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First Mid Bancshares, Inc. Announces Second Quarter 2024 Results
MATTOON, Ill., Aug. 01, 2024 (GLOBE NEWSWIRE) -- First Mid Bancshares, Inc. (NASDAQ:FMBH) (the "Company") today announced its financial results for the quarter ended June 30, 2024.
Highlights
Net income of $19.7 million, or $0.82 diluted EPS
Adjusted net income (non-GAAP) of $20.1 million, or $0.84 diluted EPS
Margin expansion and loan growth drove an increase in net interest income of $1.3 million for the quarter
Announced the acquisition of Mid Rivers Insurance Group ("MRIG") on July 9th deepening our Missouri presence and increasing noninterest income
Board of Directors increases quarterly dividend by $0.01 per share to $0.24 per share
"We delivered another strong quarter of financial results and continued our strategy to expand noninterest income with the acquisition of MRIG," said Joe Dively, Chairman and Chief Executive Officer. "The quarter included solid loan growth and superior asset quality. The loan growth and repricing of our earning assets, combined with active management of our funding costs helped drive an 11-basis point increase in margin for the period."
"The MRIG acquisition deepens our Missouri presence with a highly productive team covering the St. Louis and mid-Missouri footprint. We welcome the MRIG team and are excited about the growth and diversity they bring to our insurance offerings and the opportunity to deepen relationships for customers of both companies," Dively concluded.
Taxes
On June 7, 2024, Illinois passed HB 4951, which among other things changed the apportionment related to investment income. For purposes of computing Illinois sourced receipts, the apportionment on investment income is now the same as the apportionment factor on all non-investment income. The effect of this for First Mid is a lower Illinois tax rate going forward. However, the impact to the second quarter of 2024 was a $1.0 million tax expense for the lower rate applied to associated deferred tax assets. This nonrecurring expense reduced diluted EPS for the period by $0.04.
Net Interest Income
Net interest income for the second quarter of 2024 increased by $1.3 million, or 2.3% compared to the first quarter of 2024. Interest income increased by $1.0 million primarily driven by loan growth and repricing of maturing loans. The Company primarily utilized cash for loan funding and did not replace most borrowings that matured. This strategy combined with lower deposit balances drove a decline in interest expense by $0.3 million.
In comparison to the second quarter of 2023, net interest income increased $14.4 million, or 34.0%. Interest income increased by $22.6 million and interest expense increased $8.2 million. The increases were primarily driven by the addition of Blackhawk and higher interest rates.
Net Interest Margin
Net interest margin, on a tax equivalent basis, was 3.36% for the second quarter of 2024, which was an 11-basis point increase compared to the prior quarter. Earning asset yields increased by 11 basis points, while the average cost of funds was flat. Accretion income for the quarter was $3.7 million, which was an increase of $0.1 million from the prior quarter.
In comparison to the second quarter of last year, the net interest margin increased 52 basis points, with an average earnings asset increase of 84 basis points versus the average cost of funds increase of 32 basis points. The increases were due to higher rates on new and renewed loans as well as increased competition on deposits.
Loan Portfolio
Total loans ended the quarter at $5.56 billion, representing an increase of $61.3 million, or 1.1% compared to the prior quarter. Growth was well diversified between construction and land development, multifamily, commercial real estate and commercial and industrial loans. The average yield on new loans and operating line usage was approximately 8.0% in the quarter.
Asset Quality
The Company benefits from a strong performing credit culture that is reflective in its ratios for the current quarter. The allowance for credit losses (‘ACL') increased by $0.4 million to $68.3 million with an ending ACL to total loans ratio of 1.23%. Provision expense was recorded in the amount of $1.1 million and the Company had net charge offs of $0.7 million in the period. Also, at the end of the second quarter, the ratio of non-performing loans to total loans was 0.34%, and the ACL to non-performing loans was 358%. The ratio of non-performing assets to total assets was 0.27% at quarter end. Non-performing loans decreased by $1.0 million in the period to $19.1 million. Special mention loans declined $34.9 million in the quarter to $30.8 million driven by a combination of upgrades and paydowns. Substandard loans declined $1.7 million in the period to $27.6 million.
Deposits and Funding
Total deposits ended the quarter at $6.12 billion, which represented a decrease of $127.2 million, or 2.0% from the prior quarter. The decrease was primarily in interest bearing demand deposits and noninterest bearing accounts, which included the deposit change mentioned in the first quarter release where approximately $50.0 million of second quarter outflows were short-term customer cash flow needs that were received on the last day of the first quarter. In comparison to the prior quarter, the average cost of funds was flat in the second quarter of 2024 at 1.91%.
During the quarter, the Company repurchased and cancelled $4.0 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, of $0.1 million.
Noninterest Income and MRIG
Noninterest income for the second quarter of 2024 was $22.4 million compared to $24.5 million in the prior quarter. The decrease compared to the prior quarter was primarily due to the seasonality in insurance revenues, which were lower by $2.7 million. Excluding insurance, noninterest income increased in the quarter primarily driven by higher service charges, mortgage banking and debit card fees. Wealth management revenues increased $0.1 million in the quarter and ended the period with $6.3 billion in assets under management.
In comparison to the second quarter of 2023, noninterest income increased $2.9 million, or 15.1%. The increase was primarily driven by the addition of Blackhawk and growth in insurance revenues.
On July 9, 2024, our subsidiary First Mid Insurance Group closed on the acquisition of Mid Rivers Insurance Group based in O'Fallon, Missouri. MRIG serves the greater St. Louis and mid-Missouri markets overlapping First Mid's operating markets. MRIG has a diversified product offering including personal lines, commercial lines, transportation and agriculture. The experienced team of 10 producers generates annual revenue of approximately $2.7 million, which is expected to significantly grow with the opportunities from bank referrals and access to expanded markets.
