FIRST MID BANCSHARES, INC.

First Mid Bancshares, Inc. operates as a financial holding company engaged in banking through its wholly owned subsidiary, First Mid Bank & Trust, N.A., and offers insurance products and services through First Mid Insurance Group, Inc., as well as trust, farm services, investment services, and retirement planning through First Mid Wealth Management Company. The company also wholly owns a captive insurance company, First Mid Captive, Inc., and five statutory business trusts. First Mid Bank operates branches across Illinois, Missouri, Wisconsin, and Texas, serving sixty different communities with fifty-four separate locations in Illinois, eighteen locations in Missouri, three locations in Wisconsin, one location in Texas, and one office in Indiana dedicated for agency finance and loan production. The company faces active competition in all areas from many Illinois, Missouri, Wisconsin and Texas banks, savings and loan associations, and credit unions, with principal methods of competition being quality of services, ease of access, on-line services, and pricing of services including interest rates and fees.

The company's competitive positioning is built on its community-focused strategy, emphasizing organic growth through adding new customers and selling more products and services to existing customers, as well as strategic acquisitions. Management focuses on organizations where there is a cultural fit with existing operations and a strong likelihood of building shareholder value. The company's credit loss experience has been good with average net charge offs amounting to $3.1 million (0.06% of total loans) over the past five years ¹. Nonperforming loans were $31.9 million (0.53% of total loans) at December 31, 2025 ². These percentages have historically compared well with peer financial institutions. The company's vision is to be a nimble, independent, community-focused financial organization committed to quality, growth and earned independence for the benefit of all stakeholders.

The company generates revenue primarily through lending activities, with approximately 74% of total revenues derived from lending activities in the fiscal year ended December 31, 2025 ³. Net interest income, the largest source of operating revenue, represented the difference between total interest income earned on earning assets and total interest expense paid on interest-bearing liabilities. The company also generates non-interest income from wealth management revenues, insurance commissions, service charges, mortgage banking, ATM/debit card revenue, bank owned life insurance, and other income. Customer-contact personnel across all business lines are engaged in organic growth efforts, attempting to match products and services with the particular financial needs of individual customers and prospective customers. Cross-selling opportunities are encouraged and measured between the business lines.

The company's loan portfolio is a critical component of its business model. Total commercial real estate loans have increased from $1.7 billion at December 31, 2021 to $2.6 billion at December 31, 2025 ⁴. Net loan balances increased to $5.94 billion at December 31, 2025, from $5.60 billion at December 31, 2024, and from $5.51 billion at December 31, 2023 ⁵. The increase in 2025 was primarily due to organic growth within the established footprint. The company maintains $4.1 billion in loans secured by commercial, agricultural, and residential real estate ⁶. The wealth management line focuses on estate planning, investment services, employee benefit services, farm management, and brokerage services, with total assets under management of $6.6 billion at December 31, 2025 compared to $6.4 billion at December 31, 2024 and $6.1 billion at December 31, 2023 ⁷. The insurance brokerage line focuses on property and casualty, senior insurance products, group medical insurance for businesses, and personal lines insurance.

The company's deposit base is another key component. Total deposit balances increased to $6.40 billion at December 31, 2025 from $6.06 billion at December 31, 2024 which was a decrease from $6.12 billion at December 31, 2023 ⁸. The increase in 2025 was primarily due to an increase in CD's, brokered CDs, and non-interest bearing deposits. The company has also focused on growing its commercial and retail deposit base through growth in checking, money markets and customer repurchase agreement balances. The company's net interest margin on a tax-effected basis increased to 3.70% as of December 31, 2025 from 3.34% in December 31, 2024 primarily due to continued focus on loan pricing on new and renewed loans, continued efforts to increase the performance of the investment portfolio, and a decrease in funding costs ⁹.

