

)

 

 

 

 

 

 

 

 

 

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

Fair value hedges:

 

 

 

 

 

 

 

 

 

 

Interest rate swap agreements

 

Other liabilities

 

4.3

 

$

12,486

 

 

$

(2,006

)

The effects of the fair value hedges on the Company's income statement during the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

 

 

 

 

 

Three months ended

 

 

Six months ended

 

 

 

 

 

June 30,

 

 

June 30,

 

Derivative

 

Location of Gain (Loss) on Derivatives

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Interest rate swap agreements

 

Interest income on loans

 

$

(103

)

 

$

20

 

 

$

(366

)

 

$

174

 

 

 

 

 

 

Three months ended

 

 

Six months ended

 

 

 

 

 

June 30,

 

 

June 30,

 

Derivative

 

Location of Gain (Loss) on Hedged Items

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Interest rate swap agreements

 

Interest income on loans

 

$

103

 

 

$

(20

)

 

$

366

 

 

$

(174

)

As of June 30, 2025, the following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustment for fair value hedges (in thousands):

 

Line Item in the Balance Sheet in Which
the Hedge Item is Included

 

Carrying Amount of the
Hedged Asset

 

 

Cumulative Amount of Fair Value Hedging
Adjustment Included in the Carrying
Amount of the Hedged Asset

 

Loans

 

$

11,649

 

 

$

(577

)

Derivatives Not Designated as Hedging Instruments

The following amounts represent the notional amounts and gross fair value of derivative contracts not designated as hedging instruments outstanding during the six months ended June 30, 2025 (dollars in thousands):

 

June 30, 2025

 

Balance
Sheet
Location

 

Weighted
Average
Remaining
Maturity
(Years)

 

Notional
Amount

 

 

Estimated
Value

 

Interest rate swap agreements

 

Other assets

 

3.5

 

$

28,108

 

 

$

2,065

 

Interest rate swap agreements

 

Other liabilities

 

3.5

 

 

28,108

 

 

 

(2,065

)

 

Note 10 – Regulatory Capital

The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Bank holding companies follow minimum regulatory requirements established by the Board of Governors of the Federal Reserve System (“Federal Reserve System”), First Mid Bank follows similar minimum regulatory requirements established for banks by the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation, as applicable. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary action by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Quantitative measures established by regulatory capital standards to

34

 

 

ensure capital adequacy require the Company and its subsidiary bank to maintain minimum capital amounts and ratios (set forth in the table below). Management believes that, as of June 30, 2025 and December 31, 2024, the Company and First Mid Bank, as applicable, met all capital adequacy requirements.

To be categorized as well-capitalized, total risk-based capital, Tier 1 risk-based capital, common equity Tier 1 risk-based capital and Tier 1 leverage ratios must be maintained as set forth in the following table (dollars in thousands):

 

 

 

Actual

 

 

Required Minimum For
Capital Adequacy
Purposes

 

To Be Well-Capitalized
Under Prompt Corrective
Action Provisions

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

Amount

 

 

Ratio

June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

968,670

 

 

 

15.76

%

 

$

645,528

 

 

> 10.50%

 

N/A

 

 

N/A

First Mid Bank

 

 

894,817

 

 

 

14.61

%

 

 

643,182

 

 

> 10.50%

 

$

612,554

 

 

> 10.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 capital (to risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

818,499

 

 

 

13.31

%

 

 

522,570

 

 

> 8.50%

 

N/A

 

 

N/A

First Mid Bank

 

 

824,236

 

 

 

13.46

%

 

 

520,671

 

 

> 8.50%

 

 

490,043

 

 

> 8.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital (to risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

794,115

 

 

 

12.92

%

 

 

430,352

 

 

> 7.00%

 

N/A

 

 

N/A

First Mid Bank

 

 

824,236

 

 

 

13.46

%

 

 

428,788

 

 

> 7.00%

 

 

398,160

 

 

> 6.50%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 capital (to average assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

818,499

 

 

 

10.73

%

 

 

305,223

 

 

> 4.00%

 

N/A

 

 

N/A

First Mid Bank

 

 

824,236

 

 

 

10.85

%

 

 

303,954

 

 

> 4.00%

 

 

379,943

 

 

> 5.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

935,189

 

 

 

15.37

%

 

$

639,015

 

 

>10.50%

 

N/A

 

 

N/A

First Mid Bank

 

 

880,621

 

 

 

14.51

%

 

 

637,089

 

 

>10.50%

 

$

606,752

 

 

> 10.00%

Tier 1 capital (to risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

780,096

 

 

 

12.82

%

 

 

517,298

 

 

> 8.50%

 

N/A

 

 

N/A

First Mid Bank

 

 

813,000

 

 

 

13.40

%

 

 

515,739

 

 

> 8.50%

 

 

485,401

 

 

> 8.00%

Common equity tier 1 capital (to risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

755,816

 

 

 

12.42

%

 

 

426,010

 

 

> 7.00%

 

N/A

 

 

N/A

First Mid Bank

 

 

813,000

 

 

 

13.40

%

 

 

424,726

 

 

> 7.00%

 

 

394,389

 

 

> 6.50%

Tier 1 capital (to average assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

780,096

 

 

 

10.33

%

 

 

301,976

 

 

> 4.00%

 

N/A

 

 

N/A

First Mid Bank

 

 

813,000

 

 

 

10.82

%

 

 

300,596

 

 

> 4.00%

 

 

375,745

 

 

> 5.00%

The Company's risk-weighted assets, capital, and capital ratios for June 30, 2025 are computed in accordance with Basel III capital rules which were effective January 1, 2015. As of June 30, 2025, the Company and First Mid Bank had capital ratios above the required minimums for regulatory capital adequacy, and First Mid Bank had capital ratios that qualified it for treatment as well-capitalized under the regulatory framework for prompt corrective action with respect to banks.

 

35

 

 

Note 11 – Commitments

First Mid Bank enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include lines of credit, letters of credit and other commitments to extend credit. Each of these instruments involves, to varying degrees, elements of credit, interest rate and liquidity risk in excess of the amounts recognized in the consolidated balance sheets. The Company uses the same credit policies and requires similar collateral in approving lines of credit and commitments and issuing letters of credit as it does in making loans. The exposure to credit losses on financial instruments is represented by the contractual amount of these instruments. However, the Company does not anticipate any losses from these instruments. The off-balance sheet financial instruments whose contract amounts represent credit risk at June 30, 2025 and December 31, 2024 were as follows (in thousands):

 

 

 

June 30, 2025

 

 

December 31, 2024

 

Unused commitments and lines of credit:

 

 

 

 

 

 

Commercial real estate

 

$

368,278

 

 

$

323,979

 

Commercial operating

 

 

645,588

 

 

 

649,082

 

Home equity

 

 

107,394

 

 

 

105,867

 

Other

 

 

308,883

 

 

 

332,113

 

Total

 

$

1,430,143

 

 

$

1,411,041

 

Standby letters of credit

 

$

19,091

 

 

$

16,909

 

Commitments to originate credit represent approved commercial, residential real estate and home equity loans that are not fully funded as of June 30, 2025. Lines of credit are agreements by which the Company agrees to provide a borrowing accommodation up to a stated amount as long as there is no violation of any condition established in the loan agreement. Both commitments to originate credit and lines of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the lines and some commitments are expected to expire without being drawn upon, the total amounts do not necessarily represent future cash requirements.

Standby letters of credit are conditional commitments issued by the Company to guarantee the financial performance of customers to third parties. Standby letters of credit are primarily issued to facilitate trade or support borrowing arrangements and generally expire in one year or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending credit facilities to customers. The maximum amount of credit that would be extended under letters of credit is equal to the total off-balance sheet contract amount of such instrument. The Company's deferred revenue under standby letters of credit was nominal.

Note 12 – Subsequent Events

 

On June 24, 2025, the Board of Directors approved the termination of its previously authorized stock repurchase plan and approved a new stock repurchase program which allows for the repurchase of up to 1,200,000 shares of the Company's issued and outstanding shares of common stock, which represents approximately 5% of the Company's issued and outstanding shares of common stock as of June 24, 2025. The Repurchase Program will be effective on July 1, 2025 and will remain effective until December 31, 2026.

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to provide a better understanding of the consolidated financial condition and results of operations of the Company and its subsidiaries as of, and for the three and six months ended June 30, 2025 and 2024. This discussion and analysis should be read in conjunction with the consolidated financial statements, related notes and selected financial data appearing elsewhere in this report.

Forward-Looking Statements

This document may contain certain forward-looking statements about First Mid, such as discussions of First Mid’s pricing and fee trends, credit quality and outlook, liquidity, new business results, expansion plans, anticipated expenses and planned schedules. First Mid intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of First Mid, are identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. Actual results could differ materially from the results indicated by these statements because the realization of those results is subject to many risks and uncertainties, including, among other things; changes in interest rates; general economic conditions and those in the market areas of First Mid; legislative and/or regulatory changes; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of First Mid’s loan or investment portfolios and the valuation of those investment portfolios; demand for loan

36

 

 

products; deposit flows; competition, demand for financial services in the market areas of First Mid; accounting principles, policies and guidelines. Additional information concerning First Mid, including additional factors and risks that could materially affect First Mid’s financial results, are included in First Mid’s filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the SEC, we do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

Overview

This overview of management’s discussion and analysis highlights selected information in this document and may not contain all the information that is important to you. For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources, and critical accounting estimates which have an impact on the Company’s financial condition and results of operations you should carefully read this entire document.

Net income was $45.6 million and $40.2 million for the six months ended June 30, 2025 and 2024, respectively. Diluted net income per common share was $1.90 and $1.68 for the six months ended June 30, 2025 and 2024, respectively.

The following table shows the Company’s annualized performance ratios for six months ended June 30, 2025 and 2024, compared to the performance ratios for the year ended December 31, 2024:

 

 

Six months ended

 

 

Year ended

 

 

June 30, 2025

 

 

June 30, 2024

 

 

December 31, 2024

 

Return on average assets

 

1.20

%

 

 

1.06

%

 

 

1.04

%

Return on average common equity

 

10.52

%

 

 

10.14

%

 

 

9.67

%

Average equity to average assets

 

11.44

%

 

 

10.44

%

 

 

10.76

%

Total assets were $7.7 billion at June 30, 2025, compared to $7.5 billion as of December 31, 2024. From December 31, 2024 to June 30, 2025, cash and cash equivalents increased $68.8 million, net loan balances increased $92.8 million and investment securities increased $13.7 million. Net loan balances were $5.7 billion at June 30, 2025 compared to $5.6 billion at December 31, 2024.

Net interest margin, on a tax equivalent basis, defined as net interest income divided by average interest-earning assets, was 3.66% for the six months ended June 30, 2025, up from 3.30% for the same period in 2024. This increase was primarily due to an increase in earning asset yields and by decreased rates on interest-bearing deposits and borrowings. Net interest income before the provision for credit losses was $123.3 million compared to net interest income of $112.2 million for the same period in 2024. The increase in net interest income was primarily due to the increased net interest margin as mentioned above.

Total non-interest income of $48.5 million increased $1.6 million or 3.3% from $46.9 million for the same period last year. The increase in non-interest income resulted primarily from an increase in insurance commissions, wealth management revenues, and a gain recognized on a death benefit received from bank owned life insurance partially offset by a decrease in miscellaneous income.

Total non-interest expense of $109.2 million increased $4.4 million or 4.2% from $104.8 million for the same period last year. The increase was primarily due to the routine annual increases in salaries and employee benefits, an increase in expense accrued for incentive compensation based on overperformance compared to the 2025 budget, and nonrecurring technology project expenses which were partially offset by the decrease in integration expenses compared to the first two quarters of 2024 related to Blackhawk Bank.

