First Mid Bancshares, Inc. Announces Third Quarter 2024 Results
MATTOON, Ill., Oct. 31, 2024 (GLOBE NEWSWIRE) -- First Mid Bancshares, Inc. (NASDAQ:FMBH) (the "Company") today announced its financial results for the quarter ended September 30, 2024.
Highlights
Net income of $19.5 million, or $0.81 diluted EPS
Adjusted net income (non-GAAP) of $19.8 million, or $0.83 diluted EPS
Loan growth of 1% helped drive second consecutive quarter of net interest income expansion
16.6% year-over-year growth for wealth management and insurance combined
Tangible book value per share increased 6.6% in the quarter
Board of Directors declares regular quarterly dividend of $0.24 per share
"We are pleased to deliver another solid and consistent quarter of financial results," said Joe Dively, Chairman and Chief Executive Officer. "Healthy growth in loans, core deposits, and noninterest income, along with the sustainable strength in our asset quality, helped fuel our operating results for the period. We strengthened our balance sheet with a reduction in borrowings and subordinated debt while increasing tangible book value per share by nearly 7% in the quarter and 26% from last September. We continue to advance on our strategic initiatives to deliver exceptional value to our customers, communities, and shareholders," Dively concluded.
Net Interest Income
Net interest income for the third quarter of 2024 increased by $0.8 million, or 1.4% compared to the second quarter of 2024. Interest income increased by $2.5 million primarily driven by loan growth and repricing of maturing loans, as well as a remix of lower yielding securities into cash. Interest expense increased by $1.7 million primarily in higher rates on money market accounts and repricing of CD's. The increase was primarily early in the quarter and stabilized in the second half of the period. In addition, the Company paid off $55.0 million of brokered CD's that matured at the end of September and carried an average rate of 5.3%.
In comparison to the third quarter of 2023, net interest income increased $7.1 million, or 14.1%. Interest income increased by $10.7 million and interest expense increased $3.6 million. The increases were partially driven by the addition of Blackhawk, which closed in the middle of the third quarter last year. In addition, higher rates on new loan originations and refinancing have outpaced higher interest costs.
Net Interest Margin
Net interest margin, on a tax equivalent basis, was 3.35% for the third quarter of 2024, which was a decline of one basis point compared to the prior quarter. Earning asset yields increased by eight basis points, while the average cost of funds increased by nine basis points. Accretion income for the quarter was $3.6 million, which was a decrease of $0.1 million from the prior quarter.
In comparison to the third quarter of last year, the net interest margin increased 29 basis points, with an average earnings asset increase of 46 basis points versus the average cost of funds increase of 17 basis points. The increases were due to higher rates on new and renewed loans and deposits.
Loan Portfolio
Total loans ended the quarter at $5.62 billion, representing an increase of $54.0 million, or 1.0% compared to the prior quarter. Loan growth was well diversified primarily between commercial real estate, agricultural operating, and commercial and industrial. The largest decline was in consumer loans.
Asset Quality
The Company's asset quality metrics were solid again in the third quarter reflecting the strength of the credit culture. The allowance for credit losses ("ACL") increased by $0.5 million to $68.8 million with an ending ACL to total loans ratio of 1.22%. Provision expense was recorded in the amount of $1.3 million and the Company had net charge offs of $0.8 million in the period. Also, at the end of the third quarter, the ratio of non-performing loans to total loans was 0.32%, and the ACL to non-performing loans was 377%. The ratio of non-performing assets to total assets was 0.27% at quarter end. Non-performing loans decreased by $0.8 million in the period to $18.2 million. Special mention loans increased $7.4 million in the quarter to $38.2 million. Substandard loans increased $1.4 million in the period to $29.0 million.
Deposits and Borrowings
Total deposits ended the quarter at $6.09 billion, which represented a decrease of $26.9 million, or 0.04% from the prior quarter. The decrease included $55.0 million of brokered CD's that had an average rate of 5.30% and matured at the end of the quarter. Excluding these brokered CD's, deposits increased in the period primarily with higher CD's more than offsetting a decline in interest bearing demand deposits. In addition, the Company reduced its FHLB advances by $25.0 million in the quarter. In comparison to the prior quarter, the average cost of funds increased in the third quarter of 2024 to 2.00%.
