First Mid Bancshares, Inc. (NASDAQ:FMBH) is a diversified financial holding company headquartered in Mattoon, Illinois. The company operates through its wholly-owned subsidiary, First Mid Bank & Trust, N.A., which provides a wide range of banking and wealth management services to individuals and businesses across Illinois, Missouri, Texas, and Wisconsin.
Business Overview
First Mid Bancshares, Inc. has a long and storied history, tracing its roots back to 1865 when it was founded as a community bank. Over the decades, the company has grown organically and through strategic acquisitions, expanding its footprint and service offerings to meet the evolving needs of its customers. Today, the company operates a network of over 100 branches and employs nearly 1,200 full-time equivalent employees.The company's business model is centered around providing personalized banking and wealth management services to its customers. On the banking side, First Mid offers a comprehensive suite of products and services, including commercial and industrial loans, commercial real estate loans, agricultural loans, residential mortgages, and consumer loans. The company's wealth management division, First Mid Wealth Management, provides investment advisory, trust, and retirement planning services to individuals and institutions.
Financial Performance
First Mid Bancshares, Inc. has demonstrated consistent financial performance, even in the face of challenging economic conditions. For the fiscal year ended December 31, 2023, the company reported annual net income of $68.9 million, annual revenue of $385.1 million, annual operating cash flow of $75.9 million, and annual free cash flow of $72.2 million.In the first quarter of 2024, the company continued to deliver strong results. Net income for the quarter was $20.5 million, up from $19.2 million in the same period of the prior year. Revenue for the quarter was $112.2 million, compared to $86.2 million in the first quarter of 2023. Operating cash flow for the quarter was $29.0 million.
The company's net interest margin, a key measure of profitability, expanded to 3.25% in the first quarter of 2024, up from 2.94% in the same period of the prior year. This improvement was driven by an increase in earning asset yields, partially offset by higher rates on interest-bearing deposits and borrowings.
Loan Portfolio and Asset Quality
First Mid Bancshares, Inc.'s loan portfolio is well-diversified, with a focus on commercial and industrial loans, commercial real estate loans, and agricultural loans. As of March 31, 2024, the company's total loan portfolio stood at $5.5 billion, with loans secured by real estate comprising 69.3% of the total.The company's asset quality remains strong, with nonperforming loans accounting for just 0.36% of total loans as of March 31, 2024. The allowance for credit losses stood at $67.9 million, or 1.24% of total loans, providing a solid buffer against potential loan losses.
Geographical Diversification
First Mid Bancshares, Inc. has a strong presence in its core markets of Illinois, Missouri, Texas, and Wisconsin. The company's geographic diversification helps to mitigate regional economic risks and provides opportunities for growth in new markets.In 2023, the company completed the acquisition of Blackhawk Bancorp, Inc., a Wisconsin-based bank holding company. This strategic acquisition expanded First Mid's footprint into the attractive Wisconsin market and added approximately $1.3 billion in assets to the company's balance sheet.
Liquidity and Capital Position
First Mid Bancshares, Inc. maintains a strong liquidity position, with a diverse funding base that includes deposits, securities sold under agreements to repurchase, and borrowings from the Federal Home Loan Bank. As of March 31, 2024, the company's cash and cash equivalents totaled $355.7 million, providing ample liquidity to meet its funding needs.The company's capital position also remains robust, with a total risk-based capital ratio of 15.35% and a Tier 1 risk-based capital ratio of 12.46% as of March 31, 2024. These ratios exceed the regulatory requirements for well-capitalized institutions, underscoring the company's financial strength and stability.
Risks and Challenges
While First Mid Bancshares, Inc. has demonstrated impressive financial performance, the company is not without its risks and challenges. The banking industry is inherently cyclical, and the company's profitability is susceptible to changes in interest rates, economic conditions, and regulatory environments.Additionally, the company's significant exposure to the agricultural sector, with loans to borrowers in the agricultural and agricultural real estate industries accounting for over 11% of the total loan portfolio, presents a potential risk. Any prolonged period of low commodity prices, drought conditions, or reduced government assistance could adversely impact the performance of these loans.
Outlook and Guidance
Despite these risks, the outlook for First Mid Bancshares, Inc. remains positive. The company's management team has a proven track record of navigating challenging environments and delivering consistent financial results.In its most recent guidance, the company has projected continued growth in its loan portfolio, with a focus on commercial and industrial loans, commercial real estate loans, and agricultural loans. The company also expects to see further expansion of its net interest margin, driven by rising interest rates and disciplined pricing of its deposit and lending products.