8-K: First Mid Bancshares Reports Record Q4 2025 Earnings

First Mid Bancshares, Inc. announced record high quarterly net income and diluted EPS for the fourth quarter of 2025, alongside significant loan and deposit growth and regulatory approval for the Two Rivers acquisition.

Summary

• Record high quarterly net income of $23.7 million, or $0.99 diluted EPS.
• Adjusted quarterly net income was $25.3 million, or $1.06 diluted EPS.
• Total loans reached $6.01 billion, marking a quarterly increase of $187.3 million (3.2%) and an annual increase of 6.0%.
• Total deposits grew to $6.40 billion, a quarterly increase of $105.7 million (1.7%) and an annual increase of 5.6%.
• Tangible book value per share increased 4.3% during the quarter to $29.42 and 20.3% for the full year.
• Received all regulatory approvals for the acquisition of Two Rivers Financial Group, Inc.
• The Board of Directors declared a regular quarterly dividend of $0.25 per share.
• Net interest income for the fourth quarter of 2025 was $66.5 million, a $0.2 million increase from the prior quarter and a $7.6 million (12.9%) increase from the fourth quarter of 2024.
• Net interest margin, on a tax equivalent basis, was 3.73% for the quarter, a decrease of 7 basis points from the prior quarter.
• Asset quality remained strong with the allowance for credit losses (ACL) to total loans ratio at 1.25%.
• Non-performing loans to total loans increased to 0.53% from 0.38% due to two specific relationships.
• Non-interest income for the quarter was $21.7 million, down from $22.9 million in the prior quarter.
• Non-interest expense totaled $55.9 million, compared to $57.1 million in the prior quarter.
• The adjusted efficiency ratio improved to 57.55% from 58.75% in the prior quarter and 58.76% in the same period last year.
• Capital levels remained strong, with Total capital to risk-weighted assets at 15.67% and Common equity tier 1 capital to risk-weighted assets at 13.16%.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong quarter with record earnings, robust loan and deposit growth, and strategic progress on the Two Rivers acquisition, despite a slight dip in net interest margin and an increase in non-performing loans.

Positives

• Achieved record high quarterly net income of $23.7 million and diluted EPS of $0.99.
• Reported strong adjusted quarterly net income of $25.3 million, or $1.06 diluted EPS.
• Experienced significant loan growth of 3.2% quarterly ($187.3 million) and 6.0% annually ($338.9 million), diversified across multiple segments.
• Demonstrated solid deposit growth of 1.7% quarterly ($105.7 million) and 5.6% annually.
• Tangible book value per share increased substantially by 4.3% quarterly to $29.42 and 20.3% annually.
• Successfully implemented new retail online banking and core banking applications, enhancing customer experience and operational efficiency.
• Received all necessary regulatory approvals for the acquisition of Two Rivers Financial Group, Inc., signaling progress on strategic expansion.
• Wealth management revenues increased by $1.4 million from the prior quarter to $6.6 million, contributing to a record year for the segment.
• Insurance commissions increased by $0.4 million from the prior quarter to $7.4 million, driven by organic growth and acquired books of business, also achieving a record year.
• Improved the adjusted efficiency ratio to 57.55%, indicating better cost management.
• Maintained strong capital levels, well above well-capitalized thresholds.
• Net charge-offs were $0.4 million, the lowest in six quarters.

Negatives

• Net interest margin (tax equivalent) decreased by 7 basis points to 3.73% from the prior quarter, primarily due to lower accretion income and increased interest expense from sub-debt repricing.
• Non-interest-bearing demand deposits declined by $57.7 million (4.0%) due to seasonal cash flow fluctuations from a few large depositors.
• Non-performing loans to total loans increased to 0.53% from 0.38% in the prior quarter, primarily due to two specific relationships.
• Nonperforming assets to total assets increased from 0.30% in the prior quarter to 0.44%.
• Special mention loans increased by $59.3 million to $120.5 million.
• Substandard loans increased by $4.6 million to $80.0 million.
• Incurred net securities losses of $0.4 million from the sale of low-yielding bonds.
• Recorded a write-down of subordinated debt-related discount costs totaling $0.3 million.
• Wrote down other investments totaling $0.4 million during the quarter.

