FIRST MID BANCSHARES INC
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
FMBH$50.61-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0000950170-24-092347
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0000950170-24-123741
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 189 previous paragraphs and 189 current paragraphs.
107 unchanged; 77 reworded; 3 added; 4 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 25 previous and 25 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
Insurance commissions increased primarily due to organic growth and the acquisitions of PGIB and MRIG during the second quarter of 2023 and third quarter of 2024, respectively.
Current report
$100.5 million (representing 579 loans) for the nine months ended September 30, 2024.
Current report
$45.5 million (representing 318 loans) for the nine months ended September 30, 2023.
Removed paragraphs (4)
Previous report
Insurance commissions increased primarily due to an increase in commission income, including the acquisition of PGIB, partially offset by a decrease in contingency income during 2024 compared to the same period last year.
Previous report
$52.4 million (representing 312 loans) for the six months ended June 30, 2024.
Previous report
$25.8 million (representing 176 loans) for the six months ended June 30, 2023.
Previous report
On a net basis, all other categories of operating expenses increased during the period compared to last year primarily due to the acquisition of Blackhawk Bank.
Reworded paragraphs (77)
Previous wording
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, 2024 and 2023. 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.
Current wording
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 nine months ended September 30, 2024 and 2023. 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.
Previous wording
Net income was $40.2 million and $35.7 million for the six months ended June 30, 2024 and 2023, respectively. Diluted net income per common share was $1.68 and $1.74 for the six months ended June 30, 2024 and 2023, respectively.
Current wording
Net income was $59.7 million and $50.9 million for the nine months ended September 30, 2024 and 2023, respectively. Diluted net income per common share was $2.49 and $2.40 for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
The following table shows the Company’s annualized performance ratios for six months ended June 30, 2024 and 2023, compared to the performance ratios for the year ended December 31, 2023:
Current wording
The following table shows the Company’s annualized performance ratios for nine months ended September 30, 2024 and 2023, compared to the performance ratios for the year ended December 31, 2023:
Previous wording
Total assets were $7.6 billion at June 30, 2024, compared to $7.6 billion as of December 31, 2023. From December 31, 2023 to June 30, 2024, cash and cash equivalents increased $92.4 million, net loan balances decreased $22.4 million and investment securities decreased $60.7 million. Net loan balances were $5.48 billion at June 30, 2024 compared to $5.51 billion at December 31, 2023.
Current wording
Total assets were $7.6 billion at September 30, 2024, compared to $7.6 billion as of December 31, 2023. From December 31, 2023 to September 30, 2024, cash and cash equivalents increased $21.1 million, net loan balances increased $30.8 million and investment securities decreased $55.7 million. Net loan balances were $5.5 billion at September 30, 2024 compared to $5.5 billion at December 31, 2023.
Previous wording
Net interest margin, on a tax equivalent basis, defined as net interest income divided by average interest-earning assets, was 3.30% for the six months ended June 30, 2024, up from 2.89% for the same period in 2023. This increase was primarily due to an increase in earning asset yields partially offset by increased rates on interest-bearing deposits and borrowings. Net interest income before the provision for loan losses was $112.2 million compared to net interest income of $85.6 million for the same period in 2023. The increase in net interest income was primarily due to the acquisition of Blackhawk Bank during the third quarter of 2023 and increased net interest margin as mentioned above.
Current wording
Net interest margin, on a tax equivalent basis, defined as net interest income divided by average interest-earning assets, was 3.32% for the nine months ended September 30, 2024, up from 2.95% for the same period in 2023. This increase was primarily due to an increase in earning asset yields partially offset by increased rates on interest-bearing deposits and borrowings. Net interest income before the provision for loan losses was $169.8 million compared to net interest income of $136.0 million for the same period in 2023. The increase in net interest income was primarily due to the acquisition of Blackhawk Bank during the third quarter of 2023 and increased net interest margin as mentioned above.
Previous wording
Total non-interest income of $46.9 million increased $4.9 million or 11.8% from $42.0 million for the same period last year. The increase in non-interest income resulted primarily from an increase in insurance commissions and income generated from former Blackhawk Bank customers partially offset by a decrease in wealth management revenues, bank owned life insurance income, and miscellaneous income.
Current wording
Total non-interest income of $69.9 million increased $4.9 million or 7.5% from $65.0 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 income generated from former Blackhawk Bank customers partially offset by a decrease in bank owned life insurance income and a decrease in the gain or loss on securities.
