FIRST MID BANCSHARES, INC.

The allowance for credit losses represents the Company’s best estimate of the reserve necessary to adequately account for probable losses expected over the remaining contractual life of the assets. The provision for credit losses is the charge against current earnings that is determined by the Company as the amount needed to maintain an adequate allowance for credit losses. In determining the adequacy of the allowance for credit losses, and therefore the provision to be charged to current earnings, the Company relies predominantly on a disciplined credit review and approval process that extends to the full range of the Company’s credit exposure. The review process is directed by the overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. Factors considered by the Company in evaluating the overall adequacy of the allowance include historical net credit losses, the level and composition of nonaccrual, past due and modified loans, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. The Company estimates the appropriate level of allowance for credit losses by evaluating large substandard, and large impaired loans separately from other loans.

Individually Evaluated Loans

The Company individually evaluates certain loans to estimate expected credit losses. Loans are individually evaluated for expected credit losses when their principal balance exceeds $250,000 and they are in nonaccrual status, their risk rating assigned is Substandard and their principal balances exceed $5 million, or they are designated as having a modification or probable of being foreclosed. For loans that allowance for credit loss is individually measured each quarter one ofthree alternatives is used: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price, if available; or (3) the fair value of the collateral less costs to sell for collateral dependent loans and loans for which foreclosure is deemed to be probable. A specific allowance is assigned when expected cash flows or collateral are less than the carrying amount of the loan. The carrying value of the loan reflects reductions from prior charge-offs.

Non-Individually Evaluated Loans

Non-individually evaluated loans comprise the vast majority of the Company’s total loan portfolio and include all loans not mentioned above in the individually evaluated loans section. A small portion of these loans are considered “criticized” due to the risk rating assigned reflecting elevated credit risk due to characteristics, such as a strained cash flow position, associated with the individual borrowers. Criticized loans are those assigned risk ratings of Special Mention, Substandard, or Doubtful.

The Company first bifurcates the loan portfolio into segments that share risk characteristics and then utilizes a discounted cash flow (DCF) method to measure the ACL on loans collectively evaluated that are sub-segmented by credit risk levels. The DCF method incorporates assumptions for probability of default, loss given default, prepayments, and curtailments over the contractual term of the loans. In determining the probability of default, the Company utilized regression analysis that includes the use of peer data to determine certain economic factors that are relevant loss drivers in the portfolio segments based on historical evaluations. National unemployment is a loss driver used in all portfolios.

Within each segment, factors are evaluated that have specific impacts to the borrowers within the segment. These, along with the general risks and events, and the specific lending policies and procedures by loan type described above, are analyzed to estimate the qualitative factors used to adjust the historical loss rates.

During the current period, the following assumptions and factors were considered when determining the historical loss rate and any potential adjustments by loan segment.

Construction and Land Development Loans. Historical losses in this segment remain very low. While inflationary pressures have caused some risk in this segment, most projects are associated with financially strong borrowers. The qualitative factors for this segment increased for the period due to past due levels increasing.

Agricultural Real Estate Loans. Historical losses in the segment remain very low. Farmland values have increased over an extended period of time. While values have declined slightly from their peak, values have continued to hold up well. This continues to drive low loan to values in this segment. As a result, the qualitative factors for this segment were lowered during the quarter. In addition, the qualitative factors were lowered due to past dues in the segment.

Residential Real Estate Non-Owner Occupied Loans. The loan segment increased in the first quarter of 2026 with the addition of the Two Rivers Bank loan portfolio. The qualitative factors for this segment were decreased during the quarter due to further integration of the Two Rivers loan portfolio and administration practices and continuation of risk management practices that were previously under review.

Residential Real Estate Owner Occupied Loans. The loan segment increased in the first quarter of 2026 with the addition of the Two Rivers Bank loan portfolio. The qualitative factors for this segment decreased for the period due to further integration of the Two Rivers loan portfolio and administration practices and continuation of risk management practices that were previously under review.

HELOC Loans. These loans are a small segment to overall loan balances. There was no change to the qualitative factors for this segment during the period.

Commercial Real Estate Owner Occupied Loans. This segment has remained stable, reflecting less uncertainty to recessionary risks that were high in prior years with the rapid movement in interest rates and inflationary pressures. The quarter ended with higher past dues in this loan segment, which increased the qualitative factors but was offset by the decrease in qualitative factors due to minimal impact of higher debt service on borrowers.

Commercial Real Estate Non-Owner Occupied Loans. This segment includes the Company's largest balances. The qualitative factors for the quarter decreased in this segment due to minimal borrower impact from higher rates from borrowers continuing to reset their lease prices to offset rising debt service payments.

Agricultural Loans. Losses in this segment include the Company's Direct Merchant Financing product, which inherently comes with higher overall risk of losses. With an overall increase in commodity prices, specifically corn and soybeans, pressures within the agricultural portfolio have lessened. As a result, qualitative factors were lowered this quarter.

Commercial and Industrial Loans. There was no change in the qualitative factors for this segment during the period.

Consumer Loans. This segment is a small portion of the Company's loan portfolio. Historical net charge-offs have been immaterial in this segment. Qualitative factors increased during the quarter due to an overall increase in past due levels in the segment.

The following table presents the balance in the allowance for credit losses and the recorded investment in loans based on portfolio segment as of thethree and nine months ended September 30, 2026 (in thousands):

The following table presents the balance in the allowance for credit losses and the recorded investment in loans based on portfolio segment as of the three and nine months ended September 30, 2025 (in thousands):

Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period where the uncollectible loss is reasonably determined. For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to time frames established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 180 days past due, charge-off of unsecured open-end loans when the loan is 180 days past due, and charge down to the net realizable value when other secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off.

The following table presents the amortized cost basis of collateral-dependent loans by class of loans that were individually evaluated to determine expected credit losses, and the related allowance for credit losses, as of September 30, 2026 and December 31, 2025 (in thousands):