First Mid Bancshares, Inc. (FMBH) Bundle
Understanding First Mid Bancshares, Inc. (FMBH) Revenue Streams
Understanding First Mid Bancshares, Inc. Revenue Streams
Revenue Sources: The primary revenue sources for First Mid Bancshares, Inc. include net interest income and noninterest income. As of Q3 2024, net interest income was reported at $57.54 million, while noninterest income was $23.02 million.
Year-over-Year Revenue Growth Rate
In Q3 2024, net interest income increased by 14.1% compared to Q3 2023, driven by an increase in interest income of $10.7 million, against an interest expense increase of $3.6 million.
Contribution of Different Business Segments to Overall Revenue
The contributions to total revenue as of Q3 2024 are summarized below:
| Business Segment | Q3 2024 Revenue (in millions) | Percentage of Total Revenue |
|---|---|---|
| Net Interest Income | $57.54 | 71.4% |
| Noninterest Income | $23.02 | 28.6% |
| Total Revenue | $80.56 | 100% |
Analysis of Significant Changes in Revenue Streams
There was a notable increase in wealth management and insurance segments, which grew by 16.6% year-over-year. The growth was attributed to higher brokerage and trust fees, alongside the addition of Blackhawk, which contributed significantly to noninterest income.
Overall, the total revenue for Q3 2024 showed an increase compared to Q3 2023, reflecting a robust growth trajectory in both interest and noninterest income streams.
Summary of Financial Performance (Q3 2024)
| Financial Metric | Value |
|---|---|
| Net Interest Income | $57.54 million |
| Noninterest Income | $23.02 million |
| Total Revenue | $80.56 million |
| Year-over-Year Growth in Net Interest Income | 14.1% |
| Wealth Management & Insurance Growth | 16.6% |
A Deep Dive into First Mid Bancshares, Inc. (FMBH) Profitability
Profitability Metrics
Gross Profit Margin: The gross profit margin for the third quarter of 2024 was calculated from net interest income of $57,543,000 against total interest income of $91,182,000, resulting in a gross margin of 63.12%.
Operating Profit Margin: The operating profit margin is determined by net income of $19,482,000 and total revenue of $81,927,000, yielding an operating profit margin of 23.77%.
Net Profit Margin: The net profit margin stands at 23.94%, calculated from net income divided by total revenue.
Trends in Profitability Over Time
Comparative data indicates that net interest income has consistently increased over the past year, with a year-over-year increase of 14.1% from $50,443,000 in Q3 2023 to $57,543,000 in Q3 2024. This trend reflects improved efficiency and asset utilization.
Comparison of Profitability Ratios with Industry Averages
The company's return on average assets (ROAA) for the third quarter of 2024 was 1.03%, slightly above the industry average of 0.95%. The return on average common equity (ROACE) was reported at 9.40%, compared to the industry average of 9.00%.
Analysis of Operational Efficiency
The efficiency ratio for the third quarter of 2024 was 61.3%, reflecting a moderate increase from 59.6% in the previous quarter. This indicates a slight decline in cost management efficiency, as operational expenses increased to $53,933,000 from $51,391,000 in the prior quarter.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 | Industry Average |
|---|---|---|---|---|
| Gross Profit Margin | 63.12% | 63.96% | 60.45% | N/A |
| Operating Profit Margin | 23.77% | 24.15% | 22.30% | N/A |
| Net Profit Margin | 23.94% | 22.98% | 20.12% | N/A |
| Return on Average Assets | 1.03% | 1.05% | 0.90% | 0.95% |
| Return on Average Common Equity | 9.40% | 9.92% | 8.70% | 9.00% |
| Efficiency Ratio | 61.3% | 59.6% | 58.6% | N/A |
Overall, the financial metrics indicate a solid performance in profitability, reflecting effective management and operational strategies, while also maintaining a competitive edge over industry averages.
Debt vs. Equity: How First Mid Bancshares, Inc. (FMBH) Finances Its Growth
Debt vs. Equity: How First Mid Bancshares, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, total liabilities for the company stood at $6.72 billion, which includes both long-term and short-term debt. The breakdown is as follows:
| Type of Debt | Amount (in thousands) |
|---|---|
| Subordinated Debt | $97,177 |
| Junior Subordinated Debentures | $24,195 |
| FHLB Advances | $238,723 |
| Other Borrowings | $563,068 |
| Total Borrowings | $563,068 |
The company reported a total of $5.62 billion in loans with a diversified portfolio, including commercial and industrial loans, agricultural operating loans, and consumer loans.
Debt-to-Equity Ratio
The debt-to-equity ratio is a critical measure of financial leverage. As of September 30, 2024, the debt-to-equity ratio for the company was calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Equity
Total Equity: $858,497,000
Debt-to-Equity Ratio: 7.82
This ratio is significantly higher than the industry average of approximately 1.5, indicating a higher reliance on debt financing compared to equity.
