EX-99.1 2 exh_991.htm PRESS RELEASE

EXHIBIT 99.1

First Mid Bancshares, Inc. Announces Second Quarter 2020 Results

MATTOON, Ill., July 30, 2020 (GLOBE NEWSWIRE) -- First Mid Bancshares, Inc. (NASDAQ: FMBH) (the “Company”) today announced its financial results for the quarter and year-to-date period ended June 30, 2020.

Highlights

- Net income of $10.1 million, or $0.60 diluted EPS
- Organic loan growth up 8.5% year-over-year, excluding Paycheck Protection Program (“PPP”) and loans acquired April 21st (the Acquired Loans”)
- Strong start with the Acquired Loans and lenders in the St. Louis metro market
- Continued supporting our communities with $260 million in total loans under the PPP

“I am proud of the strength and perseverance of the First Mid team as we have played and continue to play a key role in the support and success of the customers and communities we serve,” said Joe Dively, Chairman and Chief Executive Officer. “Our SBA expertise, along with our commitment to our communities, has allowed us to gain a significant number of new customers through the Paycheck Protection Program that will provide long-term value.”

“We delivered another solid quarter of financial results despite a reserve build for the uncertain macro-economic conditions. The team of commercial lenders and loan relationships we acquired in the second quarter have integrated successfully and are off to a great start. As our markets have either partially or fully reopened, our commercial customers who were most impacted by the shelter-in-place orders are seeing positive trends in their businesses. While it is early in the process, approximately 80% of borrowers who have ended their initial 90-day deferral program have not needed extensions,” Dively added.

“Finally, as you can see from our historical and consistent performance through various cycles, we have a very experienced underwriting team with a laser focus on asset quality. While this may be a headwind to growth during booming economic times, this culture and philosophy outperforms in periods such as the current cycle. When you combine our credit quality with our strong balance sheet and capital, we are uniquely positioned to not only manage the uncertainties that lie ahead, but also to take advantage of all opportunities to enhance shareholder value,” Dively concluded.

Net Interest Income

Net interest income for the second quarter of 2020 increased by $1.7 million, or 5.7% compared to the first quarter of 2020. Interest income increased by $0.8 million and interest expense decreased $0.9 million. The increase in interest income was primarily driven by the growth in balances from the Acquired Loans and PPP loans, partially offset by less securities income, lower loan yields and less accretion income. Total accretion income was $0.5 million, which was a decline of $0.3 million from the previous quarter. Interest expense declined due to the changes made to rates following the Federal Reserve cutting rates in March, including maturing CD’s and Federal Home Loan Bank advances.

In comparison to the second quarter of 2019, net interest income increased $0.3 million, or 0.9%. The increase was primarily attributable to a $2.3 million decline in interest expense, partially offset by lower interest income with accretion income down $2.1 million from the same quarter last year.

Net Interest Margin

Net interest margin, on a tax equivalent basis, was 3.25% for the second quarter of 2020 compared to 3.51% in the prior quarter. The PPP loans carry a 1% interest rate and were dilutive to the margin by approximately 16 basis points in the quarter. In addition, total accretion of $0.5 million for the second quarter was down from $0.8 million in the prior quarter. Excluding the PPP and accretion income, net interest margin declined by 5 basis points in the quarter with lower yields on earning assets partially offset by lower funding costs.

In comparison to the second quarter of 2019, net interest margin decreased 39 basis points. The year-over-year decrease was primarily due to the impact of the PPP loans and a $2.1 million decline in accretion income. Excluding PPP loans and accretion income, net interest margin increased one basis point in the current period compared to the second quarter of 2019.

Loan Portfolio

Total loans ended the quarter at $3.21 billion, representing an increase of $461.0 million compared to the prior quarter. The second quarter ending balance included approximately $259.6 million in PPP loans. Excluding the PPP loans and the $183.0 million in Acquired Loans, balances increased organically by approximately $18.4 million. On a year-over-year basis, loans increased $658.7 million, or 25.9%. Excluding PPP and Acquired Loans, balances increased $216.1 million, or 8.5%.

The Company has a diversified loan portfolio. The Company decided to continue to provide additional disclosures on industry segments with escalated monitoring and stress testing from the COVID-19 shelter in place. At quarter end, the more vulnerable sectors due to COVID-19, excluding PPP loans, were: 1) Retail Shopping/Strip centers, which represented 4.2% of outstanding loans, 2) Hotels, which represented 4.1% of outstanding loans, and 3) Restaurants, which represented 3.0% of outstanding loans. Most of the largest borrowers in the hotel and restaurant sector own and operate multiple businesses across various industries providing a diverse cash flow stream to support their loans and have provided personal guarantees.