Following is a summary of the factors that contributed to the changes in net income (in thousands):

 

 

 

Change in
Net Income

 

 

 

2025 versus 2024

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30, 2025

 

 

June 30, 2025

 

Net interest income

 

$

7,098

 

 

$

11,037

 

Provision for credit losses

 

 

(1,484

)

 

 

(3,493

)

Other income, including securities transactions

 

 

1,171

 

 

 

1,557

 

Other expenses

 

 

(3,371

)

 

 

(4,481

)

Income taxes

 

 

279

 

 

 

741

 

Increase in net income

 

$

3,693

 

 

$

5,361

 

Credit quality is an area of importance to the Company. Total nonperforming loans were $21.9 million at June 30, 2025, compared to

37

 

 

$19.1 million at June 30, 2024 and $29.8 million at December 31, 2024. See the discussion under the heading “Loan Quality and Allowance for Credit Losses” for a detailed explanation of these balances. Repossessed asset balances totaled $1.7 million at June 30, 2025 compared to $1.5 million at June 30, 2024 and $2.2 million at December 31, 2024.

The Company’s provision for credit losses for the six months ended June 30, 2025 and 2024 was $4.2 million and $726,000, respectively. Total loans past due 30 days or more were 0.57% of loans at June 30, 2025 compared to 0.42% at June 30, 2024, and 0.19% of loans at December 31, 2024. Loans secured by both commercial and residential real estate comprised approximately 68.2% of the loan portfolio as of June 30, 2025 and 68.4% as of December 31, 2024.

The Company’s capital position remains strong, and the Company has consistently maintained regulatory capital ratios above the “well-capitalized” standards. The Company’s Tier 1 capital to risk weighted assets ratio calculated under the regulatory risk-based capital requirements at June 30, 2025 and 2024 and December 31, 2024 was 13.31%, 12.65% and 12.82%, respectively. The Company’s total capital to risk weighted assets ratio calculated under the regulatory risk-based capital requirements at June 30, 2025 and 2024, and December 31, 2024 was 15.76%, 15.46% and 15.37%, respectively.

The Company’s liquidity position remains sufficient to fund operations and meet the requirements of borrowers, depositors, and creditors. The Company maintains various sources of liquidity to fund its cash needs. See the discussion under the heading “Liquidity” for a full listing of sources and anticipated significant contractual obligations.

The Company enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include lines of credit, letters of credit and other commitments to extend credit. The total outstanding commitments at June 30, 2025 and 2024, were $1.4 billion and $1.3 billion, respectively.

Federal Deposit Insurance Corporation Insurance Coverage. As FDIC-insured institutions, First Mid Bank is required to pay deposit insurance premium assessments to the FDIC. Several requirements with respect to the FDIC insurance system have affected results, including insurance assessment rates.

The Company expensed $1.7 million and $1.8 million for the assessment during the first six months of 2025 and 2024, respectively.

Critical Accounting Policies and Use of Significant Estimates

The Company has established various accounting policies that govern the application of U.S. generally accepted accounting principles in the preparation of the Company’s consolidated financial statements. The significant accounting policies and use of significant estimates of the Company are described in the footnotes to the consolidated financial statements included in the Company’s 2024 Annual Report on Form 10-K.

Results of Consolidated Operations

Net Interest Income

The largest source of revenue for the Company is net interest income. Net interest income represents the difference between total interest income earned on earning assets and total interest expense paid on interest-bearing liabilities. The amount of interest income is dependent upon many factors, including the volume and mix of earning assets, the general level of interest rates and the dynamics of changes in interest rates. The cost of funds necessary to support earning assets varies with the volume and mix of interest-bearing liabilities and the rates paid to attract and retain such funds.

Net interest income is the excess of interest received from earning assets over interest paid on interest-bearing liabilities. For analytical purposes, net interest income is presented on a full tax equivalent ("TE") basis in the table that follows. The federal statutory rate in effect of 21% for 2025 and 2024 was used. The TE analysis portrays the income tax benefits associated with the tax-exempt assets. The year-to-date net yield on interest-earning assets excluding the TE adjustments of $1.5 million and $1.2 million for 2025 and 2024, respectively were 3.62% and 3.25% at June 30, 2025 and 2024, respectively.

38

 

 

The Company’s average balances, fully tax equivalent interest income and interest expense, and rates earned or paid for major balance sheet categories are set forth for the three and six months ended June 30, 2025 and 2024 in the following table (dollars in thousands):

 

 

 

Three months ended June 30, 2025

 

 

Three months ended June 30, 2024

 

 

 

Average

 

 

 

 

 

Average

 

 

Average

 

 

 

 

 

Average

 

 

 

Balance

 

 

Interest

 

 

Rate

 

 

Balance

 

 

Interest

 

 

Rate

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits with other financial institutions

 

$

146,907

 

 

$

1,694

 

 

 

4.63

%

 

$

127,962

 

 

$

1,667

 

 

 

5.24

%

Federal funds sold

 

 

75

 

 

 

—

 

 

 

0.00

%

 

 

23

 

 

 

8

 

 

 

139.89

%

Certificates of deposit

 

 

2,515

 

 

 

28

 

 

 

4.47

%

 

 

3,745

 

 

 

43

 

 

 

4.62

%

Investment securities (1)

 

 

1,082,974

 

 

 

7,381

 

 

 

2.73

%

 

 

1,154,991

 

 

 

7,933

 

 

 

2.75

%

Loans net of unearned income (TE) (2)

 

 

5,743,312

 

 

 

85,070

 

 

 

5.94

%

 

 

5,529,211

 

 

 

79,628

 

 

 

5.79

%

Total earning assets

 

 

6,975,783

 

 

 

94,173

 

 

 

5.41

%

 

 

6,815,932

 

 

 

89,279

 

 

 

5.27

%

Other nonearning assets

 

 

767,422

 

 

 

 

 

 

 

 

 

803,946

 

 

 

 

 

 

 

Allowance for credit losses

 

 

(70,671

)

 

 

 

 

 

 

 

 

(67,929

)

 

 

 

 

 

 

Total assets

 

$

7,672,534

 

 

 

 

 

 

 

 

$

7,551,949

 

 

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

3,119,484

 

 

$

15,594

 

 

 

2.01

%

 

$

3,021,299

 

 

$

17,286

 

 

 

2.30

%

Savings deposits

 

 

638,174

 

 

 

158

 

 

 

0.10

%

 

 

688,057

 

 

 

185

 

 

 

0.11

%

Time deposits

 

 

1,078,174

 

 

 

9,213

 

 

 

3.43

%

 

 

977,265

 

 

 

8,867

 

 

 

3.65

%

Total interest-bearing deposits

 

 

4,835,832

 

 

 

24,965

 

 

 

2.07

%

 

 

4,686,621

 

 

 

26,338

 

 

 

2.26

%

Securities sold under agreements to repurchase

 

 

199,345

 

 

 

1,218

 

 

 

2.45

%

 

 

205,711

 

 

 

1,615

 

 

 

3.16

%

FHLB advances

 

 

218,846

 

 

 

2,043

 

 

 

3.74

%

 

 

249,187

 

 

 

2,248

 

 

 

3.63

%

Subordinated Debt

 

 

79,554

 

 

 

849

 

 

 

4.28

%

 

 

106,033

 

 

 

1,180

 

 

 

4.48

%

Junior subordinated debt

 

 

24,360

 

 

 

464

 

 

 

7.64

%

 

 

24,140

 

 

 

537

 

 

 

8.95

%

Total borrowings

 

 

522,105

 

 

 

4,574

 

 

 

3.51

%

 

 

585,071

 

 

 

5,580

 

 

 

3.84

%

Total interest-bearing liabilities

 

 

5,357,937

 

 

 

29,539

 

 

 

2.21

%

 

 

5,271,692

 

 

 

31,918

 

 

 

2.44

%

Non-interest-bearing demand deposits

 

 

1,402,374

 

 

 

 

 

 

1.75

%

 

 

1,439,414

 

 

 

 

 

 

1.91

%

Other liabilities

 

 

35,264

 

 

 

 

 

 

 

 

 

44,595

 

 

 

 

 

 

 

Stockholders' equity

 

 

876,959

 

 

 

 

 

 

 

 

 

796,248

 

 

 

 

 

 

 

Total liabilities and equity

 

$

7,672,534

 

 

 

 

 

 

 

 

$

7,551,949

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

64,634

 

 

 

 

 

 

 

 

$

57,361

 

 

 

 

Net interest spread

 

 

 

 

 

 

 

 

3.20

%

 

 

 

 

 

 

 

 

2.83

%

TE net yield on interest-earning assets (3)

 

 

 

 

 

 

 

 

3.72

%

 

 

 

 

 

 

 

 

3.36

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

 

 

Six months ended June 30, 2025

 

 

Six months ended June 30, 2024

 

 

 

Average

 

 

 

 

 

Average

 

 

Average

 

 

 

 

 

Average

 

 

 

Balance

 

 

Interest

 

 

Rate

 

 

Balance

 

 

Interest

 

 

Rate

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits with other financial institutions

 

$

109,015

 

 

$

2,521

 

 

 

4.66

%

 

$

150,664

 

 

$

4,074

 

 

 

5.44

%

Federal funds sold

 

 

75

 

 

 

1

 

 

 

3.83

%

 

 

559

 

 

 

25

 

 

 

9.03

%

Certificates of deposit

 

 

2,837

 

 

 

64

 

 

 

4.58

%

 

 

2,645

 

 

 

63

 

 

 

4.76

%

Investment securities (1)

 

 

1,086,517

 

 

 

14,635

 

 

 

2.69

%

 

 

1,169,829

 

 

 

15,853

 

 

 

2.71

%

Loans net of unearned income (TE) (2)

 

 

5,674,946

 

 

 

165,264

 

 

 

5.87

%

 

 

5,526,698

 

 

 

157,552

 

 

 

5.73

%

Total earning assets

 

 

6,873,390

 

 

 

182,485

 

 

 

5.35

%

 

 

6,850,395

 

 

 

177,567

 

 

 

5.21

%

Other nonearning assets

 

 

772,272

 

 

 

 

 

 

 

 

 

816,301

 

 

 

 

 

 

 

Allowance for credit losses

 

 

(70,646

)

 

 

 

 

 

 

 

 

(68,494

)

 

 

 

 

 

 

Total assets

 

$

7,575,016

 

 

 

 

 

 

 

 

$

7,598,202

 

 

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

3,079,773

 

 

$

30,494

 

 

 

2.00

%

 

$

3,029,068

 

 

$

33,898

 

 

 

2.25

%

Savings deposits

 

 

639,424

 

 

 

322

 

 

 

0.10

%

 

 

697,953

 

 

 

363

 

 

 

0.10

%

Time deposits

 

 

1,050,342

 

 

 

17,871

 

 

 

3.43

%

 

 

1,002,655

 

 

 

18,173

 

 

 

3.64

%

Total interest-bearing deposits

 

 

4,769,539

 

 

 

48,687

 

 

 

2.06

%

 

 

4,729,676

 

 

 

52,434

 

 

 

2.23

%

Securities sold under agreements to repurchase

 

 

200,505

 

 

 

2,398

 

 

 

2.41

%

 

 

235,149

 

 

 

3,671

 

 

 

3.14

%

FHLB advances

 

 

206,653

 

 

 

3,850

 

 

 

3.76

%

 

 

253,871

 

 

 

4,562

 

 

 

3.61

%

Subordinated debt

 

 

81,073

 

 

 

1,798

 

 

 

4.47

%

 

 

106,412

 

 

 

2,374

 

