First Mid Bancshares, Inc. Delivers Strong Second Quarter Results: A Case Study in Merger Success

July 29, 2021 ? By a Finance Enthusiast

In the world of banking, where margins can feel tighter than a pair of skinny jeans, First Mid Bancshares, Inc. (NASDAQ: FMBH) is showing us how to dance elegantly through a crowded financial ballroom. The company recently reported its second quarter results, and let?s just say, the earnings surprise was as delightful as finding a forgotten $20 in your winter coat pocket.

Key Financial Highlights

First Mid posted a net income of $12.2 million, translating to an EPS of $0.68, which is right on target with the EPS consensus expectations. Adjusted net income, which some might argue is the real star of the earnings show, came in at $17.8 million, or $0.98 diluted EPS. If you?re keeping score at home, that?s a solid performance that suggests the company is on track to meet its revenue forecast for the year.

Dividend Increases & Strategic Moves

The company?s Board of Directors decided to increase the quarterly dividend by 7.3% to $0.22 per share. This isn?t just a nice gesture; it?s a signal that the company is confident in its financial stability. Plus, it's a great way to keep investors happy?nothing says ?we love you? like a little extra cash in their pockets.

In May, First Mid completed its merger with Providence Bank and managed to integrate it smoothly, a feat that many in the industry would consider akin to juggling chainsaws while riding a unicycle. The merger not only expanded their footprint but also added a wealth management and insurance agency to the mix. Talk about diversification!

Income Growth and Loan Portfolio Dynamics

Net interest income soared by 16.3% over the previous quarter, hitting a remarkable $6.0 million increase. This growth was primarily driven by the full quarter impact of the Providence merger. Interestingly, the company did see a decline in PPP loans, which dropped by $94.6 million, indicating a return to normalcy as pandemic-related programs wind down.

The total loan portfolio now stands at $3.80 billion, reflecting a decrease of $146.8 million from the prior quarter?likely a result of increased payoffs. But with deferrals at a mere 0.3% of the loan portfolio, it seems that First Mid is managing its risks well.

Asset Quality and Expenses

First Mid's asset quality remains robust, with non-performing loans at just 0.80% of total loans. The company reported a significant reduction in classified loans, which indicates a strong credit culture?something that will surely resonate well with regulators and investors alike. Net charge-offs were also down, adding another feather to their cap.

However, noninterest expenses climbed to $46.0 million due to the inclusion of Providence and some non-recurring acquisition costs. This increase isn?t exactly a surprise, but it does raise questions about how efficiently the company can operate going forward.

Looking Ahead

As First Mid Bancshares sets its sights on future acquisitions, like the pending acquisition of Delta Bancshares Company, the focus on expanding its presence in the St. Louis market could prove fruitful. The bank's strategy of diversifying income streams through insurance and wealth management services is likely to yield dividends?both literal and metaphorical?as they leverage market opportunities.

In an industry where the financial landscape is constantly shifting, First Mid's proactive approach and strong financial results suggest that it is not just surviving but thriving. As other banks navigate their own post-pandemic journeys, FMBH offers a model of resilience and adaptability that could serve as a roadmap for its peers.