During the quarter, the Company repurchased and cancelled $16.0 million of its outstanding 3.95% fixed-to-floating rate subordinated notes due 2030 ("Notes"). The Notes were purchased at a discount in the open market and generated a gain, net of the discount and fees, of $0.4 million.
Noninterest Income
Noninterest income for the third quarter of 2024 was $23.0 million compared to $22.4 million in the prior quarter. Wealth management revenues increased $0.4 million primarily on higher brokerage and trust fees and ended the period with $6.4 billion in assets under management. Ag services revenue totaled $1.8 million in the quarter most of which was farm management income versus land sales. Insurance revenues declined $0.5 million compared to the prior quarter due to regular seasonality in the business. Other income increased $0.9 million in the period and included a net gain on the repurchase of a portion of the Company's subordinated Notes.
In comparison to the third quarter of 2023, noninterest income increased $3.6 million when excluding the impacts from securities gains and losses. The increase was primarily driven by the addition of Blackhawk and growth in insurance revenues.
Noninterest Expenses
Noninterest expense for the third quarter of 2024 totaled $53.9 million compared to $51.4 million in the prior quarter. The increase was partially driven by the acquisition of Mid Rivers Insurance Group, which closed on July 9th. In addition, expenses were higher in salaries and benefits driven by higher incentive compensation and medical insurance expenses. Debit card expense increased $0.6 million due to higher usage and the annual service provider incentive credit in the second quarter. Net occupancy and equipment increased by $0.5 million on higher software license costs. The current quarter included $0.2 million in acquisition and integration costs.
In comparison to the third quarter of 2023, noninterest expenses increased $6.8 million. The increase was primarily driven by the addition of Blackhawk and organic growth, including the impacts from higher inflation, partially offset with lower acquisition and integration costs.
The Company's efficiency ratio, as adjusted in the non-GAAP reconciliation table herein, for the third quarter 2024 was 61.3% compared to 59.6% in the prior quarter and 58.6% for the same period last year.
Capital Levels and Dividend
The Company's capital levels remained strong and comfortably above the "well capitalized" levels. Capital levels ended the period as follows:
Total capital to risk-weighted assets
15.24%
Tier 1 capital to risk-weighted assets
12.70%
Common equity tier 1 capital to risk-weighted assets
12.29%
Leverage ratio
10.14%
The Company's Board of Directors approved its regular quarterly dividend of $0.24 payable on November 29, 2024 for shareholders of record on November 14, 2024.
About First Mid: First Mid Bancshares, Inc. ("First Mid") is the parent company of First Mid Bank & Trust, N.A., First Mid Insurance Group, Inc., and First Mid Wealth Management Co. First Mid is a $7.6 billion community-focused organization that provides a full-suite of financial services including banking, wealth management, brokerage, Ag services, and insurance through a sizeable network of locations throughout Illinois, Missouri, Texas, and Wisconsin and a loan production office in the greater Indianapolis area. Together, our First Mid team takes great pride in providing solutions and services to the customers and communities and has done so over the last 159 years. More information about the Company is available on our website at www.firstmid.com.
Non-GAAP Measures: In addition to reports presented in accordance with generally accepted accounting principles ("GAAP"), this release contains certain non-GAAP financial measures. The Company believes that such non-GAAP financial measures provide investors with information useful in understanding the Company's financial performance. Readers of this release, however, are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported. These non-GAAP financial measures are detailed as supplemental tables and include "Adjusted Net Income," "Adjusted Diluted EPS," "Efficiency Ratio," "Net Interest Margin, tax equivalent," and "Tangible Book Value per Common Share". While the Company believes these non-GAAP financial measures provide investors with a broader understanding of the capital adequacy, funding profile and financial trends of the Company, this information should be considered as supplemental in nature and not as a substitute to the related financial information prepared in accordance with GAAP. These non-GAAP financial measures may also differ from the similar measures presented by other companies.
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 products; deposit flows; competition, demand for financial services in the market areas of First Mid; accounting principles, policies and guidelines; and the impact of pandemics on First Mid's businesses. 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.
Investor Contact: Austin FrankSVP, Shareholder Relations217-258-5522
Matt SmithChief Financial
FIRST MID BANCSHARES, INC.