 

 

4.49

%

Junior subordinated debentures

 

 

24,333

 

 

 

932

 

 

 

7.72

%

 

 

24,112

 

 

 

1,079

 

 

 

9.00

%

Other debt

 

 

729

 

 

 

24

 

 

 

6.64

%

 

 

—

 

 

 

—

 

 

 

—

%

Total borrowings

 

 

513,293

 

 

 

9,002

 

 

 

3.54

%

 

 

619,544

 

 

 

11,686

 

 

 

3.79

%

Total interest-bearing liabilities

 

 

5,282,832

 

 

 

57,689

 

 

 

2.20

%

 

 

5,349,220

 

 

 

64,120

 

 

 

2.41

%

Non-interest-bearing demand deposits

 

 

1,386,330

 

 

 

 

 

 

1.74

%

 

 

1,403,606

 

 

 

 

 

 

1.91

%

Other liabilities

 

 

39,120

 

 

 

 

 

 

 

 

 

51,826

 

 

 

 

 

 

 

Stockholders' equity

 

 

866,734

 

 

 

 

 

 

 

 

 

793,550

 

 

 

 

 

 

 

Total liabilities and equity

 

$

7,575,016

 

 

 

 

 

 

 

 

$

7,598,202

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

124,796

 

 

 

 

 

 

 

 

$

113,447

 

 

 

 

Net interest spread

 

 

 

 

 

 

 

 

3.15

%

 

 

 

 

 

 

 

 

2.80

%

TE net yield on interest-earning assets (3)

 

 

 

 

 

 

 

 

3.66

%

 

 

 

 

 

 

 

 

3.30

%

 

1.
The tax-exempt income is shown on a tax equivalent basis.
2.
Nonaccrual loans and loans held for sale are included in the average balances. Balances are net of unaccreted discount related to loans acquired.
3.
During the first quarter 2025, the Company changed the methodology utilized for the calculation of net interest margin to be more consistent with what is typically used by peer banks and research analysts. The calculation now is the annualized net interest income on a tax equivalent basis divided by average interest earning assets.

40

 

 

Changes in net interest income may also be analyzed by segregating the volume and rate components of interest income and interest expense. The following table summarizes the approximate relative contribution of changes in average volume and interest rates to changes in net interest income for the three and six months ended June 30, 2025, compared to the same period in 2024 (in thousands):

 

 

Three months ended June 30, 2025
compared to 2024 Increase/(Decrease)

 

 

Six months ended June 30, 2025
compared to 2024 Increase/(Decrease)

 

 

Total

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

Change

 

 

Volume (1)

 

 

Rate (1)

 

 

Change

 

 

Volume (1)

 

 

Rate (1)

 

Earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

$

27

 

 

$

889

 

 

$

(862

)

 

$

(1,553

)

 

$

(1,023

)

 

$

(530

)

Federal funds sold

 

(8

)

 

 

39

 

 

 

(47

)

 

 

(24

)

 

 

(14

)

 

 

(10

)

Certificates of deposit

 

(15

)

 

 

(14

)

 

 

(1

)

 

 

1

 

 

 

7

 

 

 

(6

)

Investment securities

 

(552

)

 

 

(491

)

 

 

(61

)

 

 

(1,218

)

 

 

(1,123

)

 

 

(95

)

Loans (2) (3)

 

5,442

 

 

 

3,260

 

 

 

2,182

 

 

 

7,712

 

 

 

4,036

 

 

 

3,676

 

Total interest income

$

4,894

 

 

$

3,683

 

 

$

1,211

 

 

$

4,918

 

 

$

1,883

 

 

$

3,035

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

$

(1,692

)

 

$

3,244

 

 

$

(4,936

)

 

$

(3,404

)

 

$

1,537

 

 

$

(4,941

)

Savings deposits

 

(27

)

 

 

(12

)

 

 

(15

)

 

 

(41

)

 

 

(41

)

 

 

—

 

Time deposits

 

346

 

 

 

2,934

 

 

 

(2,588

)

 

 

(302

)

 

 

1,767

 

 

 

(2,069

)

Securities sold under agreements to repurchase

 

(397

)

 

 

(48

)

 

 

(349

)

 

 

(1,273

)

 

 

(494

)

 

 

(779

)

FHLB advances

 

(205

)

 

 

(603

)

 

 

398

 

 

 

(712

)

 

 

(1,205

)

 

 

493

 

Subordinated debt

 

(331

)

 

 

(281

)

 

 

(50

)

 

 

(576

)

 

 

(566

)

 

 

(10

)

Junior subordinated debentures

 

(73

)

 

 

33

 

 

 

(106

)

 

 

(147

)

 

 

29

 

 

 

(176

)

Other debt

 

—

 

 

 

—

 

 

 

—

 

 

 

24

 

 

 

—

 

 

 

24

 

Total interest expense

 

(2,379

)

 

 

5,267

 

 

 

(7,646

)

 

 

(6,431

)

 

 

1,027

 

 

 

(7,458

)

Net interest income

$

7,273

 

 

$

(1,584

)

 

$

8,857

 

 

$

11,349

 

 

$

856

 

 

$

10,493

 

 

1.
Changes attributable to the combined impact of volume and rate have been allocated proportionately to the change due to volume and the change due to rate.
2.
The tax-exempt income is shown on a tax-equivalent basis.
3.
Nonaccrual loans have been included in the average balances.

Tax equivalent net interest income increased $11.3 million, or 10.0%, to $124.8 million for the six months ended June 30, 2025, from $113.4 million for the same period in 2024. Net interest income and net interest margin increased primarily due to an increase in earning asset yields and a decrease in deposit and borrowing rates.

For the six months ended June 30, 2025, average earning assets increased $23.0 million, or 0.3%, and average interest-bearing liabilities decreased $66.4 million or 1.2% compared with average balances for the same period in 2024.

The changes in average balances for these periods are shown below:

•
Average interest-bearing deposits with other financial institutions decreased $41.6 million or 27.6%.
•
Average federal funds sold decreased $484,000 or 86.6%.
•
Average certificates of deposits investments increased $192,000 or 7.3%.
•
Average loans increased by $148.2 million or 2.7%.
•
Average securities decreased by $83.3 million or 7.1%.
•
Average interest-bearing customer deposits increased by $39.9 million or 0.8%.
•
Average securities sold under agreements to repurchase decreased by $34.6 million or 14.7%.

41

 

 

•
Average borrowings and other debt decreased by $71.6 million or 18.6%.
•
Net interest margin increased to 3.66% for the first six months of 2025 from 3.30% for the first six months of 2024.

Provision for Credit Losses

The provision for credit losses for the six months ended June 30, 2025 and 2024 was $4.2 million and $726,000, respectively. Net charge offs were $3.2 million for the six months ended June 30, 2025, compared to net charge offs of $1.1 million for June 30, 2024. Nonperforming loans were $21.9 million and $19.1 million as of June 30, 2025 and 2024, respectively. For information on loan loss experience and nonperforming loans, see discussion under the “Nonperforming Loans” and “Loan Quality and Allowance for Credit Losses” sections below.

Other Income

An important source of the Company’s revenue is other income. The following table sets forth the major components of other income for the three and six months ended June 30, 2025 and 2024 (in thousands):

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2025

 

 

2024

 

 

$ Change

 

 

% Change

 

 

2025

 

 

2024

 

 

$ Change

 

 

% Change

 

Wealth management revenues

 

$

5,394

 

 

$

5,405

 

 

$

(11

)

 

 

-0.2

%

 

$

11,205

 

 

$

10,727

 

 

$

478

 

 

 

4.5

%

Insurance commissions

 

 

7,840

 

 

 

6,531

 

 

 

1,309

 

 

 

20.0

%

 

 

17,765

 

 

 

15,744

 

 

 

2,021

 

 

 

12.8

%

Service charges

 

 

2,995

 

 

 

3,227

 

 

 

(232

)

 

 

-7.2

%

 

 

5,896

 

 

 

6,183

 

 

 

(287

)

 

 

-4.6

%

Security gains (losses), net

 

 

—

 

 

 

(156

)

 

 

156

 

 

 

-100.0

%

 

 

(181

)

 

 

(156

)

 

 

(25

)

 

 

—

%

Mortgage banking revenue, net

 

 

1,070

 

 

 

1,038

 

 

 

32

 

 

 

3.1

%

 

 

1,781

 

 

 

1,744

 

 

 

37

 

 

 

2.1

%

ATM/debit card revenue

 

 

4,636

 

 

 

4,281

 

 

 

355

 

 

 

8.3

%

 

 

8,282

 

 

 

8,336

 

 

 

(54

)

 

 

-0.6

%

Bank owned life insurance

 

 

1,206

 

 

 

1,192

 

 

 

14

 

 

 

1.2

%

 

 

2,893

 

 

 

2,313

 

 

 

580

 

 

 

25.1

%

Other

 

 

452

 

 

 

904

 

 

 

(452

)

 

 

-50.0

%

 

 

816

 

 

 

2,009

 

 

 

(1,193

)

 

 

-59.4

%

Total other income

 

$

23,593

 

 

$

22,422

 

 

$

1,171

 

 

 

5.2

%

 

$

48,457

 

 

$

46,900

 

 

$

1,557

 

 

 

3.3

%

Following are explanations of the significant changes in these other income categories for the three and six months ended June 30, 2025 compared to the same period in 2024:

•
Wealth management revenues increased for the six month period due to increased brokerage fees and agricultural services fee incomes.
•
Insurance commissions increased primarily due to the acquisition of MRIG during the third quarter of 2024.
•
Bank owned life insurance income increased approximately $580,000 during the first six months of 2025 compared to the same period in 2024 primarily due the gain recognized on a death claim filed in 2025.
•
Other income decreased due to a loss recognized on the repayment of the Company's subordinated debentures and Captive insurance charges shown as offsetting the company's other income and numerous other miscellaneous decreases.

42

 

 

Other Expense

The following table sets forth the major components of other expense for the three and six months ended June 30, 2025 and 2024 (dollars in thousands):

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2025

 

 

2024

 

 

$ Change

 

 

% Change

 

 

2025

 

 

2024

 

 

$ Change

 

 

% Change

 

Salaries and employee benefits

 

$

33,623

 

 

$

30,164

 

 

$

3,459

 

 

 

11.5

%

 

$

65,371

 

 

$

60,612

 

 

$

4,759

 

 

 

7.9

%

Net occupancy and equipment expense

 

 

7,869

 

 

 

7,507

 

 

 

362

 

 

 

4.8

%

 

 

16,348

 

 

 

15,067

 

 

 

1,281

 

 

 

8.5

%

Net other real estate owned expense

 

 

75

 

 

 

85

 

 

 

(10

)

 

 

-11.8

%

 

 

176

 

 

 

64

 

 

 

112

 

 

 

175.0

%

FDIC insurance

 

 

873

 

 

 

902

 

 

 

(29

)

 

 

-3.2

%

 

 

1,722

 

 

 

1,771

 

 

 

(49

)

 

 

-2.8

%

Amortization of intangible assets

 

 

3,121

 

 

 

3,340

 

 

 

(219

)

 

 

-6.6

%

 

 

6,352

 

 

 

6,837

 

 

 

(485

)

 

 

-7.1

%

Stationery and supplies

 

 

367

 

 

 

370

 

 

 

(3

)

 

 

-0.8

%

 

 

798

 

 

 

761

 

 

 

37

 

 

 

4.9

%

Legal and professional

 

 

2,757

 

 

 

2,536

 

 

 

221

 

 

 

8.7

%

 

 

5,833

 

 

 

4,985

 

 

 

848

 

 

 

17.0

%

Marketing and donations

 

 

777

 

 

 

814

 

 

 

(37

)

 

 

-4.5

%

 

 

1,629

 

 

 

1,676

 

 

 

(47

)

 

 

-2.8

%

ATM/debit card expense

 

 

1,144

 

 

 

1,281

 

 

 

(137

)

 

 

-10.7

%

 

 

2,975

 

 

 

2,472

 

 

 

503

 

 

 

20.3

%

Other operating expenses

 

 

4,156

 

 

 

4,392

 

 

 

(236

)

 

 

-5.4

%

 

 

8,030

 

 

 

10,508

 

 

 

(2,478

)

 

 

-23.6

%

Total other expense

 

$

54,762

 

 

$

51,391

 

 

$

3,371

 

 

 

6.6

%

 

$

109,234

 

 

$

104,753

 

 

$

4,481

 

 

 

4.3

%

Following are explanations for the significant changes in these other expense categories for the three and six months ended June 30, 2025 compared to the same period in 2024:

•
The increase in salaries and employee benefits, the largest component of other expense, is primarily due to regularly scheduled annual raises and increase in expense accrued for incentive compensation to be paid in 2026 based on overperformance compared to the 2025 budgeted net income. Additionally, there is an increase of salary and employee benefits due to the acquisition of MRIG during the third quarter of 2024. There were 1,190 and 1,185 full-time equivalent employees at June 30, 2025 and 2024, respectively.
•
The increase in occupancy and equipment and legal and professional fees expenses are primarily due to nonrecurring technology project expenses in the first two quarter of 2025.
•
The decrease in all other operating expenses during the first six months of 2025 was primarily due to integration related expenses for Blackhawk Bank occurring during the first quarter of 2024.

