MATTOON, Ill., Oct. 24, 2019 (GLOBE NEWSWIRE) -- First Mid Bancshares, Inc. (NASDAQ: FMBH) (the “Company”) today announced its financial results for the quarter and year-to-date period ended September 30, 2019.

Highlights

• Quarterly net income of $11.7 million, or $0.70 diluted earnings per share
• Strong loan growth for the quarter of $77.0 million, or 3.0%
• Repurchased over $1.1 million worth of outstanding shares during the quarter
• Redeemed $10.3 million trust preferred debt issuance in early October
• Board approves 11.1% increase to December semi-annual dividend

“The second half of the year started very strong with 3.0% loan growth in the quarter,” said Joe Dively, Chairman and Chief Executive Officer.  “Early signs for the fourth quarter are continuing on a positive trend helping make up for the softer first half of the year.  Despite higher than normal provision expense partially tied to loan growth, we delivered solid earnings for the third quarter.  In addition, we executed on our capital management strategy with a combination of stock repurchases and debt redemption.” 

“Noninterest income continues to be a differentiator for us representing over 30% of our year-to-date revenues.  A prime example of that success was the recent recognition where First Mid Insurance Group was named a top performing agency by the Independent Insurance Agents and Brokers of America.  In addition, our lending, wealth management and insurance teams have never worked more closely to address the needs of the combined customer base,” Dively concluded.  

Net Interest Income

Net interest income for the third quarter of 2019 decreased by $0.2 million, or 0.6% compared to the second quarter of 2019.  While interest income was flat, interest expenses increased on higher deposit costs.  The current quarter included $2.6 million in accretion income, which was flat compared to the prior quarter.

In comparison to the third quarter of 2018, net interest income increased by $1.0 million, or 3.4%.  The increase was primarily attributable to the acquisition of SCB Bancorp, Inc. (“Soy Capital”), which closed on November 15, 2018.     

Net Interest Margin

Net interest margin, on a tax equivalent basis, was 3.60% for the third quarter of 2019 compared to 3.64% in the prior quarter.  The decrease was primarily driven by higher funding costs from seasonal movement of demand deposit balances and higher CD costs.  Loan yields declined one basis point on a reduction to floating rate loans from the Federal Reserve rate cuts in the quarter, which was almost completely offset by loan growth.  Given our strong cash and capital position, the Company redeemed its most expensive trust preferred debt issuance in early October.  The $10.3 million borrowing was at 3-month LIBOR plus 280 basis points and the redemption will help lower interest expense moving forward.

In comparison to the third quarter of 2018, net interest margin decreased by 29 basis points.  The year-over-year decrease in the ratio was primarily due to the inclusion of Soy Capital’s lower net interest margin and higher funding costs in a more competitive and challenging interest rate environment.     

Loan Portfolio

Total loans ended the quarter at $2.62 billion, representing an increase of $77.0 million, or 3.0% compared to the prior quarter.  The increase was primarily in commercial real estate and commercial and industrial loans.  With respect to agriculture operating loans, which represent 4.6% of outstanding loans, First Mid continues to monitor cash flows closely.  Harvest is underway and initial signs reflect cash flows in line with estimates developed early in the spring for a majority of the Company’s borrowers.  Generally, while yields are lower, prices and subsidies are higher.  First Mid has minimal exposure to the cattle and dairy sector.  

Loans increased by $223.4 million, or 9.3%, compared to the third quarter of last year through a combination of both organic and acquisition related growth.      

Asset Quality

At September 30, 2019, nonperforming loans were 0.92% of total loans, allowance for loan losses was 1.02% of total loans, and the allowance for loan losses to non-performing loans was 110.5%.  Non-performing loans declined from the previous quarter by $1.6 million to $24.2 million.  Excluding outstanding acquired loans, the allowance for loan losses to total loans was 1.33%.        

Net charge-offs were $2.3 million during the third quarter with $0.7 million of this total tied to a single credit.  This was an acquired loan and the offsetting discount was accreted to income.  The Company recorded provision expense of $2.7 million during the third quarter compared to $0.1 million in the second quarter of 2019 and $2.6 million in the third quarter of last year.  Excluding the previously mentioned individual charge-off, the increase in provision expense was mostly driven by loan growth.         