The Company began offering a 90-day principal and interest deferral program primarily for the hotel and restaurant sector in late March. Subsequently, the Company offered a principal deferral program to select borrowers upon request primarily in the commercial real estate market. In addition, the Company offered a residential mortgage and consumer principal and interest deferral program. As of July 17th, 2020, approximately 80%, or $141.3 million, of the $177.5 million in deferred loans that reached the end of the original deferral period were not extended to a new deferral period. After reaching a peak of approximately $424.0 million in deferrals, the Company had total outstanding deferrals of $282.6 million, or 8.8% of total outstanding loans on July 17th, 2020.

The Company will continue to monitor and grant additional deferrals based upon the facts and circumstances of each borrower’s financial position. These loan deferrals and modifications have been executed consistent with the CARES Act and are not included in our non-performing loans.

Asset Quality

The Company’s asset quality measures continue to reflect a strong credit culture. The allowance for loan losses, excluding $259.6 million of PPP loans, was 1.30% of total loans. Also, the remaining fair value mark on certain acquired loans represents seven basis points in addition to the current allowance. The ratio of non-performing loans to total loans was 0.72%, and the allowance for loan losses to non-performing loans was 166.2%. Non-performing loans declined $1.4 million to $23.1 million at quarter end. Non-performing assets to total assets declined to 0.57%. Net charge-offs were $0.6 million during the second quarter compared to $1.2 million in the prior quarter.

Provision expense was recorded in the amount of $6.1 million in the second quarter reflecting $5.5 million of a reserve build above the $0.6 million in net charge-offs. This reserve build was recorded under Accounting Standards Update 2016-13 known as the current expected credit loss model. The Company’s required allowance for credit loss was calculated using a combination of, among other things, historical loss experience and the uncertainty of future macro-economic conditions.

Deposits

Total deposits ended the quarter at $3.39 billion, which represented an increase of $477.2 million from the prior quarter. The increase includes approximately $160.0 million of funding under the depository agreement setup for the acquired loans. The Company’s average rate on cost of funds was 0.43% for the quarter compared to 0.60% in the first quarter and 0.76% in the second quarter of 2019. Total interest-bearing deposit costs declined by 17 basis points in the first quarter 2020 and declined by 32 basis points year-over-year.

Noninterest Income

Noninterest income for the second quarter of 2020 was $13.9 million compared to $16.5 million in the first quarter and $13.6 million in the second quarter of last year. The decrease compared to first quarter was primarily driven by the timing of insurance revenues, which are seasonally higher in the first quarter. Excluding insurance revenues, noninterest income was essentially flat in the second quarter 2020. In addition, the current period included a negative $0.2 million mortgage servicing rights valuation adjustment.

In comparison to the second quarter of 2019, noninterest income increased $0.3 million, or 2.2% with increases in insurance, wealth management, and mortgage banking more than offsetting declines in services charges and late fees recorded in other income. The Company’s fee businesses continue to provide significant diversification and are a valuable and consistent income generator. Our First Mid Wealth Management division ended the quarter with $4.1 billion in assets under management.

Noninterest Expenses

Noninterest expense for the second quarter totaled $26.1 million compared to $27.7 million in the first quarter and $30.2 million in the second quarter last year. The current quarter was lower than the first quarter primarily due to the seasonality of our business lines as well as the deferral of loan origination costs related to the PPP loans.

The second quarter of 2019 included $2.4 million of costs related to the Soy Capital acquisition and integration versus $0.1 million of acquisition costs in the current period. The remaining year-over-year decline was primarily driven by lower occupancy and equipment costs, less OREO expense, and lower amortization of intangibles.

The Company will be closing two branches in the third quarter of 2020 as part of its ongoing initiative to optimize its branch network and manage its cost structure. The continued increase in the use of the Company’s advanced digital platform and the location of other nearby First Mid locations is expected to minimize any disruption to the customer.

The Company’s efficiency ratio, on a tax equivalent basis, for the second quarter 2020 improved to 54.3% compared to 57.1% in the prior quarter and 62.3% for the same period last year.

Regulatory Capital Levels

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 | 15.19%
Tier 1 capital to risk-weighted assets | 14.07%
Common equity tier 1 capital to risk-weighted assets | 13.46%
Leverage ratio | 10.43%

Capital levels declined in the period compared to the prior quarter as the Company paid its semi-annual dividend of $0.40 per share in June and the balance sheet increased from both organic growth and Acquired Loans.