Income Taxes

Total income tax expense amounted to $12.7 million (21.7% effective tax rate) for the six months ended June 30, 2025, compared to $13.4 million (25.0% effective tax rate) for the same period in 2024. The decrease in effective rate is primarily related the interest expense disallowance decreasing due to the Company beginning to utilize an investment subsidiary during the second quarter of 2024, a decrease in nondeductible expenses, and the state of Illinois law change that became effective during the second quarter of 2024 and required a one-time revalue of deferred taxes.

The Company files U.S. federal and state of Florida, Illinois, Indiana, Missouri, Texas, and Wisconsin income tax returns. As of June 30, 2025, the Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2021.

43

 

 

Analysis of Consolidated Balance Sheets

Securities

The Company’s overall investment objectives are to insulate the investment portfolio from undue credit risk, maintain adequate liquidity, insulate capital against changes in market value and control excessive changes in earnings while optimizing investment performance. The types and maturities of securities purchased are primarily based on the Company’s current and projected liquidity and interest rate sensitivity positions. The following table sets forth the amortized cost of the available-for-sale and held-to-maturity securities as of June 30, 2025 and December 31, 2024 (dollars in thousands):

 

 

 

June 30, 2025

 

 

December 31, 2024

 

 

 

Amortized
Cost

 

 

Weighted
Average Yield

 

 

Amortized
Cost

 

 

Weighted
Average Yield

 

U.S. Treasury securities and obligations of U.S. government corporations and agencies

 

$

199,299

 

 

 

1.22

%

 

$

212,513

 

 

 

1.28

%

Obligations of states and political subdivisions

 

 

325,609

 

 

 

2.30

%

 

 

324,046

 

 

 

2.28

%

Mortgage-backed securities: GSE residential

 

 

685,640

 

 

 

2.15

%

 

 

653,760

 

 

 

1.88

%

Other securities

 

 

47,442

 

 

 

4.73

%

 

 

69,396

 

 

 

4.27

%

Total securities

 

$

1,257,990

 

 

 

2.14

%

 

$

1,259,715

 

 

 

2.01

%

At June 30, 2025, the Company’s investment portfolio decreased by $1.7 million from December 31, 2024 primarily due to the sale of three securities, paydowns, calls and maturities of various securities mostly offset by the purchase of fifteen securities. When purchasing investment securities, the Company considers its overall liquidity and interest rate risk profile, as well as the adequacy of expected returns relative to the risks assumed. The table below presents the credit ratings as of June 30, 2025 for investment securities (in thousands):

 

 

 

 

 

 

 

 

 

Average Credit Rating of Fair Value at June 30, 2025 (1)

 

 

 

Amortized
Cost

 

 

Estimated
Fair Value

 

 

AAA

 

 

AA +/-

 

 

A +/-

 

 

BBB +/-

 

 

< BBB -

 

 

Not rated

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of U.S. government corporations and agencies

 

$

199,299

 

 

$

183,616

 

 

$

—

 

 

$

183,616

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Obligations of state and political subdivisions

 

 

325,609

 

 

 

261,324

 

 

 

44,723

 

 

 

193,939

 

 

 

21,016

 

 

 

—

 

 

 

—

 

 

 

1,646

 

Mortgage-backed securities (2)

 

 

685,640

 

 

 

588,711

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

588,711

 

Other securities

 

 

45,155

 

 

 

43,190

 

 

 

—

 

 

 

998

 

 

 

7,187

 

 

 

6,983

 

 

 

—

 

 

 

28,022

 

Total available-for-sale

 

$

1,255,703

 

 

$

1,076,841

 

 

$

44,723

 

 

$

378,553

 

 

$

28,203

 

 

$

6,983

 

 

$

—

 

 

$

618,379

 

Held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other securities

 

$

2,287

 

 

$

2,287

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

2,287

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Agricultural Mtg Corp

 

 

85

 

 

 

486

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

486

 

Midwest Independent BankersBank

 

 

150

 

 

 

213

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

213

 

Equalize Community Development Fund

 

 

3,843

 

 

 

3,844

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,844

 

Total equity securities

 

$

4,078

 

 

$

4,543

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

4,543

 

 

1.
Credit ratings reflect the lowest current rating assigned by a nationally recognized credit rating agency.
2.
Mortgage-backed securities include mortgage-backed securities (MBS) and collateralized mortgage obligation (CMO) issues from the following government sponsored enterprises: FHLMC, FNMA, GNMA and FHLB. While MBS and CMOs are no longer explicitly rated by credit rating agencies, the industry recognizes that they are backed by agencies which have an implied government guarantee.

44

 

 

Loans

The loan portfolio is the largest category of the Company’s earning assets. The following table summarizes the composition of the loan portfolio at amortized cost, including loans held for sale, as of June 30, 2025 and December 31, 2024 (in thousands):

 

 

 

June 30, 2025

 

 

December 31, 2024

 

 

 

Amortized
Cost

 

 

% Outstanding
Loans

 

 

Amortized
Cost

 

 

% Outstanding
Loans

 

Construction and land development

 

$

298,812

 

 

 

5.2

%

 

$

236,093

 

 

 

4.2

%

Agricultural real estate

 

 

381,517

 

 

 

6.6

%

 

 

390,760

 

 

 

6.9

%

1-4 family residential properties

 

 

495,787

 

 

 

8.6

%

 

 

496,597

 

 

 

8.8

%

Multifamily residential properties

 

 

360,604

 

 

 

6.3

%

 

 

332,644

 

 

 

5.9

%

Commercial real estate

 

 

2,393,640

 

 

 

41.5

%

 

 

2,417,585

 

 

 

42.6

%

Loans secured by real estate

 

 

3,930,360

 

 

 

68.2

%

 

 

3,873,679

 

 

 

68.4

%

Agricultural loans

 

 

306,374

 

 

 

5.3

%

 

 

239,671

 

 

 

4.2

%

Commercial and industrial loans

 

 

1,324,653

 

 

 

23.0

%

 

 

1,335,920

 

 

 

23.6

%

Consumer loans

 

 

41,604

 

 

 

0.7

%

 

 

53,960

 

 

 

1.0

%

All other loans

 

 

164,008

 

 

 

2.8

%

 

 

169,232

 

 

 

2.8

%

Total loans

 

$

5,766,999

 

 

 

100.0

%

 

$

5,672,462

 

 

 

100.0

%

Loan balances increased $94.5 million, or 1.7%. The increase was primarily due to construction and land development and multifamily residential properties increasing and increased seasonal demand for agricultural operating loans partially offset by decreases in all other loan types. The balance of real estate loans held for sale, included in the balances shown above, amounted to $7.4 million and $6.6 million as of June 30, 2025 and December 31, 2024, respectively.

Commercial real estate loans generally involve higher credit risks than residential real estate and consumer loans. Because payments on loans secured by commercial real estate or equipment are often dependent upon the successful operation and management of the underlying assets, repayment of such loans may be influenced to a great extent by conditions in the market or the economy. The Company does not have any sub-prime mortgages or credit card loans outstanding which are also generally considered to be higher credit risk.

Loans are geographically dispersed primarily throughout Illinois, the St. Louis Metro area, central Missouri, Texas, and southern Wisconsin. While these regions have experienced some economic stress during 2024 and 2025, the Company does not consider these locations high risk areas.

First Mid Bank does not have a concentration, as defined by the regulatory agencies, in construction and land development loans or commercial real estate loans as a percentage of the sum of Tier 1 Capital and allowance for loan loss for the periods shown above. At June 30, 2025 and December 31, 2024, First Mid Bank did have industry loan concentrations that exceeded 25% of the sum of Tier 1 Capital and allowance for loan loss in the following industries (dollars in thousands):

 

 

June 30, 2025

 

 

December 31, 2024

 

 

 

Principal
balance

 

 

% Outstanding
 Loans

 

 

Principal
balance

 

 

% Outstanding
Loans

 

Other grain farming

 

$

584,470

 

 

 

10.13

%

 

$

507,555

 

 

 

8.95

%

Lessors of non-residential buildings

 

 

1,046,682

 

 

 

18.15

%

 

 

1,049,372

 

 

 

18.50

%

Lessors of residential buildings and dwellings

 

 

616,200

 

 

 

10.68

%

 

 

557,285

 

 

 

9.82

%

Hotels and motels

 

 

221,541

 

 

 

3.84

%

 

not applicable

 

First Mid Bank had no further industry loan concentrations in excess of 25% of the sum of Tier 1 Capital and allowance for loan loss.

45

 

 

The following table presents the balance of loans outstanding as of June 30, 2025, by contractual maturities (in thousands):

 

 

 

Maturity (1)

 

 

 

One year
or less (2)

 

 

Over 1 through
5 years

 

 

Over 5
years

 

 

Total

 

Construction and land development

 

$

42,902

 

 

$

135,272

 

 

$

120,638

 

 

$

298,812

 

Agricultural real estate

 

 

39,299

 

 

 

119,439

 

 

 

222,779

 

 

 

381,517

 

1-4 family residential properties

 

 

28,165

 

 

 

96,253

 

 

 

371,369

 

 

 

495,787

 

Multifamily residential properties

 

 

87,043

 

 

 

215,014

 

 

 

58,547

 

 

 

360,604

 

Commercial real estate

 

 

325,276

 

 

 

1,400,931

 

 

 

667,433

 

 

 

2,393,640

 

Loans secured by real estate

 

 

522,685

 

 

 

1,966,909

 

 

 

1,440,766

 

 

 

3,930,360

 

Agricultural loans

 

 

208,386

 

 

 

97,010

 

 

 

978

 

 

 

306,374

 

Commercial and industrial loans

 

 

474,732

 

 

 

557,308

 

 

 

292,613

 

 

 

1,324,653

 

Consumer loans

 

 

3,084

 

 

 

37,488

 

 

 

1,032

 

 

 

41,604

 

All other loans

 

 

27,490

 

 

 

15,959

 

 

 

120,559

 

 

 

164,008

 

Total loans

 

$

1,236,377

 

 

$

2,674,674

 

 

$

1,855,948

 

 

$

5,766,999

 

 

1.
Based upon remaining contractual maturity.
2.
Includes demand loans, past due loans and overdrafts.

As of June 30, 2025, loans with maturities over one year consisted of approximately $2.5 billion in fixed rate loans and approximately $2.0 billion in variable rate loans. The loan maturities noted above are based on the contractual provisions of the individual loans. The Company has no general policy regarding renewals and borrower requests, which are handled on a case-by-case basis.