Deposits

Total deposits at September 30, 2019 were $2.99 billion, a decrease of $23.6 million in the quarter.  Repurchase agreements with customers increased by $22.3 million in the third quarter.  Despite the Company reducing rates in certain products based on the Federal Reserve rate cuts, it has been successful in maintaining deposit relationships.  The Company’s average rate on cost of funds was 0.79% for the quarter compared to 0.76% in the second quarter and 0.46% in the third quarter of 2018. 

Noninterest Income

Noninterest income for the third quarter of 2019 was $12.9 million compared to $13.6 million in the second quarter.  The decrease was primarily driven by the seasonality of the insurance division and the wealth management real estate brokerage sales.  Revenues in other noninterest fee income categories increased mostly due to mortgage banking.      

Noninterest income increased $5.0 million compared to the third quarter of last year due to a combination of both organic and acquisition growth.

Noninterest Expenses    

Noninterest expense for the third quarter totaled $25.9 million compared to $30.2 million in the second quarter.  The second quarter included $2.4 million in acquisition related costs and $0.4 million in expense related to a fair value impairment on mortgage servicing rights.  Excluding these items, noninterest expenses decreased $1.5 million in the period, primarily tied to the full quarter of cost saves for the Soy Capital acquisition, lower noninterest income, and a small bank assessment credit from the FDIC.    

Noninterest expense was $1.4 million higher than the third quarter of 2018.  The increase is primarily due to the addition of Soy Capital, partially offset by lower acquisition costs.  The Company’s efficiency ratio, on a tax equivalent basis, for the third quarter 2019 was 54.7% compared to 61.6% for the same period last year.

Regulatory Capital Levels and Dividend

The Company’s capital levels remained comfortably above the “well capitalized” levels and ended the period as follows: 

Total capital to risk-weighted assets  Tier 1 capital to risk-weighted assets  Common equity tier 1 capital to risk-weighted assets Leverage ratio

15.30% 14.39% 13.39% 11.38%

The Company’s Board of Directors approved its next semi-annual dividend in the amount of $0.40, representing an increase of 11.1%.  The dividend is payable on December 13, 2019 for shareholders of record on November 29, 2019.

Capital Markets

On August 16, 2019, the Company adopted a repurchase plan under Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, as amended.  During the quarter, the Company repurchased $1.1 million, or 35,427 shares.  The Company has approximately $5.1 million in remaining capacity under the plan. 

Under the previously announced ‘at-the-market’ equity offering, the Company did not sell any shares during the current quarter.         

About Us: 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.  Our mission is to fulfill the financial needs of our communities with exceptional personal service, professionalism and integrity, and deliver meaningful value and results for our customers and shareholders.

First Mid is a $3.8 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 and eastern Missouri and a loan production office in the greater Indianapolis area.  Together, our First Mid team takes great pride in their work and their ability to serve our customers well over the last 154 years. 

More information about the Company is available on our website at www.firstmid.com.  Our stock is traded in The NASDAQ Stock Market LLC under the ticker symbol “FMBH”.

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 “Net Interest Margin, tax equivalent,” “Tangible Book Value per Common Share,” and “Common Equity Tier 1 Capital to Risk Weighted Assets”.  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 1955. 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/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; and accounting principles, policies and guidelines. 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 Securities and Exchange Commission (the “SEC”), including its Annual Reports on Form 10-K. 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: 
Aaron Holt
VP, Shareholder Relations
217-258-0463
aholt@firstmid.com

- Tables Follow –

FIRST MID BANCSHARES, INC.
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
			As of
			September 30,			December 31,			September 30,
			2019			2018			2018
Assets
Cash and cash equivalents			$	108,229		$	141,400		$	64,485
Investment securities			811,573			769,279			670,672
Loans (including loans held for sale)			2,623,558			2,644,519			2,400,160
Less allowance for loan losses			(26,741)			(26,189)			(23,839)
Net loans			2,596,817			2,618,330			2,376,321
Premises and equipment, net			59,724			59,117			47,327
Goodwill and intangibles, net			134,461			139,097			102,014
Bank owned life insurance			66,786			65,484			51,443
Other assets			60,139			47,027			43,215
Total assets			$	3,837,729		$	3,839,734		$	3,355,477
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing			$	596,518		$	575,784		$	493,935
Interest bearing			2,392,407			2,412,902			2,157,462
Total deposits			2,988,925			2,988,686			2,651,397
Repurchase agreement with customers			174,530			192,330			98,875
Other borrowings			80,862			127,469			150,236
Junior subordinated debentures			29,126			29,000			28,958
Other liabilities			42,327			26,385			9,178
Total liabilities			3,315,770			3,363,870			2,938,644
Total stockholders' equity			521,959			475,864			416,833
Total liabilities and stockholders' equity			$	3,837,729		$	3,839,734		$	3,355,477