Previous wording
Total non-interest expense of $104.8 million increase $23.2 million or 28.4% from $81.6 million for the same period last year. The increase was primarily due to the acquisition of Blackhawk Bank during the third quarter of 2023 and the related amortization of intangibles and increased size of the bank causing increased expenses.
Current wording
Total non-interest expense of $158.7 million increased $30.0 million or 23.3% from $128.7 million for the same period last year. The increase was primarily due to the acquisition of Blackhawk Bank during the third quarter of 2023 and the related amortization of intangibles and increased size of the bank causing increased expenses.
Previous wording
Credit quality is an area of importance to the Company. Total nonperforming loans were $19.1 million at June 30, 2024, compared to $18.6 million at June 30, 2023 and $20.1 million at December 31, 2023. See the discussion under the heading “Loan Quality and Allowance for Loan Losses” for a detailed explanation of these balances. Repossessed asset balances totaled $1.5 million at June 30, 2024 compared to $4.0 million at June 30, 2023 and $1.2 million at December 31, 2023.
Current wording
Credit quality is an area of importance to the Company. Total nonperforming loans were $18.2 million at September 30, 2024, compared to $21.3 million at September 30, 2023 and $20.1 million at December 31, 2023. See the discussion under the heading “Loan Quality and Allowance for Loan Losses” for a detailed explanation of these balances. Repossessed asset balances totaled $1.8 million at September 30, 2024 compared to $2.3 million at September 30, 2023 and $1.2 million at December 31, 2023.
Previous wording
The Company’s provision for credit losses for the six months ended June 30, 2024 and 2023 was $726,000 and ($359,000), respectively. Total loans past due 30 days or more were 0.42% of loans at June 30, 2024 compared to 0.22% at June 30, 2023, and 0.26% of loans at December 31, 2023. Loans secured by both commercial and residential real estate comprised approximately 69.0% of the loan portfolio as of June 30, 2024 and 68.9% as of December 31, 2023.
Current wording
The Company’s provision for credit losses for the nine months ended September 30, 2024 and 2023 was $2.0 million and $5.6 million, respectively. Total loans past due 30 days or more were 0.39% of loans at September 30, 2024 compared to 0.23% at September 30, 2023, and 0.26% of loans at December 31, 2023. Loans secured by both commercial and residential real estate comprised approximately 68.8% of the loan portfolio as of September 30, 2024 and 68.9% as of December 31, 2023.
Previous wording
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, 2024 and 2023 and December 31, 2023 was 12.65%, 12.82% and 12.02%, respectively. The Company’s total capital to risk weighted assets ratio calculated under the regulatory risk-based capital requirements at June 30, 2024 and 2023, and December 31, 2023 was 15.46%, 15.67% and 14.84%, respectively. The increase in Tier 1 capital and total to risk weighted assets ratio from December 31, 2023 was primarily due to net income less dividends declared for the period increasing equity and a decrease in risk weighted assets related to a reallocation of the Company's balance sheet resulting in lower risk weighted assets such as cash on hand significantly increasing.
Current wording
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 September 30, 2024 and 2023 and December 31, 2023 was 12.70%, 10.19% and 12.02%, respectively. The Company’s total capital to risk weighted assets ratio calculated under the regulatory risk-based capital requirements at September 30, 2024 and 2023, and December 31, 2023 was 15.24%, 12.60% and 14.84%, respectively. The increase in Tier 1 capital and total to risk weighted assets ratio from December 31, 2023 was primarily due to net income less dividends declared for the period increasing equity and a decrease in risk weighted assets related to a reallocation of the Company's balance sheet resulting in lower risk weighted assets such as cash on hand increasing and investment securities decreasing.
Previous wording
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, 2024 and 2023, were $1.3 billion and $1.2 billion, respectively.
Current wording
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 September 30, 2024 and 2023, were $1.4 billion and $1.1 billion, respectively.
Previous wording
The Company expensed $1,771,000 and $1,539,000 for the assessment during the first six months of 2024 and 2023, respectively.
Current wording
The Company expensed $2.6 million and $2.3 million for the assessment during the first nine months of 2024 and 2023, respectively.
Previous wording
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 2024 and 2023 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 $1,211,000 and $1,500,000 for 2024 and 2023, respectively were 3.25% and 2.84% at June 30, 2024 and 2023, respectively.