Nonperforming Loans and Nonperforming Other Assets

Nonperforming loans include: (a) loans accounted for on a nonaccrual basis; (b) accruing loans contractually past due ninety days or more as to interest or principal payments; and (c) loans not included in (a) and (b) above which are defined as “modified”. Repossessed assets include primarily repossessed real estate and automobiles.

The Company’s policy is to discontinue the accrual of interest income on any loan for which principal or interest is ninety days past due. The accrual of interest is discontinued earlier when, in the opinion of management, there is reasonable doubt as to the timely collection of interest or principal. Once interest accruals are discontinued, accrued but uncollected interest is charged against current year income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal.

Restructured loans are loans on which, due to deterioration in the borrower’s financial condition, the original terms have been modified in favor of the borrower or either principal or interest has been forgiven. Repossessed assets represent property acquired as the result of borrower defaults on loans. These assets are recorded at estimated fair value, less estimated selling costs, at the time of foreclosure or repossession. Write-downs occurring at foreclosure are charged against the allowance for credit losses. On an ongoing basis, properties are appraised as required by market indications and applicable regulations. Write-downs for subsequent declines in value are recorded in non-interest expense in other real estate owned along with other expenses related to maintaining the properties.

The following table presents information concerning the aggregate amount of nonperforming loans and repossessed assets at June 30, 2025 and December 31, 2024 (dollars in thousands):

 

 

 

June 30, 2025

 

 

December 31, 2024

 

Nonaccrual loans

 

$

20,354

 

 

$

28,775

 

Modified loans which are performing in accordance with revised terms

 

 

1,541

 

 

 

1,060

 

Total nonperforming loans

 

 

21,895

 

 

 

29,835

 

Repossessed assets

 

 

1,677

 

 

 

2,195

 

Total nonperforming loans and repossessed assets

 

$

23,572

 

 

$

32,030

 

Nonperforming loans to loans, before allowance for credit losses

 

 

0.38

%

 

 

0.53

%

Nonperforming loans and repossessed assets to loans, before allowance for credit losses

 

 

0.41

%

 

 

0.56

%

 

46

 

 

The $8.4 million decrease in nonaccrual loans during 2025 resulted from the net of $4.5 million of loans put on nonaccrual status offset by $9.7 million of loans becoming current or paid-off and $3.2 million of loans charged off. The following table summarizes the composition of nonaccrual loans (dollars in thousands):

 

 

 

June 30, 2025

 

 

December 31, 2024

 

 

 

Balance

 

 

% of Total

 

 

Balance

 

 

% of Total

 

Construction and land development

 

$

5

 

 

 

—

%

 

$

6

 

 

 

—

%

Agricultural real estate

 

 

1,856

 

 

 

9.1

%

 

 

2,213

 

 

 

7.7

%

1-4 family residential properties

 

 

5,586

 

 

 

27.4

%

 

 

4,937

 

 

 

17.2

%

Commercial real estate

 

 

6,959

 

 

 

34.3

%

 

 

7,716

 

 

 

26.8

%

Loans secured by real estate

 

 

14,406

 

 

 

70.8

%

 

 

14,872

 

 

 

51.7

%

Agricultural loans

 

 

1,617

 

 

 

7.9

%

 

 

11,521

 

 

 

40.0

%

Commercial and industrial loans

 

 

1,986

 

 

 

9.8

%

 

 

2,071

 

 

 

7.2

%

Consumer loans

 

 

151

 

 

 

0.7

%

 

 

311

 

 

 

1.1

%

Other loans

 

 

2,194

 

 

 

10.8

%

 

 

—

 

 

 

—

%

Total loans

 

$

20,354

 

 

 

100.0

%

 

$

28,775

 

 

 

100.0

%

Interest income that would have been reported if nonaccrual and restructured loans had been performing totaled $662,000 and $487,000 for the six months ended June 30, 2025 and 2024, respectively.

The $1.0 million decrease in repossessed assets during the 2025 resulted from $106,000 of additional assets repossessed and $1.0 million repossessed assets sold, $100,000 write-downs, and no change in fair value premiums and discounts. The following table summarizes the composition of repossessed assets (dollars in thousands):

 

 

 

June 30, 2025

 

 

December 31, 2024

 

 

 

Balance

 

 

% of Total

 

 

Balance

 

 

% of Total

 

Construction and land development

 

$

983

 

 

 

58.6

%

 

$

1,084

 

 

 

39.8

%

1-4 family residential properties

 

 

159

 

 

 

9.5

%

 

 

568

 

 

 

20.9

%

Commercial real estate

 

 

528

 

 

 

31.5

%

 

 

527

 

 

 

19.4

%

Total real estate

 

 

1,670

 

 

 

99.6

%

 

 

2,179

 

 

 

80.1

%

Consumer loans

 

 

7

 

 

 

0.4

%

 

 

543

 

 

 

19.9

%

Total repossessed collateral

 

$

1,677

 

 

 

100.0

%

 

$

2,722

 

 

 

100.0

%

Repossessed assets sold during the first six months of 2025 resulted in $21,000 net gain or loss of related to real estate asset sales and net losses of $9,000 related to other asset sales. The Company also recognized no deferred losses and recorded $100,000 write-downs on real estate properties owned. Repossessed assets sold during the same period in 2024 resulted in net gains of $17,000 related to real estate asset sales and net gains of $69,000 related to other asset sales. The Company also recognized no deferred losses and recorded no write-downs on real estate properties owned.

Loan Quality and Allowance for Credit Losses

The allowance for credit losses represents management’s estimate of the reserve necessary to adequately account for probable losses existing in the current portfolio. The provision for credit losses is the charge against current earnings that is determined by management as the amount needed to maintain an adequate allowance for credit losses. In determining the adequacy of the allowance for credit losses, and therefore the provision to be charged to current earnings, management relies predominantly on a disciplined credit review and approval process that extends to the full range of the Company’s credit exposure. The review process is directed by overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. Factors considered by management in evaluating the overall adequacy of the allowance include a migration analysis of the historical net loan losses by loan segment, the level and composition of nonaccrual, past due and renegotiated loans, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates.

Management reviews economic factors including the potential for reduced cash flow for commercial operating loans from reduction in sales or increased operating costs, decreased occupancy rates for commercial buildings, reduced levels of home sales for commercial land developments, the uncertainty regarding grain prices, increased operating costs for farmers, and increased levels of unemployment and bankruptcy impacting consumer’s ability to pay. Each of these economic uncertainties was taken into consideration in developing the level of the reserve. Management considers the allowance for credit losses a critical accounting policy.

47

 

 

Management recognizes there are risk factors that are inherent in the Company’s loan portfolio. All financial institutions face risk factors in their loan portfolios because risk exposure is a function of the business. A portion of the Company’s operations (and therefore its loans) are concentrated in Illinois, Missouri, Texas, and Wisconsin areas, where agriculture is a major industry. Accordingly, lending and other business relationships with agriculture-based businesses are critical to the Company’s success. At June 30, 2025, the Company’s loan portfolio included $687.8 million of loans to borrowers whose businesses are directly related to agriculture. Of this amount, $584.5 million was concentrated in other grain farming. Total loans to borrowers whose businesses are directly related to agriculture increased $57.2 million from $630.6 million at December 31, 2024 while loans concentrated in other grain farming increased $76.9 million from $507.6 million at December 31, 2024. While the Company adheres to sound underwriting practices, including collateralization of loans, any extended period of low commodity prices, drought conditions, significantly reduced yields on crops and/or reduced levels of government assistance to the agricultural industry could result in an increase in the level of problem agriculture loans and potentially result in loan losses within the agricultural portfolio. In addition, the Company has $221.5 million of loans to motels and hotels. The performance of these loans is dependent on borrower specific issues as well as the general level of business and personal travel within the region. While the Company adheres to sound underwriting standards, a prolonged period of reduced business or personal travel could result in an increase in nonperforming loans to this business segment and potentially in loan losses. The Company also has $1.0 billion of loans to lessors of non-residential buildings, and $616.2 million of loans to lessors of residential buildings and dwellings.

The structure of the Company’s loan approval process is based on progressively larger lending authorities granted to individual loan officers, loan committees, and ultimately the Board of Directors. Outstanding balances to one borrower or affiliated borrowers are limited by federal regulation; however, limits well below the regulatory thresholds are generally observed. Most of the Company’s loans are to businesses located in the geographic market areas served by the Company’s branch bank system. Additionally, a significant portion of the collateral securing the loans in the portfolio is located within the Company’s primary geographic footprint. In general, the Company adheres to loan underwriting standards consistent with industry guidelines for all loan segments.

The Company minimizes credit risk by adhering to sound underwriting and credit review policies. Management and the board of directors of the Company review these policies at least annually. Senior management is actively involved in business development efforts and the maintenance and monitoring of credit underwriting and approval. The loan review system and controls are designed to identify, monitor and address asset quality problems in an accurate and timely manner. The board of directors and management review the status of problem loans each month and formally determine a best estimate of the allowance for credit losses on a quarterly basis. In addition to internal policies and controls, regulatory authorities periodically review asset quality and the overall adequacy of the allowance for credit losses.

48

 

 

Analysis of the allowance for credit losses as of June 30, 2025 and 2024, and of changes in the allowance for the three and six months ended June 30, 2025 and 2024, is as follows (dollars in thousands):

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Average loans outstanding, net of unearned income

 

$

5,743,312

 

 

$

5,529,211

 

 

$

5,674,946

 

 

$

5,526,698

 

Allowance-beginning of period

 

 

70,051

 

 

 

67,936

 

 

 

70,182

 

 

 

68,675

 

1-4 family residential

 

 

55

 

 

 

34

 

 

 

94

 

 

 

101

 

Commercial real estate

 

 

70

 

 

 

—

 

 

 

408

 

 

 

—

 

Agricultural

 

 

1,386

 

 

 

209

 

 

 

2,503

 

 

 

261

 

Commercial and industrial

 

 

489

 

 

 

368

 

 

 

712

 

 

 

642

 

Consumer

 

 

261

 

 

 

374

 

 

 

627

 

 

 

800

 

Total charge-offs

 

 

2,261

 

 

 

985

 

 

 

4,344

 

 

 

1,804

 

Recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

1-4 family residential

 

 

134

 

 

 

100

 

 

 

152

 

 

 

149

 

Commercial real estate

 

 

3

 

 

 

5

 

 

 

11

 

 

 

166

 

Agricultural

 

 

217

 

 

 

—

 

 

 

217

 

 

 

—

 

Commercial and industrial

 

 

282

 

 

 

44

 

 

 

372

 

 

 

108

 

Consumer

 

 

167

 

 

 

129

 

 

 

351

 

 

 

292

 

Total recoveries

 

 

803

 

 

 

278

 

 

 

1,103

 

 

 

715

 

Net charge-offs (recoveries)

 

 

1,458

 

 

 

707

 

 

 

3,241

 

 

 

1,089

 

Provision (release) for credit losses

 

 

2,567

 

 

 

1,083

 

 

 

4,219

 

 

 

726

 

Allowance-end of period

 

$

71,160

 

 

$

68,312

 

 

$

71,160

 

 

$

68,312

 

Ratio of annualized net charge-offs to average loans

 

 

0.10

%

 

 

0.05

%

 

 

0.11

%

 

 

0.04

%

Ratio of allowance for credit losses to loans outstanding (at amortized cost)

 

 

1.23

%

 

 

1.23

%

 

 

1.23

%

 

 

1.23

%

Ratio of allowance for credit losses to nonperforming loans

 

 

325

%

 

 

358

%

 

 

325

%

 

 

358

%

The allowance for credit losses to nonperforming loans ratio has remained consistent due to the amount of nonperforming loans changing at a similar rate as the loan portfolio.