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 $4.5 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 155 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, planned schedules and impacts from COVID-19. 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; accounting principles, policies and guidelines; the severity, magnitude and duration of the COVID-19 pandemic; the direct and indirect impact of such pandemic, including responses to the pandemic by the government, businesses and consumers, on First Mid’s operations and personnel, commercial activity and demand across First Mid’s business and customers’ businesses; the disruption of global, national, state and local economies associated with the COVID-19 pandemic, which could affect First Mid’s liquidity and capital positions, impair the ability of First Mid’s borrowers to repay outstanding loans, impair collateral values, and further increase the allowance for credit losses; and the impact of the COVID-19 pandemic on First Mid’s financial results, including possible lost revenue and increased expenses (including the cost of capital), as well as possible goodwill impairment charges. 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 |  |
| June 30, |  | December 31, |  | June 30,
|  | 2020 |  |  |  | 2019 |  |  |  | 2019 |
Assets |  |  |  |  |
Cash and cash equivalents | $ | 238,487 |  |  | $ | 85,080 |  |  | $ | 168,416 |
Investment securities |  | 727,154 |  |  |  | 760,215 |  |  |  | 833,763 |
Loans (including loans held for sale) |  | 3,205,262 |  |  |  | 2,695,347 |  |  |  | 2,546,543 |
Less allowance for loan losses |  | (38,381 | ) |  |  | (26,911 | ) |  |  | (26,359 | )
Net loans |  | 3,166,881 |  |  |  | 2,668,436 |  |  |  | 2,520,184 |
Premises and equipment, net |  | 58,905 |  |  |  | 59,491 |  |  |  | 59,898 |
Goodwill and intangibles, net |  | 130,656 |  |  |  | 133,257 |  |  |  | 135,762 |
Bank owned life insurance |  | 68,084 |  |  |  | 67,225 |  |  |  | 66,347 |
Other assets |  | 68,144 |  |  |  | 65,722 |  |  |  | 58,471 |
Total assets | $ | 4,458,311 |  |  | $ | 3,839,426 |  |  | $ | 3,842,841 |
Liabilities and Stockholders' Equity |  |  |  |  |
Deposits: |  |  |  |  |
Non-interest bearing | $ | 817,623 |  |  | $ | 633,331 |  |  | $ | 603,823 |
Interest bearing |  | 2,568,204 |  |  |  | 2,284,035 |  |  |  | 2,408,667 |
Total deposits |  | 3,385,827 |  |  |  | 2,917,366 |  |  |  | 3,012,490 |
Repurchase agreement with customers |  | 350,288 |  |  |  | 208,109 |  |  |  | 152,264 |
Other borrowings |  | 103,939 |  |  |  | 118,895 |  |  |  | 95,826 |
Junior subordinated debentures |  | 18,942 |  |  |  | 18,858 |  |  |  | 29,084 |
Other liabilities |  | 50,042 |  |  |  | 49,589 |  |  |  | 44,219 |
Total liabilities |  | 3,909,038 |  |  |  | 3,312,817 |  |  |  | 3,333,883 |
Total stockholders' equity |  | 549,273 |  |  |  | 526,609 |  |  |  | 508,958 |
Total liabilities and stockholders' equity | $ | 4,458,311 |  |  | $ | 3,839,426 |  |  | $ | 3,842,841 |