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,
			2019			2018				2019			2018
Interest income:
Interest and fees on loans			$	31,976		$	28,850			$	95,619		$	75,219
Interest on investment securities			5,297			4,511				15,942			13,271
Interest on federal funds sold & other deposits			305			127				1,639			287
Total interest income			37,578			33,488				113,200			88,777
Interest expense:
Interest on deposits			5,174			2,217				14,492			5,149
Interest on securities sold under agreements to repurchase			196			72				671			196
Interest on other borrowings			691			707				2,111			1,683
Interest on subordinated debt			392			405				1,236			1,013
Total interest expense			6,453			3,401				18,510			8,041
Net interest income			31,125			30,087				94,690			80,736
Provision for loan losses			2,658			2,551				3,696			5,483
Net interest income after provision for loan			28,467			27,536				90,994			75,253
Non-interest income:
Wealth management revenues			3,311			1,579				10,543			4,920
Insurance commissions			3,242			877				12,557			3,202
Service charges			2,091			2,009				5,852			5,447
Securities gains, net			51			0				323			901
Mortgage banking revenues			582			368				1,167			939
ATM/debit card revenue			2,173			1,979				6,391			5,443
Other			1,467			1,107				4,311			2,915
Total non-interest income			12,917			7,919				41,144			23,767
Non-interest expense:
Salaries and employee benefits			14,497			11,600				46,636			32,851
Net occupancy and equipment expense			4,377			3,530				13,375			10,308
Net other real estate owned (income) expense			172			(61)				413			22
FDIC insurance			(87)			174				389			740
Amortization of intangible assets			1,373			838				4,552			2,059
Stationary and supplies			284			328				835			725
Legal and professional expense			1,215			1,071				3,713			3,925
Marketing and donations			523			468				1,458			1,253
Other			3,540			6,542				13,020			11,777
Total non-interest expense			25,894			24,490				84,391			63,660
Income before income taxes			15,490			10,965				47,747			35,360
Income taxes			3,820			2,731				11,780			8,699
Net income			$	11,670		$	8,234			$	35,967		$	26,661
Per Share Information
Basic earnings per common share			$	0.70		$	0.54			$	2.16		$	1.91
Diluted earnings per common share			0.70			0.54				2.15			1.90
Dividends per common share			$  -			$  -				$	0.36		$	0.34
Weighted average shares outstanding			16,684,395			15,290,539				16,677,932			13,982,389
Diluted weighted average shares outstanding			16,719,175			15,306,218				16,712,712			13,999,159

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,
						2019			2019			2019			2018			2018
Interest income:
Interest and fees on loans						$	31,976		$	31,539		$	32,104		$	30,553		$	28,850
Interest on investment securities						5,297			5,436			5,209			4,966			4,511
Interest on federal funds sold & other deposits						305			596			738			269			127
Total interest income						37,578			37,571			38,051			35,788			33,488
Interest expense:
Interest on deposits						5,174			4,940			4,378			3,422			2,217
Interest on securities sold under agreements to repurchase						196			215			260			134			72
Interest on other borrowings						691			697			723			834			707
Interest on subordinated debt						392			406			438			396			405
Total interest expense						6,453			6,258			5,799			4,786			3,401
Net interest income						31,125			31,313			32,252			31,002			30,087
Provision for loan losses						2,658			91			947			3,184			2,551
Net interest income after provision for loan						28,467			31,222			31,305			27,818			27,536
Non-interest income:
Wealth management revenues						3,311			3,587			3,645			3,540			1,579
Insurance commissions						3,242			3,760			5,555			2,390			877
Service charges						2,091			1,959			1,802			1,988			2,009
Securities gains, net						51			218			54			0			0
Mortgage banking revenues						582			346			239			266			368
ATM/debit card revenue						2,173			2,202			2,016			2,044			1,979
Other						1,467			1,516			1,328			1,419			1,107
Total non-interest income						12,917			13,588			14,639			11,647			7,919
Non-interest expense:
Salaries and employee benefits						14,497			15,565			16,574			13,952			11,600
Net occupancy and equipment expense						4,377			4,543			4,455			4,225			3,530
Net other real estate owned (income) expense						172			188			53			260			(61)
FDIC insurance						(87)			197			279			319			174
Amortization of intangible assets						1,373			1,823			1,356			1,156			838
Stationary and supplies						284			264			287			238			328
Legal and professional expense						1,215			1,304			1,194			1,318			1,071
Marketing and donations						523			481			454			541			468
Other						3,540			5,822			3,658			4,311			6,542
Total non-interest expense						25,894			30,187			28,310			26,320			24,490
Income before income taxes						15,490			14,623			17,634			13,145			10,965
Income taxes						3,820			3,642			4,318			3,206			2,731
Net income						$	11,670		$	10,981		$	13,316		$	9,939		$	8,234