During the first six months of 2025, the Company had net charge offs of $3.2 million compared to net charge offs of $1.1 million in 2024. During the first six months of 2025, the Company had the following significant charge offs, one commercial real estate loan to one borrower totaling $338,000, nine agricultural loans to eight borrowers totaling $1.8 million, and three commercial operating loans to three borrowers totaling $620,000. During the first six months of 2024, the Company had the following significant charge offs, one commercial real estate loan to one borrower totaling $193,000.

Deposits

Funding of the Company’s earning assets is substantially provided by a combination of consumer, commercial and public fund deposits. The Company continues to focus its strategies and emphasis on retail core deposits, the major component of funding sources. The following table sets forth the average deposits and weighted average rates for the six months ended June 30, 2025 and 2024 and for the year ended December 31, 2024 (dollars in thousands):

 

 

 

Six months ended
June 30, 2025

 

 

Six months ended
June 30, 2024

 

 

Year ended
December 31, 2024

 

 

 

Average
Balance

 

 

Weighted
Average
Rate

 

 

Average
Balance

 

 

Weighted
Average
Rate

 

 

Average
Balance

 

 

Weighted
Average
Rate

 

Demand deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing

 

$

1,386,330

 

 

—%

 

 

$

1,403,606

 

 

—%

 

 

$

1,407,537

 

 

—%

 

Interest-bearing

 

 

3,079,773

 

 

 

2.00

%

 

 

3,029,068

 

 

 

2.25

%

 

 

3,040,397

 

 

 

2.24

%

Savings

 

 

639,424

 

 

 

0.10

%

 

 

697,953

 

 

 

0.10

%

 

 

675,622

 

 

 

0.12

%

Time deposits

 

 

1,050,342

 

 

 

3.43

%

 

 

1,002,655

 

 

 

3.64

%

 

 

1,019,629

 

 

 

3.74

%

Total average deposits

 

$

6,155,869

 

 

 

1.59

%

 

$

6,133,282

 

 

 

1.72

%

 

$

6,143,185

 

 

 

1.74

%

 

49

 

 

During the first six months of 2025, the average balance of deposits increased by $12.7 million from the average balance for the year ended December 31, 2024. Average non-interest-bearing deposits decreased by $21.2 million, average interest-bearing balances increased by $39.4 million, average savings account balances decreased $36.2 million, and average balances of time deposits increased $30.7 million. Approximately 99% of the Company’s deposit accounts are less than $250,000. The average account balance for all deposit customers is approximately $23,000.

The following table sets forth the high and low month-end balances for the six months ended June 30, 2025 and 2024 and for the year ended December 31, 2024 (in thousands):

 

 

Six months ended
June 30, 2025

 

 

Six months ended
June 30, 2024

 

 

Year ended
December 31, 2024

 

High month-end balances of total deposits

$

6,284,705

 

 

$

6,242,937

 

 

$

6,242,937

 

Low month-end balances of total deposits

 

6,081,565

 

 

 

6,104,309

 

 

 

6,057,095

 

Balances of time deposits, including brokered time deposits of $100,000 or more include time deposits maintained for public fund entities and consumer time deposits. The following table sets forth the maturity of time deposits, including brokered time deposits of $100,000 or more at June 30, 2025 and December 31, 2024 (in thousands):

 

 

 

June 30, 2025

 

 

December 31, 2024

 

3 months or less

 

$

252,615

 

 

$

237,309

 

Over 3 through 6 months

 

 

182,348

 

 

 

206,586

 

Over 6 through 12 months

 

 

117,985

 

 

 

121,154

 

Over 12 months

 

 

99,244

 

 

 

72,818

 

Total

 

$

652,192

 

 

$

637,867

 

 

50

 

 

Repurchase Agreements and Other Borrowings

Securities sold under agreements to repurchase are short-term obligations of First Mid Bank. These obligations are collateralized with certain government securities that are direct obligations of the United States or one of its agencies. These retail repurchase agreements are offered as a cash management service to its corporate customers. Other borrowings consist of Federal Home Loan Bank (“FHLB”) advances, federal funds purchased, loans (short-term or long-term debt) that the Company has outstanding and junior subordinated debentures. Information relating to securities sold under agreements to repurchase and other borrowings as of June 30, 2025 and December 31, 2024 is presented below (dollars in thousands):

 

 

 

June 30, 2025

 

 

December 31, 2024

 

Securities sold under agreements to repurchase

 

$

193,941

 

 

$

204,122

 

Federal Home Loan Bank advances:

 

 

 

 

 

 

FHLB-overnight

 

 

25,000

 

 

 

90,000

 

Fixed term-due in one year or less

 

 

50,000

 

 

 

7,435

 

Fixed term-due after one year

 

 

170,000

 

 

 

145,085

 

Other borrowings:

 

 

 

 

 

 

Debt due in one year or less

 

 

—

 

 

 

—

 

Subordinated debt

 

 

79,590

 

 

 

87,472

 

Junior subordinated debentures

 

 

24,384

 

 

 

24,280

 

Total

 

$

542,915

 

 

$

558,394

 

Average interest rate at end of period

 

 

3.21

%

 

 

3.30

%

 

 

 

 

 

 

Maximum outstanding at any month-end:

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

$

219,772

 

 

$

282,285

 

Federal Home Loan Bank advances:

 

 

 

 

 

 

FHLB-overnight

 

 

25,000

 

 

 

90,000

 

Fixed term-due in one year or less

 

 

50,000

 

 

 

65,000

 

Fixed term-due after one year

 

 

195,000

 

 

 

223,744

 

Other borrowings:

 

 

 

 

 

 

Debt due in one year or less

 

 

4,000

 

 

 

—

 

Subordinated debt

 

 

87,505

 

 

 

106,934

 

Junior subordinated debentures

 

 

24,384

 

 

 

24,280

 

 

 

 

 

 

 

Averages for the period (YTD):

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

$

200,505

 

 

$

221,789

 

Federal Home Loan Bank advances:

 

 

 

 

 

 

FHLB-overnight

 

 

10,313

 

 

 

560

 

Fixed term-due in one year or less

 

 

14,586

 

 

 

45,587

 

Fixed term-due after one year

 

 

181,754

 

 

 

193,802

 

Other borrowings:

 

 

 

 

 

 

Debt due in one year or less

 

 

729

 

 

 

—

 

Subordinated debt

 

 

81,073

 

 

 

99,313

 

Junior subordinated debentures

 

 

24,333

 

 

 

24,168

 

Total

 

$

513,293

 

 

$

585,219

 

Average interest rate during the period

 

 

3.54

%

 

 

3.71

%

 

51

 

 

Securities sold under agreements to repurchase decreased $10.2 million during the first six months of 2025 primarily due to the seasonal demands in balances. FHLB advances represent borrowings by First Mid Bank to economically fund loan demand. At June 30, 2025 the advances, consisted of $245.0 million as follows:

 

Advance

 

 

Term (in years)

 

Interest Rate

 

Maturity Date

 

25,000,000

 

 

overnight

 

4.45%

 

July 1, 2025

 

25,000,000

 

 

1.0

 

4.33%

 

November 17, 2025

 

25,000,000

 

 

3.0

 

4.40%

 

June 15, 2026

 

25,000,000

 

 

3.0

 

4.37%

 

May 10, 2027

 

25,000,000

 

 

3.0

 

4.32%

 

May 17, 2027

 

25,000,000

 

 

5.0

 

3.95%

 

June 29, 2028

 

25,000,000

 

 

5.0

 

3.93%

 

June 27, 2029

 

5,000,000

 

 

10.0

 

1.15%

 

October 3, 2029

 

5,000,000

 

 

10.0

 

1.12%

 

October 3, 2029

 

10,000,000

 

 

10.0

 

1.39%

 

December 31, 2029

 

25,000,000

 

 

5.0

 

3.46%

 

February 7, 2030

 

25,000,000

 

 

10.0

 

2.71%

 

March 5, 2035

The Company is party to a revolving credit agreement with The Northern Trust Company in the amount of $15.0 million. There was no balance on this line of credit as of June 30, 2025. This loan was renewed on April 4, 2025 for one year as a revolving credit agreement. The interest rate is floating at 2.25% over the federal funds rate. The Company and First Mid Bank, as applicable, were in compliance with the existing covenants at June 30, 2025 and 2024, and December 31, 2024.

On October 6, 2020, the Company issued and sold $96.0 million in aggregate principal amount of its 3.95% Fixed-to-Floating Rate Subordinated Notes due 2030 (the “Notes”). The Notes were issued pursuant to the Indenture, dated as of October 6, 2020 (the “Base Indenture”), between the Company and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of October 6, 2020 (the “Supplemental Indenture”), between the Company and the Trustee. The Base Indenture, as amended and supplemented by the Supplemental Indenture, governs the terms of the Notes and provides that the Notes are unsecured, subordinated debt obligations of the Company and will mature on October 15, 2030. From and including the date of issuance to, but excluding October 15, 2025, the Notes will bear interest at an initial rate of 3.95% per annum. From and including October 15, 2025 to, but excluding the maturity date or earlier redemption, the Notes will bear interest at a floating rate equal to three-month Term SOFR plus a spread of 383 basis points, or such other rate as determined pursuant to the Supplemental Indenture, provided that in no event shall the applicable floating interest rate be less than zero per annum. On June 7, 2024, August 27, 2024, and September 6, 2024, the Company repurchased in open market transactions and subsequently cancelled $4.0 million, $15.0 million, and $1.0 million respectively, of the outstanding Notes. As a result, as of June 30, 2025, $76 million in aggregate principal amount of the Notes remain issued and outstanding.

The Company may, beginning with the interest payment date of October 15, 2025, and on any interest payment date thereafter, redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption. The Company may also redeem the Notes at any time, including prior to October 15, 2025, at the Company’s option, in whole but not in part, if: (i) a change or prospective change in law occurs that could prevent the Company from deducting interest payable on the Notes for U.S. federal income tax purposes; (ii) a subsequent event occurs that could preclude the Notes from being recognized as Tier 2 capital for regulatory capital purposes; or (iii) the Company is required to register as an investment company under the Investment Company Act of 1940, as amended; in each case, at a redemption price equal to 100% of the principal amount of the Notes plus any accrued and unpaid interest to but excluding the redemption date.

On August 15, 2023, the Company assumed, as part of the Blackhawk Bancorp, Inc. acquisition, $7.5 million principal amount of 3.5% Fixed-to-Floating Rate Subordinated Notes due 2031 (the “Blackhawk Subordinated Debt I Notes”). The Blackhawk Subordinated Debt I was issued pursuant to the Indenture (the "Blackhawk Subordinated Debt I Indenture") between the Company and UMB Bank, as trustee. The Blackhawk Subordinated Debt I Indenture governs the terms of Blackhawk Subordinated Debt I Notes and provides that the Blackhawk Subordinated Debt I Notes are unsecured, subordinated debt obligations of the Company and will mature on May 14, 2031. From and including the date of issuance to, but excluding May 14, 2026, Blackhawk Subordinated Debt I Notes will bear interest at an initial rate of 3.5% per annum. From and including May 14, 2026 to, but excluding the maturity date, Blackhawk Subordinated Debt I Notes will bear interest at a floating rate equal to three-month Term SOFR plus a spread of 285 basis points. On February 5, 2025, the Company repurchased in open market transactions and subsequently cancelled $3.0 million of the outstanding Blackhawk Subordinated Debt I Notes. As a result, as of June 30, 2025, $4.5 million in aggregate principal amount of Blackhawk Subordinated Debt I Notes remain issued and outstanding.