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,
|  | 2020 |  |  |  | 2019 |  |  |  | 2020 |  |  |  | 2019
Interest income: |  |  |  |  |  |  |  |
Interest and fees on loans | $ | 31,382 |  |  | $ | 31,539 |  |  | $ | 61,409 |  |  | $ | 63,643
Interest on investment securities |  | 4,077 |  |  |  | 5,436 |  |  |  | 8,666 |  |  |  | 10,645
Interest on federal funds sold & other deposits |  | 76 |  |  |  | 596 |  |  |  | 201 |  |  |  | 1,334
Total interest income |  | 35,535 |  |  |  | 37,571 |  |  |  | 70,276 |  |  |  | 75,622
Interest expense: |  |  |  |  |  |  |  |
Interest on deposits |  | 3,105 |  |  |  | 4,940 |  |  |  | 6,966 |  |  |  | 9,318
Interest on securities sold under agreements to repurchase |  | 158 |  |  |  | 215 |  |  |  | 352 |  |  |  | 475
Interest on other borrowings |  | 516 |  |  |  | 697 |  |  |  | 1,111 |  |  |  | 1,420
Interest on subordinated debt |  | 174 |  |  |  | 406 |  |  |  | 392 |  |  |  | 844
Total interest expense |  | 3,953 |  |  |  | 6,258 |  |  |  | 8,821 |  |  |  | 12,057
Net interest income |  | 31,582 |  |  |  | 31,313 |  |  |  | 61,455 |  |  |  | 63,565
Provision for loan losses |  | 6,136 |  |  |  | 91 |  |  |  | 11,617 |  |  |  | 1,038
Net interest income after provision for loan |  | 25,446 |  |  |  | 31,222 |  |  |  | 49,838 |  |  |  | 62,527
Non-interest income: |  |  |  |  |  |  |  |
Wealth management revenues |  | 3,827 |  |  |  | 3,587 |  |  |  | 7,453 |  |  |  | 7,232
Insurance commissions |  | 4,088 |  |  |  | 3,760 |  |  |  | 10,709 |  |  |  | 9,315
Service charges |  | 1,111 |  |  |  | 1,959 |  |  |  | 2,889 |  |  |  | 3,761
Securities gains, net |  | 287 |  |  |  | 218 |  |  |  | 818 |  |  |  | 272
Mortgage banking revenues |  | 1,236 |  |  |  | 346 |  |  |  | 1,544 |  |  |  | 585
ATM/debit card revenue |  | 2,239 |  |  |  | 2,202 |  |  |  | 4,226 |  |  |  | 4,218
Other |  | 1,097 |  |  |  | 1,516 |  |  |  | 2,756 |  |  |  | 2,844
Total non-interest income |  | 13,885 |  |  |  | 13,588 |  |  |  | 30,395 |  |  |  | 28,227
Non-interest expense: |  |  |  |  |  |  |  |
Salaries and employee benefits |  | 15,455 |  |  |  | 15,565 |  |  |  | 31,955 |  |  |  | 32,139
Net occupancy and equipment expense |  | 4,141 |  |  |  | 4,543 |  |  |  | 8,383 |  |  |  | 8,998
Net other real estate owned (income) expense |  | (2 | ) |  |  | 188 |  |  |  | (48 | ) |  |  | 241
FDIC insurance |  | 289 |  |  |  | 197 |  |  |  | 382 |  |  |  | 476
Amortization of intangible assets |  | 1,290 |  |  |  | 1,823 |  |  |  | 2,585 |  |  |  | 3,179
Stationary and supplies |  | 275 |  |  |  | 264 |  |  |  | 543 |  |  |  | 551
Legal and professional expense |  | 1,489 |  |  |  | 1,304 |  |  |  | 2,887 |  |  |  | 2,498
Marketing and donations |  | 314 |  |  |  | 481 |  |  |  | 795 |  |  |  | 935
Other |  | 2,847 |  |  |  | 5,822 |  |  |  | 6,347 |  |  |  | 9,480
Total non-interest expense |  | 26,098 |  |  |  | 30,187 |  |  |  | 53,829 |  |  |  | 58,497
Income before income taxes |  | 13,233 |  |  |  | 14,623 |  |  |  | 26,404 |  |  |  | 32,257
Income taxes |  | 3,096 |  |  |  | 3,642 |  |  |  | 6,268 |  |  |  | 7,960
Net income | $ | 10,137 |  |  | $ | 10,981 |  |  | $ | 20,136 |  |  | $ | 24,297
Per Share Information |  |  |  |  |  |  |  |
Basic earnings per common share | $ | 0.61 |  |  | $ | 0.66 |  |  | $ | 1.21 |  |  | $ | 1.46
Diluted earnings per common share |  | 0.60 |  |  |  | 0.66 |  |  |  | 1.20 |  |  |  | 1.45
Weighted average shares outstanding |  | 16,709,886 |  |  |  | 16,683,194 |  |  |  | 16,701,536 |  |  |  | 16,674,646
Diluted weighted average shares outstanding |  | 16,756,794 |  |  |  | 16,717,974 |  |  |  | 16,748,444 |  |  |  | 16,709,426