Risks

• The possibility that any of the anticipated benefits of the proposed transactions between First Mid and Two Rivers will not be realized within the expected time period.
• The risk that integration of the operations of Two Rivers with First Mid will be materially delayed or will be more costly or difficult than expected.
• The inability to complete the proposed transactions due to the failure to satisfy conditions to completion, including failure to obtain required shareholder and other approvals.
• The failure of the proposed transactions to close for any other reason.
• The effect of the announcement of the proposed transactions on customer relationships and operating results.
• The possibility that the proposed transactions may be more expensive to complete than anticipated, including as a result of unexpected factors or events.
• Changes in interest rates.
• General economic conditions and those in the market areas of First Mid and Two Rivers.
• 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 and Two Rivers' loan or investment portfolios and the valuation of those investment portfolios.
• Demand for loan products.
• Deposit flows.
• Competition and demand for financial services in the market areas of First Mid and Two Rivers.
• Accounting principles, policies, and guidelines.
• The ability to complete the proposed transactions.

Future Outlook

First Mid Bancshares anticipates closing the acquisition of Two Rivers Financial Group, Inc. in the first quarter of 2026, expanding its presence into Iowa. The company expects continued growth and improved customer experience and efficiency following the successful implementation of new retail online banking and core banking applications. Management projects minimal future losses from a large non-performing loan relationship currently in discussions for a book of business sale.

Management Comments

• "We finished off a landmark year for First Mid with record annual earnings per share and net income. Our team executed at the highest levels on key strategic technology projects and now with our new retail online banking and core banking applications implemented, we have improved the customer experience and deployed a more efficient platform for growth. We are pleased with the continued progress towards closing our pending acquisition of Two Rivers Financial Group, Inc. as we received all regulatory approvals in the fourth quarter. We still anticipate closing to occur in the first quarter of 2026 as we enter Iowa with a great partner." Joseph Dively, Chairman and CEO.
• "Our team was able to capitalize on opportunities late in the fourth quarter to drive over 3% loan growth during the period and 6% for the year. In addition, our commitment to creating shareholder value through a diversified income stream is reflected in the growth of our business lines, including a record year of revenue for both wealth management and insurance." Matthew Smith, President.

Industry Context

StockSavvy.ai notes that First Mid Bancshares' strong loan and deposit growth, coupled with an improved efficiency ratio, positions it favorably within the regional banking sector, especially as it expands into new markets like Iowa through strategic acquisitions. The focus on diversified income streams from wealth management and insurance aligns with broader industry trends seeking to reduce reliance on traditional interest income, enhancing resilience in varying interest rate environments.

Comparison to Industry Standards

• NA

Stakeholder Impact

• Shareholders: Positive impact due to record earnings, increased tangible book value, declared quarterly dividend, and strategic growth initiatives (Two Rivers acquisition).
• Customers: Improved customer experience due to new retail online banking and core banking applications. Potential for expanded services and geographic reach with the Two Rivers acquisition.
• Employees: Potential for integration challenges and opportunities related to the Two Rivers acquisition. Incentive compensation tied to strong business line performance.
• Creditors: Strong capital levels and asset quality provide reassurance.

Next Steps

• Closing of the acquisition of Two Rivers Financial Group, Inc. in the first quarter of 2026.
• Continued integration of Two Rivers' operations with First Mid.
• Ongoing efforts to capitalize on opportunities for loan growth.
• Further development and utilization of new retail online banking and core banking applications.
• Monitoring credit normalization trends.

Key Dates

Recommendation

The company delivered record quarterly net income and EPS, demonstrating strong operational performance. Significant loan and deposit growth, coupled with a notable increase in tangible book value per share, indicates robust financial health and effective capital management. The successful receipt of regulatory approvals for the Two Rivers acquisition signals strategic expansion and future growth potential. While there was a slight decrease in net interest margin and an increase in non-performing loans, these are manageable given the overall positive trends, improved efficiency ratio, and strong capital position. The outlook for continued growth and strategic execution makes this an attractive investment.

Keywords

First Mid Bancshares, FMBH, Financial Results, Q4 2025, Earnings, Net Income, EPS, Loans, Deposits, Tangible Book Value, Two Rivers Financial Group, Acquisition, Merger, Banking, Wealth Management, Insurance, Net Interest Income, Net Interest Margin, Asset Quality, Efficiency Ratio, Dividend, Community Bank