52

 

 

On August 15, 2023, the Company assumed, as part of the Blackhawk Bancorp, Inc. acquisition, $7.5 million principal amount of 3.875% Fixed-to-Floating Rate Subordinated Notes due 2036 (the “Blackhawk Subordinated Debt II Notes”). The Blackhawk Subordinated Debt II was issued pursuant to the Indenture (the "Blackhawk Subordinated Debt II Indenture") between the Company and UMB Bank, as trustee. The Blackhawk Subordinated Debt II Indenture governs the terms of Blackhawk Subordinated Debt II Notes and provides that the Blackhawk Subordinated Debt II Notes are unsecured, subordinated debt obligations of the Company and will mature on May 14, 2036. From and including the date of issuance to, but excluding May 14, 2031, Blackhawk Subordinated Debt II Notes will bear interest at an initial rate of 3.875% per annum. From and including May 14, 2031 to, but excluding the maturity date, Blackhawk Subordinated Debt II Notes will bear interest at a floating rate equal to three-month Term SOFR plus a spread of 255 basis points. On February 5, 2025, the Company repurchased in open market transactions and subsequently cancelled $7.0 million of the outstanding Blackhawk Subordinated Debt II Notes. As a result, as of June 30, 2025, $500,000 in aggregate principal amount of Blackhawk Subordinated Debt II Notes remain issued and outstanding.

On April 26, 2006, the Company completed the issuance and sale of $10.0 million of fixed/floating rate trust preferred securities through First Mid-Illinois Statutory Trust II (“Trust II”), a statutory business trust and wholly owned unconsolidated subsidiary of the Company, as part of a pooled offering. The Company established Trust II for the purpose of issuing the trust preferred securities. The $10.0 million in proceeds from the trust preferred issuance and an additional $310,000 for the Company’s investment in common equity of Trust II, a total of $10.3 million, was invested in junior subordinated debentures of the Company. The underlying junior subordinated debentures issued by the Company to Trust II mature in 2036, bore interest at a fixed rate of 6.98% paid quarterly until June 15, 2011 and then converted to floating rate (SOFR plus 160 basis points, 6.18% and 6.81% at June 30, 2025 and December 31, 2024, respectively).

On September 8, 2016, the Company assumed the trust preferred securities of Clover Leaf Statutory Trust I (“CLST I”), a statutory business trust that was a wholly owned unconsolidated subsidiary of First Clover Financial. The $4.0 million of trust preferred securities and an additional $124,000 investment in common equity of CLST I, is invested in junior subordinated debentures issued to CLST I. The subordinated debentures mature in 2035, bear interest at three-month SOFR plus 185 basis points (6.43% and 7.06% at June 30, 2025 and December 31, 2024, respectively) and resets quarterly.

On May 1, 2018, the Company assumed the trust preferred securities of FBTC Statutory Trust I (“FBTCST I”), a statutory business trust that was a wholly owned unconsolidated subsidiary of First BancTrust Corporation. The $6.0 million of trust preferred securities and an additional $186,000 investment in common equity of FBTCST I is invested in junior subordinated debentures issued to FBTCST I. The subordinated debentures mature in 2035, bear interest at three-month SOFR plus 170 basis points (6.28% and 6.91% at June 30, 2025 and December 31, 2024, respectively) and resets quarterly.

On August 15, 2023, the Company assumed the trust preferred securities of Blackhawk Statutory Trust I (“BHST I”), a statutory business trust that was a wholly owned unconsolidated subsidiary of Blackhawk Bancorp, Inc. The $1.0 million of trust preferred securities and an additional $31,000 investment in common equity of BHST I is invested in junior subordinated debentures issued to BHST I. The subordinated debentures mature in 2032, bear interest at three-month SOFR plus 325 basis points (7.81% and 8.17% at June 30, 2025 and December 31, 2024, respectively) and resets quarterly.

On August 15, 2023, the Company assumed the trust preferred securities of Blackhawk Statutory Trust II (“BHST II”), a statutory business trust that was a wholly owned unconsolidated subsidiary of Blackhawk Bancorp, Inc. The $4.0 million of trust preferred securities and an additional $124,000 investment in common equity of BHST II is invested in junior subordinated debentures issued to BHST II. The subordinated debentures mature in 2035, bear interest at three-month SOFR plus 205 basis points (6.62% and 7.25% at June 30, 2025 and December 31, 2024, respectively) and resets quarterly.

The trust preferred securities issued by Trust II, CLST I, FBTCST I, BHST I, and BHST II are included as Tier 1 capital of the Company for regulatory capital purposes. On March 1, 2005, the Federal Reserve Board adopted a final rule that allows the continued limited inclusion of trust preferred securities in the calculation of Tier 1 capital for regulatory purposes. The final rule provided a five-year transition period, ending September 30, 2010, for application of the revised quantitative limits. On March 17, 2009, the Federal Reserve Board adopted an additional final rule that delayed the effective date of the new limits on inclusion of trust preferred securities in the calculation of Tier 1 capital until March 31, 2012. The application of the revised quantitative limits did not and is not expected to have a significant impact on its calculation of Tier 1 capital for regulatory purposes or its classification as well-capitalized. The Dodd-Frank Act, signed into law July 21, 2010, removes trust preferred securities as a permitted component of a holding company’s Tier 1 capital after a three-year phase-in period beginning January 1, 2013 for larger holding companies. For holding companies with less than $15.0 billion in consolidated assets, existing issues of trust preferred securities are grandfathered and not subject to this new restriction.

Similarly, the final rule implementing the Basel III reforms allows holding companies with less than $15.0 billion in consolidated assets as of December 31, 2009 to continue to count toward Tier 1 capital any trust preferred securities issued before May 19, 2010. New issuances of trust preferred securities, however, would not count as Tier 1 regulatory capital.

53

 

 

In addition to requirements of the Dodd-Frank Act discussed above, the act also required the federal banking agencies to adopt certain rules that prohibit banks and their affiliates from engaging in proprietary trading and investing in and sponsoring certain unregistered investment companies (defined as hedge funds and private equity funds). This rule is generally referred to as the “Volcker Rule.” The rules permit the retention of an interest in or sponsorship of covered funds by banking entities under $15.0 billion in assets (such as the Company) if (1) the collateralized debt obligation was established and issued prior to May 19, 2010, (2) the banking entity reasonably believes that the offering proceeds received by the collateralized debt obligation were invested primarily in qualifying trust preferred collateral, and (3) the banking entity’s interests in the collateralized debt obligation was acquired on or prior to December 10, 2013. The Company does not currently anticipate that the Volcker Rule will have a material effect on the operations of the Company or First Mid Bank.

Interest Rate Sensitivity

The Company seeks to maximize its net interest margin while maintaining an acceptable level of interest rate risk. Interest rate risk can be defined as the amount of forecasted net interest income that may be gained or lost due to changes in the interest rate environment, a variable over which management has no control. Interest rate risk, or sensitivity, arises when the maturity or repricing characteristics of interest-bearing assets differ significantly from the maturity or repricing characteristics of interest- bearing liabilities. The Company monitors its interest rate sensitivity position to maintain a balance between rate sensitive assets and rate sensitive liabilities. This balance serves to limit the adverse effects of changes in interest rates. The Company’s asset liability management committee (ALCO) oversees the interest rate sensitivity position and directs the overall allocation of funds.

In the banking industry, a traditional way to measure potential net interest income exposure to changes in interest rates is through a technique known as “static GAP” analysis which measures the cumulative differences between the amounts of assets and liabilities maturing or repricing at various intervals. By comparing the volumes of interest-bearing assets and liabilities that have contractual maturities and repricing points at various times in the future, management can gain insight into the amount of interest rate risk embedded in the balance sheet. The following table sets forth the Company’s interest rate repricing GAP for selected maturity periods at June 30, 2025 (dollars in thousands):

 

 

 

Rate Sensitive Within

 

 

 

 

 

 

1 year

 

 

3 years

 

 

5 years

 

 

Thereafter

 

 

Total

 

 

Fair Value

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and other interest-bearing deposits

 

$

72,234

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

72,234

 

 

$

72,234

 

Certificates of deposit

 

 

2,030

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,030

 

 

 

2,030

 

Taxable investment securities

 

 

112,122

 

 

 

226,231

 

 

 

235,931

 

 

 

445,104

 

 

 

1,019,388

 

 

 

1,019,388

 

Nontaxable investment securities

 

 

10,889

 

 

 

628

 

 

 

2,406

 

 

 

50,360

 

 

 

64,283

 

 

 

64,283

 

Loans

 

 

3,007,544

 

 

 

1,886,049

 

 

 

627,657

 

 

 

245,749

 

 

 

5,766,999

 

 

 

5,442,527

 

Total

 

$

3,204,819

 

 

$

2,112,908

 

 

$

865,994

 

 

$

741,213

 

 

$

6,924,934

 

 

$

6,600,462

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings and NOW accounts

 

$

239,029

 

 

$

—

 

 

$

—

 

 

$

2,341,640

 

 

$

2,580,669

 

 

$

2,580,669

 

Money market accounts

 

 

1,206,140

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,206,140

 

 

 

1,206,140

 

Other time deposits

 

 

944,092

 

 

 

117,679

 

 

 

19,520

 

 

 

653

 

 

 

1,081,944

 

 

 

1,002,725

 

Short-term borrowings/debt

 

 

218,941

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

218,941

 

 

 

218,941

 

Long-term borrowings/debt

 

 

203,586

 

 

 

75,000

 

 

 

45,000

 

 

 

388

 

 

 

323,974

 

 

 

318,171

 

Total

 

$

2,811,788

 

 

$

192,679

 

 

$

64,520

 

 

$

2,342,681

 

 

$

5,411,668

 

 

$

5,326,646

 

Rate sensitive assets-rate sensitive liabilities

 

$

393,031

 

 

$

1,920,229

 

 

$

801,474

 

 

$

(1,601,468

)

 

$

1,513,266

 

 

 

 

Cumulative GAP

 

 

393,031

 

 

 

2,313,260

 

 

 

3,114,734

 

 

 

1,513,266

 

 

 

 

 

 

 

Cumulative amounts as % of total Rate sensitive assets

 

 

5.7

%

 

 

27.7

%

 

 

11.6

%

 

 

-23.1

%

 

 

 

 

 

 

Cumulative Ratio

 

 

5.7

%

 

 

33.4

%

 

 

45.0

%

 

 

21.9

%

 

 

 

 

 

 

The static GAP analysis shows that at June 30, 2025, the Company was asset sensitive, on a cumulative basis, through the twelve-month time horizon. This indicates that future decreases in interest rates could have an adverse effect on net interest income. There are several ways the Company measures and manages the exposure to interest rate sensitivity, including static GAP analysis. The Company’s ALCO also uses other financial models to project interest income under various rate scenarios and prepayment/extension assumptions consistent with First Mid Bank’s historical experience and with known industry trends. ALCO meets at least monthly to review the Company’s exposure to interest rate changes as indicated by the various techniques and to make necessary changes in the composition terms and/or rates of the assets and liabilities.

54

 

 

Capital Resources

At June 30, 2025, the Company’s stockholders' equity increased $47.7 million or 5.6%, to $894.1 million from $846.4 million as of December 31, 2024. During the first six months of 2025, net income contributed $45.6 million to equity before the payment of dividends to stockholders. The change in market value of available-for-sale investment securities increased stockholders' equity by $11.7 million, net of tax. Dividends of $11.5 million were paid during the first six months of 2025.