Current wording
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 2024 and 2023 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 $2.3 million and $2.3 million for 2024 and 2023, respectively were 3.26% and 2.90% at September 30, 2024 and 2023, respectively.
Previous wording
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, 2024 and 2023 in the following table (dollars in thousands):
Current wording
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 nine months ended September 30, 2024 and 2023 in the following table (dollars in thousands):
Previous wording
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, 2024, compared to the same period in 2023 (in thousands):
Current wording
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 nine months ended September 30, 2024, compared to the same period in 2023 (in thousands):
Previous wording
Tax equivalent net interest income increased $26.4 million, or 30.3%, to $113.4 million for the six months ended June 30, 2024, from $87.1 million for the same period in 2023. Net interest income and net interest margin increased primarily due to an increase in earning asset yields partially offset by the increase in deposit and borrowing rates.
Current wording
Tax equivalent net interest income increased $33.8 million, or 24.4%, to $172.1 million for the nine months ended September 30, 2024, from $138.3 million for the same period in 2023. Net interest income and net interest margin increased primarily due to an increase in earning asset yields partially offset by the increase in deposit and borrowing rates.
Previous wording
For the six months ended June 30, 2024, average earning assets increased $799.5 million, or 13.2%, and average interest-bearing liabilities increased $610.1 million or 12.9% compared with average balances for the same period in 2023.
Current wording
For the nine months ended September 30, 2024, average earning assets increased $618.8 million, or 9.9%, and average interest-bearing liabilities increased $427.8 million or 8.7% compared with average balances for the same period in 2023.
Previous wording
Average interest-bearing deposits with other financial institutions increased $125.2 million or 492.1%.
Current wording
Average interest-bearing deposits with other financial institutions increased $106.3 million or 223.7%.
Previous wording
Average federal funds sold decreased $7.3 million or 92.9%.
Current wording
Average federal funds sold decreased $7.7 million or 95.3%.
Previous wording
Average certificates of deposits investments increased $893,000 or 51.0%.
Current wording
Average certificates of deposits investments increased $1.0 million or 53.9%.
Previous wording
Average loans increased by $743.9 million or 15.6%.
Current wording
Average loans increased by $609.8 million or 12.4%.
Previous wording
Average securities decreased by $63.3 million or 5.1%.
Current wording
Average securities decreased by $90.6 million or 7.2%.
Previous wording
Average interest-bearing customer deposits increased by $847.2 million or 21.8%.
Current wording
Average interest-bearing customer deposits increased by $672.9 million or 16.6%.
Previous wording
Average securities sold under agreements to repurchase increased by $6.3 million or 2.7%.
Current wording
Average securities sold under agreements to repurchase increased by $0.9 million or 0.4%.
Previous wording
Average borrowings and other debt decreased by $243.4 million or 38.8%.
Current wording
Average borrowings and other debt decreased by $246.0 million or 39.5%.
Previous wording
Net interest margin increased to 3.30% for the first six months of 2024 from 2.89% for the first six months of 2023.
Current wording
Net interest margin increased to 3.32% for the first nine months of 2024 from 2.95% for the first nine months of 2023.
Previous wording
The provision for credit losses for the six months ended June 30, 2024 and 2023 was $726,000 and ($359,000), respectively. Net charge offs were $1,089,000 for the six months ended June 30, 2024, compared to net charge offs of $15,000 for June 30, 2023. Nonperforming loans were $19.1 million and $18.6 million as of June 30, 2024 and 2023, respectively. For information on loan loss experience and nonperforming loans, see discussion under the “Nonperforming Loans” and “Loan Quality and Allowance for Loan Losses” sections below.
Current wording
The provision for credit losses for the nine months ended September 30, 2024 and 2023 was $2.0 million and $5.6 million, respectively. Net charge offs were $1.9 million for the nine months ended September 30, 2024, compared to net charge offs of $0.2 million for September 30, 2023. Nonperforming loans were $18.2 million and $21.3 million as of September 30, 2024 and 2023, respectively. For information on loan loss experience and nonperforming loans, see discussion under the “Nonperforming Loans” and “Loan Quality and Allowance for Loan Losses” sections below.