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,
| 2020 |  |  | 2020 |  |  |  | 2019 |  |  |  | 2019 |  |  | 2019
Interest income: |  |  |  |  |  |  |  |  |
Interest and fees on loans | $ | 31,382 |  | $ | 30,027 |  |  | $ | 31,206 |  |  | $ | 31,976 |  |  | $ | 31,539
Interest on investment securities |  | 4,077 |  |  | 4,589 |  |  |  | 5,101 |  |  |  | 5,297 |  |  |  | 5,436
Interest on federal funds sold & other deposits |  |  | 125 |  |  |  | 214 |  |  |  | 305 |  |  |  | 596
Total interest income |  | 35,535 |  |  | 34,741 |  |  |  | 36,521 |  |  |  | 37,578 |  |  |  | 37,571
Interest expense: |  |  |  |  |  |  |  |  |
Interest on deposits |  | 3,105 |  |  | 3,861 |  |  |  | 4,447 |  |  |  | 5,174 |  |  |  | 4,940
Interest on securities sold under agreements to repurchase |  |  | 194 |  |  |  | 240 |  |  |  | 196 |  |  |  | 215
Interest on other borrowings |  | 516 |  |  | 595 |  |  |  | 610 |  |  |  | 691 |  |  |  | 697
Interest on subordinated debt |  | 174 |  |  | 218 |  |  |  | 240 |  |  |  | 392 |  |  |  | 406
Total interest expense |  | 3,953 |  |  | 4,868 |  |  |  | 5,537 |  |  |  | 6,453 |  |  |  | 6,258
Net interest income |  | 31,582 |  |  | 29,873 |  |  |  | 30,984 |  |  |  | 31,125 |  |  |  | 31,313
Provision for loan losses |  | 6,136 |  |  | 5,481 |  |  |  | 2,737 |  |  |  | 2,658 |  |  |  | 91
Net interest income after provision for loan |  |  | 24,392 |  |  |  | 28,247 |  |  |  | 28,467 |  |  |  | 31,222
Non-interest income: |  |  |  |  |  |  |  |  |
Wealth management revenues |  | 3,827 |  |  | 3,626 |  |  |  | 5,027 |  |  |  | 3,311 |  |  |  | 3,587
Insurance commissions |  | 4,088 |  |  | 6,621 |  |  |  | 3,361 |  |  |  | 3,353 |  |  |  | 3,760
Service charges |  | 1,111 |  |  | 1,778 |  |  |  | 1,985 |  |  |  | 2,091 |  |  |  | 1,959
Securities gains, net |  | 287 |  |  | 531 |  |  |  | 479 |  |  |  | 51 |  |  |  | 218
Mortgage banking revenues |  | 1,236 |  |  | 308 |  |  |  | 579 |  |  |  | 582 |  |  |  | 346
ATM/debit card revenue |  | 2,239 |  |  | 1,987 |  |  |  | 2,100 |  |  |  | 2,173 |  |  |  | 2,202
Other |  | 1,097 |  |  | 1,659 |  |  |  | 1,342 |  |  |  | 1,356 |  |  |  | 1,516
Total non-interest income |  | 13,885 |  |  | 16,510 |  |  |  | 14,873 |  |  |  | 12,917 |  |  |  | 13,588
Non-interest expense: |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  | 15,455 |  |  | 16,500 |  |  |  | 15,942 |  |  |  | 14,497 |  |  |  | 15,565
Net occupancy and equipment expense |  | 4,141 |  |  | 4,242 |  |  |  | 4,305 |  |  |  | 4,377 |  |  |  | 4,543
Net other real estate owned (income) expense |  |  | (46 | ) |  |  | 30 |  |  |  | 172 |  |  |  | 188
FDIC insurance |  | 289 |  |  | 93 |  |  |  | (170 | ) |  |  | (87 | ) |  |  | 197
Amortization of intangible assets |  | 1,290 |  |  | 1,295 |  |  |  | 1,296 |  |  |  | 1,373 |  |  |  | 1,823
Stationary and supplies |  | 275 |  |  | 268 |  |  |  | 269 |  |  |  | 284 |  |  |  | 264
Legal and professional expense |  | 1,489 |  |  | 1,398 |  |  |  | 1,451 |  |  |  | 1,215 |  |  |  | 1,304
Marketing and donations |  | 314 |  |  | 481 |  |  |  | 573 |  |  |  | 523 |  |  |  | 481
Other |  | 2,847 |  |  | 3,500 |  |  |  | 3,905 |  |  |  | 3,540 |  |  |  | 5,822
Total non-interest expense |  | 26,098 |  |  | 27,731 |  |  |  | 27,601 |  |  |  | 25,894 |  |  |  | 30,187
Income before income taxes |  | 13,233 |  |  | 13,171 |  |  |  | 15,519 |  |  |  | 15,490 |  |  |  | 14,623
Income taxes |  | 3,096 |  |  | 3,172 |  |  |  | 3,543 |  |  |  | 3,820 |  |  |  | 3,642
Net income | $ | 10,137 |  | $ | 9,999 |  |  | $ | 11,976 |  |  | $ | 11,670 |  |  | $ | 10,981

