FMBH - First Mid Bancshares Inc. Announces Fourth Quarter and Full Year 2019 Results

MATTOON, Ill., Jan. 23, 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 December 31, 2019.

Highlights

• Diluted earnings per share of $0.72 and $2.87 for the fourth quarter and full year, respectively
• Increased tangible book value for the year by 16.7% to $23.59
• Strong loan growth for the quarter of $71.8 million, or 2.7%
• Record quarter of noninterest income driven by growth in wealth management revenues

“We followed up a strong third quarter of loan growth with another solid quarter,” said Joe Dively, Chairman and Chief Executive Officer.  “Our wealth management division had a great quarter and, combined with our insurance division’s successful 2019, we delivered record noninterest income for both the fourth quarter and the full year.” 

“We achieved a lot in 2019 through our intense focus on the customer and delivering shareholder value.  We made significant investments in technology to ensure we are delivering the best and most competitive products and services to our customers and for the communities we serve.  For our shareholders, we increased our dividend, repurchased shares and delivered strong financial results, including an increase in tangible book value by nearly 17%.  Our capital position is strong and we are well positioned for 2020 and beyond,” Dively concluded.  

Net Interest Income

Net interest income for the fourth quarter of 2019 decreased by $0.1 million, or 0.5% compared to the third quarter of 2019.  The decline was primarily driven by a decrease of $0.8 million in accretion income, partially offset by lower interest expenses.  Total accretion income for the quarter was $1.8 million compared to $2.6 million in the third quarter.

In comparison to the fourth quarter of 2018, net interest income was essentially the same at $31.0 million.  Interest income increased by $0.7 million and was offset by higher interest expenses.      

Net Interest Margin

Net interest margin, on a tax equivalent basis, was 3.57% for the fourth quarter of 2019 compared to 3.60% in the prior quarter.  The decrease was primarily driven by the decrease in accretion income of $0.8 million.  Excluding accretion income, the net interest margin increased seven basis points for the quarter. Strong loan growth in the second half of the year, along with active management of funding costs, helped drive the increase.

In comparison to the fourth quarter of 2018, net interest margin decreased by 18 basis points.  The year-over-year decrease in the ratio was primarily due to less accretion income and higher funding costs in a more competitive and challenging interest rate environment.     

Loan Portfolio

Total loans ended the quarter at $2.70 billion, representing an increase of $71.8 million, or 2.7% compared to the prior quarter.  The increase was in multiple categories with commercial real estate representing the largest amount.  The loan growth was also well dispersed geographically with a majority of the growth coming from our St. Louis Metro and Peoria markets.  

Loans increased by $50.8 million, or 1.9%, compared to the fourth quarter of last year.  The year-over-year loan growth was primarily in commercial real estate and construction and land development, partially offset by declines in multifamily and 1-4 family properties.  Loan growth for the year was muted by higher payoffs and efforts to improve overall credit quality from certain acquired loans.       

Asset Quality

Nonperforming loans decreased by $1.9 million from year-end 2018, while the fourth quarter 2019 increased by $3.6 million primarily tied to two commercial credits.  At December 31, 2019, nonperforming loans were 1.03% of total loans, allowance for loan losses was 1.00% of total loans, and the allowance for loan losses to non-performing loans was 96.7%.  Non-performing loans increased from the previous quarter by $3.6 million to $27.8 million.  Excluding outstanding acquired loans, the allowance for loan losses to total loans was 1.26%.        

Net charge-offs were $2.6 million during the fourth quarter compared to $2.3 million in the third quarter of 2019.  The Company recorded provision expense of $2.7 million consistent with the third quarter of 2019 and $0.4 million less than the fourth quarter of last year.           

Deposits

Total deposits at December 31, 2019 were $2.92 billion, a decrease of $71.6 million in the quarter.  Some of the decrease was directly attributable to the increase of $33.6 million in repurchase agreements.  A majority of the remaining decline came from maturities on higher cost time deposits and certain commercial customers with seasonal cash flows.  The Company took steps to reduce its funding costs in early October through a variety of steps and the average cost of funds declined 12 basis points to 0.67% for the quarter.  

On a year-over-year basis, deposits were down $71.3 million.  Increases in noninterest bearing demand deposits were offset by decreases in money market accounts and interest bearing demand deposits.

Noninterest Income

Noninterest income for the fourth quarter of 2019 was a record $14.9 million compared to $12.9 million in the third quarter.  The increase was primarily driven by farm management and real estate income within wealth management revenues.        

Noninterest income increased $3.2 million compared to the fourth quarter of last year due to a combination of both organic and acquisition growth.

Noninterest Expenses    

Noninterest expense for the fourth quarter totaled $27.6 million compared to $25.9 million in the third quarter.  Most of the increase was in the salaries and benefits line on the income statement and was primarily driven by the growth in revenues.    

Noninterest expense was $1.3 million higher than the fourth quarter of 2018.  The year-over-year increase was primarily due to the expense tied to the growth in noninterest income revenues and having the SCB Bancorp acquisition in for the full quarter in 2019.  The Company’s efficiency ratio, on a tax equivalent basis, for the fourth quarter of 2019 was 57.2% compared to 57.7% for the same period last year.

Capital and CECL

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

In June 2016, the Financial Accounting Standards Board issued Accounting Standard Update 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“the standard”). The standard replaces the incurred loss methodology of estimating allowance for loan losses with an expected loss methodology that is commonly referred to as the current expected credit losses (“CECL”) methodology. The Company was required to adopt the standard, as amended, effective January 1, 2020.  The Company has prepared an initial estimate of the impact from adopting the standard and believes its allowance for loan losses will be increased within a range of 5% to 10% as of adoption.

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 did not repurchase any shares 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

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