10-K: First Mid Bancshares Reports Increased Net Income for 2024, Driven by Strategic Acquisitions and Organic Growth

First Mid Bancshares, Inc. reports a net income increase for the year ended December 31, 2024, fueled by strategic acquisitions and organic growth initiatives.

Summary

• First Mid Bancshares, Inc. reported a net income of $78.9 million for the year ended December 31, 2024, compared to $68.9 million in 2023 and $73.0 million in 2022.
• Diluted earnings per share were $3.30 in 2024, $3.15 in 2023, and $3.60 in 2022.
• Total assets were $7.52 billion at December 31, 2024, down slightly from $7.59 billion in 2023 but up from $6.74 billion in 2022.
• Net loan balances increased to $5.60 billion at the end of 2024 from $5.51 billion in 2023 and $4.77 billion in 2022.
• Total deposit balances decreased to $6.06 billion at December 31, 2024, from $6.12 billion at December 31, 2023, but increased from $5.26 billion at December 31, 2022.
• The net interest margin (tax-effected) increased to 3.34% for 2024 from 3.05% in 2023 and 3.13% in 2022.
• Non-interest income increased to $96.3 million in 2024, compared to $86.8 million in 2023 and $74.7 million in 2022.
• Non-interest expenses increased to $215.0 million in 2024, compared to $185.7 million in 2023 and $162.9 million in 2022.
• The company's Tier 1 capital ratio to risk-weighted assets was 12.82% at December 31, 2024.
• The total capital to risk-weighted assets ratio was 15.37% at December 31, 2024.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with increased net income and strategic growth, but also acknowledges risks and challenges.

Positives

• The company's capital position remains strong and consistently maintains regulatory capital ratios above the well-capitalized standards.
• The company's liquidity position remains sufficient to fund operations and meet the requirements of borrowers, depositors, and creditors.
• The company is committed to enhancing employees' overall experience by offering a competitive total rewards package.
• The company increased the starting rate of pay an additional $0.50 per hour, for the second consecutive year, positively impacting many entry level employees.
• All salary range bands were increased by 7%, providing employees with even greater opportunities for growth and earning potential within their roles.
• A chronic condition management program was introduced at no cost to employees and their covered dependents enrolled in our medical plans, providing valuable resources to manage their health effectively.

Negatives

• Nonperforming loans increased to $29.8 million at December 31, 2024, compared to $20.1 million at December 31, 2023.
• Repossessed assets balances totaled $2.2 million at December 31, 2024 compared to $1.2 million at December 31, 2023.
• Net charge-offs were $4.1 million during 2024, compared to $0.3 million during 2023.
• The ratio of the allowance for credit losses to nonperforming loans decreased to 235.2% as of December 31, 2024, compared to 341.2% as of December 31, 2023.

Risks

• The company is exposed to credit risk, interest rate and liquidity risk, operational risk, risks from economic and market conditions, and general business risks.
• Difficult economic conditions and market disruption have adversely impacted the banking industry and financial markets generally and may again significantly affect the business, financial condition, or results of operations of the company.
• The company is subject to Environmental, Social and Governance (ESG) risks that could adversely affect its reputation and the market price of its securities.
• Climate change could have a material negative impact on the company and customers.
• A failure in or breach of the company's operational or security systems, or those of its third-party service providers, including as a result of cyber-attacks, could disrupt the company's business, result in unintentional disclosure or misuse of confidential or proprietary information, damage the company's reputation, increase our costs, and cause losses.

Future Outlook

The company strives to create shareholder value by maintaining a strong balance sheet and increasing profits through organic growth and strategic acquisitions.

Management Comments

• The company believes that growth of revenues and its customer base is vital to the goal of increasing the value of its shareholders investment.
• The company strives for employee engagement at all levels of the organization.
• The judgments, experiences and capabilities of these employees are used to create an environment where meeting the needs of our customer, communities and stockholders is always a priority.

Industry Context

The company operates in a highly competitive industry, facing competition from national, regional, and internet banks, as well as other financial institutions.

Comparison to Industry Standards

• The company's credit loss experience has been good with average net charge offs amounting to $2.6 million (0.06% of total loans) over the past five years.
• Nonperforming loans were $29.8 million (0.53% of total loans) at December 31, 2024.
• These percentages have historically compared well with peer financial institutions and continue to do so today.

Legal Proceedings

• 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.

Related Party Transactions

• Certain officers, directors and principal stockholders of the company and its subsidiaries, their immediate families or their affiliated companies (related parties) have loans with one or more of the subsidiaries.
• Loans to related parties totaled approximately $247.9 million and $248.7 million at December 31, 2024 and 2023, respectively.
• Deposits from related parties held by First Mid Bank at December 31, 2024 and 2023 totaled $61.2 million and $37.7 million, respectively.

Stakeholder Impact

• The company strives to provide a competitive dividend as well as the opportunity for stock price appreciation.
• The company invests in and contributes to the growth and development of its communities.
• The commitment to the communities program encourages employees to be engaged in the communities where they live and work.

Next Steps

• Management focuses on intentional development with activities needed to prepare the employee for the next level.

Key Dates