FIRST MID BANCSHARES, INC.
Consolidated Financial Highlights and Ratios
(Dollars in thousands, except per share data)
(Unaudited)
|  | As of and for the Quarter Ended
|  | June 30, |  | March 31, |  | December 31, |  | September 30, |  | June 30,
|  |  | 2020 |  |  |  | 2020 |  |  |  | 2019 |  |  |  | 2019 |  |  |  | 2019 |
Loan Portfolio |  |  |  |  |  |  |  |  |  |
Construction and land development |  | $ | 180,934 |  |  | $ | 123,326 |  |  | $ | 94,142 |  |  | $ | 68,821 |  |  | $ | 57,069 |
Farm real estate loans |  |  | 251,382 |  |  |  | 242,891 |  |  |  | 240,241 |  |  |  | 229,715 |  |  |  | 229,924 |
1-4 Family residential properties |  |  | 342,036 |  |  |  | 325,128 |  |  |  | 336,427 |  |  |  | 347,370 |  |  |  | 355,143 |
Multifamily residential properties |  |  | 141,015 |  |  |  | 139,734 |  |  |  | 153,948 |  |  |  | 154,859 |  |  |  | 167,709 |
Commercial real estate |  |  | 1,123,540 |  |  |  | 1,002,868 |  |  |  | 995,702 |  |  |  | 954,992 |  |  |  | 888,711 |
Loans secured by real estate |  |  | 2,038,907 |  |  |  | 1,833,947 |  |  |  | 1,820,460 |  |  |  | 1,755,757 |  |  |  | 1,698,556 |
Agricultural operating loans |  |  | 149,043 |  |  |  | 139,136 |  |  |  | 136,124 |  |  |  | 121,650 |  |  |  | 118,216 |
Commercial and industrial loans |  |  | 811,169 |  |  |  | 565,789 |  |  |  | 528,973 |  |  |  | 543,937 |  |  |  | 530,405 |
Consumer loans |  |  | 82,084 |  |  |  | 82,104 |  |  |  | 83,183 |  |  |  | 83,171 |  |  |  | 84,907 |
All other loans |  |  | 124,059 |  |  |  | 123,322 |  |  |  | 126,607 |  |  |  | 119,043 |  |  |  | 114,459 |
Total loans |  |  | 3,205,262 |  |  |  | 2,744,298 |  |  |  | 2,695,347 |  |  |  | 2,623,558 |  |  |  | 2,546,543 |
Deposit Portfolio |  |  |  |  |  |  |  |  |  |
Non-interest bearing demand deposits |  | $ | 817,623 |  |  | $ | 642,384 |  |  | $ | 633,331 |  |  | $ | 596,518 |  |  | $ | 603,823 |
Interest bearing demand deposits |  |  | 938,710 |  |  |  | 827,387 |  |  |  | 850,956 |  |  |  | 899,763 |  |  |  | 844,931 |
Savings deposits |  |  | 474,545 |  |  |  | 441,998 |  |  |  | 428,778 |  |  |  | 431,497 |  |  |  | 438,769 |
Money Market |  |  | 625,361 |  |  |  | 441,381 |  |  |  | 419,801 |  |  |  | 435,517 |  |  |  | 473,160 |
Time deposits |  |  | 529,588 |  |  |  | 555,477 |  |  |  | 584,500 |  |  |  | 625,630 |  |  |  | 651,807 |
Total deposits |  |  | 3,385,827 |  |  |  | 2,908,627 |  |  |  | 2,917,366 |  |  |  | 2,988,925 |  |  |  | 3,012,490 |
Asset Quality |  |  |  |  |  |  |  |  |  |
Non-performing loans |  | $ | 23,096 |  |  | $ | 24,463 |  |  | $ | 27,818 |  |  | $ | 24,203 |  |  | $ | 25,773 |
Non-performing assets |  |  | 25,397 |  |  |  | 27,306 |  |  |  | 31,538 |  |  |  | 28,645 |  |  |  | 29,380 |
Net charge-offs |  |  | 631 |  |  |  | 1,188 |  |  |  | 2,567 |  |  |  | 2,276 |  |  |  | 436 |
Allowance for loan losses to non-performing loans |  | 166.18 | % |  |  | 134.39 | % |  |  | 96.74 | % |  |  | 110.49 | % |  |  | 102.27 | %
Allowance for loan losses to total loans outstanding | 1.30%1 |  |  | 1.20 | % |  |  | 1.00 | % |  |  | 1.02 | % |  |  | 1.04 | %
Nonperforming loans to total loans |  |  | 0.72 | % |  |  | 0.89 | % |  |  | 1.03 | % |  |  | 0.92 | % |  |  | 1.01 | %
Nonperforming assets to total assets |  |  | 0.57 | % |  |  | 0.71 | % |  |  | 0.82 | % |  |  | 0.75 | % |  |  | 0.77 | %
Common Share Data |  |  |  |  |  |  |  |  |  |
Common shares outstanding |  |  | 16,728,190 |  |  |  | 16,702,484 |  |  |  | 16,673,480 |  |  |  | 16,663,095 |  |  |  | 16,694,316 |
Book value per common share |  | $ | 32.84 |  |  | $ | 31.91 |  |  | $ | 31.58 |  |  | $ | 31.32 |  |  | $ | 30.49 |
Tangible book value per common share |  |  | 25.02 |  |  |  | 24.00 |  |  |  | 23.59 |  |  |  | 23.25 |  |  |  | 22.35 |
Market price of stock |  |  | 26.23 |  |  |  | 23.74 |  |  |  | 35.25 |  |  |  | 34.62 |  |  |  | 34.92 |
Key Performance Ratios and Metrics |  |  |  |  |  |  |  |  |  |
End of period earning assets |  | $ | 4,093,511 |  |  | $ | 3,492,271 |  |  | $ | 3,464,144 |  |  | $ | 3,444,775 |  |  | $ | 3,447,695 |
Average earning assets |  |  | 3,942,832 |  |  |  | 3,451,123 |  |  |  | 3,464,200 |  |  |  | 3,444,088 |  |  |  | 3,470,776 |
Average rate on average earning assets (tax equivalent) |  | 3.68 | % |  |  | 4.11 | % |  |  | 4.24 | % |  |  | 4.39 | % |  |  | 4.40 | %
Average rate on cost of funds |  |  | 0.43 | % |  |  | 0.60 | % |  |  | 0.67 | % |  |  | 0.79 | % |  |  | 0.76 | %
Net interest margin (tax equivalent) |  |  | 3.25 | % |  |  | 3.51 | % |  |  | 3.57 | % |  |  | 3.60 | % |  |  | 3.64 | %
Return on average assets |  |  | 0.94 | % |  |  | 1.05 | % |  |  | 1.25 | % |  |  | 1.22 | % |  |  | 1.15 | %
Return on average common equity |  |  | 7.47 | % |  |  | 7.48 | % |  |  | 9.17 | % |  |  | 9.04 | % |  |  | 8.80 | %
Efficiency ratio (tax equivalent) 2 |  |  | 54.27 | % |  |  | 57.14 | % |  |  | 57.23 | % |  |  | 54.69 | % |  |  | 62.31 | %
Full-time equivalent employees |  |  | 828 |  |  |  | 835 |  |  |  | 827 |  |  |  | 830 |  |  |  | 826 |
1 Excludes Payment Protection Program loans.
2 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.