The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Bank holding companies follow minimum regulatory requirements established by the Board of Governors of the Federal Reserve System (“Federal Reserve System”), First Mid Bank follows similar minimum regulatory requirements established for banks by the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation, as applicable. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary action by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Quantitative measures established by regulatory capital standards to ensure capital adequacy require the Company and its subsidiary bank to maintain minimum capital amounts and ratios (set forth in the table below). Management believes that, as of June 30, 2025 and December 31, 2024, the Company and First Mid Bank, as applicable, met all capital adequacy requirements, as further detailed in Note 10 of our consolidated financial statements.

Stock Plans

Stock Incentive Plan. At the Annual Meeting of Stockholders held April 26, 2017, the stockholders approved the 2017 Stock Incentive Plan ("SI Plan"). The SI Plan was implemented to succeed the Company’s 2007 Stock Incentive Plan, which had a ten-year term. The SI Plan is intended to provide a means whereby directors, employees, consultants and advisors of the Company and its Subsidiaries may sustain a sense of proprietorship and personal involvement in the continued development and financial success of the Company and its Subsidiaries, thereby advancing the interests of the Company and its stockholders. Accordingly, directors and selected employees, consultants and advisors may be provided the opportunity to acquire shares of Common Stock of the Company on the terms and conditions established in the SI Plan.

Following the stockholders’ approval at the 2025 annual meeting of the Company, a maximum of 1,000,000 shares of common stock may be issued under the SI Plan. The Company awarded 79,635 and 53,766 restricted stock awards during 2025 and 2024, respectively and 53,130 and 39,150 as stock unit awards during 2025 and 2024, respectively.

Employee Stock Purchase Plan. At the Annual Meeting of Stockholders held April 25, 2018, the stockholders approved the First Mid-Illinois Bancshares, Inc. Employee Stock Purchase Plan (“ESPP”). The ESPP is intended to promote the interests of the Company by providing eligible employees with the opportunity to purchase shares of common stock of the Company at a 15% discount through payroll deductions. The ESPP is also intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. A maximum of 600,000 shares of common stock may be issued under the ESPP. As of June 30, 2025, 140,634 shares have been issued pursuant to the ESPP. During the six months ended June 30, 2025 and 2024, 13,970 shares and 15,935 shares, respectively, were issued pursuant to the ESPP.

Stock Repurchase Program. Since August 5, 1998, the Board of Directors has approved repurchase programs pursuant to which the Company may repurchase a total of approximately $76.7 million of the Company’s common stock. During 2025, the Company did not repurchase any shares. As of June 30, 2025, the Company had approximately $2.9 million in remaining capacity under its existing repurchase program.

Although the Company adopted the repurchase plan, the Company may make discretionary repurchases in the open market or in privately negotiated transactions from time to time. The timing, manner, price and amount of any such repurchases will be determined by the Company at its discretion and will depend upon a variety of factors including economic and market conditions, price, applicable legal requirements and other factors.

On June 24, 2025, the Board of Directors terminated this stock repurchase plan effective June 30, 2025, and adopted a new stock repurchase program that became effective on July 1, 2025.

Liquidity

Liquidity represents the ability of the Company and its subsidiaries to meet all present and future financial obligations arising in the daily operations of the business. Financial obligations consist of the need for funds to meet extensions of credit, deposit withdrawals and debt servicing. The Company’s liquidity management focuses on the ability to obtain funds economically through assets that may be converted into cash at minimal costs or through other sources. The Company’s other sources of cash include overnight federal fund lines, Federal Home Loan Bank advances, deposits of the State of Illinois, the ability to borrow at the Federal Reserve Bank of Chicago, and the Company’s operating line of credit with The Northern Trust Company.

55

 

 

Details of the Company's liquidity sources include:

•
First Mid Bank has $130 million available in overnight federal fund lines, including $30 million from First Horizon Bank, N.A., $20 million from U.S. Bank, N.A., $20 million from Bankers' Bank, $15 million from The Northern Trust Company, $25 million from Zions Bank, and $20 million from BMO Bank, N.A. Availability of the funds is subject to First Mid Bank meeting minimum regulatory capital requirements for total capital to risk-weighted assets and Tier 1 capital to total average assets. As of June 30, 2025, First Mid Bank met these regulatory requirements.
•
First Mid Bank can borrow from the Federal Home Loan Bank as a source of liquidity. Availability of the funds is subject to the pledging of collateral to the Federal Home Loan Bank. Collateral that can be pledged includes one-to-four family residential real estate loans and securities. At June 30, 2025, the excess collateral at the FHLB would support approximately $1.6 billion of additional advances for First Mid Bank.
•
First Mid Bank is a member of the Federal Reserve System and can borrow funds provided that sufficient collateral is pledged.
•
First Mid Bank has received formal approval from the Federal Reserve Bank and can participate in the Borrower-in-Custody (BIC) program. As a result, the Bank can pledge loans as collateral at the Federal Reserve Bank's Discount Window while retaining custody of the pledged loans. The program enhanced our contingent liquidity position by approximately $401 million as of June 30, 2025.
•
In addition, as of June 30, 2025, the Company had a revolving credit agreement in the amount of $15.0 million with The Northern Trust Company with an outstanding balance of $0 and $15.0 million in available funds. This loan was renewed on April 4, 2025 for one year as a revolving credit agreement. The interest rate is floating at 2.25% over the federal funds rate. The loan is unsecured. The Company and its subsidiary bank were in compliance with the existing covenants at June 30, 2025 and 2024 and December 31, 2024.

Management continues to monitor its expected liquidity requirements carefully, focusing primarily on cash flows from:

•
lending activities, including loan commitments, letters of credit and mortgage prepayment assumptions;
•
deposit activities, including seasonal demand of private and public funds;
•
investing activities, including prepayments of mortgage-backed securities and call provisions on U.S. Treasury and government agency securities; and
•
operating activities, including scheduled debt repayments and dividends to stockholders.

The following table summarizes significant contractual obligations and other commitments at June 30, 2025 (in thousands):

 

 

 

 

 

 

Less than

 

 

 

 

 

 

 

 

More than

 

 

 

Total

 

 

1 year

 

 

1-3 years

 

 

3-5 years

 

 

5 years

 

Time deposits

 

$

1,081,944

 

 

$

944,092

 

 

$

117,679

 

 

$

19,520

 

 

$

653

 

Debt

 

 

103,974

 

 

 

4,124

 

 

 

—

 

 

 

—

 

 

 

99,850

 

Other borrowing

 

 

438,941

 

 

 

268,941

 

 

 

75,000

 

 

 

70,000

 

 

 

25,000

 

Operating leases

 

 

15,234

 

 

 

3,139

 

 

 

5,575

 

 

 

3,541

 

 

 

2,979

 

Supplemental retirement

 

 

1,980

 

 

 

50

 

 

 

250

 

 

 

300

 

 

 

1,380

 

 

 

$

1,642,073

 

 

$

1,220,346

 

 

$

198,504

 

 

$

93,361

 

 

$

129,862

 

For the six months ended June 30, 2025, net cash of $55.6 million was provided by operating activities, $93.1 million was used in investing activities, and $106.3 million was provided by financing activities. In total, cash and cash equivalents increased by $68.8 million since year-end 2024.

56

 

 

Off-Balance Sheet Arrangements

First Mid Bank enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include lines of credit, letters of credit and other commitments to extend credit. Each of these instruments involves, to varying degrees, elements of credit, interest rate and liquidity risk in excess of the amounts recognized in the consolidated balance sheets. The Company uses the same credit policies and requires similar collateral in approving lines of credit and commitments and issuing letters of credit as it does in making loans. The exposure to credit losses on financial instruments is represented by the contractual amount of these instruments. However, the Company does not anticipate any losses from these instruments. Off-balance sheet arrangements are further detailed in Note 11 of our consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in the market risk faced by the Company since December 31, 2024. For information regarding the Company’s market risk, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, such officers have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective. Further, there have been no changes in the Company’s internal control over financial reporting during the last fiscal quarter that have materially affected or that are reasonably likely to affect materially the Company’s internal control over financial reporting.

PART II

From time to time the Company and its subsidiaries may be involved in litigation that the Company believes is a type common to our industry. None of any such existing claims are believed to be individually material at this time to the Company, although the outcome of any such existing claims cannot be predicted with certainty.

ITEM 1A. RISK FACTORS

Various risks and uncertainties, some of which are difficult to predict and beyond the Company’s control, could negatively impact the Company. As a financial institution, the Company is exposed to interest rate risk, liquidity risk, credit risk, operational risk, risks from economic or market conditions, and general business risks among others. Adverse experience with these or other risks could have a material impact on the Company’s financial condition and results of operations, as well as the value of its common stock. See the risk factors and “Supervision and Regulation” described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES

 

Period

 

(a)
Total
Number
of Shares
Purchased

 

 

(b)
Average
Price Paid
per Share

 

 

(c)
Total
Number
of Shares
Purchased
as Part of
Publicly
Announced
Plans or
Programs

 

 

(d)
Approximate
Dollar Value
of Shares
that May
Yet Be
Purchased
Under the
Plans or
Programs

 

April 1, 2025-April 30, 2025

 

 

—

 

 

$

—

 

 

 

—

 

 

$

2,941,000

 

May 1, 2025-May 31, 2025

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,941,000

 

June 1, 2025-June 30, 2025

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,941,000

 

Total

 

 

—

 

 

$

—

 

 

 

—

 

 

$

2,941,000

 

See heading “Stock Repurchase Program” for more information regarding stock purchases.

57

 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None of the Company's directors and officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company's fiscal quarter ended June 30, 2025 (each as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended).
 

58

 

 

ITEM 6. EXHIBITS

The exhibits required by Item 601 of Regulation S-K and filed herewith are listed in the Exhibit Index that precedes the Signature Page and the exhibits filed.

 

Exhibit

Number

 

Exhibit Index to Quarterly Report on Form 10-Q Description and Filing or Incorporation Reference

 

 

 

3.1

 

Amendment to Restated Certificate of Incorporation, dated May 12, 2025

Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on May 16, 2025

3.2

 

Restated Certificate of Incorporation, dated May 12, 2025

Incorporated by reference to Exhibit 3.2 to the Company;s Current Report on Form 8-K filed with the SEC on May 16, 2025

10.1

 

Ninth Amendment to the Sixth Amended and Restated Credit Agreement by and between First Mid Bancshares, Inc. and The Northern Trust Company, dated as of April 4, 2025.

Incorporated by reference to Exhibit 10.1to the Company's Current Report on Form 8-K filed with the SEC on April 4, 2025

10.2

 

2025 Stock Incentive Plan

Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on May 6, 2025

10.3

 

Employment Agreement between the Company and Matthew K. Smith, effective June 24, 2025

Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on June 30, 2025

10.4

 

Employment Agreement between the Company and Jordan D. Read, effective June 24, 2025

Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on June 30, 2025

31.1

 

Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002

31.2

 

Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002

 

32.1

 

Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

 

32.2

 

Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

 

101.INS

 

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document

 

101.SCH

 

Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents

 

104

 

Cover page formatted as Inline XBRL and contained in Exhibits 101

 

 

 

 

 

59

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FIRST MID BANCSHARES, INC.

(Registrant)

 

Date: August 8, 2025

 

 

/s/ Joseph R. Dively

 

Joseph R. Dively

Chief Executive Officer

 

/s/ Jordan D. Read

 

Jordan D. Read

Chief Financial and Risk Officer

 

60

 

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