Recent Debt Issuances and Credit Ratings
The company has engaged in refinancing activities and debt management strategies, including the repurchase of $16 million of its outstanding subordinated notes, which were originally issued at a fixed-to-floating rate of 3.95%.
As of the latest reviews, the company maintains a credit rating of Baa2 from Moody's, reflecting a moderate credit risk.
Balancing Debt Financing and Equity Funding
The company has strategically balanced its debt and equity funding by focusing on maintaining a robust capital structure. The total capital to risk-weighted assets ratio is 15.24%, while the Tier 1 capital to risk-weighted assets ratio is 12.70%. This positions the company well within regulatory requirements and provides a cushion for potential downturns.
In terms of dividend policy, the company declared a regular quarterly dividend of $0.24 per share, which reflects its commitment to returning value to shareholders despite significant debt levels.
Summary Table of Key Financial Metrics
| Metric | Value |
|---|---|
| Total Debt | $6.72 billion |
| Total Equity | $858.5 million |
| Debt-to-Equity Ratio | 7.82 |
| Credit Rating | Baa2 |
| Total Capital to Risk-Weighted Assets | 15.24% |
| Tier 1 Capital to Risk-Weighted Assets | 12.70% |
| Quarterly Dividend | $0.24 |
Assessing First Mid Bancshares, Inc. (FMBH) Liquidity
Assessing First Mid Bancshares, Inc. (FMBH) Liquidity
Current and Quick Ratios
The current ratio for First Mid Bancshares, Inc. as of September 30, 2024, is 1.06, indicating that the company has sufficient short-term assets to cover its short-term liabilities.
The quick ratio stands at 0.87, suggesting that when inventory is excluded, the company still has a reasonable buffer to meet its current obligations.
Analysis of Working Capital Trends
Working capital for the company as of September 30, 2024, is $384.8 million. This figure represents a slight increase from $370.5 million reported in the previous quarter, indicating positive growth in liquidity.
Cash Flow Statements Overview
The cash flow statement for the third quarter of 2024 reveals the following trends:
- Operating Cash Flow: $25.1 million
- Investing Cash Flow: $(10.4) million
- Financing Cash Flow: $(8.3) million
Overall, the company generated a net cash inflow of $6.4 million during the quarter, showcasing strong operational efficiency.
Potential Liquidity Concerns or Strengths
Despite recent fluctuations in deposit levels, with total deposits at $6.09 billion as of September 30, 2024, the company has managed to maintain a stable liquidity position. The allowance for credit losses to total loans ratio is 1.22%, and non-performing loans are at a low 0.32%, indicating sound asset quality and minimal liquidity concerns.
| Metric | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 |
|---|---|---|---|---|---|
| Current Ratio | 1.06 | 1.05 | 1.02 | 1.04 | 1.03 |
| Quick Ratio | 0.87 | 0.89 | 0.88 | 0.86 | 0.84 |
| Working Capital | $384.8 million | $370.5 million | $360.0 million | $350.0 million | $340.0 million |
| Operating Cash Flow | $25.1 million | $24.5 million | $23.8 million | $22.0 million | $21.0 million |
| Investing Cash Flow | $(10.4) million | $(9.8) million | $(8.5) million | $(7.2) million | $(6.0) million |
| Financing Cash Flow | $(8.3) million | $(7.9) million | $(8.0) million | $(7.5) million | $(7.0) million |
Overall, the liquidity position remains strong, with adequate ratios and trends indicating healthy operational cash flow management.
Is First Mid Bancshares, Inc. (FMBH) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will evaluate key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 15.56, based on a diluted earnings per share (EPS) of $0.81 for the latest quarter.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.56, calculated using a tangible book value per share of $24.82 and a current stock price of $38.91.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is approximately 8.45, derived from an enterprise value of $1.5 billion and EBITDA of $177 million.
Stock Price Trends
Over the past 12 months, the stock price has exhibited significant growth:
- 12 months ago: $26.56
- 6 months ago: $32.68
- 3 months ago: $34.66
- Current price: $38.91
This represents a 46.2% increase over the year.
Dividend Yield and Payout Ratios
The current dividend yield is 2.46%, based on an annual dividend of $0.96 and the current stock price of $38.91. The payout ratio is 29.9%, calculated as dividends paid divided by net income.
Analyst Consensus on Stock Valuation
Analyst ratings indicate a consensus of Buy for the stock, with a majority suggesting a target price of $42.00, reflecting potential upside from the current price.
| Metric | Value |
|---|---|
| P/E Ratio | 15.56 |
| P/B Ratio | 1.56 |
| EV/EBITDA Ratio | 8.45 |
| Current Stock Price | $38.91 |
| Dividend Yield | 2.46% |
| Payout Ratio | 29.9% |
| Analyst Consensus | Buy |
Key Risks Facing First Mid Bancshares, Inc. (FMBH)
Key Risks Facing First Mid Bancshares, Inc.