FIRST MID BANCSHARES, INC.
Net Interest Margin
(In thousands, unaudited)
| For the Quarter Ended June 2020
| QTD Average |  |  |  | Average
| Balance |  | Interest |  | Rate
INTEREST EARNING ASSETS |  |  |  |  |
Interest bearing deposits | $ | 152,090 |  |  | $ | 55 |  | 0.15 | %
Federal funds sold |  | 1,069 |  |  |  | - |  | 0.00 | %
Certificates of deposits investments |  | 4,154 |  |  |  | 21 |  | 2.03 | %
Investment Securities: |  |  |  |  |
Taxable (total less municipals) |  | 507,466 |  |  |  | 2,751 |  | 2.17 | %
Tax-exempt (Municipals) |  | 182,585 |  |  |  | 1,678 |  | 3.68 | %
Loans (net of unearned income) |  | 3,095,468 |  |  |  | 31,566 |  | 4.10 | %
Total interest earning assets |  | 3,942,832 |  |  |  | 36,071 |  | 3.68 | %
NONEARNING ASSETS |  |  |  |  |
Cash and due from banks |  | 80,492 |  |  |  |  |
Premises and equipment |  | 59,155 |  |  |  |  |
Other nonearning assets |  | 254,386 |  |  |  |  |
Allowance for loan losses |  | (36,215 | ) |  |  |  |
Total assets | $ | 4,300,650 |  |  |  |  |
INTEREST BEARING LIABILITIES |  |  |  |  |
Demand deposits | $ | 1,464,173 |  |  | $ | 697 |  | 0.19 | %
Savings deposits |  | 465,281 |  |  |  | 98 |  | 0.08 | %
Time deposits |  | 541,413 |  |  |  | 2,310 |  | 1.72 | %
Total interest bearing deposits |  | 2,470,867 |  |  |  | 3,105 |  | 0.51 | %
Repurchase agreements |  | 301,810 |  |  |  | 158 |  | 0.21 | %
FHLB advances |  | 114,368 |  |  |  | 505 |  | 1.78 | %
Federal funds purchased |  | 0 |  |  |  | 0 |  | 0.00 | %
Subordinated debt |  | 18,915 |  |  |  | 174 |  | 3.70 | %
Other borrowings |  | 1,868 |  |  |  | 11 |  | 2.37 | %
Total borrowings |  | 436,961 |  |  |  | 848 |  | 0.78 | %
Total interest bearing liabilities |  | 2,907,828 |  |  |  | 3,953 |  | 0.55 | %
NONINTEREST BEARING LIABILITIES |  |  |  |  |
Demand deposits |  | 799,332 |  |  | Average cost of funds | 0.43 | %
Other liabilities |  | 50,804 |  |  |  |  |
Stockholders' equity |  | 542,686 |  |  |  |  |
Total liabilities & stockholders' equity | $ | 4,300,650 |  |  |  |  |
Net Interest Earnings / Spread |  |  | $ | 32,118 |  | 3.13 | %
Impact of Non-Interest Bearing Funds |  |  |  |  | 0.12 | %
Tax effected yield on interest earning assets |  |  |  |  | 3.25 | %