FIRST MID BANCSHARES, INC.
Consolidated Financial Highlights and Ratios
(Dollars in thousands, except per share data)
(Unaudited)
			As of and for the Quarter Ended
			September 30,			June 30,			March 31,			December 31,			September 30,
			2019			2019			2019			2018			2018
Loan Portfolio
Construction and land development			$	68,821		$	57,069		$	49,179		$	50,619		$	91,355
Farm loans			229,715			229,924			236,864			231,700			191,724
1-4 Family residential properties			347,370			355,143			362,617			373,518			367,343
Multifamily residential properties			154,859			167,709			175,903			184,051			100,368
Commercial real estate			954,992			888,711			905,679			906,850			814,574
Loans secured by real estate			1,755,757			1,698,556			1,730,242			1,746,738			1,565,364
Agricultural loans			121,650			118,216			118,026			135,877			120,770
Commercial and industrial loans			543,937			530,405			550,853			557,011			540,387
Consumer loans			83,171			84,907			86,540			91,516			57,248
All other loans			119,043			114,459			111,333			113,377			116,391
Total loans			2,623,558			2,546,543			2,596,994			2,644,519			2,400,160
Deposit Portfolio
Non-interest bearing demand deposits			$	596,518		$	603,823		$	628,944		$	575,784		$	493,935
Interest bearing demand deposits			899,763			844,931			828,144			903,426			749,396
Savings deposits			431,497			438,769			444,619			432,319			397,910
Money Market			435,517			473,160			483,867			485,388			481,799
Time deposits			625,630			651,807			660,639			591,769			528,357
Total deposits			2,988,925			3,012,490			3,046,213			2,988,686			2,651,397
Asset Quality
Non-performing loans			$	24,203		$	25,773		$	25,988		$	29,749		$	27,925
Non-performing assets			28,645			29,380			29,857			32,344			30,065
Net charge-offs			2,276			436			432			834			757
Allowance for loan losses to non-performing loans			110.49%			102.27%			102.76%			88.03%			85.37%
Allowance for loan losses to total loans outstanding			1.02%			1.04%			1.03%			0.99%			0.99%
Nonperforming loans to total loans			0.92%			1.01%			1.00%			1.13%			1.16%
Nonperforming assets to total assets			0.75%			0.77%			0.77%			0.84%			0.90%
Common Share Data
Common shares outstanding			16,663,095			16,694,316			16,677,128			16,644,635			15,294,925
Book value per common share			$	31.32		$	30.49		$	29.81		$	28.57		$	27.25
Tangible book value per common share			23.25			22.35			21.57			20.22			20.58
Market price of stock			34.62			34.92			33.32			31.92			40.33
Key Performance Ratios and Metrics
End of period earning assets			$	3,444,775		$	3,447,695		$	3,539,175		$	3,491,606		$	3,081,929
Average earning assets			3,444,088			3,470,776			3,516,032			3,307,437			3,090,835
Average rate on average earning assets (tax equivalent)			4.39%			4.40%			4.44%			4.35%			4.35%
Average rate on cost of funds			0.79%			0.76%			0.70%			0.60%			0.46%
Net interest margin (tax equivalent)			3.60%			3.64%			3.74%			3.75%			3.89%
Return on average assets			1.22%			1.15%			1.38%			1.10%			0.98%
Return on average common equity			9.04%			8.80%			11.02%			8.99%			7.92%
Efficiency ratio (tax equivalent) 1			54.69%			62.31%			56.77%			57.66%			61.56%
Full-time equivalent employees			830			826			832			818			686
1 Represents non-interest expense divided by the sum of fully tax equivalent net interest income and non-interest income.  Non-interest expense adjustments exclude foreclosed property expense and amortization of intangibles.  Net-interest income includes tax equivalent adjustments and non-interest income excludes gains and losses on the sale of investment securities.
Note:  Asset Quality metrics as of December 31, 2018 were adjusted to match the disclosures in the 10K, which exclude TDR's from the Soy Capital acquisition.