During the quarter ended September 30, 2024, the company acquired Mid Rivers Insurance Group, Inc. which was subsequently merged into First Mid Insurance. In July 2025, the company acquired part of AAdvantage Insurance Group LLC's book of business. On October 29, 2025, the company acquired Two Rivers Financial Group, Inc. In December 2025, the company acquired Ray Farm Management Services, Inc. On June 24, 2025, the Board of Directors approved a repurchase program (the "2025 Repurchase Program"), which became effective on July 1, 2025, authorizing the company to repurchase up to 1.2 million shares of the company's common stock ¹⁰. During 2025, the company did not repurchase any shares through this plan. The company also repurchased subordinated debt during the period. The company recognized losses on the sale of low performing securities in the investment portfolio of $2.5 million in 2025 compared to losses of $433,000 in 2024 ¹¹.

Net income was $91.7 million, $78.9 million, and $68.9 million and diluted earnings per share were $3.83, $3.30, and $3.15 for the years ended December 31, 2025, 2024, and 2023, respectively ¹². Return on average assets was 1.20% for 2025, 1.04% for 2024, and 0.97% for 2023 ¹³. Return on average common equity was 10.24% for 2025, 9.67% for 2024, and 10.10% for 2023 ¹⁴. Net interest income increased to $256.2 million in 2025 from $228.7 million in 2024 and $193.5 million in 2023 ¹⁵. Non-interest income decreased to $93.1 million in 2025 compared to $96.3 million in 2024 and $86.8 million in 2023 ¹⁶. Non-interest expenses increased to $222.2 million in 2025 compared to $215.0 million in 2024, and $185.7 million in 2023 ¹⁷. The company's provision for credit losses was $9.9 million for 2025, compared to $5.6 million for 2024, and $6.1 million for 2023 ¹⁸.

The company states that forward-looking statements are based on certain assumptions and describe future plans, strategies, and expectations, but actual results could differ materially due to many risks and uncertainties.

The company's primary growth vector is organic growth through adding new customers and selling more products and services to existing customers, supported by cross-selling opportunities encouraged and measured between business lines. The company has focused on a variety of lending and deposit services products that meet the needs of the communities it serves, achieving significant growth with total commercial real estate loans increasing from $1.7 billion at December 31, 2021 to $2.6 billion at December 31, 2025 ¹⁹. The wealth management line focuses growth efforts on estate planning, investment services, employee benefit services, farm management, and brokerage services. The insurance brokerage line focuses on increasing property and casualty, senior insurance products, group medical insurance for businesses, and personal lines insurance to individuals.

Growth through acquisitions has been an integral part of the company's strategy for an extended period of time. Recent acquisitions include Mid Rivers Insurance Group, Inc. in the quarter ended September 30, 2024, part of AAdvantage Insurance Group LLC's book of business in July 2025, Two Rivers Financial Group, Inc. on October 29, 2025, and Ray Farm Management Services, Inc. in December 2025. When reviewing acquisition possibilities, the company focuses on organizations where there is a cultural fit with its existing operations and where there is a strong likelihood of building shareholder value. The company may continue to make such acquisitions in the future.

The company's net interest margin on a tax-effected basis increased to 3.70% as of December 31, 2025 from 3.34% in December 31, 2024 primarily due to continued focus on loan pricing on new and renewed loans, continued efforts to increase the performance of the investment portfolio, and a decrease in funding costs ²⁰. The company's net interest spread was 3.18% for 2025 compared to 2.83% for 2024 and 2.62% for 2023 ²¹. The company's efficiency efforts include centralizing most administrative and operational tasks within its home office in Mattoon, Illinois, which allows branches to maintain customer focus, helps assure compliance with banking regulations, keeps fixed administrative costs at as low a level as practicable, and allows for better management of risk. The company also utilizes technology where practicable in daily banking activities to reduce the potential for human error.

Operationally, the company centralizes most administrative and operational tasks within its home office in Mattoon, Illinois. The company utilizes technology where practicable in daily banking activities to reduce the potential for human error. While the company does not employ every new technology that is introduced, it attempts to be competitive with other banking organizations with respect to operational and customer technology. The company completed a core system conversion during the period. There were 1,170 full-time equivalent employees at December 31, 2025, compared to 1,198 at December 31, 2024, and 1,187 at December 31, 2023 ²². The company increased the starting rate of pay an additional $1.00 per hour for the third consecutive year, positively impacting many entry level employees. All salary ranges were increased by 4% ²³.

