425: First Mid Bancshares Reports Record Q4, Annual Earnings

First Mid Bancshares, Inc. announced record high quarterly and annual net income and diluted EPS for Q4 2025, alongside significant loan and deposit growth and regulatory approval for the Two Rivers acquisition.

Summary

• First Mid Bancshares, Inc. reported record high quarterly net income of $23.7 million, or $0.99 diluted EPS, for the quarter ended December 31, 2025.
• Adjusted quarterly net income reached $25.3 million, or $1.06 diluted EPS.
• The company achieved record annual earnings per share and net income for the full year 2025.
• Total loans grew by $187.3 million (3.2%) during the quarter to $6.01 billion, and by 6.0% for the full year.
• Total deposits increased by $105.7 million (1.7%) during the quarter to $6.40 billion, and by 5.6% for the full year.
• Tangible book value per share increased 4.3% during the quarter to $29.42 and 20.3% for the year.
• Regulatory approval was received for the acquisition of Two Rivers Financial Group, Inc., with closing anticipated in the first quarter of 2026.
• The Board of Directors declared a regular quarterly dividend of $0.25 per share.
• Net interest income for Q4 2025 was $66.5 million, a slight increase of $0.2 million from the prior quarter and a 12.9% increase from Q4 2024.
• Net interest margin, on a tax equivalent basis, was 3.73% for Q4 2025, a decrease of 7 basis points from the prior quarter, primarily due to lower accretion income and increased interest expense from sub-debt repricing.
• Asset quality remained strong with an allowance for credit losses (ACL) to total loans ratio of 1.25%, in line with the prior quarter.
• Net charge-offs were $0.4 million, the lowest in 6 quarters.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive report, driven by record earnings, robust loan and deposit growth, and successful strategic execution on technology and acquisitions. While there are some signs of asset quality normalization and NIM compression, the overall financial health and strategic progress are highly favorable.

Positives

• Record high quarterly net income of $23.7 million and diluted EPS of $0.99.
• Record annual earnings per share and net income for the full year 2025.
• Strong quarterly loan growth of 3.2% ($187.3 million) and annual growth of 6.0% ($338.9 million).
• Solid quarterly deposit growth of 1.7% ($105.7 million) and annual growth of 5.6%.
• Tangible book value per share increased 4.3% quarterly to $29.42 and 20.3% annually.
• Received all regulatory approvals for the acquisition of Two Rivers Financial Group, Inc., with closing expected in Q1 2026.
• Successful implementation of new retail online banking and core banking applications, enhancing customer experience and efficiency.
• Net interest income increased by $7.6 million (12.9%) compared to Q4 2024.
• Wealth management revenues increased by $1.4 million from the prior quarter, contributing to a record year for revenue in this segment.
• Insurance commissions increased by $0.4 million from the prior quarter, also contributing to a record year for revenue.
• Efficiency ratio improved to 57.55% from 58.75% in the prior quarter.
• Capital levels remained strong and above well-capitalized thresholds (Total capital to risk-weighted assets 15.67%, Tier 1 capital 13.55%, Common equity tier 1 13.16%, Leverage ratio 11.07%).
• Net charge-offs of $0.4 million were the lowest in 6 quarters.

Negatives

• Net interest margin (tax equivalent) decreased by 7 basis points to 3.73% from 3.80% in the prior quarter, mainly due to lower accretion income and increased interest expense from sub-debt repricing.
• Non-interest-bearing demand deposits declined $57.7 million (4.0%) from the prior quarter 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 from two relationships.
• The ACL to non-performing loans ratio decreased to 234% from 328.51% in the prior quarter due to the addition of new non-performing relationships.
• Nonperforming assets to total assets increased from 0.30% to 0.44%.
• Special mention loans increased by $59.3 million to $120.5 million.
• Substandard loans increased $4.6 million to $80.0 million.

Risks

• The anticipated benefits of the proposed transactions between First Mid and Two Rivers may not be realized within the expected time period.
• Integration of the operations of Two Rivers with First Mid may be materially delayed or will be more costly or difficult than expected.
• 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 or any of the other foregoing risks.

Future Outlook

First Mid Bancshares anticipates closing the acquisition of Two Rivers Financial Group, Inc. in the first quarter of 2026, following the receipt of all regulatory approvals. The company expects to continue leveraging its newly implemented retail online banking and core banking applications for improved customer experience and efficient growth. Management also expects continued progress in diversifying income streams through wealth management and insurance business lines.

Management Comments

• Joseph Dively, Chairman and CEO: "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."
• Matthew Smith, President: "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."

Industry Context

StockSavvy.ai notes that First Mid Bancshares' strong loan and deposit growth, coupled with record annual earnings, positions it favorably within the regional banking sector, which is currently navigating a dynamic interest rate environment. The successful implementation of new core banking technology aligns with broader industry trends towards digital transformation and enhanced customer experience. The pending acquisition of Two Rivers Financial Group, Inc. reflects a continued consolidation trend in the banking industry, as institutions seek to expand market share and achieve economies of scale. The growth in non-interest income from wealth management and insurance also indicates a strategic diversification away from traditional interest-based revenue, a common strategy among banks to build more resilient income streams.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to benchmark against industry standards. However, the reported capital ratios (Total capital to risk-weighted assets 15.67%, Tier 1 capital to risk-weighted assets 13.55%, Common equity tier 1 capital to risk-weighted assets 13.16%, Leverage ratio 11.07%) are well above regulatory 'well capitalized' minimums, suggesting a strong capital position relative to general banking industry requirements.

Stakeholder Impact

• Shareholders: Positive impact due to record earnings, increased tangible book value per share, and a consistent quarterly dividend. The successful acquisition is expected to enhance future value.
• Customers: Improved customer experience through new retail online banking and core banking applications. Two Rivers customers will be integrated into First Mid's services.
• Employees: Integration of Two Rivers employees into First Mid, with potential for new opportunities or changes in roles. Incentive compensation tied to strong performance in wealth management and insurance business lines.
• Creditors: Strong capital levels and a paydown of subordinated debt indicate a healthy financial position, reducing credit risk.

Next Steps

• Closing of the Two Rivers Financial Group, Inc. acquisition, anticipated in the first quarter of 2026.
• Payment of the regular quarterly dividend of $0.25 per share on February 27, 2026, to shareholders of record as of February 12, 2026.
• Continued integration of Two Rivers operations post-acquisition.
• Ongoing leveraging of new retail online banking and core banking applications for growth and efficiency.

Key Dates

Recommendation

The filing presents exceptionally strong financial results, including record quarterly and annual net income and EPS, robust loan and deposit growth, and a significant increase in tangible book value per share. The successful receipt of regulatory approvals for the Two Rivers acquisition, expected to close soon, provides a clear path for strategic expansion. While there are minor concerns regarding NIM compression and a slight increase in non-performing loans, these are overshadowed by the overall positive performance, improved efficiency, and strong capital position. The company's strategic initiatives in technology and diversified income streams further enhance its long-term growth prospects, making it an attractive investment.

Keywords

First Mid Bancshares, FMBH, Q4 2025 Earnings, Bank Earnings, Financial Results, Loan Growth, Deposit Growth, Net Income, EPS, Two Rivers Acquisition, Bank M&A, Net Interest Margin, Asset Quality, Tangible Book Value, Wealth Management, Insurance Commissions, Community Banking, SEC Filing