FIRST MID BANCSHARES, INC.
Reconciliation of Non-GAAP Financial Measures
(In thousands, unaudited)
| As of and for the Quarter Ended
| June 30, |  | March 31, |  | December 31, | September 30, | June 30,
|  | 2020 |  |  |  | 2020 |  |  |  | 2019 |  |  |  | 2019 |  |  |  | 2019 |
Net interest income as reported | $ | 31,582 |  |  | $ | 29,873 |  |  | $ | 30,984 |  |  | $ | 31,125 |  |  | $ | 31,313 |
Net interest income, (tax equivalent) |  | 32,118 |  |  |  | 30,393 |  |  |  | 31,517 |  |  |  | 31,659 |  |  |  | 31,850 |
Average earning assets |  | 3,942,832 |  |  |  | 3,451,123 |  |  |  | 3,464,200 |  |  |  | 3,444,088 |  |  |  | 3,470,776 |
Net interest margin (tax equivalent) 1 |  | 3.25 | % |  |  | 3.51 | % |  |  | 3.57 | % |  |  | 3.60 | % |  |  | 3.64 | %
Common stockholder's equity | $ | 549,273 |  |  | $ | 533,051 |  |  | $ | 526,609 |  |  | $ | 521,959 |  |  | $ | 508,958 |
Goodwill and intangibles, net |  | 130,656 |  |  |  | 132,199 |  |  |  | 133,257 |  |  |  | 134,461 |  |  |  | 135,762 |
Common shares outstanding |  | 16,728 |  |  |  | 16,702 |  |  |  | 16,673 |  |  |  | 16,663 |  |  |  | 16,695 |
Tangible Book Value per common share | $ | 25.02 |  |  | $ | 24.00 |  |  | $ | 23.59 |  |  | $ | 23.25 |  |  | $ | 22.35 |
Common equity tier 1 capital | $ | 417,326 |  |  | $ | 410,565 |  |  | $ | 398,536 |  |  | $ | 391,429 |  |  | $ | 379,581 |
Risk weighted assets |  | 3,101,449 |  |  |  | 2,854,102 |  |  |  | 2,822,648 |  |  |  | 2,923,245 |  |  |  | 2,935,236 |
Common equity tier 1 capital to risk weighted assets 2 |  | 13.46 | % |  |  | 14.39 | % |  |  | 14.12 | % |  |  | 13.39 | % |  |  | 12.93 | %
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.