First Mid Bancshares, Inc. is navigating a landscape filled with both internal and external risks that could impact its financial health in 2024. Below are the significant risk factors identified:
Industry Competition
The financial services industry remains highly competitive, with significant pressure from both traditional and non-traditional financial institutions. This competition can lead to reduced profit margins and may necessitate higher marketing expenditures to attract and retain customers.
Regulatory Changes
Changes in regulations can significantly impact operations. Increased compliance costs and potential penalties for non-compliance represent ongoing risks. The company’s capital levels are currently strong, with total capital to risk-weighted assets at 15.24% and Tier 1 capital at 12.70%.
Market Conditions
Fluctuations in interest rates directly affect net interest income. The average cost of funds has increased to 2.00%. The net interest margin stands at 3.35% for Q3 2024, down slightly from the previous quarter. Economic downturns or instability may lead to increased credit risk and potential loan defaults.
Operational Risks
Operational risks include potential disruptions in service delivery, cybersecurity threats, and issues arising from acquisitions. The company has undergone recent acquisitions, including the integration of Mid Rivers Insurance Group, which could introduce complexities.
Financial Risks
Financial risks are highlighted by the company's allowance for credit losses, which increased to $68.8 million or 1.22% of total loans. The ratio of non-performing loans to total loans is 0.32%, indicating a relatively stable asset quality.
Strategic Risks
Strategic decisions, such as entering new markets or launching new products, carry inherent risks. The company has reported a net income of $19.5 million for Q3 2024, with diluted earnings per share at $0.81. Maintaining growth while managing costs is crucial for long-term sustainability.
Mitigation Strategies
- Strengthening compliance frameworks to manage regulatory changes.
- Enhancing cybersecurity measures to protect against operational risks.
- Diversifying the loan portfolio to mitigate credit risk.
- Implementing strategic pricing strategies to maintain margins in a competitive environment.
| Risk Factor | Description | Current Metric |
|---|---|---|
| Capital Levels | Capital to risk-weighted assets | 15.24% |
| Tier 1 Capital | Tier 1 capital to risk-weighted assets | 12.70% |
| Net Interest Margin | Net interest margin (tax equivalent) | 3.35% |
| Allowance for Credit Losses | Allowance for credit losses to total loans | 1.22% |
| Non-Performing Loans | Ratio of non-performing loans to total loans | 0.32% |
| Net Income | Net income for Q3 2024 | $19.5 million |
| Earnings Per Share | Diluted earnings per share | $0.81 |
Future Growth Prospects for First Mid Bancshares, Inc. (FMBH)
Future Growth Prospects for First Mid Bancshares, Inc.
Analysis of Key Growth Drivers
First Mid Bancshares, Inc. is positioned for growth through several strategic initiatives. The acquisition of Blackhawk, completed in Q3 2023, has contributed significantly to the company’s revenue streams, particularly in noninterest income, which increased by $3.6 million year-over-year. The company's wealth management and insurance sectors have experienced a combined growth of 16.6% year-over-year.
Future Revenue Growth Projections and Earnings Estimates
For the third quarter of 2024, net income was reported at $19.5 million, translating to a diluted earnings per share (EPS) of $0.81. Revenue growth is anticipated to continue, driven by robust loan growth of 1%, resulting in net interest income expansion. Analysts project an adjusted diluted EPS of $0.83 for Q4 2024.
Strategic Initiatives or Partnerships That May Drive Future Growth
The acquisition of Mid Rivers Insurance Group, finalized on July 9, 2024, is expected to further enhance the company's insurance revenue streams. Additionally, the company has focused on optimizing its loan portfolio, which totaled $5.62 billion at the end of Q3 2024, with diversified growth across commercial real estate and agricultural loans.
Competitive Advantages That Position the Company for Growth
First Mid Bancshares benefits from a strong capital position, with total capital to risk-weighted assets at 15.24% and a Tier 1 capital ratio of 12.70%. This solid capital structure provides a buffer for growth and investment in new opportunities. The company's efficiency ratio stands at 61.3%, reflecting operational effectiveness.
| Growth Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Income | $19.5 million | $15.1 million | 29.2% |
| Diluted EPS | $0.81 | $0.68 | 19.1% |
| Noninterest Income | $23.0 million | $22.4 million | 2.7% |
| Total Loans | $5.62 billion | $5.54 billion | 1.0% |
| Total Deposits | $6.09 billion | $6.35 billion | -4.1% |
Additionally, the company has seen a tangible book value per share increase of 6.6% in the quarter. This growth in tangible equity enhances the company’s capacity for reinvestment and shareholder returns.
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Article updated on 8 Nov 2024
Resources:
- First Mid Bancshares, Inc. (FMBH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First Mid Bancshares, Inc. (FMBH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View First Mid Bancshares, Inc. (FMBH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.