The company's capital allocation strategy includes providing a competitive dividend as well as the opportunity for stock price appreciation. On June 24, 2025, the Board of Directors approved a repurchase program (the "2025 Repurchase Program"), which became effective on July 1, 2025, authorizing the company to repurchase up to 1.2 million shares of the company's common stock ²⁴. During 2025, the company did not repurchase any shares through this plan. The company's Tier 1 capital ratio to risk weighted assets ratio at December 31, 2025 was 13.55% ²⁵. The company's total capital to risk weighted assets ratio at December 31, 2025 was 15.67% ²⁶. The company's common equity Tier 1 capital ratio was 13.16% and leverage ratio was 11.07% at December 31, 2025 ²⁷. The company expensed $3.5 million for its FDIC insurance assessment during 2025 ²⁸.

The company faces structural headwinds from changes in interest rates, which could negatively impact net interest income, its largest source of revenue. The company's net interest income is highly dependent on achieving a positive spread between the interest earned on loans and investments and the interest paid on deposits and borrowings. Changes in interest rates could negatively impact the company's ability to attract deposits, make loans, and achieve a positive spread resulting in compression of the net interest margin. The company also faces risks from difficult economic conditions and market disruption, which have adversely impacted the banking industry and financial markets generally. A large percentage of the company's loans are to individuals and businesses in Illinois, consequently, any decline in the economy of this market area could have a materially adverse effect on the company's financial condition and results of operations.

The company faces execution risks related to its acquisition strategy, including potential exposure to unknown or contingent liabilities or asset quality issues of target institutions, difficulty and expense of integrating operations and personnel, potential disruption to the company including diversion of management's time and attention, difficulty in estimating the value of target institutions, and potential changes in banking or tax laws or regulations that may affect target institutions. The company also faces risks from the adequacy of its allowance for credit losses, which may prove inadequate due to unanticipated adverse changes in the economy, market conditions, or events adversely affecting specific customers, industries, or markets. The company's total loan balances by industry exceeded 25% of total risk-based capital for each of four industries as of December 31, 2025 ²⁹.

The company faces material credit risk from its $4.1 billion in loans secured by commercial, agricultural, and residential real estate, where a significant decline in real estate values could have a negative effect on financial condition and results of operations ³⁰. The allowance for credit losses may prove inadequate, with net charge-offs of $5.2 million during 2025, $4.1 million during 2024, and $0.3 million during 2023 ³¹. Interest rate risk is significant as net interest income, the largest source of revenue, is highly dependent on achieving a positive spread between interest earned and interest paid; the net interest margin on a tax-effected basis was 3.70% for 2025 ³². The company's loan portfolio has concentrations in four industries that each exceeded 25% of total risk-based capital as of December 31, 2025, exposing the company to industry-specific downturns ³³. The company also faces operational risks from cyber-attacks and information security breaches, which could disrupt business, result in unintentional disclosure of confidential information, and cause losses, though the company maintains cyber insurance coverage intended to help mitigate certain potential losses.

Management's message emphasizes the company's strong financial performance and strategic positioning, highlighting net income of $91.7 million for 2025 compared to $78.9 million for 2024 and $68.9 million for 2023 ³⁴. Management notes that diluted earnings per share were $3.83 for 2025, $3.30 for 2024, and $3.15 for 2023 ³⁵. The company's vision statement is to be a nimble, independent, community-focused financial organization committed to quality, growth and earned independence for the benefit of all stakeholders. Management's strategic priorities include growing revenues and customer base through organic growth and strategic acquisitions, maintaining a strong balance sheet, and increasing profits. Management emphasizes the importance of credit quality, noting that average net charge offs amounted to $3.1 million (0.06% of total loans) over the past five years ³⁶.