Noninterest Expenses
Noninterest expense for the second quarter of 2024 totaled $51.4 million compared to $53.4 million in the prior quarter. The decrease was primarily driven by lower nonrecurring integration costs, which totaled $0.3 million in the second quarter of 2024 versus $2.3 million in the first quarter of 2024. The current quarter included a $0.7 million annual incentive credit in debit card fees, while the prior quarter included a $0.9 million credit for a negotiated adjustment for a new agreement.
In comparison to the second quarter of 2023, noninterest expenses increased $11.3 million. The increase was primarily driven by the addition of Blackhawk and organic growth, including the impacts from higher inflation.
The Company's efficiency ratio, as adjusted in the non-GAAP reconciliation table herein, for the second quarter 2024 was 59.6% compared to 59.1% in the prior quarter and 60.4% 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
15.46%
Tier 1 capital to risk-weighted assets
12.65%
Common equity tier 1 capital to risk-weighted assets
12.24%
Leverage ratio
10.04%
The Company's Board of Directors approved an increase of $0.01 to its next quarterly dividend of $0.24 payable on August 30, 2024 for shareholders of record on August 16, 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 the global COVID-19 pandemic 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
– Tables Follow –
FIRST MID BANCSHARES, INC.
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
As of
June 30,
December 31,
June 30,
2024
2023
2023
Assets
Cash and cash equivalents
$
235,480
$
143,064
$
174,253
Investment securities
1,120,930
1,179,402
1,169,428
Loans (including loans held for sale)
5,560,617
5,580,565
4,813,416
Less allowance for credit losses
(68,312
)
(68,675
)
(58,719
)
Net loans
5,492,305
5,511,890
4,754,697
Premises and equipment, net
101,583
101,396
89,924
Goodwill and intangibles, net
257,377
264,231
178,615
Bank Owned Life Insurance
168,439
166,125
152,538
Other assets
204,946
220,686
184,414
Total assets
$
7,581,060
$
7,586,794
$
6,703,869
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing
$
1,393,336
$
1,398,234
$
1,171,047
Interest bearing
4,722,443
4,725,425
4,048,538
Total deposits
6,115,779
6,123,659
5,219,585
Repurchase agreements with customers
205,955
213,721
209,170
Other borrowings
263,735
263,787
449,979
Junior subordinated debentures
24,169
24,058
19,448
Subordinated debt
103,029
106,755
94,632
Other liabilities
54,748
61,610
50,368
Total liabilities
6,767,415
6,793,590
6,043,182
Total stockholders' equity
813,645
793,204
660,687
Total liabilities and stockholders' equity
$
7,581,060
$
7,586,794
$
6,703,869
FIRST MID BANCSHARES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data, unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Interest income:
Interest and fees on loans
$
79,560
$
58,368
$
157,383
$
114,604
Interest on investment securities
7,405
7,193
14,810
14,320
Interest on federal funds sold & other deposits
1,718
569
4,162
877
Total interest income
88,683
66,130
176,355
129,801
Interest expense:
Interest on deposits
26,338
16,580
52,434
29,347
Interest on securities sold under agreements to repurchase
1,615
1,723
3,671
3,186
Interest on other borrowings
2,248
4,084
4,562
8,967
Interest on jr. subordinated debentures
537
390
1,079
769
Interest on subordinated debt
1,180
986
2,374
1,974
Total interest expense
31,918
23,763
64,120
44,243
Net interest income
56,765
42,367
112,235
85,558
Provision for credit losses
1,083
458
726
(359
)
Net interest income after provision for loan
55,682
41,909
111,509
85,917
Non-interest income:
Wealth management revenues
5,405
5,341
10,727
10,855
Insurance commissions
6,531
5,737
15,744
14,217
Service charges
3,227
2,386
6,183
4,589
Net securities gains/(losses)
(156
)
(6
)
(156
)
(52
)
Mortgage banking revenues
1,038
332
1,744
482
ATM/debit card revenue
4,281
3,265
8,336
6,348
Other
2,096
2,431
4,322
5,526
Total non-interest income
22,422
19,486
46,900
41,965
Non-interest expense:
Salaries and employee benefits
30,164
23,544
60,612
49,615
Net occupancy and equipment expense
7,507
6,035
15,067
12,040
Net other real estate owned (income) expense
85
27
64
160
FDIC insurance
902
1,076
1,771
1,539
Amortization of intangible assets
3,340
1,477
6,837
2,999
Stationary and supplies
370
315
761
607
Legal and professional expense
2,536
1,780
4,985
3,470
ATM/debit card expense
1,281
1,016
2,472
2,239
Marketing and donations
814
908
1,676
1,562
Other
4,392
3,864
10,508
7,388
Total non-interest expense
51,391
40,042
104,753
81,619
Income before income taxes
26,713
21,353
53,656
46,263
Income taxes
6,968
4,786
13,408
10,516
Net income
$
19,745
$
16,567
$
40,248
$
35,747
Per Share Information
Basic earnings per common share
$
0.83
$
0.81
$
1.69
$
1.74
Diluted earnings per common share
0.82
0.80
1.68
1.74
Weighted average shares outstanding
23,896,210
20,528,717
23,884,472
20,510,585
Diluted weighted average shares outstanding
23,998,152
20,628,239
23,979,244
20,596,283
FIRST MID BANCSHARES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data, unaudited)
For the Quarter Ended
June 30,
March 31,
December 31,
September 30,
June 30,
2024
2024
2023
2023
2023
Interest income:
Interest and fees on loans
$
79,560
$
77,823
$
78,676
$
69,143
$
58,368
Interest on investment securities