FIRST MID BANCSHARES, INC.
Net Interest Margin
(In thousands, unaudited)
		For the Quarter Ended September 2019
		QTD Average						Average
		Balance			Interest			Rate
INTEREST EARNING ASSETS
Interest bearing deposits		$	33,991		$	268		3.13%
Federal funds sold		921			4			1.72%
Certificates of deposits investments		5,685			33			2.30%
Investment Securities:
Taxable (total less municipals)		638,628			3,958			2.48%
Tax-exempt (Municipals)		186,962			1,695			3.63%
Loans (net of unearned income)		2,577,901			32,154			4.95%
Total interest earning assets		3,444,088			38,112			4.39%
NONEARNING ASSETS
Cash and due from banks		92,106
Premises and equipment		59,951
Other nonearning assets		248,392
Allowance for loan losses		(26,726)
Total assets		$	3,817,811
INTEREST BEARING LIABILITIES
Demand deposits		$	1,291,555		$	1,803		0.55%
Savings deposits		436,002			156			0.14%
Time deposits		646,346			3,215			1.97%
Total interest bearing deposits		2,373,903			5,174			0.86%
Repurchase agreements		150,026			196			0.52%
FHLB advances		105,784			683			2.56%
Federal funds purchased		1,247			8			2.55%
Subordinated debt		29,098			392			5.34%
Other borrowings		0			0			0.00%
Total borrowings		286,155			1,279			1.77%
Total interest bearing liabilities		2,660,058			6,453			0.96%
NONINTEREST BEARING LIABILITIES
Demand deposits		597,524			Average cost of funds			0.79%
Other liabilities		44,126
Stockholders' equity		516,103
Total liabilities & stockholders' equity		$	3,817,811
Net Interest Earnings / Spread					$	31,659		3.43%
Impact of Non-Interest Bearing Funds								0.17%
Tax effected yield on interest earning assets								3.60%

FIRST MID BANCSHARES, INC.
Reconciliation of Non-GAAP Financial Measures
(In thousands, unaudited)
					As of and for the Quarter Ended
					September 30,			June 30,			March 31,			December 31,			September 30,
					2019			2019			2019			2018			2018
Net interest income as reported					$	31,125		$	31,313		$	32,252		$	31,002		$	30,087
Net interest income, (tax equivalent)					31,659			31,850			32,800			31,546			30,604
Average earning assets					3,444,088			3,470,776			3,516,032			3,307,437			3,090,835
Net interest margin (tax equivalent) 1					3.60%			3.64%			3.74%			3.75%			3.89%
Common stockholder's equity					$	521,959		$	508,958		$	497,152		$	475,864		$	416,833
Goodwill and intangibles, net					134,461			135,762			137,461			139,097			102,014
Common shares outstanding					16,663			16,695			16,677			16,645			15,295
Tangible Book Value per common share					$	23.25		$	22.35		$	21.57		$	20.22		$	20.58
Common equity tier 1 capital					$	391,429		$	379,581		$	372,731		$	357,690		$	335,552
Risk weighted assets					2,923,245			2,935,236			2,964,638			3,030,259			2,662,706
Common equity tier 1 capital to risk weighted assets  2					13.39%			12.93%			12.57%			11.80%			12.60%
1 Annualized and calculated on a tax equivalent basis where interest earned on tax-exempt securities and loans is adjusted to an amount comparable to interest subject to normal income taxes assuming a federal tax rate of 21% and includes the impact of non-interest bearing funds.
2 Defined as total common equity adjusted for gains/(losses) less goodwill and intangibles divided by risk weighted assets as of period end.

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