Previous wording
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, 2024 and 2023 (in thousands):
Current wording
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 nine months ended September 30, 2024 and 2023 (in thousands):
Previous wording
Following are explanations of the changes in these other income categories for the three and six months ended June 30, 2024 compared to the same period in 2023:
Current wording
Following are explanations of the changes in these other income categories for the three and nine months ended September 30, 2024 compared to the same period in 2023:
Previous wording
Wealth management revenues decreased for the six month period due to less agricultural service fees mostly offset by increased brokerage and trust fees.
Current wording
Wealth management revenues increased for the nine month period due to increased brokerage and trust fees, partially offset by less agricultural services fee incomes.
Previous wording
Fees from service charges increased during the first six months of 2024 primarily due to the acquisition of Blackhawk Bank.
Current wording
Fees from service charges increased during the first nine months of 2024 primarily due to the acquisition of Blackhawk Bank in the third quarter of 2023.
Previous wording
Net losses from the sale of securities during 2024 were $156,000 and net losses in 2023 were $52,000. The Company sold 17 securities during the quarter ended June 30, 2024 with the intent to replace them with higher yielding assets.
Current wording
Net losses from the sale of securities during 2024 were $0.4 million compared to net gains in 2023 of $3.3 million. The Company sold 37 securities during the nine months ended September 30, 2024 with the intent to replace them with higher yielding assets and restructured the balance sheet of Blackhawk Bank after the acquisition in 2023.
Previous wording
The increase in mortgage banking income was due to an increase from loans sold in the secondary market and the acquisition of Blackhawk Bank.
Current wording
The increase in mortgage banking income was due to an increase from loans sold in the secondary market and the acquisition of Blackhawk Bank in the third quarter of 2023. First Mid Bank generally releases the servicing rights on loans sold into the secondary market.
Previous wording
Revenue from ATMs and debit cards increased due to an increase in activity during the period and the acquisition of Blackhawk Bank.
Current wording
Revenue from ATMs and debit cards increased due to an increase in activity during the period and the acquisition of Blackhawk Bank in the third quarter of 2023.
Previous wording
Bank owned life insurance income decreased approximately $517,000 during the first six months of 2024 compared to the same period in 2023 primarily due to a claim payout in 2023.
Current wording
Bank owned life insurance income decreased approximately $0.3 million during the first nine months of 2024 compared to the same period in 2023 primarily due to a claim payout in 2023.
Previous wording
Other income decreased primarily due to late charges on loans being presented as interest income starting in 2024.
Current wording
Other income increased primarily due to gains recognized on the repayment of the Company's subordinated debentures being partially offset by late charges on loans being presented as interest income starting in 2024.
Previous wording
The following table sets forth the major components of other expense for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):
Current wording
The following table sets forth the major components of other expense for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):
Previous wording
Following are explanations for the changes in these other expense categories for the three and six months ended June 30, 2024 compared to the same period in 2023:
Current wording
Following are explanations for the changes in these other expense categories for the three and nine months ended September 30, 2024 compared to the same period in 2023:
Previous wording
The increase in salaries and employee benefits, the largest component of other expense, is primarily due to the acquisition of Blackhawk Bank and regularly scheduled annual raises occurring during the quarter ended June 30, 2024. This was partially offset by the Company's efficiency improvement efforts. There were 1,185 and 995 full-time equivalent employees at June 30, 2024 and 2023, respectively.
Current wording
The increase in salaries and employee benefits, the largest component of other expense, is primarily due to the acquisition of Blackhawk Bank and regularly scheduled annual raises occurring during the quarter ended March 31, 2024. This was partially offset by the Company's efficiency improvement efforts. There were 1,207 and 1,224 full-time equivalent employees at September 30, 2024 and 2023, respectively.
Previous wording
The increase in occupancy and equipment expense was primarily due to the acquisition of Blackhawk Bank.
Current wording
The increase in occupancy and equipment expense was primarily due to the acquisition of Blackhawk Bank during the third quarter of 2023.
Showing the first 40 of 77 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
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. The Company’s operations (and therefore its loans) are concentrated in Illinois, Missouri, Texas, and Wisconsin areas, where agriculture is the dominant industry. Accordingly, lending and other business relationships with agriculture-based businesses are critical to the Company’s success. At September 30, 2024, the
Current report — wording carried from elsewhere
From and including the date of issuance to, but excluding May 14, 2031, the 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, the Notes will bear interest at a floating rate equal to three-month Term SOFR plus a spread of 255 basis points.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
First Mid Bank generally releases the servicing rights on loans sold into the secondary market.