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
As of
September 30,
December 31,
September 30,
2024
2023
2023
Assets
Cash and cash equivalents
$
164,191
$
143,064
$
383,237
Investment securities
1,125,774
1,179,402
1,226,746
Loans (including loans held for sale)
5,614,591
5,580,565
5,540,065
Less allowance for credit losses
(68,774
)
(68,675
)
(68,241
)
Net loans
5,545,817
5,511,890
5,471,824
Premises and equipment, net
101,464
101,396
102,004
Goodwill and intangibles, net
265,139
264,231
267,793
Bank Owned Life Insurance
169,635
166,125
165,022
Other assets
190,469
220,686
238,668
Total assets
$
7,562,489
$
7,586,794
$
7,855,294
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing
$
1,387,290
$
1,398,234
$
1,389,022
Interest bearing
4,701,544
4,725,425
4,957,302
Total deposits
6,088,834
6,123,659
6,346,324
Repurchase agreements with customers
204,343
213,721
214,978
Other borrowings
238,712
263,787
364,953
Junior subordinated debentures
24,224
24,058
24,003
Subordinated debt
87,373
106,755
106,648
Other liabilities
60,506
61,610
60,440
Total liabilities
6,703,992
6,793,590
7,117,346
Total stockholders' equity
858,497
793,204
737,948
Total liabilities and stockholders' equity
$
7,562,489
$
7,586,794
$
7,855,294
FIRST MID BANCSHARES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Interest income:
Interest and fees on loans
$
81,775
$
69,143
$
239,158
$
183,747
Interest on investment securities
7,036
9,284
21,846
23,604
Interest on federal funds sold & other deposits
2,371
2,011
6,533
2,888
Total interest income
91,182
80,438
267,537
210,239
Interest expense:
Interest on deposits
28,341
22,047
80,775
51,394
Interest on securities sold under agreements to repurchase
1,444
1,625
5,115
4,811
Interest on other borrowings
2,195
4,749
6,757
13,716
Interest on jr. subordinated debentures
567
545
1,646
1,314
Interest on subordinated debt
1,092
1,029
3,466
3,003
Total interest expense
33,639
29,995
97,759
74,238
Net interest income
57,543
50,443
169,778
136,001
Provision for credit losses
1,266
5,911
1,992
5,552
Net interest income after provision for loan
56,277
44,532
167,786
130,449
Non-interest income:
Wealth management revenues
5,816
4,940
16,543
15,795
Insurance commissions
6,003
5,199
21,747
19,416
Service charges
3,121
2,994
9,304
7,583
Net securities gains/(losses)
(277
)
3,389
(433
)
3,337
Mortgage banking revenues
1,109
846
2,853
1,328
ATM/debit card revenue
4,267
3,766
12,603
10,114
Other
2,984
1,919
7,306
7,445
Total non-interest income
23,023
23,053
69,923
65,018
Non-interest expense:
Salaries and employee benefits
31,565
25,422
92,177
75,037
Net occupancy and equipment expense
8,055
6,929
23,122
18,969
Net other real estate owned (income) expense
107
902
171
1,062
FDIC insurance
829
785
2,600
2,324
Amortization of intangible assets
3,405
2,568
10,242
5,567
Stationary and supplies
482
335
1,243
942
Legal and professional expense
2,573
1,844
7,558
5,314
ATM/debit card expense
1,869
1,751
4,341
3,990
Marketing and donations
836
764
2,512
2,326
Other
4,212
5,796
14,720
13,184
Total non-interest expense
53,933
47,096
158,686
128,715
Income before income taxes
25,367
20,489
79,023
66,752
Income taxes
5,885
5,372
19,293
15,888
Net income
$
19,482
$
15,117
$
59,730
$
50,864
Per Share Information
Basic earnings per common share
$
0.81
$
0.81
$
2.50
$
1.74
Diluted earnings per common share
0.81
0.80
2.49
1.74
Weighted average shares outstanding
23,905,099
20,528,717
23,891,430
20,510,585
Diluted weighted average shares outstanding
24,006,647
20,628,239
23,988,478
20,596,283
FIRST MID BANCSHARES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data, unaudited)
For the Quarter Ended
September 30,
June 30,
March 31,
December 31,
September 30,
2024
2024
2024
2023
2023
Interest income:
Interest and fees on loans
$
81,775
$
79,560
$
77,823
$
78,676
$
69,143
Interest on investment securities
7,036
7,405
7,405
8,515
9,284
Interest on federal funds sold & other deposits
2,371
1,718
2,444
2,736
2,011
Total interest income
91,182
88,683
